Entrepreneurial change: Does being
entrepreneurial mean being good at
organizational change?
Johan de Haan
University of Groningen, Groningen MscBa, Faculty of Economics & Business
Student number: s1768255 Sint Jansstraat 15a 9712 JM Groningen Tel: 0651905997 E-mail: j.m.de.haan.1@student.rug.nl 1st supervisor: Dr. J.F.J. Vos 2nd supervisor: Dr. M. J. Brand Date: 06-12-2012 ABSTRACT
This study researches the impact of entrepreneurial characteristics of a company (entrepreneurial orientation) and a change agent (achievement orientation and locus of control) on change effectiveness and the employment of change strategies in SMEs. Furthermore, the moderating influence of scope of change on the relationship between the change strategies and change effectiveness is investigated. Two datasets were combined to create a sample of 221 change agents in SMEs who completed a survey. We found that entrepreneurial characteristics predict change effectiveness and certain change strategies. This study did not confirm the moderating influence of scope of change.
1
INTRODUCTION
In order to survive and remain competitive, organizations reorganize, downsize, and implement new technologies. Therefore, they are constantly subject to organizational change (Nikolaou, Gouras, Vakola & Bourantas, 2007). According to Cummings & Worley (2008), organizations have to adapt to increasingly complex and uncertain technological, economic, political and cultural changes, suggesting that organizational change is becoming increasingly important. This is strengthened by the recent economic crisis, making change even more necessary (Mohrman & Worley, 2009).
Literature distinguishes two main groups of people in organizational change, the agents and the recipients. The change agents manage and lead the change, and the change recipients are the employees who have to change their behavior and/or the operations of the company. As Ford, Ford & D’Amelio (2008) point out, most researchers presume that failure in organizational change is caused by change recipients, viewing change agents as helpless victims of the irrational behavior of recipients. However, Ford et al. (2008) argue that change agents also have a large role in this respect, and largely influence the outcome of organizational change. This study will focus on the role of the change agent in organizational change.
Successful change is hard to achieve. Several empirical studies have shown that most change projects in organizations are unsuccessful (Higgs & Rowland, 2011). Therefore, it is important to determine which factors influence the effectiveness of a change project. Woodman (1993) argues that the separation between science and practice forms the largest obstacle in the progression in successful change management. This suggests that empirical research studying the determinants of change effectiveness is necessary to overcome this. Pettigrew, Woodman and Cameron (2001) recommend to, despite its challenges, include a measure of performance in studies. They argue that this provides a focal point for a research and it adds to the understanding of how and why variability in contextual factors shape variation in performance. This study will focus on factors that influence the success of organizational change.
2 change in large companies. However, it is unlikely for several reasons that such studies can be generalized to SMEs. First, SMEs differ from large companies in their structure and strategy (Meijaard, Brand, & Mosselman, 2002), and management (Verdu-Jover, Lloréns-Montes, & García-Morales, 2006). Next to this, in large companies the change agent is the change implementer but often not the initiator. Balogun and Johnson (2005) showed that middle managers are both recipients of change – as it is initiated by top management – and agents of change, implementing it. This differs from SMEs as here the business owner typically makes the important decisions (Hankinson, Bartlett, & Ducheneaut, 1997), and consequently, is likely to be both initiator and implementer of the change. Therefore, research in an SME context will increase our understanding of change agents. This study will address this gap, focusing on change agents in SMEs.
Obviously, the change agent has a major role in the change process and has a large influence on its success (Higgs & Rowland, 2005). Although present research discusses the skills that enable change agents to more effectively implement change (e.g.
Johnson, & Fredian, 1986; Bloom, 1989; Buchanan & Boddy, 1992; Bennis, 1993), little is known about the influence of change agents’ characteristics. However, this is important as agents’ behavior influences their approach to change, especially in smaller firms (Vos & Brand, 2012).
3 creating the case for change - effectively engaging others in recognizing the business need for change - , (2) creating structural change - ensuring that the change is based on depth of understanding of the issues and supported with a consistent set of tools and processes -, (3) engagement and commitment, - engaging others in the whole change process and building commitment -, (4) implementing and sustaining changes - developing effective plans and ensuring good monitoring and review practices are developed -, (5) facilitating and developing capability - ensuring that people are challenged to find their own answers and that they are supported in doing this-.
The question that arises here is: will certain agent characteristics make a successful change implementation more or less likely? Some researchers suggest that this could indeed be the case. Hamilton (1988) found that in an army context the personality characteristics of effective organizational development consultants differed from less effective organizational development consultants. Nikolaou et al. (2007) found resilience to be an important characteristic of change agents to accept and apply change. They suggest researchers to look for other characteristics in relation to the success of change agents.
SMEs experience a lot of change. A well-known strength of SMEs is their flexibility and adaptability (Belvedere, Grando & Papadimitriou, 2010). Therefore, SMEs are expected to be ‘good in change’. Does this mean that entrepreneurs and small business owners possess the right characteristics to be a successful change agent? And moreover, which particular characteristics influence this skill? Or can change success be explained by the characteristics of the company? This study will address these issues.
A number of personal characteristics that are discussed in almost every research about characteristics of successful entrepreneurs are need for achievement, locus of control and risk taking propensity (Driessen & Zwart, 2006). These factors have repeatedly been found to be related to business performance (Aaker & Jacobson, 1987; Schiller & Crewson, 1997; Lee & Tsang, 2001). This study will research whether change agents who have a more entrepreneurial personality use particular change strategies and whether they are more effective in implementing change.
