THE SME’S CHANGE PROCESS:
A STRATEGIC APPROACH TOWARDS
ORGANIZATIONAL CHANGE
A study on the employment of SME change strategies and
its influence on the perceived effectiveness of change.
by
Mandy Broekhof
University of Groningen Faculty of Economics and Business Master BA, Small Business & Entrepreneurship
1 ABSTRACT
Change in SMEs and in large firms is often assumed to be similar. However, the questionability of this assumption causes a need for further investigation. The purpose of this study is to research the influence of several contingencies on the employment of SME change strategies and how these change strategies affect the perceived effectiveness of change initiatives in the change processes of SMEs. From this study can be concluded that a positive relationship exists between the strength of the drivers of change, the scope of change and the level of entrepreneurial orientation and the planned SME change strategies. In particular, this relationship appears to be the strongest for the empirical-rational change strategy. Furthermore, this study demonstrates a positive relationship between the extent to which an SME change agent employs planned SME change strategies and the perceived effectiveness of change initiatives. Interviews with SME change agents provided insight in the SME change process from which additional variables are proposed that seem to influence the SME change process as well. This study thereby provides insight in the change processes of SMEs and also demonstrates that their approach towards change significantly deviates from the one applied by larger firms.
Keywords: SMEs, Organizational change, Change process, Change strategies, Drivers of Change, Scope of Change, Entrepreneurial Orientation, Small Business Orientation.
2
TABLE OF CONTENTS
1. INTRODUCTION ... 3
2. THEORETICAL FRAMEWORK... 5
2.1 SME Change strategies ... 6
2.2 Perceived effectiveness of realized change... 8
2.3 Drivers of change ... 9
2.4 Scope of Change ... 11
2.5 Entrepreneurial orientation and Small business orientation... 15
3. METHOD... 19
3.1 Participants... 19
3.2 Research method 1: Survey on the SME’s approach towards organizational change ... 20
3.3 Research method 2: Interviews on the SME’s change process ... 26
4. RESULTS... 28
4.1 Survey results... 28
4.2 Interview results... 34
5. DISCUSSION & CONCLUSIONS ... 39
5.1 The SME’s approach towards organizational change ... 39
5.2 The SME’s change process ... 43
5.3 Future research... 46
5.4 Limitations ... 46
6. REFERENCES ... 48
APPENDIX A - Summary of the variables and the related items in the questionnaire... 53
APPENDIX B - Factor analysis... 56
APPENDIX C - Interview guideline on the SME’s change process... 59
APPENDIX D - Adapted items of the employee questionnaire... 61
APPENDIX E - Moderator analysis ... 62
3
1. INTRODUCTION
The rapidly changing and unpredictable environment, fortified due to the aftermath of the worldwide economic crisis, increases the urgency for firms to change. According to Kovoor-Misra (2009) this results in the fact that crises as well as change have become inherent to the current business environment for entrepreneurs. According to By (2005), the need for change and the intensity of change initiatives becomes greater over time due to the continuous development of the environment in which organizations are situated. Hence, ‘change’ is an important factor that is inevitably related to all organizations in their pursuit of their future goals (Burnes, 2004; By, 2005). Subsequently how to achieve this, by means of explicitly engaging to actions to accomplish this, cannot be seen separately and is interrelated to organizational change.
4
Bamford and Forrester (2004) stated that the key to achieving successful organizational change is to align the change strategy to the initiated change and the circumstances under which the change is implemented. By performing research on change within SMEs and taking into account the contingencies related to the change and the change initiator, insight can be gained into how and which contingencies influence the strategies that SMEs adopt when implementing change. Subsequently, it could provide insight into which change strategies contribute to the implementation of successful changes in SMEs. Hence, investigating the strategic approach of SMEs towards change and moreover what leads change to be successful in these firms, could be a major contribution to this undiscovered field.
Furthermore, insight in the overall process of implementing changes in SMEs is another lacking issue. A change process is defined as a series of stages through which the implementation of a change progresses (Kotter, 1995). How smaller firms commit to particular decisions in such a change process with regards to the change initiative or change strategy is unknown. Therefore studying the change process of SMEs as well, can give a more in depth understanding of how SMEs implement changes.
The main research question of this study is: How do SMEs approach organizational change? Several sub questions are developed to answer this research question:
1. Which change strategies do SMEs apply when dealing with organizational change and which variables influence the employment of these change strategies?
2. Which change strategies are perceived effectively for implementing change initiatives by SME change agents?
3. How do SMEs carry out a change process and what factors fulfill an influential role during this process?
5
2. THEORETICAL FRAMEWORK
A central subject of this study is the change agent that can be defined as the individual who is responsible for creating and directing the implementation of a change within a firm (Weick and Quinn, 1999), and thereby the one employing a strategy for implementing such an initiative. This section will provide insight in the change strategies that can be employed by a change agent in a change process. According to Higgs and Rowland (2005), the change agent has a considerable influence on the success of a change initiative. Consequently, a change agent fulfills a crucial role in the change process and significantly affects the selection and implementation of changes within firms. This is especially a distinct characteristic for SMEs since the smaller the size of a firm, the more a change agent’s behavior will influence the firm’s behavior and thereby its approach towards organizational change. A detailed elaboration of the influence of the size of a firm on the change agent’s change approach will follow further on in the theory section. Due the focus on SMEs in this study, these agents are referred to as SME change agent.
Several variables are selected that are expected to influence the decision of an SME change agent for a change strategy. The chosen variables are different in focus and can be divided into two classes, namely the variables related to the change initiative and the variables related to the SME change agent. The change initiative variables are the scope of change and the drivers of change, the latter includes the reason for a firm to implement the change. A driver that will be discussed in-depth due to its assumed importance in today’s turbulent business environment is the urgency for change within SMEs. Two variables that focus on the change agent are the level of entrepreneurial orientation and the level of small business orientation of the SME change agent.
Besides investigating the relationships between the above mentioned contingencies and the change strategies, it is interesting to investigate whether a particular change strategy influences the effectiveness of a change. If so, this research can reveal change strategies that are able to contribute to the successful implementation of change initiatives within SMEs.
6 2.1 SME Change strategies
When SMEs change, deliberately or not, it engages in a particular strategy for implementing the change initiative. Such a strategy is referred to as change strategy and is defined as “A coherent
set of measures, activities and interventions adopted to achieve the (intended) change, of which it is assumed that this contributes to achieving the intended state by a change agent” (Emans and Vos, 2011). A variety of change strategies can be distinguished. Each strategy differs in the underlying reasoning on how change should be implemented and the degree to which change recipients are involved in the change process. A change recipient can be defined as an individual who is responsible for implementing or adapting to a change (Ford, Ford and D’Amelio, 2008).
