Dej, D., Gorgievski, M., Augustin, A., Wegge, J. (2009). Paper presented at 14th European Congress of Work and Organizational Psychology

1. Fakultät Mathematik und Naturwissenschaften
Entrepreneurial Success as Defined by
Entrepreneurs: Development of a Measurement
Instrument
Symposium: Entrepreneurial success and innovation
Santiago de Compostela, 15 May 2009

2. Measurement of Entrepreneurial Success
Multidimensional approach to entrepreneurial success
• objective economic success criteria (e.g. profit, turnover, employee
growth, innovation, ) (e.g. Schenk, 1998, Murphy, 1996; Chandler &
Hanks, 1993)
• subjective success criteria (e.g. satisfaction, achievement of personal
goals and company goals) (e.g. Schenk, 1998, Kurtko, 1997; Orser, 2005,
2006)
they may be better predictors of subsequent entrepreneurial decisions and
behaviors than objective economic and business criteria (e.g. Cooper &
Artz, 1995)
2

3. Why a new measure?
Limitations of current success measures
• objective data is rarely available (e.g. Fiorito & LaForge, 1986) and
difficult to compare due to sample heterogeneity (e.g. industry related
factors, enormous and erratic growth rates, small starting base) (e.g.
Chandler & Hanks, 1993)
• subjective success measurements are not all encompassing and focus
on limited number of general aspects, often single item measures e.g.
My company is in general very successful.
I am satisfied with my income.
Instrument to measure success criteria
that entrepreneurs themselves regard as relevant 3

4. Which Success Criteria?
Authors Items developed
Chandler & Hanks Satisfaction with performance (growth, return on investment,
(1993) return on assets, profit), Growth, Concurrence
Extrinsic rewards (income growth, personal good life, security)
Independence (being own boss, personal freedom)
Kuratko et al.
Intrinsic rewards (challenge, personal growth, social recognition)
(1997)
Family security (company succession, family security, possibility
to retire early, social recognition)
Professional (intellectual activities, Work-Life-Balance, autonomy,
relations to community, income, raise of personal goods, income)
Subjective non financial (product and service quality, market
Orser et al. (2005)
acceptance, company performance, relations to clients)
Objective financial (profitability, income, raise of personal goods,
company performance)
Personal (remaining personal networks, Work-Life-Balance)
Person oriented (personal satisfaction, balance between work
Gorgievski & Ascalon
and free time, profit generation)
(2005)
Company oriented (continuity, innovation, profit generation)
4

5. Which Success Criteria?
Own qualitative study among 240 entrepreneurs from Germany and Poland (2006)
WHAT IS ENTREPRENEURIAL SUCCESS?
Authors Success criteria
Entrepreneur: Goals and challenge, Satisfaction, Wealth,
Creativity and innovation, Free time and health,
Firm continuity
Enterprise: Any kind of growth, Stability, Reputation,
Dej, Stephan, Richter Market position, Survival
(2007)
Employees and co-owners: Satisfaction of employees
and co-owners, employee security
Customer satisfaction and loyalty
5

6. Conceptualization of Entrepreneurial Success
Rentability (e.g. profitable firm)
Growth (employee, revenue, profit)
company succes Innovation
Being better compared with competition
Contributing back to the society
social success Social responsibility for employees
Creating new working places
Professional reputation
Entrepreneurial
success Positive relations with clients
employee & Employee satisfaction and loyalty
customer Positive & supportive working climate
relations
Personal income enhancement
personal financial To afford a good life
success Personal financial & family security
Work-life balance & time flexibility
personal non Making decisions, challenge
financial success Personal development 6

7. Success Scale Construction
Success = achievement of goals
A Importance of success criteria Scale consists of 36 Items
B Achievement of success criteria
A B
Not Very
Not im- Very
achie- well
portant impor-
ved achie-
at all tant
at all ved
1. Employee growth 1 2 3 4 5 1 2 3 4 5
2. Social recognition 1 2 3 4 5 1 2 3 4 5
3. Employee satisfaction 1 2 3 4 5 1 2 3 4 5
4. Personal income 1 2 3 4 5 1 2 3 4 5
5. Work-life balance 1 2 3 4 5 1 2 3 4 5
7