4 with a higher EO generally focus on achieving profit and growth, whereas a more SBO indicates a focus on achieving personal goals of the business owner (Vos & Brand, 2012). This study will research if companies which are more entrepreneurial oriented use particular change strategies and if they are more effective in implementing organizational change.
Next to this, the relationship between change strategies and change effectiveness will be dealt with. This study attempts to make a start in exploring situational factors that influence this relationship, starting with scope of change.
The main questions this article will attempt to answer are:
- Do entrepreneurial characteristics lead to the use of certain change strategies and a more successful change project?
- Is the effectiveness of change strategies dependent on the scope of the change?
Several contributions are made by exploring these issues. First of all, insight in organizational change in SMEs is created. Secondly, this study will increase our understanding of the change agent as both initiator and implementer of change. Third, this study seeks to explore agent and company characteristics as antecedents of change strategy choice and change effectiveness. This increases our understanding of which factors contribute to change success and the way in which change is implemented. Finally, this study attempts to start exploring the relationship between change strategies and change effectiveness, researching the influence of scope of change.
THEORETICAL FRAMEWORK
5 FIGURE 1
Conceptual model
Concepts
Effectiveness of change
The literature lacks a clear definition of change effectiveness. Researchers that have worked with this concept did so without developing a definition (e.g. Arvonen & Petterson, 1999; Smith, 2002). Cameron (1980) provides four complementary approaches in assessing and defining organizational effectiveness, which we consider useful to develop a definition of change effectiveness. The most widely used approach is the goal approach, defining effectiveness in terms of the extent to which an organization accomplishes its goals. The second approach, the system resource approach defines effectiveness as the extent to which the organization acquires needed resources. The third approach focuses on the internal processes of the organization, in this approach effectiveness means smooth internal functioning and information flow. The fourth and final approach focuses on the satisfaction of stakeholders. Effectiveness has two dimensions, the ‘result’ and the ‘process’ dimension (Fu & Yukl, 1999; Higgs & Rowland, 2005). The first and fourth approaches of defining effectiveness provided by Cameron (19680) are consistent with the result dimension, the second and third approaches are in line with the process dimension. Organizational change also aims to achieve certain goals, the use of resources, a change in internal processes, and stakeholder satisfaction (Kraatz & Zajac, 2001; Beck, Brüderl & Woywode, 2008), therefore these approaches of effectiveness can be used to define change effectiveness.
6 As a result, following from these approaches and taken into account the perspective of the change agent, effectiveness of change is defined as the satisfaction of the change agent with the extent to which the change goals are accomplished, the needed resources for the change project and the internal processes.
Entrepreneurial Orientation
According to Pérez-Luño, Wiklund & Cabrera (2011), entrepreneurial orientation (EO) stems from the strategy making process literature. Hart (1992) argues it is an organization-wide phenomenon which includes planning and decision making, analyses and a great deal of aspects of an organizations culture, value system and mission. EO is embedded in the policies and practices that are the basis of entrepreneurial actions and decisions, and is used to enact an organization’s purpose and to sustain its vision (Pérez-Luño et al., 2011).
Miller (1983) provided a starting point for identifying the dimensions of EO. He argued that an entrepreneurial firm engages in product market innovation and risky ventures, and is first to develop proactive innovations. Covin & Slevin (1989) have, among others (Lumpkin & Dess, 1996), built further on Millers conceptualization and identified three core dimensions of EO: innovativeness, proactiveness and risk taking.
In order to gain a competitive advantage, every firm has to innovate to some extent (de Jong & Vermeulen, 2006). Freeman & Soete’s (1997) statement that ‘not to innovate is to die’ is widely recognized in the literature (de Jong & Vermeulen, 2006). ‘Newness’ is a pivotal element in the concept of innovation (Perez-Luno et al, 2011). Therefore, innovation can be defined as the development and use of new behaviors or ideas in organizations, which are manifested in terms of a new product, service, method of production, market, organizational structure or administrative system (Damanpour & Wischnevsky, 2006).
7 Proactiveness can be defined as the organizational pursuit of business opportunities which are perceived to be positive or favorable to the firm (Stevenson & Jarillo, 1990). This definition is consistent with the definition provided by Lumpkin & Dess (2001), who view it as an opportunity seeking and forward looking perspective, in which new products and/or services are introduced ahead of competition, and firms act in anticipation of future demand in order to create change and to shape the environment.
The link between risk taking and entrepreneurship has already been acknowledged in literature for a long time (Kreiser, Marino & Weaver, 2002). Researchers widely agree that risk taking propensity is embedded in entrepreneurship (McClelland, 1960). This is not only because entrepreneurs have a higher propensity to take risk, but also because they tend to view situations more optimistic and favorable than non-entrepreneurs (Palich & Bagby, 1995; Busenitz, 1999). According to Lumpkin & Dess, (2001, p. 431), risk taking means a tendency to take bold actions such as venturing into unknown new markets, committing a large portion of resources to ventures with uncertain outcomes, and/or borrowing heavily.