According to Burnes (2004) there is a general agreement in the literature on the two dominant approaches towards managing organizational change, namely the planned- and the emergent change. Bamford and Forrester (2004) classify change strategies according to these two types of changes as well, the deliberate change strategy and the emergent change strategy whereas the former is a planned attempt to improve the organization, the latter takes place out of the control of the firm and is caused by changes in the firm’s environment. This distinction between planned- and emergent change strategies will also be applied in this study. First the planned change strategies will be discussed followed by an explanation of the emergent change strategy. Since this research focuses on change within SMEs, these four strategies will be referred to as SME change strategies. Besides the variety of change strategies that can be employed, the strength to which these strategies are employed by SME change agents can differ as well since particular change agents can align stronger to strategies for implementing change than others.
In this research, Chin and Benne’s (1961) well known taxonomy for planned change strategies will be used to explain the approaches that can be applied by SMEs for implementing changes. This taxonomy classifies the planned strategies for leading change into three types, the empirical-rational strategy, the normative-reeducative strategy, and the power-coercive strategy.
7
individuals will engage in change that is guided by reason and in which logics are used to gain organizational support and to change behavior (Szabla, 2007).
Normative-reeducactive change strategy. The normative-reeducative strategy is based on the involvement of the entire firm and is more collaborative of nature. It is based on the assumption that change is a bottom up process, with the focus on changing the individuals, instead of using a top down approach (Jafaari, 2003). Quinn et al. (2000) add that communication in stead of manipulation is emphasized within this strategy. Relevant data for implementing the change is gathered throughout all layers of the firm, indicating that all individuals of the firm are involved in conceptualizing the change initiative (Quinn et al., 2000; Miles and Thangaraj, 2002). According to Chin and Benne (1961:43) when aligning to this strategy individuals “must
participate in their own re-education if they are to be re-educated at all”. Therefore, participation of all individuals in the change process is a distinct characteristic of this strategy.
Power-coercive change strategy. The most important feature of the power-coercive strategy is that change is imposed on change recipients by applying power, they are compelled to behave in a certain way. This strategy for change is based on the dependency of change recipients on the ones with authority (Chin and Benne, 1961). Those who posses the power are responsible for directing the others in the firm to engage in changes (Miles and Thangaraj, 2002). The change agents are leveraging others to change and use sanctions to make people commit to the change, in this way people are forced to align to the change initiative (Quinn et al., 2000). Szabla (2007) adds that there is no organization wide participation and that the change agent imposes the content and the consequences of the change within the firm.
Emergent change strategy. The last SME change strategy is derived from the other dominant approach to change, the emergent approach (Burnes, 2004). Weick (2000: 237) defines emergent change as it: “consists of ongoing accommodations, adaptations, and alterations that
produce fundamental change without a priori intentions to do so. Emergent change occurs when people reaccomplish routines and when they deal with contingencies, breakdowns, and opportunities in everyday work. Much of this change goes unnoticed because small alterations are lumped together in otherwise uneventful inertia and because small changes are neither heroic nor plausible ways to make strategy”.
8
collaboration of several internal and external variables (By, 2005). The pace of emergent change can be described as complex and continuous, it has no clear beginning or ending.
This emergent strategy seems to be a strange approach. Although the literature describes the emergent strategy as an approach to change, it is rather paradoxical to refer to this complex and unpredictable continuous change process as a strategy which is emphasized by the continuing debate in the literature on this strategy (Bamford & Forrester, 2004; Burnes, 2004). It might even be questionable to which degree a change agent is capable of deliberately choosing such a strategy due to its explicit unintended nature. However, since a change agent can facilitate an environment in which unplanned change is allowed (Plowman et al., 2007), thereby enhancing the occurrence of emergent change, this approach is classified as change strategy as well.
2.2 Perceived effectiveness of a realized change
Besides the variables that will be discussed below that may influence the SME change agent’s choice for a particular SME change strategy, it is also interesting to investigate what the effect of a particular change strategy is on the effectiveness of a realized change. Thus, whether the aimed change initiative was successful and achieved its initial purpose.
The importance of determining the effectiveness of a change initiative is stressed by the findings of Higgs and Rowland (2005), which show that implementing successful change is rather difficult to achieve. Besides this, the high number of failing change initiatives among large firms (Beer and Nohria, 2000; Szabla, 2007), emphasize once again the crucial need for evaluating the results of change initiatives for all firms. By evaluating change initiatives, SMEs can gain an understanding of the change process and are able to determine where difficulties arise and subsequently, where improvements are necessary in this process. According to Bennebroek-Gravenhorst et al. (2003) there is often a difference between the planned outcomes of a change initiative and the actual result. Moreover firms frequently engage in new change initiatives without properly determining the success of the one before, although such an evaluation might thus reveal relevant issues for the implementation of future change initiatives.
9
effectiveness of a change and it might reveal particular change strategies that positively influence the success of a change.
However the effectiveness of a realized change is difficult to measure due to the different perceptions and criteria that change initiators can have to determine if a change was successful. Moreover, each change process is different and will have distinct goals to achieve. This situation specific nature of change causes that there are no general measures available for determining the effectiveness of realized changes. Consequently, in this research the perceived effectiveness of the realized change will be used. Although perceptions on effectiveness are not an equivalent for the actual effectiveness, these two concepts are closely related and it is therefore assumed to be a plausible measure for determining the effectiveness of a change initiative (Fu and Yukl, 1999).
A clear definition of perceived effectiveness seems to be absent in the literature, therefore a definition is proposed for this study. Perceived effectiveness is the SME change agent’s perception of the success of a change initiative which includes as well the satisfaction about its results, whether the change is effective and if the initial goals were achieved, as the satisfaction about the process of implementing the change initiative, whether the SME change agent is satisfied about the resources and time that were necessary during the change process.
2.3 Drivers of change
The majority of firms in today’s business environment commonly experience an increasing need to implement change initiatives to cope with the rapidly changing and turbulent environment (Higgs and Rowland, 2005). However, where this need stems from and how strong this need is, will differ per firm since the reasons for initiating change can be diverse. This is confirmed by Leana and Barry (2000), who suggest that a variety of forces push and pull firms towards change. Therefore it is interesting to understand what mobilizes SMEs to implement change initiatives, thus what drives these firms to change. Moreover to be able to perform a proper research on how SMEs deal with change it is necessary to start with investigating the source for change, since the main reason behind the change initiative might influence the SME change agent’s approach towards implementing change. This is confirmed by Dunphy and Stace (1993), who state that the choice of a change agent for a change leadership style is dependent on the circumstances that caused the firm to initiate a change.
