New and small venture performance: The interactive effects of entrepreneurial growth propensity, strategic management practices, and industry growth

The purpose of this study was to attempt to identify the traits that differentiate the relatively few small businesses that generate significant growth (entrepreneurial firms) from low-growth small businesses.;In this study firm performance was studied as a function of three interacting sets of variables: the growth propensity of the owner/manager, strategic management practices, and the industry growth rate. The objective was to test and refine a model of small firm growth and overall performance.;A survey containing the Business Management Practices Survey (BMPS) developed by the author and the Miner Sentence Completion Scale-Form T (MSCS) was mailed to the population of firms in two small business dominated industries in Missouri, Iowa, Kansas, and Nebraska. This yielded 293 responses, 187 from the dry cleaning industry, and 106 from the video rental industry.;The analysis of the data revealed a significant positive relationship between owner/manager growth propensity, as measured by the MSCS, and perceived firm performance. Although MSCS scores did not differ significantly by industry, it was found that trade association members in the video industry scored significantly higher than did non-members. In addition, it was found that trade association members were significantly higher on three of four perceived performance measures.;Little support was found for the hypothesized positive relationship between planning formality and firm performance. The total sample analysis yielded a set of identifiable competitive strategies consistent with Porter's three generic strategies. Significant differences in perceived performance were found across strategic clusters in the total sample and in each of the industry sub-samples when analyzed separately. Specifically, differentiation strategies emerged as superior to low-cost strategies. Multiple regression analysis indicated that industry was significantly related to growth in sales, and that both industry and strategic orientation were significantly related to growth in employees for the total sample.