Agent characteristics
According to Driessen & Zwart (2006), the most important individual entrepreneurial characteristics are need for achievement, locus of control and risk taking propensity. In his review of the entrepreneurship literature, Shane (2003) found these characteristics to be commonly associated with entrepreneurship. However, as risk taking is already included in the entrepreneurial orientation, this study will only include the former two characteristics, need for achievement and locus of control. This is because in SMEs the decision making in general and strategic management in particular are to a large extent dependent on the business owner/manager (Lans, Biemans, Verstegen & Mulder, 2008). As a result, no significant differences are expected in measuring risk taking propensity on the company level versus the individual level. Therefore, we consider risk taking propensity as captured in the EO variable.
8 achievement is found to be a characteristic which is stronger included in entrepreneurs. Hornoaday and Aboud (1973) found firm founders to have a higher need for achievement than the general population. Furthermore, in their meta-analysis Stewart & Roth (2007) found that entrepreneurs have a higher achievement motivation than managers.
Locus of control is the belief of individuals that they can influence the environment in which they are in (Rotter, 1996). People with a higher internal locus of control have a stronger feeling that they can control their environment. A relatively high level of this characteristic is also found to be included in an entrepreneurial personality. Entrepreneurs are found to have more internal locus of control than the general population (Caird, 1991), and also than managers (Ward, 1993).
Change strategies
The two main approaches to change in literature are planned change and emergent change (Bamford & Forester, 2003). Planned change, a concept which was initiated by Lewin, has long dominated the literature as change approach. More recently, some authors have challenged the planned approach, stating that it does not hold in the current environment which is increasingly uncertain (Bamford & Forester, 2003). They deem emergent change to be more appropriate. According to Orlikowski (1996) emergent changes are continuous changes which are ongoing, evolving and cumulative. A new pattern of organizing is established without explicit beforehand intentions (Orlikowski, 1996). This study will use this distinction between planned and emergent change.
A well-known classification of planned change strategies is that of Chin & Benne (1961). These strategies are the empirical-rational, normative-reeducative, and the power-coercive strategy. The normative-reeducative (NORE) strategy acknowledges that change is a complex phenomenon (Kennedy, 1987). This strategy adopts the idea that people act on their values and attitudes which are common in their environment, and that accepting change means the need to change these values and attitudes. Collaboration is important, and ideas and input from others are welcome (Quinn, Spreitzer & Brown, 2000). Involvement and creating win-win situations are fundamental in this strategy.
9 beneficial to them (Kennedy, 1987). Resistance to change is likely to come from ignorance and superstition, and can be countered by educating the recipients about the logic and the benefits of the change (Quinn et al., 2000). Reason and logic are fundamental in this strategy; recipients will adopt the change if they understand it and if it is in their self-interest. The NORE and EMRA strategy both seek to persuade the change recipients to accept the organizational change. In the NORE strategy recipients are persuaded by being involved and creating win-win situations. In the EMRA strategy they are persuaded by showing them their own benefits. Therefore, these strategies can be referred to as the ‘persuading strategies’ (Vos & Brand, 2012).
The power-coercive (POCO) strategy is top-down and based on sanctions which force recipients to change (Kennedy, 1987). This strategy does obviously not seek to gain the commitment of people. However, when an organization is in a state of inertia - a state in which organizational change is not accepted - the use of this strategy can be necessary (Kennedy, 1987). The change recipients are guided by the people who possess the power and the authority, and are forced to adopt the change initiative (Quinn et al, 2000). Unlike the former two strategies, this strategy does not seek to persuade the recipients, they are forced to participate in the organizational change.
10 whereas in planned change projects he acts as a controller (Bamford & Forrester, 2003). Therefore, we also classify this approach as a strategy.
Scope of change
Scope of change is a variable used to distinguish changes. This variable has two dimensions: breadth and depth. The breadth dimension includes the size of the part of the organization that is influenced by the change, the depth dimension includes the intensity of the influence of the change on the recipients. The scope of the change refers to the level of novelty or unfamiliarity of the change (Street & Gallupe, 2009), and ranges from convergent to radical (Plowman et al., 2007). Changes which are more convergent in scope have a low breadth and depth. In these changes the current organizational structure and process are remained, and they are complementary to, or for improvement of the current situation (Street & Gallupe, 2009). Changes which are more radical in scope have a high breadth and depth. These changes are not complementary with the current situation and require new ways of operating (Street & Gallupe, 2009).
Hypothesis development
The effect of EO on change effectiveness
11 change and support new ideas (Rauch, Wiklund, Lumpkin, & Frese, 2009). Proactive firms have an attitude of anticipation and acting on future changes in the market, and pioneer new products and processes (Li, Wei, & Liu, 2010). Risk taking involves a willingness of a firm to commit resources to new projects with uncertain outcomes (Baker & Sinkula, 2009). Wiklund & Shepherd (2003) found a strong positive relationship between EO and firm performance. A prerequisite to achieve this performance is to adapt to the environment and therefore, to change (Nikolaou et al., 2007). All in all, the above arguments above lead to the following hypothesis:
Hypothesis 1: The higher a firms Entrepreneurial Orientation, the more successful these firms are in organizational change.
The effect of EO on the change strategies
A higher EO is likely to lead to a higher level of implementation of the NORE change strategy in SMEs. This is for several reasons. First of all, participation and involvement are fundamental in this strategy, and these factors are generally more present in SMEs (Davies & Crane, 2010). Secondly, EO is about doing and anticipating on what customers want. Entrepreneurial organizations are more customer-oriented and closer to the customer, as they are less bureaucratic and hierarchal (Liao, Welsch & Stoica, 2003). This suggests that it is the larger individual freedom and involvement in entrepreneurial organizations that allow for this customer orientation, thereby also promoting the normative-reeducative strategy.