10
presumably deliberately engage in change initiatives. Therefore it is expected that the stronger the need for change, the more an SME change agent will use planned SME change strategies for implementing a change. This leads to the following hypothesis.
Hypothesis 1: The stronger the drivers of change are for an SME, the stronger an SME change agent will employ planned SME change strategies for implementing a change initiative.
The literature presents different drivers of change. While some changes will be initiated due to organizational factors, other changes might be a reaction to external factors (By, 2005). A multitude of reasons can be applicable for SMEs to engage in change initiatives like deregulation, technological innovations, growth objectives or trends. The competition might be another important driver for change within SMEs, since they must constantly evaluate their actions to stay innovative, responsive and competitive (Aloulou and Fayolle, 2005). This is also supported by Buono and Kerber (2010), who add that all firms in the 21st century in each industry face challenges to change and respond to the rapidly changing competition, business environment and markets, technology, and the economic conditions.
For studying the change processes of SMEs, the classification presented by Palmer, Dunford and Akin (2009) will be used for determining the drivers of change. In their classification a distinction is made between two types of pressures.
Environmental pressures for change are external to the firm and outside the control of the firm. A sub division of pressures can be made. Fashion pressures are pressures for change in line with fashionable management practices. It also includes imitating changes of other firms that are perceived successful. Geopolitical pressures stem from changes in geopolitical relations due to global crises that have an immediate impact. Hyper competition pressures challenge firms to anticipate to the hypercompetitive and fast changing business environment.
Organizational pressures for change stem from drivers of change that originate within the firm. Two types will be discussed. Growth pressures are pressures and challenges related to the pursuit of firms to achieve organizational growth and to continue to do so in the future.
Integration and collaboration pressures stem from a need for integration and collaboration within the organization in order to become more efficient.
11
Degree of urgency for change (Influence of the crisis). Responding to a recession is for many firms a complicated matter due to sudden and radical shifts in the environment that increases the complexity of decision making for firms. Operating under these circumstances is especially burdensome for SMEs since they don’t possess the advantages that larger firms have because of their size, such as learning effects and economies of scale and scope. As a result, this causes high numbers of failing SMEs during a recession compared to larger firms (Latham, 2009). According to Kovoor-Misra (2009), crises and change go together since the former is often followed by the latter in firms in order to recuperate from a crisis. Consequently, an interesting external pressure to consider which can force firms to change, and thereby might affect the change process, is the worldwide financial crisis that started in 2008. The consequences of this crisis tremendously affected markets and SMEs all over the world (Overweel and Pleijster, 2009).
A characteristic of a crisis is that the environment is less predictable and changing rapidly. The implementation of change might therefore not allow for widespread consultation and the involvement of change recipients due to the lack of time. Kotter and Schlesinger (2008) support the effect of this environmental pressure on the change approach of change agents and state that rapid change is a common response to crises. Burnes (2004) and Buono and Kerber (2010) add that economic downturns create a need for firms to change rapidly and revolutionary in order to survive and that change is often directed from the top in such situations due to the urgent need for change. Therefore, the global financial crisis can create a sense of urgency for SMEs to implement change initiatives which thereby might influence the decision for a particular SME change strategy by SME change agents.
2.4 Scope of Change
When firms initiate a change, the degree of change that is needed has to be considered (Balogun and Hope Hailey, 2008). The impact of a change and the scale on which such an initiative is implemented within an SME might influence the decision of an SME change agent for employing a particular change strategy, since different types of changes need different approaches towards the implementation of a change initiative.
12
similar taxonomy is proposed by Dunphy and Stace (1988) who distinguish between incremental and transformational changes. Balogun and Hope Hailey (2008:70) refer to the degree of change as the scope of change which is defined as: “the required outcome of the change, varying from
realignment to more radical change aimed at transformation of an organization”. The scope of change can be explained along two dimensions, including the impact of a change and the breadth of a change.
Impact of a change. The impact of a change includes the desired profoundness an SME change agent wants to achieve by implementing a change. It is the influence a change has on the change recipients within the firm and can range from low- to high impact. Changes that have a low impact are not frame breaking and are in line with the current beliefs and assumptions of the people within the firm and lead to minor adoptions (Street and Gallupe, 2007). Those changes are refinements to a firm’s current practices or strategies. Plowman et al. (2007) refer to this as convergent change, which entails changes that are consistent with the existing organizational template and are implemented to improve the firm and to achieve a better fit with the business environment. Changes that have a high impact cause fundamental shifts for the change recipients and the firm. These changes include radical shifts away from a firm’s current practices and profoundly transform the organization’s nature (Palmer, Dunford and Akin, 2009). According to Balogun and Hope Hailey (2008) these changes occur in essential parts of the organization such as in its strategy, structure and organizational culture. Plowman et al. (2007) add that these radical changes require new ways of operating and therefore have a large impact on the change recipients.
Breadth of a change. The breadth of a change can be defined as: “the physical spread of
change across the organization” (Balogun and Hope Hailey, 2008:70). It can range from broad to narrow and entails whether the change affects the entire organization or if it is limited to particular parts of the organization. According to By (2005), changes that are narrow in breadth are usually focused on implementation at departmental or divisional level within firms whereas broader changes are organization-wide and thus manifested throughout the entire firm. Change initiatives that influence the entire organization can be an indication of a change in the firm’s goals or a change in the way to achieve these goals, since such changes have to be carried out and implemented throughout the entire firm and therefore affect all employees. Plowman et al. (2007) use a similar classification for the breadth of a change but refer to this as the nature of a change and differentiate between change initiatives that are implemented on a local scale or system wide.
13
profoundness of a change initiative and was therefore replaced by impact. In the adapted matrix a distinction is made between four different types of change (figure 1).
FIGURE 1
Scope of Change - Classification matrix (adapted from Buitenwerf, 2010)
The different types of changes along these two dimensions are defined as follows.
Fine-tuning. These change initiatives are minor adjustments to realign and improve the firm. The physical spread of these changes is narrow and it therefore only influences a limited part of the firm. Due to its low impact, the change will only affect change recipients in a rather shallow way. Reorientation. These changes involve refinements and incremental improvements within the current state of being of the organization. This type of change has a low impact and will therefore have a minor influence on the change recipients but is implemented throughout the entire firm. Regeneration. A change that is characterized as regeneration has a major impact on the change recipients within the firm and can thereby cause radical shifts for the ones involved. This change is narrow in terms of breadth and therefore only aims at influencing a part of the firm.
Revolution. Revolutionary changes have the largest influence on the firm. Not only do these changes affect a very large part of the firm, but moreover such a change will have a high impact on the change recipients and can thereby cause fundamental shifts in the organization.
