Download FRONTIERS OF ENTPEPRENEURSHIP RESEARCH 1988

FRONTIERS
OF
ENTPEPRENEURSHIP
RESEARCH
1988
Proceedings of the Eighth Annual Babson College
Entrepreneurship Research Conference.
Sponsored by
Center for Entrepreneurial Studies
Babson College
Wellesley, Massachusetts 02157
and
Co-sponsored by
New Venture Development
Faculty of Management
The University of Calgary
Calgary, Alberta, Canada
Edited by
BRUCE A. KIRCHHOFF
Babson College
WAYNEA.LONG
The University of Calgary
W. ED McMULLAN
The University of Calgary
KARL H. VESPER
University of Washington
WILLIAM E. WETZEL, Jn.
Babson College
C Babson College 1988
SUMMARY
NEW CONCEPTS IN ENTREPRENEURIAL TESTING
Authors
Norbert Szyperski
Heinz Klandt
Address
University of Cologne Projektbereich
Gruendungsforschung D-5000 Koeln 41, West
Germany (0049) 221-470-4316 (0049) 6597-3837
Principal Topics
Classical approaches of entrepreneurial testing are related to personal characteristics like
demographia, needs, motivations, traits, etc.
During the last ten years we have done some empirical work at the Cologne University in the
field of researching for the personal traits of entrepreneurs comparing our German population
with the results of US and other international studies. We also have intensified the research of
factors related to the micro-social environment of the entrepreneur (family, incubators). The
paper-starts with an overview of our related results. But only a limited degree of statistical
variance can be explained that way.
Some psychologists have shown alternative approaches in the similar field of vocational
testing (personnel-selection), using, for example, biographical questionnaires,
in-baskettests or -which is rather new also for personnel-testingcomputer-simulation of
real world systems.
Looking for alternative approaches in entrepreneicial testing, we first used biographical
questionnaires, which'jeemed to be interesting because of the quality of the data (hard data)
they are based on, and because biographical questionnaires are successfully used in loosing
practical problems of personnel-
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selection; they explain a considerable part of the statistical variance of vocational
performance.
Since two years we have been working yet in another field by developing a
business-simulation-game for entrepreneurial testing purposes which is now finished with a 360
KByte Pascal source code; it is named "EVa". An English language version is in preparation.
In this complex computer-simulation of the start-up and early developmental stage of a software
firm, the subject (i.e., real or potential new business founders) has to practice entrepreneurial
decisions. Therefore, the experimenter is able to observe entrepreneurial behavior of the subject
in a quasi experimental environment, and the computer registrates each action of the subject and
the resulting development of the simulated firm.
Method and Data Base
Our research is based on a panel sample of 238 potential and actual entrepreneurs, which were
recruited when participating on entrepreneurial seminars or were ordering a planning help for
new business founders. First data were picked up in the seminars in 1981. By the first
questionnaire we used in the seminars and two other mailed questionnaries in 1982 we
collected demographical, motivational, personality and personal situation variables
(micro-social environment) as well as indicators of entrepreneurial performance. In 1984 we
repeated the measurement of success-indicators to have a longer performance time. In 1986 we
again collected data of entrepreneurial performance and added a biographical questionnaire
with about two hundred biographical items.
We started our pretests with the business-simulation game in late 1987 with MBA students,
and are continuing the data collection of different groups of potential and real entrepreneurs.
We plan to use also some of the subjects of the panel mentioned above. We focus especially
on the correlation between one's entrepreneurial success in the real world and the success the
same person reaches when playing with our simulation model.
Major Findings
The following results are related to 179 potential and real German entrepreneurs from the
panel sample mentioned above.
In the traditional field of entrepreneurial mot2.~ations and
personality most of the German results correspond to those
found in the U.S.A.; this is true for n-ach, n-risk, n-indep.,
locus of c., as factors influencing entrepreneurial activities.
Even though we do have some striking results in respect to the
Job satisfaction and similar aspects: our German entrepreneurs
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are more content with their last Job then are potential entrepreneurs and are positively
(through, for example, inheritance of wealth; not negatively through Job loss or similar events)
displaced. It is also striking that German entrepreneurs are more likely to come from
employers with 100 and more employees than could be statistically expected.