A higher EO is also likely to lead to a higher implementation of an EMRA change strategy. An organization with a higher EO will have employees who act accordingly to this (Atuahene-Gima & Ko, 2001), and therefore they will understand the necessity of the organization to be innovative and proactive, which encompasses organizational change. This makes the use of an EMRA strategy easier to enforce for change agents, as persuasion is easier in this situation. If change recipients in this company would be resistant to change, this would inhibit the company to have an EO.
12 1996), a POCO strategy could prove useful to save time of arguments and persuasion. However, as argued above, change recipients of companies with an EO are expected to be less resistant to change, making the use of this strategy more unlikely.
Finally, we will also determine the direction of the relationship between EO and the use of an EMER strategy. Although small companies are commonly expected to use this type of strategy more (Smart, Maull, Childe, & Radnor, 2004), a higher EO is likely to cause more radical change as new products/services or processes are adopted to align with customer wishes, which is likely to require a more planned change.
The arguments above lead to the following hypotheses:
Hypothesis 2a: The higher a firm’s Entrepreneurial Orientation, the more the change agent will tend to adopt a normative-reeducative change strategy.
Hypothesis 2b: The higher a firm’s Entrepreneurial Orientation, the more the change agent will tend to adopt an empirical-rational change strategy.
The effect of agent characteristics on change effectiveness
13 control were more successful in solving problems that were created by a stressful event, thereby increasing organizational performance. This leads him to conclude that locus of control is an essential characteristic for entrepreneurs to achieve success. The arguments lead to the following hypothesis:
Hypothesis 3: The higher the change agent’s need for achievement and internal locus of control, the higher the effectiveness of the change.
The effect of agent characteristics on the use of change strategies
Change agents with higher achievement orientation and locus of control believe they are responsible for their environment and can influence it (Rotter, 1996). In general, they believe that outcomes are subject to actions and behavior of persons. Therefore, they are expected to try to influence the change recipients to support the change, which will be reflected in recipients’ actions and behaviors. This would require the use a persuasion strategy (NORE and EMRA). If the recipient is persuaded, his/her actions will result in organizational change, because they believe this is in their own best interest. Therefore, change agents with a higher need for achievement and locus of control are more likely to use the persuasion strategies.
Furthermore, this study will determine the direction of the relationship between need for achievement and locus of control on the use of a POCO strategy. A high hierarchal place of the agent could lead to the use of force and coercion to some extent. However, we do not expect these characteristics, which are commonly associated with entrepreneurs in smaller firms, to lead to the use of this strategy, as SMEs typically have more personal contact between owner/manager and employees (Yetim, & Yetim, 2006) and a higher satisfaction rate (Idson, 1990), which is not in line with the use of this strategy.
14 in their pursuit of new achievements (Kirkpatrick & Locke, 1991), making the use of planned change more likely.
The arguments above lead to the following hypotheses:
Hypothesis 4a: The higher the change agent’s need for achievement and locus of control, the more they will tend to adopt a normative-reeducative change strategy.
Hypothesis 4b: The higher the change agent’s need for achievement and locus of control, the more they will tend to adopt an empirical-rational change strategy.
The moderating effect of scope of change
The chosen change strategy is expected to influence the effectiveness of the change. A large amount of research has established a link between strategy and performance (Capon, Farley, & Hoenig, 1990). However, as contingency theory indicates, there is no one best way to organize or manage change, which implies that different strategies are suitable for different situations (Burke & Litwin, 1992). Different situations require different actions to be taken. According to Yukl & Fu (1999), effective managers select a type of behavior that suites the situation the best. For example, if the time for a large change project is scarce, the change agent may need to use a POCO strategy more strongly to achieve successful change (Kotter & Schlesinger, 2008). This suggests that different situations require different strategies to ensure success of a change project.
15 Consequently, we expect the relationship between the change strategies and effectiveness of the change to be influenced by the scope of the change.
The arguments above lead to the following hypothesis:
Hypothesis 5: The relationship between change strategy and change effectiveness is moderated by the scope of change.
METHOD
Data collection
For this study, two databases containing data of change agents in SMEs were used. These databases included the variables discussed above. The first data were collected in a survey in 2011 of 116 change agents in companies in different sectors, almost all in the Netherlands. The second data were collected in a survey in 2012, containing 105 change agents, also mostly in the Netherlands. Respondents were individuals that had recently been change agents in a change project, and were found through the personal networks of the interviewers. They were asked to select a change project which had occurred between not more than three years ago (in the 2011 additionally at least half a year ago), and to fill in a questionnaire about this change project.
16
Measures
Entrepreneurial orientation This factor was measured differently in the two surveys. In the 2011 survey a scale with 14 items was used, based on Baker and Sinkula (2009), Covin and Slevin (1989), and Runyan et al., (2008). This scale contained four questions about innovativeness (e.g. ‘I consider innovations to be the most important orientation of our strategy’), four questions about proactiveness (e.g. ‘I consider the company to be proactive, we try to create opportunities in our market’), four questions about risk orientation (e.g. ‘Taking risk is an absolute prerequisite in this company for survival’), and two questions about profit and growth orientation (e.g. ‘one of the most important goals of this company is to generate profit’). In the 2012 survey two questions on innovation and the two questions on profit and growth orientation were remained, the other items were excluded. The bipolar scale of Covin & Slevin (1989) with nine items was added to measure EO, containing three questions on innovation, three on proactiveness and three on risk orientation. This is the standard scale of measuring EO (George & Marino, 2011).