14
Changes that are large in scope could benefit from the support and participation of the affected change recipients in designing and implementing the change initiative. These profound changes are in need of thorough analyses for which information is needed that might only be available through the experience of the change recipients. Therefore the support of change recipients is of crucial importance for implementing high impact changes, which increases the necessity to justify and explain the initiative in order to create an understanding for the change among the change recipients. Kotter and Schlesinger (2008) confirm this and argue that implementing a change initiative that influences a lot of parties will benefit from involving those that are affected by it. As a result, it is not expected that SME change agents use a coercive change strategy for implementing such changes but that they will tend to use a more participative change strategy for changes that are large in scope.
However, another source suggested that deliberately involving change recipients in a change process will not always be advantageous to changes that are large in scope. Even though the normative reeducative strategy and the empirical-rational strategy, to a certain extent, involve the people that will be affected by the change, Quinn et al. (2000) argued that these strategies in such situations may be inappropriate. Although change recipients understand the reason and logics behind the change, commitment might be hard to achieve if the changes are not beneficial to them. In this way the strength of these strategies, involving the change recipients, becomes its weakness at the same time which greatly diminishes the effects of using these strategies.
Based on this, it is questionable whether SME change agents tend to use a planned change approach to implement changes that are large in scope. Higgs and Rowland (2005), who conducted similar research among large firms, suggest that change agents tend to employ an emergent change strategy for dealing with changes that are large in scope. Due to the earlier presumed inappropriateness of planned change strategies for SMEs for implementing changes that are large in scope, it is therefore expected that the emergent change strategy will be employed by SMEs as well for implementing such change initiatives. These arguments lead to the following hypothesis.
15
2.5 Entrepreneurial orientation and Small business orientation
The role of the change agent in the change process is of major influence on the implementation of a change. The business owner’s orientation towards its firm is especially in SMEs and important characteristic since the smaller the firm is, the larger the impact of the behavior of the business owner will be on the behavior of the firm. Fulford and Rizzo (2009) confirm this and show that how a business owner reacts and acts towards its environment will also largely determine the firm’s behavior. Subsequently, to understand the behavior of SMEs, including their approach towards change, the behavior of the business owner has to be considered as well.
An important issue for a business owner is to have a clear view of what they want to realize when implementing a change (Burnes, 2004). Changes are often the result of the business owner’s pursuit of the firm’s strategy and goals, based on the business owner’s characteristics and on the underlying reasons that made the business owner decide to start a firm. These thoughts and behaviors are thus fundamental to the business owner’s attitude towards change (Higgs and Rowland, 2005). Since strategic behavior can largely differ among SMEs, the business owner’s orientation towards its firm, from which the firm’s strategic behavior originates, presumably differs as well and can therefore influence the SME change agent’s approach towards change.
Based on the difference in strategic orientation of business owners, Carland, Hoy, Boulton and Carland (1984) distinguished entrepreneurs from small business owners. The differences in entrepreneurial intensity and goals for the firm between those two groups cause that business owners can have different orientations towards operating their firm. The literature distinguishes two types of orientations for business owners, the Entrepreneurial Orientation and the Small Business Orientation. Entrepreneurial orientation is often considered to be the opposite of small business orientation, however Runyan, Droge and Swinney (2008) show that these concepts are not the extremes on a continuum but rather two separate constructs that can be present simultaneously and measure distinct characteristics of an SME change agent. Therefore having a high level of one of these orientations, does not exclude the possession of the other but measures the degree to which each of these particular orientations are present.
Entrepreneurial Orientation (EO). The entrepreneurial orientation originated in the literature on processes of strategy-making and can be defined as: “the strategy making process that
16
market. According to Aloulou and Fayolle (2005) entrepreneurial orientation can be described as the firm’s entrepreneurial attitude towards dealing with the competition as well as towards pursuing the firm’s strategy and vision. These firms take advantage by focusing on opportunities and by trying out new combinations of resources instead of solely relying on existing practices. This orientation is commonly classified into three dimensions (Baker and Sinkula, 2009).
Innovativeness. According to Lumpkin and Dess (1996:142) the characteristic innovativeness can be defined as it: “reflects a firm’s tendency to engage in and support new
ideas, novelty, experimentation and creative processes that may result in new products, services or technological processes”. A similar description is given by Baker and Sinkula (2009) and Rauch, Wiklund, Lumpkin and Frese (2009), who argue that innovativeness is the willingness of a firm to approve and support creativity and the development of research in order to introduce new products or to improve technology, processes or procedures within the firm.
Proactiveness. The degree of proactiveness of a firm refers to how capable it is in taking the initiative in the pursuit of new opportunities and how flexible a firm is in adapting to future changes in the environment (Baker and Sinkula, 2009). Proactive firms act in an opportunistic manner by having a forward-looking perspective and are characterized by innovative activities in order to seize initiatives (Lumpkin and Dess, 1996).
Risk-taking. Risk-taking includes the willingness of a firm to engage in opportunities characterized by high-risk (Baker and Sinkula, 2009). The higher the intensity and preference of firms to support risky projects, the more risk-taking the firm is (Lumpkin and Dess, 1996). Rauch et al. (2009) add to this that risk-taking firms take bold actions into unknown areas, use a substantial amount of resources and commit this to opportunities in uncertain environments.
Entrepreneurial oriented business owners are thus oriented towards achieving growth and generating profit. However, business owners can also have a business to pursue personal goals and achievement or to solely produce an income. The concept small business orientation might be an adequate reflection for the variation in orientations of business owners (Runyan et al., 2008).
Small Business Orientation (SBO). Business owners with a small business orientation place a significant emphasis and value on achieving personal strategies by means of managing their own firm. This orientation includes two dimensions, the small business owner’s emotional attachment to the business and the owner’s purpose and goals (Runyan et al., 2008).
17
between essential family needs and the firm’s goals for the business since a proper balance between personal- and business goals is required to be able to achieve personal satisfaction.
Purpose and goals. According to Stuart et al. (2003) and Runyan et al. (2008) the small business owner’s pursuit of personal goals is perceived as more important than the achievement of financial goals for small business oriented business owners and this thereby stresses the importance of pursuing personal strategies. Furthermore, owning a business often suits the small business oriented owner’s personal life better than working for a firm owned by someone else.
Due to the different strategic orientations of business owners, and its effect on the firm’s strategic behavior, it can be expected that the entrepreneurial- and small business orientation of a business owner influence the SME’s approach towards change and the employed change strategy. Due to the emphasis that small business oriented owners put on achieving personal strategies, it can be expected that they tend to use a similar approach towards their employees for achieving their personal goals. To succeed in this, the involvement of the business owner as well as of the change recipients is necessary when implementing change to assure that the personal goals of both parties are pursued. Therefore, it can be argued that the higher the level of small business orientation of an SME change agent the more one will use a participative strategy for implementing a change. This leads to the following hypothesis.
