Hello -
Many thanks to everyone who responded to my request for measures of entrepreneurial success. I have compiled a list of responses and included those at the end of this message.
Doan Winkel
PhD Student
University of Wisconsin - Milwaukee
Sheldon B. Lubar School of Business - S360
PO Box 742
Milwaukee, WI 53201
As a general rule, the measure for start-up success should be chosen depending on the stage of development of the venture as well as considering what stakeholder, population and questions you are studying. Using a combination of objective and subjective measures is probably best (if possible).
Are you choosing a proximal outcome (founding a firm) or a distal outcome (founding a successful firm)?
Stick with the specific objectives set by an entrepreneur
Lussier, R.N. 1995. A nonfinancial business success versus failure prediction model for young firms. Journal of Small Business Management, 33(1) 8-20
Metric used: at least industry-average profit for past three years
McGee, J. E., Dowling, M. J. and Megginson, W. L. 1995 Cooperative strategy and new venture performance: the role of business strategy and management experience, Strategic Management Journal, 16: 565–580.
Metric used: at least 3 year annual compound rate of sales growth
Baron, R.A., & Markman, G.D. 2003. Beyond social capital: The role of entrepreneurs' social competence in their financial success. Journal of Business Venturing, 18, 41-60.
Metrics used: average personal yearly income (financial success), business tenure, and company revenues from sales
Lerner,M., Brush, C., & Hisrich, R. 1997. Israeli women entrepreneurs: An examination of factors affecting performance. Journal of Business Venturing, 12, 315-339.
Metrics used: Size of business (# employees), profitability (self-report), gross revenues (self-report), income (self-report monthly income)
Robinson, P.B., & Sexton, E.A. 1994. The effect of education an experience on self-employment success. Journal of Business Venturing, 9, 141-156.
Metric used: average earnings
Keh, H.T., Nguyen, T.T.M., & Ng, H.P. 2007. The effects of entrepreneurial orientation and marketing information on the performance of SMEs. Journal of Business Venturing, 22, 592-611.
Metrics used: all self-report: financial (profitability, sales growth, market share, overall), and non-financial (achieve start-up goals, provide secure jobs to employees, satisfaction with company performance)
Hmieleski, K.M., & Corbett, A.C. in press. The contrasting interaction effects of improvisational behavior with entrepreneurial self-efficacy on new venture performance and entrepreneur work satisfaction. Journal of Business Venturing,
Metric used: sales growth
M.D. Ensley, C.L. Pearce and K.M. Hmieleski, The moderating effect of environmental dynamism on the relationship on entrepreneur leadership behavior and new venture performance, Journal of Business Venturing 21 (2) (2006), pp. 243–263
Metric used: sales growth, and absolute sales volume (in conjunction with growth rate and firm age)
C. Brush and P. Wanderwerf, A comparison of methods and sources for obtaining estimates of new ventures' performance, Journal of Business Venturing 7 (1992), pp. 157–170.
Metrics used: objective sales, profit and employees, and subjective sales growth
Fiet, J.O., & Patel, P.C. 2006. Evaluating the wealth-creating potential of business plans. The Journal of Private Equity, Fall, 1-15.
Metric used: composite measure of wealth creation
Kalleberg, A.L., & Leicht, K.T. 1991. Gender and Organizational Performance: Determinants of Small Business Survival and Success. Academy of Management Journal, 34, 136-161
Metric used: based on gross earnings
Hienerth, C. & Kessler, A. (2006). Measuring success in family businesses: The concept of configurational fit. Family Business Review, 19(2): 115-134.
Kropp, Fredric, Noel J. Lindsay, and Aviv Shoham (2006), "Entrepreneurial, Market, and Learning Orientations and International Entrepreneurial Business Venture Performance in South Africa," International Marketing Review, 23(5), 504-23.
Chandler GN, Hanks SH. 1993. Measuring the performance of emerging businesses: A validation study. Journal of Business Venturing 8: 391-408
Metric used: (1) perceived growth in market share, change in cash flow, sales growth, earnings, sales, net worth; (2) weighted satisfaction with performance index; (3) comparison to competitor performance
See Table 1 on p. 394 for a summary of recently used (up to that point) new venture performance measures
Dess GG, Robinson RB. 1984. Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit. Strategic Management Journal 5(3): 265-273
Metric: subjective and objective, ROA, sales growth, etc.
Murphy GB, Trailer JW, Hill RC. 1996. Measuring performance in entrepreneurship research. Journal of Business Research 36: 15-23
Metric used: Lots
See Table 2 on page 17 for a nice summary of measures
Zahra SA. 1996. Technology strategy and new venture performance: A study of corporate-sponsored and independent biotechnology ventures. Journal of Business Venturing 11: 289-321
Metric used: subjective & objective measures growth (e.g., sales growth, market share growth, etc.) and profitability (ROE)
Fairlie, R.W., & Robb, A. 2007. Families, human capital, and small business: Evidence from the characteristics of business owners survey. Industrial and Labor Relations Review, 60(2), 225-245.
Metrics used: survival, profits, employment, sales
PSED
Metrics used: # employees, revenue, unique advantage, etc.
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