Change agent characteristics The characteristics of the change agents were two factors commonly associated with entrepreneurship; achievement orientation and locus of control (further AchLoC). The scales for both factors were adopted from Utsch & Rauch (2000), and were adjusted to focus on change (e.g. for the change process I developed clear goals). Therefore, the expression of these characteristics in a certain situation (i.e. organizational change) was measured.
Change strategies To measure the extent to which each of the three planned strategies were implemented, the scale of Szabla (2007) was adopted. As this scale focuses on change recipients, it was adjusted to focus on the perspective of the change agent. This scale contains five items on each of the three planned strategies. An example of an item is: ‘employees had a lot of power to make their own decisions about the change’. A five item scale based on Burnes (2004) and Weick & Quinn (1999) was developed to measure the extent to which an emergent strategy was adopted. An example question of this scale is: ‘This change occurred without being planned beforehand’.
17 included breadth. The scale is based on Balogun & Hope Hailey (2008). An example question of this scale is: ‘As a consequence of this change, the work of the involved employees drastically changed’.
Change effectiveness This factor was measured on a six-item scale, measuring the satisfaction of the change agent with the extent to which the change goals are accomplished, the needed resources for the change project and the internal processes. This scale is based on Higgs & Rowland (2005) and Fu & Yuki (1999), and focuses on perceived success of result (three items) and perceived success of process (three items). An example item of this scale is: ‘Overall, with the result of the change I am..’, ranging from ‘very unsatisfied’ to ‘very satisfied’.
Analyses
Several analyses were performed for this study. Factor and reliability analysis were performed to test the reliability of the constructs. The main descriptives and bivariate correlations were analyzed for a first impression of the data. Two assumptions for a regression, normality and linearity were tested by a Shapiro-Wilk test and Anova respectively. Next, regression analyses were performed to determine if EO and AchLoC determined the use of specific change strategies, and to determine their direct effect on change effectiveness. Furthermore, a regression analysis was performed to determine if there is a moderating effect of scope of change in the relationships between the change strategies and change effectiveness.
Construct development
18 TABLE I
Factor analysis and Cronbach’s Alpha
Variable Cron-bach’s Alpha
Fac-tor
Items^ Core characteristics of factor Cronbach ’s Alpha Correla-tion# EO-add 0.59 1 2 1,2 3,4 Innovation-orientation Profit/growth orientation 0.68** 0.28** EO-2011 0.71 1 2 3 4 5 1,2,7,9,11 3,10,14 4,8 5,6 12,13 Fast innovation Openness to new solutions Reactive Profit/growth orientation Intuition 0.76 0.58 0.38** 0.30** 0.32** EO-2012 0.74 1 2 3 4 5 11,12,13 1,2 5,6,7 8,9 3,4,10 Risk-taking Innovation-orientation New products Proactiveness Profit/growth and aggressiveness 0.81 0.55 0.48 0.75** 0.45** AchLoC 0.63 1 2 1,2,3 4,5,6 Change achievement Locus of Control 0.63 0.46
NORE 0.70 1 1,2,3,4,5 NORE strategy 0.70
EMRA 0.59 1
2
1,2,4
3,5
Rational, logic and facts Use of experts 0.57 0.53** POCO 0.59 1 2 1,2,4,5 3 Top-down, distance Role of commander 0.59 n.a. EMER 0.57 1 2 2,3,4 1,5 Enabling Unplanned 0.69 0.05 Scope 0.47 1 2 3 4 1,2,3 7,8,10 6,9,11 4,5 Change in work Breadth of change Process change
Work conditions and size
0.71 0.63 0.57
0.31**
Ch Eff 0.82 1 1,2,3,4,5,6 Change effectiveness 0.82
19 Some of the scales are not yet validated, which is reflected in some low Cronbach’s Alpha’s. However, some scales measure multiple distinct factors of a variable, inevitably resulting in a lower Cronbach’s alpha. For example, factor two of EO-2011 (openness to new solutions) contains openness to new ways of improving performance, openness to solutions of employees, and preparedness to take risk in implementing change (new solutions). These items all measure an aspect of openness to new solutions, however their rating can differ individually. Furthermore, if the number of items decreases the Cronbach’s alpha also tends to decrease. This could explain that some of the alphas of the distinct factors tend to be somewhat low. Most alphas of the total scales are acceptable.
RESULTS
Main descriptives
For a first impression of the data the main descriptives (Table II) and bivariate correlations (Table III) are presented. The first variable (EO-add) represents the four corresponding items that were included in both datasets. The second variable (EO-2011) represents all items questioned in the survey of 2011, and the third variable (EO-2012) represents all items questioned in the survey of 2012. The mean of the EO-add variable is somewhat higher. This variable only includes two items about the innovation dimension and two about profit and growth orientation.
The scores on the four change strategies are rather low. The Empirical-Rational strategy is used most (M = 4.79) and the Emergent strategy is used least (M = 3.71). The scores on Achievement and Locus of Control and Change Effectiveness are relatively high (M = 5.10 and M = 5.54 respectively).
