ANALYSIS OF THE RESULTS
Non-Recursive Path Model
Diagrams of the path model are shown in Figure 1. The standardized parameter estimates and levels of significance are presented. The magnitude of the zero order correlations among the variables are low to moderate suggesting that multicollinearity among the variables used in this study is negligible. Keep in mind that the path model analysis was run twice, once with employment growth as the ultimate dependent variable and once with sales growth as the ultimate dependent variable.
The indices of fit for the two models are reported in Table 1. The x2 statistics are not significant, which indicates a good fit. Furthermore, the values for GFI, NFI and NFI2 are above .90, which is within the range commonly associated with the good fit (Muliak, et. al., 1989). Hence, both models can be said to fit the data.
Hypotheses Examined Using Structural Equation Analysis:
Hypothesis 1-The parameter estimates for the models that represented the link between entrepreneurial orientation and small firm growth were significant and in the hypothesized direction. Entrepreneurial orientation had a positive effect on firm growth as measured by both employment growth (b = .17, p <.01) and sales growth as the dependent variable (b = .17, p <.01). The hypothesis was supported. As a result, it can be said that entrepreneurial behavior does have a positive influence on small firm growth. This is consistent with the previous research.
Hypothesis 3-A small business owner's perception of environmental munificence had a positive effect on entrepreneurial posture with employment growth (g = .27, p < .01) and with sales growth as the ultimate dependent variable (g = .22, p <.01). Therefore, the hypothesis was supported. As a result, it can be said that a small business owner's perception of environmental munificence does have a positive influence on his or her entrepreneurial orientation.
Hypothesis 4-The results of this analysis were positive but not as strong. With both employment and sales growth as dependent variables, resource acquisition self-efficacy was found to have a positive influence on the entrepreneurial orientation of the owner at the p < .10 level (g = .10, p < .10) and the causal direction is as hypothesized. Hayduk (1987) maintains that unless there is some other and perhaps theoretical reason beyond the mere level of significance, the model should not be reconfigured and/or the links dropped. Therefore, a small business owner's resource acquisition self-efficacy does have a positive influence on the entrepreneurial orientation of his or her firm.
Hypothesis 5-The parameter estimates for the link between the small business owner's perception of environmental munificence and the small business owner's resource acquisition self-efficacy were significant with both employment growth (f = .19, p < .01) and sales growth (f = .18, p < .01) as ultimate dependent variables. As a result, it can be said that a small business owner's perception of resource abundance in the environment is positively associated with his or her perceived ability to acquire resources.
Hypothesis Examined Using Moderated Regression Analysis:
Hypothesis 2-Moderated regression analysis indicates there is a moderator effect when the addition of the environmental turbulence and the interaction terms of turbulence and entrepreneurial posture to the regression equation increase the F-value, indicating increased power of the regression equation. As shown in Table 2, this did not happen with either dependent variable. The results of this moderated regression analysis suggest that small firm growth, as measured by employment and sales growth, is not jointly determined by the interaction of entrepreneurial posture and environmental turbulence.
Figure 1 : The Model and Resulting Parameters
Fit Indices for the Non-Recursive Entrepreneurial Model
Moderated Regression Analysis of Entrepreneurial Orientation, Environmental Turbulence and Their Interaction with Employment Growthand Sales Growth as Dependent Variables
© 1997 Babson College All Rights Reserved
Last Updated 03/05/98