Vision and support in new venture start-ups : an exploratory study of Newfoundland firms
In seeking to account for variation in the performance of new and small firms entrepreneurship theory has experienced a shift away from approaches which attribute success to personal characteristics in favour of approaches emphasizing the social context of resource acquisition and mobilization. This study develops and tests a new theoretical model concerning relations between vision, support and new venture performance based on Sooklal's (1991) grounded theory of visionary leadership. In doing so, it addresses theoretical and methodological weaknesses associated with past efforts. Four stages of data collection were required to execute the study. Phases One and Two were used to develop the instrumentation for measuring entrepreneurial vision. Phase Three was a small-scale pilot study. Phase Four, the main component of the study, was utilized to test the research hypotheses. This final phase entailed semi-structured interviews with a random sample of 50 Newfoundland firms incorporated in 1993. Employing Wold's method of Partial Least Squares analysis, five of the nine hypotheses concerning relations amongst seven theoretical constructs were statistically significant. In general, there was strong support for the contribution of both vision and support in the theoretical model. Higher performance were found to be positively influenced by both vision reach (i. e. the "ambitiousness" of the vision) and the strength of received support. Increased support strength was associated with greater vision reach and greater diversity of value-based (i. e. without expectation of reciprocal benefit) and convenience-based (i. e. relationships based on economic exchange) supporters. Contrary to expectations, visions that focused on either internal or external dimensions were associated with greater insider and outsider supporter diversity. The relative importance of predictor constructs in the model was substantially different for urban versus rural firms. Overall, the model was found to possess useful predictive power. The results of the study indicate that vision and supporter diversity play an important role in the strength of support received by start-up entrepreneurs and that both entrepreneurial vision and the strength of received support contribute to new venture performance. In developing the measurement model for the research, many of the indicators for the theoretical constructs were either adapted from other disciplines or newly developed in the absence of pre-existing measures of vision and to overcome weaknesses associated with past "network" studies of support. This measurement model was found to possess satisfactory validity and provides a substantial base upon which further advancements can be made. Practitioners stand to benefit from the predictive power of the model and the insights the model provides concerning performance-enhancing start-up activities beyond the business plan.