20 TABLE II
Main descriptives (all variables on 7-point Likert scale)
N Mean Min Max SD
EO-add 208 5,05 2,00 6,75 0,99 EO-2011 105 4,74 3,29 6,36 0,65 EO-2012 102 4,53 2,62 6,15 0,75 AchLoC 205 5,10 2,67 7,00 0,80 NORE 211 4,20 1,40 6,60 1,10 EMRA 212 4,79 2,00 7,00 0,91 POCO 210 3,92 1,60 6,60 1,03 EMER 211 3,71 1,40 6,00 0,93 Scope 216 4,34 2,36 6,09 0,71 Ch Eff 216 5,54 2,67 7,00 0,92
In total, 221 people participated in this study. The 2011 survey included 116 respondents, and the 2012 survey included 105 respondents. Of the participants, 82.4% was male and 17.6% female. Respondents’ age ranged from 20 to 65 (M = 43.93, SD = 10.93). Concerning respondents’ education, 62.4% finished higher vocational or university education. The respondents had recently acted as change agents in their company. Of these companies, 28.8% operated in the manufacturing sector, and the remaining 71.2% in the services, trade and transportation sectors. The size of the companies ranged between 2 and 250 employees, next to this two companies with more employees (N = 350 and N = 360) were included (M = 56.21, SD = 65.33). The age of the companies ranged between 1 and 835 years (M = 32.78, SD = 62.58).
Correlations
21 Some control variables also show significant correlations with a strategy. Education and firm size both correlate with NORE and POCO, Industry correlates with NORE. In the regression analysis where these strategies were the dependent variable, the relevant control variables were included (Becker, 2005).
TABLE III
Correlations between variables
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 Education Resp - 2 Gender ,02 - 3 Age resp -,14* -,17** - 4 Size of firm ,16* -,03 ,04 - 5 Age of firm ,01 ,08 ,19** ,28** - 6 Industry ,17* ,20** -,02 ,11 ,00 - 7 EO-add -,13 ,01 -,07 ,03 -,12 -,12 - 8 EO-2011 -,19 ,06 ,11 -,04 -,01 ,03 ,75** - 9 EO-2012 -,20* -,27** -,07 ,07 -,06 -,09 ,61** # - 10 AchLoC -,05 -,06 ,17* ,09 ,00 ,16* ,27** ,45** ,21* - 11 NORE ,14* ,09 ,08 ,14* ,10 ,20** ,09 ,23* -,02 ,36** - 12 EMRA ,07 ,06 -,05 ,05 -,04 ,12 ,17* ,36** ,14 ,38** ,30** - 13 POCO -,14* -,06 ,04 -,14* -,07 -,07 ,12 ,12 ,15 ,12 -,28** ,06 - 14 EMER ,06 -,05 ,03 ,04 ,13 ,05 ,06 ,15 -,08 ,14* ,50** ,10 -,12 - 15 Scope -,07 ,04 ,09 ,02 -,05 ,11 ,20** ,23* ,14 ,34** ,23** ,14* ,03 ,24** - 16 Ch Eff ,05 ,13 -,02 ,10 ,06 ,12 ,09 ,26** -,06 ,25** ,13 ,19** ,07 ,03 -,06 -
** Correlation is significant at the 0.01 level (2-tailed) * Correlation is significant at the 0.05 level (2-tailed)
# No correlation, variables not measured on the same respondents
Analyses
22 these variables did not pass all the conditions of a regression analysis, which should be taken into account in the interpretation of the results concerning these particular variables.
Change strategies We tested for the influences of EO and AchLoC on the use of change strategies using regression analysis. The results of these analyses are depicted in table IV, V, VI, and VII. In the analysis on POCO, education of respondent and size of firm were included as control variables, as these variables correlated significantly with POCO. In the analysis on NORE, education of respondent, size of firm and industry were included as control variables, as these variables correlated significantly with NORE. EO and AchLoC were both hypothesized to positively influence NORE and EMRA.
Concerning the three EO variables, outcomes were not consistent with each other. The regression showed that EO-add only predicted EMRA (β = 0.16, p = 0.02). EO-2011 influenced NORE (β = 0.44, p = 0.01) and EMRA (β = 0.51, p < 0.01). EO-2012 showed no significant relationship with any of the change strategies. As a result, hypothesis 2a and 2b were only partially confirmed. The results also suggested a positive effect of EO on POCO, however this effect was not significant on the 95% confidence level (β = 0.12, p = 0.10).
AchLoC predicted both NORE (β = 0.47, p < 0.01) and EMRA (β = 0.43, p < 0.01), confirming hypothesis 4a and 4b. The results also suggested a positive effect of AchLoC on POCO and EMER, however these effects were not significant on the 95% confidence level (β = 0.15, p = 0.09 and β = 0.15, p = 0.09 respectively).
