Academic journal article Entrepreneurship: Theory and Practice

A Person-Organization Fit Model of Owner-Managers' Cognitive Style and Organizational Demands

Academic journal article Entrepreneurship: Theory and Practice

A Person-Organization Fit Model of Owner-Managers' Cognitive Style and Organizational Demands

Article excerpt

Based on survey responses from 159 owner-managers in small high-technology firms, we examined the association among specific individual characteristics, firm characteristics, and the individual outcomes of satisfaction and intentions to exit. Regression analyses indicated higher satisfaction and lower intentions to exit for owner-managers whose dominant decision-making style complemented the levels of formalization and structure in their firms. In addition, we found that both satisfaction and intentions to exit were significantly associated with actual turnover over a 5-year period. The theoretical and practical implications of these findings are discussed.


According to the National Federation of Independent Business, approximately 12 million businesses have owners whose principal occupation is operating and managing them (Dennis, 2000). Organizational research on life-cycle and growth stages suggests that these owner-managers will likely face many different challenges as their firms mature and grow (e.g., Covin & Slevin, 1997; Hanks, Watson, Jansen, & Chandler, 1994; Kazanjian, 1988), and it is rare to find an individual who possesses all the attributes necessary to successfully lead a business from creation to maturity (Stevenson & Jarillo, 1990). The value of founders to their organizations can diminish over time and as the business grows (Jayaraman, Khorana, Nelling, & Covin, 2000), and they must often be replaced by professional managers (Hanks et al., 1994). The underlying concept behind many of these arguments is one of fit and that it is often difficult to achieve and maintain a good fit between key aspects of the owner-manager and key aspects of their firms.

The concept of fit is central to numerous theories across management disciplines. In strategic management, competitive advantage may be achieved through properly aligning the firm with its environment (Chandler, 1962). In organizational behavior, the focus is more on the implications of fit on individual rather than firm-level outcomes. A large body of work in organizational behavior has focused on the concept of Person-Organization (P-O) fit, which is based on the premise that attitudes, behaviors, and other individual-level outcomes are not results of either person or organizational factors alone, but rather of the interaction of these factors (Pervin, 1968). However, despite the numerous studies across management disciplines having examined fit at different levels of analysis, there are surprisingly few that have empirically examined the cognitive relationship between what we argue as the most influential employee in many independent organizations--the owner-manager--and aspects of his or her firm.

In P-O fit studies, employee outcomes often include job satisfaction, intentions to exit/remain, and actual turnover (e.g., O'Reilly, Chatman, & Caldwell, 1991) among others. In this study, we examined the contingent relationship between aspects of the owner-manager and his or her firm through the interaction of individual and firm variables (Drazin & Van de Ven, 1985). Specifically, we examined how the interaction between the preferred decision-making style of the owner-manager and the level of formal structure in their firms was related with the individual outcomes of satisfaction and intent to exit. Just as these outcomes are relevant for individual employees as well as to the firms they work in, we argue that they are also relevant to owner-managers and we provide some empirical evidence that they are linked more directly to his or her behavior.

In investigating owner-managers' work-related outcomes, this article makes a number of important contributions. First, although recent entrepreneurship research has focused on individual differences in knowledge (Shane, 2000) and cognition (Alvarez & Busenitz, 2001; Baron, 1998, 2000; Busenitz & Barney, 1997; Mitchell et al. …

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