Hypothesis 3: The higher the level of Small Business Orientation of an SME change agent, the more an SME change agent will tend to use a normative-reeducative change strategy.
SME change agents with a high level of entrepreneurial orientation are expected to be guided more by logics and reasoning in their pursuit for discovering opportunities, since the opportunities have to make sense for the entrepreneur to be able to understand and pursue them. These prerequisites are moreover necessities to ensure that the change recipients embrace the proposed change rapidly in order to be an innovative and proactive entrepreneurial firm compared its competitors. Consequently, the level of entrepreneurial orientation of an SME change agent is expected to influence the employment of an empirical-rational change strategy. This leads to the following hypothesis.
18
The discussion of the theory on SME change strategies and its influence on the perceived effectiveness of a realized change, results in the following theoretical framework (figure 2).
FIGURE 2
Theoretical framework explaining the influence of SME change strategies on the perceived effectiveness of a change.
The influence of the drivers of change, the scope of change and the level of entrepreneurial- and small business orientation on the SME change strategies is displayed in a second theoretical framework (figure 3).
FIGURE 3
19 3. METHOD
This section discusses the quantitative and qualitative research methods that are used in this study. Secondary data of a survey are collected from a database to perform quantitative analyses. Due to the lack of available knowledge and empirical research, interviews are conducted to better understand relationships among concepts and to gain insight in the change processes of SMEs. This section starts with the criteria that are determined for firms to participate in this study and are applicable to the participants of the survey as well as to the participants of the interviews. After this, the survey that is used in this study will be discussed and an explanation is given of the operationalization of the variables and of the data analysis. Subsequently, an explanation of the process, the participants and the data collection related to the interviews will be given.
3.1 Participants
The survey leading to the database and the interviews that will be conducted are held among SMEs that had been engaged in multiple changes. The changes had to be implemented in the firm between half a year and three years ago.
SME. A definition is necessary to determine whether a firm can be defined as an SME. There are three main criteria to determine the type of enterprise, including the staff headcount, the annual turnover and the annual balance sheet (European Commission, 2005). Whereas the headcount is an obligatory criterion, firms do not necessarily have to meet both the financial criteria but should meet either the turnover or the balance sheet criterion. These latter criteria will therefore not be applicable to all firms and are because of that, less appropriate. Moreover due to sensitivity and confidentiality issues related to providing information on these two financial criteria, firms may be less willing to cooperate in this research. Therefore only the headcount has been used to define an SME. Firms that employ fewer than 50 people are defined as small firms and medium-sized firms employ between 50 and 250 people. This staff headcount is expressed in the amount of full time employees within the firm. To ensure that the respondents fill in the accurate amount of employees according to this definition, the total amount of employees as well as the amount of full time employees is asked for.
20
questions in this research are applicable to the selected firms and their specific change initiatives. To measure the effectiveness of a change, the implementation process of such an initiative has to be finished for at least half a year to be able to make grounded conclusions. Furthermore, to determine the scope of a change such an initiative should not be implemented recently, hence within a half a year, since the impact and breadth of a change need time before the actual effects of the change become observable. To ensure that the respondents are able to recall accurate and detailed information about the change initiative, it is necessary that this change did not take place longer than three years ago.
3.2 Research method 1: Survey on the SME’s approach towards organizational change
A database is available that includes secondary data of 101 SMEs who were selected and all filled in the questionnaire that is used for this research. Analyses will be performed to test the hypotheses and to identify possible relationships among variables.
Measurement of the variables. A questionnaire is developed for this research, partly based on existing survey items, and will be described in detail below per variable.
The questionnaire included a total of 62 items that can be divided in two sections. First the change initiative is discussed in-depth to gain a detailed understanding of the change itself, followed by questions related to the SME change agent. Multi-item scales are used for all items in the questionnaire. Likert scales of 7-points are applied (ranging from 1 = strongly disagree to 7 = strongly agree), in contrast to the often used 5- and 10-point scales on which the survey items are based. A 10-point scale may cause individuals to avoid the extreme ends of the scale, which can be reduced by using a smaller scale. A 5-point scale on the other hand limits the answering possibilities and thereby the results. Therefore, it is decided to use a 7-point scale. The scores on all items that measure the same variable are accumulated and grouped into one new variable. The means of these accumulated scores will be used in order to perform the analyses.
21
section the Cronbach alpha scores will be discussed per variable as well. Appendix A provides an overview of the items that are included in the questionnaire and the related variables.
SME Change strategies. The SME change strategies are operationalized with four variables: (1) Empirical-rational change strategy, (2) Normative-reeducactive change strategy, (3) Power-coercive change strategy and (4) Emergent change strategy. The survey items for these variables are based on Szabla (2007) and Buitenwerf (2010). In the questionnaire 20 items are included, five per type of strategy, to determine the level to which each of these SME change strategies is employed by the SME change agent. The empirical-rational-, the normative reeducative- and the power-coercive change strategy generate a Cronbach alpha of respectively 0.55, 0.63 and 0.57. Increasing these scores by deleting items is not possible. Although the analyses indicate a rather low reliability score for these strategies, this scaling was validated in other studies and is therefore also applied as a measure in this research. The emergent change strategy generates a Cronbach alpha of 0.54. By deleting item F3, this score can be improved to an alpha of 0.69 which is acceptable since these items are developed for this questionnaire.
Perceived effectiveness of realized change. Since there seems to be a lack of knowledge on defining and operationalizing this concept in the literature, the items are designed for this questionnaire as a reflection of the earlier provided definition. Six items are included to measure the perceived effectiveness a change, 3 measure the perception about the results of the change initiative and 3 measure the perception about the change process itself. The reliability analysis resulted in acceptable Cronbach alpha scores for change results (0.89) as well as for change process (0.65). Deleting one item (E2, concerning the change process) improves the alpha score of the change process to 0.69. However, since perceived effectiveness is measured with a formative scale, alpha scores are less relevant since the items do not reflect one variable but are different dimensions of that particular variable (Coltman, Devinney, Midgley and Venaik, 2008).
22
imitating successful changes of other firms. The accumulated score on the drivers of change reflects the strength to which the respondent experienced these drivers of change. Although not all reasons for change are equally important in specific cases, the accumulated score is used in this study as a measure for determining the strength to which an SME change agent experiences a need for implementing change.
