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METHOD
This study uses a subset of data derived from a survey of the regional and national winners of the Ernst & Young Entrepreneur of the Year Program by the National Center for Entrepreneurship Research at the Ewing Marion Kauffman Foundation. The Entrepreneur of the Year Program recognizes fast growth business firms from a variety of U.S. industries. Thus, this sample is composed of HGEFs. Surveys were administered to the 3,662 winners between August and October of 1996. The surveys were delivered primarily through the mail or faxed; however, a few were completed via telephone interviews. A total of 906 usable responses was received, yielding a 24.7 percent response rate. The responses were tested for method bias and response time. Because no significant differences were found among those who responded early versus those responding late nor among the different methods used to collect data, responses were combined. Data used in the current study are from a random sample of 118 respondents.
The survey was designed to measure several
variables, a few of which are used in this study. Herein,
we were interested specifically in the firm’s business
strategy and the manner in which it was implemented with regard
to the firm’s entry into the market with new products.
For overall business strategy, respondents indicated the one
strategic approach that describes best their current
operations. They chose from among low–cost producer,
high–quality producer, time–based producer, and
other. The assumption was that while some entrepreneurial
firms might use multiple strategic approaches, there is usually
one dominant approach. The dominant strategic approach was
assumed to represent the firm’s business–level strategy
(Porter, 1985). Approximately 63% of respondents used a
quality–based strategy; slightly less than 8% used a
low–cost strategy. 15.5% of the respondents chose the
other category; it was deleted in the analyses to avoid a unitary
matrix. Implementation of new goods or services was a
second variable of interest. Respondents selected one
approach that describes best when and how they introduced new
products to the market. There were four choices: first to
market, early follower (i.e., early second mover), in step with
the majority of competitors, and late follower. About 55%
of the respondents indicated that their dominant approach was a
first mover, 23% noted that they were early second movers while
13% suggested that they maintained parity with their
competitors. Approximately 5% of the respondents noted that
they were late followers, the category deleted in the
analyses to avoid a unitary matrix. To measure firm
performance, financial data submitted to Ernst & Young by
firms in the sample were used. From among the variety of
data reported to Ernst & Young, return on sales (ROS) was
chosen for use in this study because growth in sales is a
significant performance measure for HGEFs—the focal firm of
the original sample. ROS was measured by net profit after
taxes divided by total annual sales. Finally, because the
firms in the sample represented a variety of industries and there
may be significant differences in net profit and yearly sales
based on industry type, particularly high technology versus other
industries, R&D intensity (operationalized as total dollar
expenditures on R&D divided by total annual sales) was used
as a control variable.
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