Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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USING COGNITIVE PROCESSES TO DIFFERENTIATE AMONG ENTREPRENEURS


D. Ray Bagby
Leslie E. Palich
Phil E. Stetz

Baugh Center for Entrepreneurship
Baylor University
Waco, TX 76798-8011

Telephone 817-755-2265
Fax 817-755-2271

Principal Topics

A previous study had showed that entrepreneurs and others differed in the way that they perceived information provided in a scenario concerning a firm. In general, the entrepreneurs perceived more strengths than weaknesses, more opportunities than threats, and greater potential for future improvement than others. At the same time, there was no observed difference between the groups on a risk propensity scale. This study sought additional data from a different sample and additional demographic data on the respondents.

Method

A random sample of 752 business owners was selected from a data base of Texas small firms. A slightly revised questionnaire from the earlier study was mailed to each. The same questionnaire was mailed to each of the owners of the firms identified in Forbes (11/8/93) as the best 200 publicly traded small companies in the world. Unfortunately, a lack of responses from a non-entrepreneur group made replication of the previous study impossible. However, when comparing entrepreneur respondents some interesting implications for differentiating among entrepreneurs emerged.

Major Findings

Using hierarchial cluster analysis, the responses to the first scenario produced two distinct groups of respondents. Using discriminant analysis with the groups as the dependent variable, the responses to scenario 1 correctly classified all respondents (as would be expected). Responses to the second scenario classified respondents with only a 15% error rate. Responses to the third scenario classified respondents correctly over 75% of the time. Thus, the two groups appear to differ in their cognitive processes as reflected in scenario responses. These two groups also reflected the dichotomy in the

samples above. Differences were found between both entrepreneur groups on goals to create innovations and to provide employment in the community. Significant differences were found in sales growth and perceived level of firm performance between the two groups. There were also significant differences in response to a risk propensity scale for each of the groups.

Implications

Each of the findings support earlier contentions of differences between entrepreneurs and small business owners. The results indicate that we should explore a taxonomy for distinguishing between various kinds of entrepreneurs. Certainly any research looking at performance measures needs to consider the possible differences within broadly defined samples. Further research is needed in order to verify these tentative conclusions.

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