Scope of change. This concept is operationalized with two dimensions including the impact- and breadth of a change and is adapted from Balogun and Hope Hailey (2008) and Buitenwerf (2010). To measure the scope of a change, 11 items are included in the questionnaire. Four items are designed to determine the breadth of a change and seven items are used to determine the impact of the change. The scores of one item measuring the impact, (C8, concerning the nature of the firm after the change initiative) are reversed in order to acquire a consistent rating. The Cronbach alpha scores on the impact- and breadth dimensions were respectively 0.66 and 0.51, increasing the alpha scores by deleting items is not possible.
Besides determining the scope of a change, this study classifies the changes as well in order to gain insight in the types of changes that occur within SMEs. Descriptive statistics are used to classify the changes according to the impact- and breadth dimension. The measures of centrality, the median and the mean, are almost equal to each other and indicate that the average of the distribution for the breadth of change equals 4.5. To classify a change as broad, a large part of the organization should be involved in the change initiative. Consequently, broad changes should have a value higher than the average, whereas narrow changes should have values lower than the average. Since 4.5 represents the mean of the distribution, the average value on the items measuring the breadth dimension should result in a clearly higher value than this mean to be classified as broad. We choose to round off this value upwards to a value of 5, to avoid the occurrence of questionable cases. Based on this, an average value of equal to or higher than 5 is classified as broad and values below 5 are classified as narrow. The same reasoning applies for the distribution of the impact of a change, which resulted in an average of 4.1. A value equal to or higher than 5 is classified as high impact and values lower than 5 are classified as low impact.
The combination of the scores on these two dimensions of the respondent leads to classifying a particular change initiative as one of the four types of changes: fine-tuning, reorientation, regeneration and revolution (figure 4).
23
confirms the typology for the large majority of changes. The results show that changes classified as fine-tuning indicate minor adjustments such as improvements to a planning or offering an additional product, whereas keywords such as downsizing, reorganization, changing the organizational culture or structure and expansion are applicable to the revolutionary changes.
FIGURE 4
Classification Scope of Change
Level of Entrepreneurial Orientation. The level of Entrepreneurial Orientation is operationalized with three variables: (1) Innovativeness, (2) Proactiveness and (3) Risk-taking. To measure the level of entrepreneurial orientation, 12 items are included in the questionnaire. The survey items for these dimensions are based on other validated instruments that measure entrepreneurial orientation (Runyan et al., 2008; Baker and Sinkula, 2009). The dimensions innovativeness, proactiveness and risk-taking are operationalized with 4 items per dimension. To acquire consistent results, the scores of two items (G2, concerning innovativeness and G3, concerning proactiveness) are reversed. The three dimensions are measured with a formative scale, which therefore reduces the relevancy of the reliability analysis. However, for the completeness and clarity of this study these scores are provided. The dimensions innovativeness, proactiveness and risk-taking generated Cronbach alpha scores of respectively 0.59, 0.22 and 0.53.
24
Emotional Attachment and (2) Purpose and Goals. The emotional attachment is operationalized with 4 items (α = 0.47) and purpose and goals with 2 items. Since the alpha value of the reliability analysis can only be calculated for variables existing of at least three items, a correlation analysis is performed to determine the reliability of the second dimension; purpose and goals (correlation = 0.20).
Data analysis. The statistical program SPSS is used for analyzing the secondary data from the questionnaire. In order to determine the validity of the items that measure a variable, a factor analysis is performed (appendix B). This analysis determines the interdependency among items and thereby the extent to which a combination of particular items is able to explain the variance in the data of the measured variable (Cooper and Schindler, 2006). The results of the factor analysis can not support the validity of the questionnaire for all concepts (table 1), which has possible implications for the results of this study.
To test the theoretical frameworks, the hypotheses and the relations between the independent and dependent variables, correlation analyses will be performed. Subsequently, regression analyses will be performed to determine the degree to which the drivers of change, the scope of change and the level of entrepreneurial- and small business orientation are capable of explaining variances in the extent to which SME change strategies are employed. Also regression analysis will be performed to test the relationship between the extent to which SME change strategies are employed and the perceived effectiveness of a change.
25 TABLE 1
Results of the factor analysis and the Kolmogorov-Smirnov test for normality
Variable Factor analysis Explained variance K-S Test Statistic K-S Test Significance (p) Empirical-rational strategy - 0.83 0.49 Normative-reeducative strategy - 0.98 0.30 Power-coercive strategy - 1.09 0.18 Emergent strategy - 1.04 0.23 Perceived effectiveness 82.5 % 1.41 0.04 Drivers of change - 0.73 0.65 Scope of change 44,0% 1.12 0.17 Level of EO 58,0% 0.49 0.97 Level of SBO 66.3 % 0.95 0.33
To verify the accuracy of this outcome, additional analyses were performed to determine the shape of the distribution of perceived effectiveness. The measures skewness and kurtosis, describe the degree to which the data set of perceived effectiveness deviates from symmetry and it measures the peakedness of the distribution. When the outcomes of the values of these control measures are equal to 0, it can be concluded that this variable is normally distributed (Cooper and Schindler, 2006). Since both measures fall within the acceptable range of -1 to 1, (skewness = - 1.0; kurtosis = 0.88), it can be concluded that the perceived effectiveness is approximately normally distributed as well.
26
3.3 Research method 2: Interviews on the SME’s change process
To acquire primary data for the empirical research, interviews will be conducted with SME change agents to gain insight in the unexplored area of SME change processes. Interviews, as opposed to a quantitative survey, can provide an in-depth perspective on SMEs and their change process because of the exploratory character of this research method. This characteristic of this research method demonstrate its applicability for this study since the aim of these interviews is to enhance the knowledge about how SMEs deal with change initiatives and which factors influence this change process.
Besides the factors that are included in the theoretical framework, insight can be gained in other factors influencing the change strategy in the change process of SMEs. Such factors may include the additional drivers of change (based on Palmer, Dunford and Akin, 2009) and the degree of urgency. In this way, a more detailed understanding can be reached of the underlying reasons for implementing a change, of the role of the crisis that possibly caused a sense of urgency for SMEs to implement a change, and about the SME change process in general.
Therefore, these interviews can provide a thorough understanding of how SMEs operate with regards to change and their change strategy and have the valuable ability to gain insight in to other relevant factors that affect the implementation of a change initiative that were not included as possible contingencies in the theoretical frameworks.
Participants of the interviews. Three interviews are performed for this research. All three firms are located in the middle of the Netherlands. Due to issues concerning their privacy, these firms will be renamed to Supermarket ABC, Hair salon DEF and Bookshop GHI.
