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METHODOLOGY

This study is based on a subset of a database compiled from a survey of leading practices of the regional and national winners of the Ernst & Young Entrepreneur of the Year program by the National Center for Entrepreneurship Research (NCER) at the Ewing Marion Kauffman Foundation. The Entrepreneur of the Year program recognizes fast-growth business firms from a wide variety of industries throughout the United States.

The survey was designed to collect information concerning management practices related to:

The survey was administered to the 3,662 winners during August-October 1996 via mail, fax and telephone calls. A total of 906 useable responses were returned with an overall response rate of 24.7 percent. The responses were tested for response time and testing method bias. No significant differences were found and the responses were combined.

For this particular study, the data included the survey responses from 113 of the Ernst & Young Entrepreneurs of the Year. As part of this data base, we also had access to the financial data for these firms, as reported by Dun & Bradstreet. This part of the analysis involved comparing the Entrepreneur of the Year (EOY) firms within the NCER data base with the industry norms based on four digit SIC classifications of publicly-traded firms from the Compustat database (Compustat PC Plus). In analyzing the financial data, we have 301 firm- year observations; that is, on average we had roughly three years of financial data for eachcompany. Thus, if we had the financial data for a given firm for three years, we used all observations as independent data points.

RESULTS

The industry affiliation of the 113 sampled winners of the Entrepreneur of the Year Award are as follows:

Construction

8 (7%)

Manufacturing 33 (29%)
Transportation and public utilities 21 (19%)
Wholesale trade 51 (45%)

In requesting our sample from the National Center for Entrepreneurship Research, we intentionally excluded financial institutions (i.e., insurance and real estate firms), mining, retailers, and service firms. We were limited in our sample size to about 100 firms. Thus, we wanted the sample to be relatively homogeneous in terms of their basic nature, and to some extent their asset intensity and profit margins.
In reporting the results, we begin first by examining the financial profiles of the sample firms, followed by the responses to the NCER survey instrument.

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