TABLE IV
Regression outcomes NORE
Adj. R2 B Sig
EO-add 0,05 0,13 0,10
EO-2011 0,13 0,44 0,01**
EO-2012 0,02 -0,05 0,73
AchLoC 0,16 0,47 0,00**
23 TABLE V
Regression outcomes EMRA
Adj. R22 B Sig
EO-add 0,02 0,16 0,02*
EO-2011 0,12 0,51 0,00**
EO-2012 0,01 0,18 0,15
AchLoC 0,14 0,43 0,00**
** Significant at the 0.01 level (2-tailed) * Significant at the 0.05 level (2-tailed)
TABLE VI
Regression outcomes POCO
Adj. R2 B Sig EO-add 0,03 0,12 0,10 EO-2011 0,01 0,16 0,33 EO-2012 0,05 0,24 0,09 AchLoC 0,03 0,15 0,09 TABLE VII
Regression outcomes EMER
Adj. R2 B Sig
EO-add 0,00 0,05 0,41
EO-2011 0,01 0,21 0,14
EO-2012 0,00 -0,09 0,43
AchLoC 0,03 0,15 0,09
Change effectiveness We tested for the direct influences of EO and AchLoC on change effectiveness using regression analysis. Moreover, we tested for the moderating effect of scope of change in the relationship between all individual change strategies and change effectiveness. The results of these regressions can be found in table VIII. As no control variables correlated significantly with change effectiveness, they were not included in the regression analysis.
24 The regression with AchLoC showed a significant effect of this variable on change effectiveness (β = 0.29, p < 0.01), confirming hypothesis 3.
We tested if scope of change moderated the relationship between the change strategies and change effectiveness using regression analyses. We performed four analyses, each testing for the moderating influence of scope of change between an individual change strategy and change effectiveness. The regressions were not significant. Scope did almost show to moderate the relationship between the use of a POCO strategy and change effectiveness, however this result was not significant on a 95% confidence level (β = 0.72, p = 0.07). Therefore, these findings did not confirm hypotheses 5.
The outcome did show a direct significant influence of EMRA on change effectiveness (β = 0.19, p = 0.01). No other strategies had a direct significant influence on change effectiveness. An additional regression analysis was performed to test for the direct influence of scope of change on change effectiveness. The regression was insignificant (β = -0.05, p = 0.52).
TABLE VIII
Regression outcomes change effectiveness
Adj. R2 B Sig EO-add 0,00 0,09 0,19 EO-2011 0,06 0,38 0,01** EO-2012 -0,01 -0,07 0,56 AchLoC 0,06 0,29 0,00** NORE 0,01 0,11 0,06 EMRA 0,03 0,19 0,01** POCO 0,00 0,06 0,31 EMER 0,00 0,03 0,69 Scope -0,03 -0,05 0,52 NORE x Scope 0,01 -0,29 0,47 EMRA x Scope 0,03 -0,44 0,32 POCO x Scope 0,01 0,72 0,07 EMER x Scope -0,01 0,04 0,94
x = Multiply sign (moderator)
25 Other findings We performed an Anova to check if respondents who owned the company had a higher AchLoC than respondents who did not own the company. This test could only be performed in the 2012 study, as this item was not numeric in the 2011 study. The test was significant (F(2,102) = 3.58, p = 0.03. However, the results indicated that non-owner managers had a higher AchLoC (M = 5.54 SD = 0.46) than non-owner-managers (M = 5.18, SD = 0.71). Other respondents had a lower mean (M = 4.92, SD = 0.99). These results were contradictory to our expectations, as owner-managers were expected to have a higher AchLoC. Also, non-owner managers rated the effectiveness of the change higher than owner managers (M = 5.88, SD = 0.63 and M = 5.44, SD = 0.83 respectively), although this difference was not significant (F(2,102) = 1.96, p = 0.15).
DISCUSSION & CONCLUSION
Discussion of the findings
This study hypothesized a positive influence of entrepreneurial orientation and achievement orientation and locus of control on NORE, EMRA and change effectiveness. AchLoC showed to significantly predict these three variables, the hypothesized influence of EO on these variables could not be fully confirmed. This study also predicted that the relationship between the individual change strategies and change effectiveness was dependent on the scope of change. However, moderation analysis could not confirm these hypotheses.
26 results showed an almost significant relationship between Add and POCO, and EO-2012 and POCO, suggesting that the relationship between EO and POCO is positively. As the discussion above shows, the differences between outcomes of the three EO variables are striking. The EO-2012 variable is the standard scale (George & Marino, 2011), and therefore using this scale would make the results more generalizable. However, as this scale is bipolar, this could result in data that does not reflect the reality properly, as in some items the answers on the opposite ends of the scale do not exclude each other. This could confuse the respondents, or prevent them from giving the answers that they think best resemble reality. A bipolar scale requires fewer items, however Gannon & Ostrom (1996) found that if unipolar items are combined into bipolar items, this does not result in similar answers. Therefore, researchers have to consider if they prefer individual ratings on all concepts, or if they want the respondents to make a choice between two concepts. The unipolar EO-2011 variable does not force respondents to choose, and will lead to less confusion. However this scale makes the results less generalizable as it is not the standard scale.
AchLoC showed to have a positive impact on NORE, EMRA and change effectiveness. Respondents with a higher AchLoC showed a higher tendency to use ‘persuasion’ strategies (NORE and EMRA). Respondents who rated their AchLoC higher also rated the change effectiveness higher, indicating that these entrepreneurial personality traits are beneficial for a change agent to possess in change projects. Moreover, the results suggested a positive effect of AchLoC on POCO and EMER, however these effects were not significant on the 0.05 level.
The scope of the change as not found to moderate the relationship between change strategy and change effectiveness. This suggests that different strategies are not more or less suitable for a certain scope of change. However, this does not mean that situational factors do not play a role at all. Other factors, such as for example industry competitiveness could determine the most suitable strategy. EMRA did show a direct positive effect on change effectiveness, indicating that the use of this strategy is beneficial for the change result.