For 49 entrepreneurs of the above mentioned Cologne panel study we got performance data in
terms of turn over; Table 1 gives a summary of our results.
Referring to the biographical questionnaire 36 entrepreneurs of
our panel were ranked along their personal income; we have
found a surprisingly high spearman rank correlation between the
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height of income and the total score of the biographical questionnaire (rho-.86). Even the
sample was small and may be rather homogeneous an explained part of variance of nearly 80%
seems to be remarkable. When splitting into quartile-groups of income, there is a high
significant difference between the biographical scores of the extremal groups: The most
successful group scores to an average (mean) of 213 points while the less successful group
scores to 120 points only.
When differentiating into 8 subscores all of them show a clear cut between the extreme
quartile groups of success.
With regard to intelligence (here: reasoning), there appears to
be no significant correlation with business success (see Table
1). This should come as no surprise since standard psychological tests are not good predictors
generally of occupational success. The attributes typically measured are seldom relevant to the
problems which are found in qualified vocational work situations and where the conteXt is the
formation of a new enterprise such tests are even less likely to be appropriate. Business
problems tend to be opaque, complex, interrelated, unstructured and uncertain and they often
demand the definition of goals and an active search for information. This kind of intelligence
seems not possible to be measured using conventional tests and this leads to the
conceptualization of simulation games as instruments of entrepreneurial testing.
Our empirical work in this field is not yet finished; until now we have played Ehe game
with atout 70 subjects in between are 10 entrepreneurs. We will pretent first results of the
empirical validity of the new test instrument "EVa" on the Babson 1988 conference.
69
height of income and the total score of the biographical questionnaire (rho-.86). Even the
sample was small and may be rather homogeneous an explained part of variance of nearly 80%
seems to be remarkable. When splitting into quartile-groups of income, there is a high
significant difference between the biographical scores of the extremal groups: The most
successful group scores to an average (mean) of 213 points while the less successful group
scores to 120 points only.
When differentiating into 8 subscores all of them show a clear cut between the extreme
quartile groups of success.
With regard to intelligence (here: reasoning), there appears to be no significant correlation with
business success (see Table 1). This should come as no surprise since standard psychological
tests are not good predictors generally of occupational success. The attribute's typically
measured are seldom relevant to the problems which are found in qualified vocational work
situations and where the context is the formation of a new enterprise such tests are even less
likely to be appropriate. Business problems tend to be opaque, complex, interrelated,
unstructured and uncertain and they often demand the definition of goals and an active search
for information. This kind of intelligence seems not possible to be measured using conventional tests and this leads to the conceptualization of simulation games as instruments of
entrepreneurial testing.
Our empirical work in this field is not yet finished; until now we have played the game with
about 70 subjects in between are 10 entrepreneurs. We will present first results of the empirical
validity of the new test instrument leEVa't on the Babson 1988 conference.
69
height of income and the total score of the biographical questionnaire (rho=.86). Even the
sample was small and may be rather homogeneous an explained part of variance of nearly
80% seems to be remarkable. When splitting into quartile-groups of income, there is a high
significant difference between the biographical scores of the extremal groups: The most
successful group scores to an average (mean) of 213 points while the less successful group
scores to 120 points only.
When differentiating into 8 subscores all of them show a clear cut between the extreme
quartile groups of success.
With regard to intelligence (here: reasoning), there appears to
be no significant correlation with business success (see Table
1). This should come as no surprise since standard psychological tests are not good predictors
generally of occupational success. The attributes typically measured are seldom relevant to the
problems which are found in qualified vocational work situations and where the context is the
formation of a new enterprise such tests are even less likely to be appropriate. Business
problems tend to be opaque, complex, interrelated, unstructured and uncertain and they often
demand tihe definition of goals and an active search for information. This kind of intelligence
seems not possible to be measured using conventional tests and this leads to the
conceptualization of simulation games as instruments of entrepreneurial testing.
Our empirical work in this field is not yet finished; until now we have played the game with
about.70 subjects in between are 10 entrepreneurs. We will present first results of the empirical
validity of the new test instrument "EVa" on the Babson 1988 conference.
69