The first participant, Supermarket ABC, is a small enterprise. Approximately two and a half years ago the firm implemented a rigorous financial savings project to cut down the expenses related to the personnel. According to the earlier established scheme for the scope of a change, this initiative can be classified as a reorientation.
The second firm that participates in this study is another small enterprise, namely Hair salon DEF. The change initiative of this firm that is used for this research can be classified as fine-tuning and includes the introduction of an online scheduling program for making appointments. The firm implemented this change initiative about one year ago.
27
of the chosen initiative clearly demonstrated signs of the change related concepts of this study and is therefore considered to be relevant.
Data collection. In advance of the interviews, the business owners will be asked whether they fulfill the determined criteria for this study to assure that the firms are able to participate. After this, face-to-face semi-structured interviews will be conducted with the business owners. During these interviews with the SME change agents (i.e. business owners), the change initiatives are discussed thoroughly by using the variables of this research as a guideline throughout the interviews. The goal of these interviews is to achieve an in-depth view on the change initiative, the change process itself and the context in which it took place. Moreover, insight may be gained on additional factors that influence the change process and the change strategy of the SME change agent. The guideline with questions for the interviews can be found in appendix C.
28 4. RESULTS
This section discusses the descriptive statistics of the secondary data of the survey, followed by the results of the correlation- and the regression analysis. After this, the results which are acquired by conducting the interviews to provide insight in the SME change process will be discussed as well.
4.1 Survey results
Descriptive statistics. In total, 101 SME change agents filled in the questionnaire that was used to perform secondary data analyses. From these respondents, 82 are defined as small firms and the remaining 19 are defined as medium-sized firms. Since not all respondents filled in the entire questionnaire, some missing values for particular variables occurred. One of the reasons for this was that besides business owners, the respondents were also individuals who did not own the business but were involved in managing the change. Therefore these respondents were unable to answer the items related to the change strategies and the level of entrepreneurial- and small business orientation. This explains the differences in sample size for particular variables. The descriptive statistics for this sample can be found in table 2.
TABLE 2
Descriptive statistics and frequency percentages
Variable N Mean SD Min. Max. 1.0-2.0 2.1-3.0 3.1-4.0 4.1-5.0 5.1-6.0 6.1-7.0
Empirical-rational strategy 95 4.86 0.88 3.00 7.00 - 2.1 15.8 46.3 25.3 10.5 Normative-reeducative strategy 94 4.10 1.03 1.40 6.00 5.3 10.7 27.6 40.4 16.0 - Power-coercive strategy 94 4.04 1.05 2.00 6.60 1.1 17.0 41.5 23.4 12.7 4.3 Emergent strategy 95 3.98 1.19 1.00 6.50 9.5 14.7 26.3 32.7 15.7 1.1 Perceived effectiveness 99 5.47 1.10 2.00 7.00 1.0 5.1 6.0 14.2 43.4 30.3 Strength drivers of change 98 4.04 0.95 1.57 6.43 4.1 10.2 33.7 38.7 12.3 1.0 Scope of change 101 4.18 0.78 2.36 6.27 - 7.9 29.7 50.5 10.9 1.0 Level of EO 96 4.50 0.61 3.00 6.25 - 1.0 20.9 58.3 18.8 1.0 Level of SBO 76 5.03 0.75 2.67 6.50 - 1.3 9.2 39.5 42.1 7.9
29 TABLE 3
Descriptive statistics and results of the t-test of the drivers of change
Drivers of change N Mean SD Min. Max. t Significance (p) D1: Endangered continuity 100 4.54 1.74 1.00 7.00 3.10 .003 D2: Mandatory change 99 2.39 1.71 1.00 7.00 -9.39 .000 D3: Adapt more rapidly to market 100 4.73 1.71 1.00 7.00 4.28 .000 D4: Cost reduction 100 4.05 2.13 1.00 7.00 0.24 .815 D5: Remain or become competitive 100 5.16 1.61 1.00 7.00 7.22 .000 D6: Improve firm's image 99 4.11 2.00 1.00 7.00 0.55 .581 D7: Successful change in other firms 100 3.35 1.72 1.00 7.00 -3.78 .000
The means of the separate drivers of change indicate differences compared to the overall mean of the seven drivers of change. A one sample t-test showed significant differences for the driver of change ‘remaining or becoming competitive’ (t = 7.22, p <.05) and ‘adapt more rapidly to the market (t = 4.28, p <.05), which display the highest means. The two drivers ‘mandatory change’ (t = -9.39, p <.05) and ‘imitating successful change of other firms’ (t = -3.78, p <.05) have significantly lower means and consequently, occur less frequently within SMEs.
Correlation Analysis. Table 4 depicts the results of the correlation analysis. The hypotheses will be discussed first, followed by an explanation of other notable correlations.
TABLE 4 Correlation analysis Variable 2 3 4 5 6 7 8 9 10 1. Empirical-rational strategy .411** -.024 .291** .749** .237* .254* .208* .279** -.059 2. Normative-reeducative strategy - -.327** .567** .614** .234* .066 .094 .111 .043 3. Power-coercive strategy - -.170 .402** .119 .165 .164 .205* .053 4. Emergent strategy - .388** .190 .158 .211* .055 -.055 5. Planned change strategies - .336** .271** .265* .334** .027 6. Perceived effectiveness - -.0.57 -.028 .450** .062 7. Strength drivers of change - .412** .231* -.018
8. Scope of change - .132 -.212
9. Level of EO - .107
10. Level of SBO -
* Correlation is significant at the 0.05 level (2-tailed), ** Correlation is significant at the 0.01 level (2-tailed)
30
of change and the planned change strategies correlate as well, which indicates that this relationship is not specifically related to an emergent change strategy. Hypothesis 3 can not be supported.
TABLE 5 Results Hypotheses
Hypothesis Relationship Correlation Conclusion
H1 Strength drivers of change - Planned strategies .271** Confirmed H2 Scope of a change - Emergent strategy .211* Partially confirmed H3 Level of SBO - Normative-reeducative strategy .043 Not confirmed H4 Level of EO - Empirical strategy .279** Confirmed * Correlation is significant at the 0.05 level (2-tailed), ** Correlation is significant at the 0.01 level (2-tailed)
Besides the tested relations for the hypotheses, the results of the correlation analysis indicate several other interesting relationships between the variables.
The SME change strategies appear to be interrelated since the empirical-rational-, the normative-reeducative- and the emergent strategy correlate positively with each other. These results indicate that the stronger an SME change agent employs one of these three change strategies, the stronger one simultaneously employs one of the other remaining strategies. A negative correlation is found between the normative-reeducative- and the power-coercive strategy, indicating that the more an SME change agent employs the former, the less one will employ the latter. This seems logical due to the contradictory characters of the participative and coercive approaches towards change. Furthermore, the analysis shows significant positive correlations between the empirical-rational- and the normative-reeducative change strategy and the perceived effectiveness of a realized change.