8. Hypotheses
1. The proposed structure of the Subjective Entrepreneurial
Success Scale (SESS) will be empirically supported.
2. Convergent and criterion validity can be established.
8

9. Study & Sample
Sample
• Total N=184
• age 45.39 (SD= 9.90), 25 % (N= 46) females, 97 % Germans
• number of employees: 22 (SD= 43), company age: 23.42 (SD= 30.52)
• Respondents sampled using business directories, the yellow pages,
business associations and internet communities
• Rejection rate = 95.51%
• Established companies (N= 116)
> 7 employees, at least 3.5 years on the market (Reynolds et al., 2005),
entrepreneur = owner and CEO (cf. Definition of entrepreneurs, Rauch &
Frese, 2000)
• Not established companies (N= 68)
Violated at least one criteria
9

10. Study & Sample
Measures
• 126 Item questionnaire (60 minutes)
• Subjective Entrepreneurial Success Scale (SESS)
• subjective financial success
• satisfaction with life & satisfaction work (adapted Bellach, 1995)
• reported objective success (c.f. Combs et al., Venkatraman & Ramanujam,
1986)
• creativity (adapted Baer & Oldham, 2006 and Zhou & George, 2001)
• innovation (Bruce, 1994)
• Avem Scale ‚Experienced Professional Success (Schaarschmidt & Fischer,
1996)
• Maastricht Questionnaire for Vital Exhaustion (Kopp et al.1998)
• demographics
10

11. Results: Hypothesis 1
Results of exploratory factor analysis and analyses of reliabilities
Scale B Achievement
5 first–order factors
•explained 61.02% of variance
•Cronbach‘s alpha between .71- .90
•29 items
•differ from assumed theoretical factors
1 second-order factor
•explained 64.64% of the variance
•entrepreneurial success (Cronbach‘s alpha at .90)
11

12. Structure of developed scale B Achievement
.70 General
financial success
.62
Employees &
working climate
Entrepreneurial .78
success Social
success
Achievement of
.83 success
Development/ criteria scale B
growth
.60
Work- life
balance
12

13. Results: Hypothesis 2
Development of nomological net to establish scale validity
(Cronbach and Meehl, 1955)
Achievement of success criteria i.e. scores on 5 factors:
1. General financial success
2. Employees & working climate
3. Social success
4. Development/growth
5. Work-life balance
should reveal plausible relationships to related constructs
Achievement of success criteria
should go along with good health, life and work satisfaction etc.
should correlate positively with objective performance measures
13

14. Results: Hypothesis 2
Convergent and criterion validity for
Scale B: Achievement of success criteria
• work satisfaction (income, financial situation,
work in general) .69**
1. General financial success
• experienced success in professional life .36**
2. Employees & working
• satisfaction at work .30**
Climate
3. Societal success • satisfaction at work .31**
• creativity .36**
4. Development/growth
• innovation .35**
• life satisfaction .59**
5. Balance
• vital exhaustion .46**
14

15. Results: Hypothesis 2
Establishing concurrent criterion validity of the
scale B- Achievement of Success Criteria
• Employee growth .337**
• Profit growth 2006/07 .307**
1. General financial success • Pre tax profit 2007 .441**
• Turnover growth .198**
• Personal net income .414**
2. Employees & working • Employee growth .166**
climate • Employee absenteeism -.138*
• Employee growth .293*
3. Societal success • Turnover 2007 .164*
• Turnover 2007/08 .144*
• Profit 2007/08 .154*
• Employee growth .152*
4. Development/growth • Pre tax profit .221**
• Employee absenteeism -.182*
5. Balance • Working hours .24** 15

16. Conclusions & Implications
Subjective Entrepreneurial Success Scale is a measure that…
• has good psychometric properties
• shows good validity
• has relatively clear factorial structure
Moreover it …
• is a multidimensional measure including individual perspective of an
entrepreneur
• Helps to gain a broader understanding of entrepreneurial success
16

17. THANK YOU !
Dominika Dej
dominikadej@psychologie.tu-dresden.de
17