Entrepreneurial Success is multidimensional: Development and Validation of Subjective

Success Scale

Faculty of Mathematics and Natural Sciences Institute for Work, Social and Organizational Psychology

Dominika Dej1, Marjan Gorgievski2 & Jürgen Wegge1

1 Dresden University of Technology2 Erasmus University Rotterdam

27th International Congress of Applied Psychology, Melbourne, Australia July 11th-16th, 2010

2

Our research goal is to propose a new scale measuring subjective entrepreneurial success that is of satisfactory construct and criterion validity

Limitations of existing measures of success

Content-related - only company related success criteria- satisfaction with objective success indicators- success comparing competitors

Measurement-related- single items or/ and general items- unclear factorial structure of success criteria

Goal of our study

Do we need a new measure of success?

3

Sample (N= 243)

- Firms founded, owned and managed by the entrepreneur (Rauch & Frese, 2000)

- East Germany (35.40%), West Germany (40.70 %), Poland (23.90%)

- Age: M=44 (SD= 9.04)

- Gender: 76.50% male (N=186)

- Industry sector: 57.2% in restaurants, 42.8% in Innovative Technologies (IT)

- Employee number: M=16 (SD=19.08)

- Company age: M=11 (SD= 5.96)

STUDY 1: How do entrepreneurs define success?Study 1: How do entrepreneur‘s define success?

4

Measures - Face-to-face interviews conducted with entrepreneurs by trained interviewers- Open-ended question:

What does entrepreneurial success mean to you? (What is your personal definition of entrepreneurial success?)

Analyses- Inductive Content analysis basing on the Grounded Theory (Strauss, 1987;

Strauss & Corbin, 1990)- Stepwise development of data driven category system - Data coding supported by MaxQda Software (2003)- Inter-coder reliability (Polish data: 86.10% and German data: 72.85 %)

STUDY 1: Measures and Analyses Study 1: Measures & Analysis

5

Category(N=243)

Frequencies

Relative Frequencies Ranking

Satisfaction of employees & co-owners 61 25,10 3

Employees’ security 16 6,58 12

Customer satisfaction & loyalty 98 40,33 2

Goals and challenge 53 21,81 5

Personal satisfaction 46 18,93 6

Creativity and innovation 20 8,23 10

Free time and health 12 4,94 13

Reputation 34 13,99 7

Firm continuity 5 2,06 14

Any kind of company growth 101 41,56 1

Stability 60 24,69 4

Market position 22 9,05 8

Survival 17 7,00 11

Wealth & good life 22 9,05 8

STUDY 1: Results. Entrepreneurs‘ Success DefinitionsStudy 1: Results. Entrepreneur‘s success definition

6

CommunityImpact &

Environment

Contributing back to the societySocial responsibility for employeesCreating new working places Environmental friendly company

Personal income enhancementTo afford a good life Personal financial & family security

Positive relations with clients Employees’ satisfaction and loyaltyPositive & supportive working climate

Work-life balance & time flexibilityMaking decisions, challengePersonal development

Company profitabilityGrowth (employee, revenue, profit) InnovationBeing better compared with competitors

Workplace Relations

Personal Fulfillment

Company Performance

Success

Personal FinancialRewards

Study 2: Proposed Model of Entrepreneurial Success

7

Hypothesis 1. The underlying structure of Entrepreneurial Subjective Success Scale consist

of five first order factors: (1) Workplace relations, (2) Personal fulfillment, (3) Community impact & environment, (4) Company performance, (5) Personal financial rewards, which load substantially on the first second order factor ‘Success’

Hypothesis 2. Entrepreneurial Subjective Success Scale is reliable, that is, five subscales and

the whole scale are internally consistent

Hypothesis 3. Validity of Entrepreneurial Subjective Success Scale can be supported, that is,

there are meaningful relationships between the score on the scale and other variables: work satisfaction, life satisfaction, vital exhaustion, objective company success (e.g., sales).

Study 2: Hypotheses

8

Sample (N=184)

Entrepreneurs = “(…) owns and manages the firm on the on the daily base” (Rauch, Frese, 2000)

- East Germany (35.32%), West Germany (60.86%), others (3.82%)

- Gender: 75% males, 25% females - Age: M=45 (SD= 9.90)

- Company age: M=23 (SD= 30.52)

- Employees’ number: M= 22 (SD=43)

Study 2: Sample acquisition & characteristics

9

Importance x Achievement of success criteria

Exploratory & Confirmatory factor analyses Development of nomological network of relationships

(multiple hierarchical regression analyses)

Study 2: Methods & Procedures

Importance Achievement

5. Success dimensions

Not at all

Very Not at all

Very well

Items 1 2 3 4 5 1 2 3 4 5

Hypothesis 1: Development of scale measuring the Perception of Entrepreneurial Success CriteriaStudy 2: Results. Hypothesis 1,2. Construct Validity & Scale Reliability

Factors of the Importance of success criteria

Items α

1. Company performance 5 .87

2. Workplace relations 5 .87

3. Community impact 4 .70

4. Personal financial rewards 3 .71

5. Personal fulfillment 7 .74

Total Scale 24 .88

Model Fit(N=184)

CMIN/DF p CFI RMSEA

Accepted model 1.69 p<.001 .90 .06

11

Subjective Entreprneurial Success is related to:

(+) Work Satisfaction (ß= .32, p<.001)

(+) Life Satisfaction (ß= .31, p<.001)

(+) Company sales (ß= .24, p<.001)

(-) Vital Exhaustion (ß= -.22, p<.001)

Study 2: Results. Hypothesis 3. Multiple hierarchical regression analyses

Control variables

- Industry sector, company age, number of employees- Age of an entrepreneur, gender, education

12

- Short, economic and reliable screening instrument for entrepreneurs themselves that provides a well basis for specific trainings and coaching

- Awareness of how health relates to achievement of important goals (negative consequences when personally important criteria are not achieved)

- There is a need for further scale refinement, especially subscales Community Impact and Personal Financial Rewards

- Investigation of the role of personal resources e.g., self-efficacy in

achievement of important success criteria

- Measurement of relation between ‘give up’ intention and Entrepreneurial Subjective Success

Implications for researchers

Implications for practitioners

THANK YOU!

Faculty of Mathematics and Natural Sciences Institute for Work, Social and Organizational Psychology

dominikadej@psychologie.tu-dresden.degorgievski@fsw.eur.nlwegge@psychologie.tu-dresden.de