The Effect of Small Business Managers' Growth Motivation on Firm Growth: A Longitudinal Study

By Delmar, Frederic; Wiklund, Johan | Entrepreneurship: Theory and Practice, May 2008 | Go to article overview

The Effect of Small Business Managers' Growth Motivation on Firm Growth: A Longitudinal Study


Delmar, Frederic, Wiklund, Johan, Entrepreneurship: Theory and Practice


This study addresses the role of small business managers' growth motivation for business growth, taking into account the important effects of previous motives and feedback from earlier performance. We hypothesize that small business managers' growth motivation has a unique influence on firm outcome measured as growth in sales and in number of employees. Data were gathered from two different Swedish samples of small firms using telephone interviews. Using cross-lagged regression analysis, we find support for our hypotheses when examining employment growth, but only partial support when examining sales.

Introduction

The psychological construct of motivation has an important role to play in entrepreneurship research. As stated by Shane, Locke, and Collins (2003, p. 257): "We believe that the development of entrepreneurship theory requires consideration of the motivations of people making entrepreneurial decisions." One of the areas in entrepreneurship where motivation is potentially of great importance relates to firm growth. There is research to suggest that growth is one of the most important outcomes of entrepreneurial efforts because it indicates the degree of success of that effort (Bhide, 1999; Venkataraman, 1997), and effort exerted is closely related to the individual's motivation (Davidsson, Delmar, & Wiklund, 2002). Research examining the link between growth motivation and growth appears to support this view as it finds a positive relationship between growth motivation and growth (e.g., Baum, Locke, & Kirkpatrick, 1998; Baum, Locke, & Smith, 2001; Kolvereid & Bullvag, 1996; Miner, Smith, & Bracker, 1989).

Implicitly, the view underlying this research and the theories used is the assumption that growth motivation affects the future growth of the firm, i.e., that growth motivation has a causal effect on firm growth. However, in their review and test of leading theories on goal-directed behaviors, Bagozzi and Kimmel (1995) demonstrated that these theories are incomplete because they fail to consider the feedback from past behavior and behavioral outcomes. Drawing on these findings, later research has further elaborated on the relationship between motivation and behavior (see e.g., Conner, Sheeran, Norman, & Armitage, 2000; Ouellette & Wood, 1998; Perugini & Conner, 2000; Sheeran & Abraham, 2003; Triandis, 1977). Specifically, the temporal stability of motives has been investigated, with results indicating that stable motives are good predictors of behavior (Sheeran & Abraham, 2003). These recent theoretical developments open up for the possibility that both motivation and future behavior represent reactions to past behavior and outcomes rather than being the result of the commitment to specific motives (e.g., Ouellette & Wood, 1998), thus challenging the causal structure of motivational models in entrepreneurship research.

To our knowledge, no research has considered how the outcomes of past behavior and the stability of motives affect the relationships between the motivations of small business managers and future outcomes. Such research is important because the failure to recognize the influence of past behavior and temporal stability of motives could lead to misinterpretations of the causal effects of motivations on outcomes. This has implications for how we model the relationship between motivation and outcomes in entrepreneurship research. Explicating and testing the causal structure of research models constitute an important step in theory development (see e.g., Whetten, 1989 for a discussion of theoretical contributions and Gartner, 1989 for a specific discussion on entrepreneurship theory and theory development).

Therefore, the purpose of this paper is to examine the causal direction between growth motivation and firm growth. We test to what extent the motivation of small business managers affect growth accounting for the feedback from previous growth using longitudinal data and cross-lagged regression analyses. …

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