The founder's self-assessed competence and venture performance

Abstract

A large body of recent research seeks to understand organizational founding and the performance of emerging businesses. Although much of this research has focused on the characteristics of the business founder, there is only mixed support for relationships between founders' characteristics and venture performance (Begley and Boyd 1987; Gartner 1988; Low and MacMillan 1988: Sexton and Bowman 1984). This study is based on research that identifies the entrepreneurial, managerial, and technical-functional functions as three roles that founders must competently enact in order to be successful (Hofer and Sandberg 1987; Mintzberg and Waters 1982; Pavett and Lau 1983; Schein 1987). Effective performance in the entrepreneurial role requires the founder to have the ability to recognize business opportunities and the drive to see firm creation through to fruition (Hofer and Sandberg 1987; Timmons et al. 1987). Effective execution of the managerial role requires conceptual, interpersonal, and political competence (Pavett and Lau 1983). To be competent in the technical-functional role, founders must be able to use the tools or procedures required in their specialized field (Pavett and Lau 1983).

To measure the competencies necessary for effectiveness in the entrepreneurial, managerial, and technical-functional roles, we developed a questionnaire to allow founders to provide self-evaluations of their competencies. The results provide strong evidence for the reliability of measurement and the validity of the constructs.

The relationships revealed in this study suggest some preliminary recommendations for potential entrepreneurs, career counselors, and educators. The number of businesses previously initiated and the years spent as an owner manager do not appear to be strongly related to the performance of the venture; however, the most successful entrepreneurs are strongly convinced of their ability to recognize business opportunity. They believe that they have the drive to see the venture through to fruition and report that they subjugate outside interests to the demands of their businesses. Thus, although self-assessed proficiency in the entrepreneurial function does not appear to be contingent on the length of previous experience as a founder; it does appear to be a necessary component in the development of high-performance companies.

Founders of the most successful firms also gave themselves high ratings on the abilities associated with effective performance in the managerial role. They had high self-evaluation scores on the items measuring organizational and interpersonal skills. Competence in the managerial role appears to be enhanced by business education and the years of general managerial experience.

The founders of highly successful firms also evaluated their technical skills highly. They believed they were experts in their fields and could use the specialized tools and procedures to produce high-quality products and services.

Thus, the results indicate that the most successful founders—those whose firms show higher levels of growth and earnings—rate themselves as competent in the entrepreneurial, managerial, and technical-functional roles; they see themselves as competent generalists. And, in a result that is most gratifying for those in higher education, it appears that a business education and experience in general managerial positions lays the ground work for a successful entrepreneurial career.