Another correlation is found between the strength of the drivers of change and the scope of change, which indicates that the stronger the drivers of change are, the larger the scope of the initiated change is. Furthermore, the absent correlation between the level of entrepreneurial- and small business orientation confirms that the two variables are different constructs and not two extremes on a continuum.
31
Regression Analysis. To test the theoretical framework displayed in figure 2, the SME change strategies are regressed on the perceived effectiveness of a realized change in order to determine the influence of each SME change strategy (table 6). The results indicate that the SME change strategies explain 7.8% of the variance in the perceived effectiveness of a realized change (F (4, 88) = 2.950, p <.05). From this it can be concluded that there is a positive relationship between the employment of SME change strategies and the perceived effectiveness of such an initiative.
Remarkably, the F-test indicates a significant result whereas the regression coefficients of the independent variables are all insignificant. This could be the result of multicollinearity which occurs when the independent variables correlate with each other as well (Cooper and Schindler, 2006), which is applicable to this study (see table 4). In this situation, the independent variables possess overlapping information which causes that the effect of one variable is insignificant after discounting the effect of the other variables. To predict the value of the dependent variable and the regression coefficients of the independent variables, additional regression analyses by excluding independent variables that are insignificant are necessary (McClave, Benson, Sincich and Knypstra, 2011). Therefore, additional regression analyses are conducted by excluding a particular strategy to determine whether the planned change strategies or the emergent change strategy explain the variance in perceived effectiveness. This analysis shows a significant result for the planned SME change strategies (table 7), which explain 8.5% of the variance in the perceived effectiveness of a change (F (3, 89) = 3.850, p <.05). The results for the emergent change strategy are insignificant (F (1, 93) = 3.479, p >.05). These results thereby confirm a significant positive relationship between the planned SME change strategies and the perceived effectiveness of a change initiative.
TABLE 6 TABLE 7
Regression SME change strategies on perceived effectiveness Regression planned change strategies on perceived effectiveness
Coefficients ANOVA Variance Coefficient ANOVA Variance
Independent variable β Sig. F Sig. Adj. R² Independent variable β Sig. F Sig. Adj. R²
Constant 13.609 .002 2.950 .024 .078 Constant 13.902 .001 3.850 .012 .085 Empirical-rational .161 .241 Empirical-rational .167 .221 Normative-reeducative .218 .126 Normative-reeducative .258 .051 Power-coercive .211 .058 Power-coercive .212 .056
Emergent .080 .563
β = Unstandardized regression coefficient.
F = Analysis of variance in means of independent variables
32
In order to test the second theoretical framework (figure 3), regression analyses are performed to determine the influence of the drivers of change, the scope of change and the level of entrepreneurial- and small business orientation on the employment of each SME change strategy (table 8-11). The analyses only indicate a significant result for the empirical-rational strategy, the model explains 10.9% of the variance in the empirical-rational strategy of change (F (4, 70) = 3.25, p < 0.05). Due to the occurrence of multicollinearity in this analysis as well, additional regression analyses should be performed. However, the analysis of the empirical-rational strategy only indicates one significant independent variable. The results of additional regression analysis with that particular variable will be similar to the results of the correlation analysis and will therefore not add valuable insights.
TABLE 8 TABLE 9
Regression independent variables on Regression independent variables on empirical-rational strategy normative-reeducative strategy
Coefficients ANOVA Variance Coefficients ANOVA Variance
Independent variable β Sig. F Sig. Adj. R² Independent variable β Sig. F Sig. Adj. R²
Constant 10.86 .048 3.25 .017 .109 Constant 13.27 .063 .342 .849 -.037 Drivers of change .088 .144 Drivers of change .036 .637 Scope of change .131 .097 Scope of change -.040 .692
Level of EO .107 .137 Level of EO .089 .332
Level of SBO -.009 .939 Level of SBO .043 .772 β = Unstandardized regression coefficient.
F = Analysis of variance in means of independent variables Adjusted R² = Adjusted coefficient of determination
TABLE 10 TABLE 11
Regression independent variables on Regression independent variables power-coercive strategy on emergent strategy
Coefficient ANOVA Variance Coefficient ANOVA Variance
Independent variable β Sig. F Sig. Adj. R² Independent variable β Sig. F Sig. Adj. R²
Constant 8.60 .20 .889 .475 -.006 Constant 10.06 .20 1.037 .395 .002 Drivers of change .058 .443 Drivers of change .109 .443 Scope of change .043 .663 Scope of change .057 .663
Level of EO .094 .293 Level of EO -.014 .293
Level of SBO .099 .498 Level of SBO -.006 .498
33
From the regression analyses can be concluded that the strength of the drivers of change, the scope of a change, and the level of entrepreneurial- and small business orientation, explain a significant part of the variance of the planned SME change strategies. This relationship appears to be the strongest for the empirical-rational change strategy. Furthermore, the analyses show that the planned SME change strategies explain a significant part of the variance of the perceived effectiveness of a change initiative. The variance of the emergent change strategy can not be explained by the independent variables, as well as this strategy itself can not explain a variance in the perceived effectiveness of a change.
Moderator Analysis. Although investigating the effect of the contingencies on the relationship between the SME change strategies and the perceived effectiveness of a change initiative is beyond the scope of this study, a moderator analysis is performed for one randomly chosen contingency as a starting point for future research. A moderator analysis tests whether a particular contingency influences the relation between an independent and a dependent variable (Baron and Kenny, 1986). These contingencies can create circumstances that might influence the effectiveness of an SME change strategy, which emphasizes the importance of exploring these moderating effects. The contingency that is used for this analysis is the scope of change.
Performing a moderator analysis consists of several steps. The independent variable and the moderator variable are centered, after which a product variable of these variables is constructed (Frazier, Tix and Barron, 2004). Regression analyses are performed which measure if a change in the scope of a change, results in a gradual change in the influence of each particular SME change strategy on the perceived effectiveness of a change. The results of this moderator analysis can be found in appendix E. Since the analyses did not show a significant result for the product variable, which is the prerequisite for a moderator (Baron and Kenny, 1986), the scope of change does not fulfill a moderating role in this relationship.
TABLE 12
Regression independent variables on planned change strategies
Coefficient ANOVA Variance
Independent variable β Sig. F Sig. Adj. R²
Constant 32.591 .005 2.864 .030 .094 Drivers of change .184 .138 Scope of change .133 .404
Level of EO .290 .050
Level of SBO .139 .567 β = Unstandardized regression coefficient.