27 inconsistent with existing literature, which states that entrepreneurs have a higher need for achievement (Stewart & Roth, 2007) and locus of control (Ward, 1993) than managers. This could indicate that non-owner manager in SMEs also possess these entrepreneurial characteristics, perhaps even more. The results could also be different because the questions only included AchLoC in the change project, instead of in general. Moreover, the scale included only a part of the original scale.
Theoretical implications
This study made some important contributions to both the change literature and the entrepreneurship literature. First of all, this study contributed to current change literature by researching relationships regarding change in a SME setting, which is under examined in this field (By & Dale, 2008). Moreover, this study made an attempt to combine literature on entrepreneurship and change. The effect of individual- and company characteristics associated with entrepreneurship on the use of change strategies and change effectiveness was determined. By doing this, a relatively unexplored field of research was entered, contributing to our understanding of change processes in SMEs.
EO-28 2011 scale, a profit- and a growth orientation item was added. These orientations are viewed as a manifestation of an EO (Runya, Droge & Swinney, 2008).
Third, this study answered the request to research characteristics of change agents that determine their success (Nikolaou et al., 2007). The present study found agent’s need for achievement and locus of control to impact the effectiveness of change in a SME context.
Fourth, we made a start in determining situational factors that determine the most appropriate change strategies. This study did not confirm scope of change as a moderating factor.
Practical implications
This study also has some important practical implications. First of all, this study showed the importance of possessing the characteristics AchLoC for the success of change. People who possess these characteristics are more likely to be successful as change agents. Moreover, we revealed that this not necessarily means that owner-managers have to act as change agents, as non-owner managers were found to have a higher need for achievement and locus of control.
Furthermore, the results of this study suggest an entrepreneurial orientation can be beneficial for the success of change of a company, indicating that SMEs should focus on innovation, be proactive and take risks to be more successful in change projects.
Finally, this study did not confirm that change agents should adapt their change strategy to the scope of change. None of the strategies was found to be more effective in either a convergent or radical change project. However, the Empirical-Rational strategy was found to directly and significantly predict change effectiveness, indicating that applying this strategy in change projects could be beneficial for the success of the change.
Limitations & further research
29 other countries and cultures. Further research could focus on researching these relationships in large companies and/or in other countries and cultures.
Secondly, this study made an attempt to determine a good EO-measure. However, the validity of a scale is hard to determine if there is no uniform conceptualization of the concept (George & Marino, 2011). In this study, both measures of EO assume the three dimensions. However, the EO-2011 measure also includes a profit- and growth orientation, which George & Marino refer to as concepts stretching. As mentioned above, the standard scale showed different results in the USA in comparison with, among others, the Netherlands. Further research could study if the EO-2011 scale that is used in this study is a better measure for EO in the Netherlands, by comparing the results of this scale with the results of the standard EO-2012 scale in the USA. The profit and growth orientation items should be excluded as they are not covered in the standard scale, however they could be used as control variables as an EO is manifested in a profit and growth orientation (Runyan et al., 2008). Moreover, further research could compare different scales of EO with each other, for instance by including three simple items, asking the respondent to indicate on a Likert scale to what extent they view their company as being innovative, proactive, and risk taking as control questions, to compare these with the EO scales.
Third, this study may suffer from common method bias, as all data was obtained by the change agent. However, this limitation may be ameliorated to some extent through the large sample. Nevertheless, to make results less sensitive to this bias, further research could require additional data from recipients to control for the answers of the agents, making the data more objective. Also case studies could overcome this problem, if the process is observed by a neutral observant.
30
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38
Appendix A – Items in questionnaire 2011
Scope of change
Item nr. Item
1 Door deze verandering is het werk van de betrokken werknemers erg veranderd.
2 Door deze verandering zijn de verantwoordelijkheden van de betrokken werknemers erg veranderd.
3 Door deze verandering zijn de samenwerkingsverbanden tussen de betrokken werknemers erg veranderd.
4 Door deze verandering zijn de werkcondities (zoals werktijden en werkomstandigheden) van de betrokken werknemers erg veranderd.
5 Door deze verandering is een behoorlijk aantal werknemers ontslagen en is het personeels-bestand beduidend lager dan daarvoor.
6 Woorden als ‘transformatie’, ‘gedaanteverandering’, ‘baanbrekend’ en ‘metamorfose’ zijn van toepassing op deze verandering.
7 Over het geheel genomen is het bedrijf ongeveer hetzelfde gebleven na de verandering. 8 De verandering was op alle werknemers gericht.
9 Door deze verandering proberen we de doelen van het bedrijf op een andere manier te behalen. 10 Deze verandering heeft betrekking op alle onderdelen (vestigingen, afdelingen) van het bedrijf. 11 Door deze verandering zijn de bedrijfsdoelen veranderd.
Change effectiveness
Item nr. Item
1 Over het functioneren van het bedrijf na en door de verandering ben ik…
2 Over de mate waarin we de doelen hebben gerealiseerd die we met de verandering hoopten te bereiken ben ik...
3 In het geheel genomen ben ik over het resultaat van de verandering…
4 Veranderen neemt middelen in beslag (zoals geld en menskracht), maar over de middelen die de verandering heeft gekost ben ik…
5 Over hoe we met het betrokken personeel zijn omgegaan tijdens de verandering ben ik… 6 Veranderen kost tijd, maar over de tijd die we nodig hadden om de verandering te realiseren
