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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.

Variable Measures

    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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