Performance constructs that are not multi-dimensional, may result in theory building that is misleading, normative and descriptive (Lumpkin & Dess, 1 996). Performance can be viewed from multiple perspectives, including sales growth, market share, profitability, goals, aspiration levels, reputation, public image, goodwill, commitment and satisf�l.Ction of employees, overall performance and stakeholder satisfaction (Brown
& Laverick, 1 994; Rockmore, 1 996). Bonoma and Clark ( 1 988) found that the most
frequently used firm level performance measures were profit, sales, market share and
cash flow. Murphy, Trailer and Hill ( 1 996) examine 5 1 em·pirical studies that measured performance in SMEs and found a number of measures that are used commonly in these studies. The most popular of these measures are used in this study, namely:
• Efficiency, for example return on investment, return on equity, and return on
assets;
• Growth, for example market share growth, change m sales, and change m employees;
• Profit, for example return on sales, net profit margin, and gross profit margin; • Liquidity, for example sales level, ability to fund growth, and cash flow level; and
• Success/failure, for example discontinued business.
This thesis therefore captures for analysis perceptions of financial measures such as return on investment, return on equity, return on sales, profitability, ability to fund growth from profit and overall firm performance. This approach is in line with Murphy et al. 's ( 1 996) suggestion that multiple measures of performance should be used in entrepreneurial studies.
5 . 7
THE SURVEY INSTRUMENT
This section provides an exposition of the survey instrument employed in this study. The process that was followed to ensure that the instrument and its scales are suitable for use with SMEs in New Zealand is explained. Then a brief overview of the type of variables that the instrument measures is provided whereafter the different scales that were chosen to represent the constructs of the study are introduced.
5 . 7 . 1
Development of the survey instrument
A survey instrument was developed to measure the constructs of interest to this study. This instrument can be perused in Appendix A of this thesis. The items and scales were chosen from scales used for measuring similar constructs in theses and published articles. The advantage in using these scales was the consistent use of particular scales in strategy-making process and EO studies (Covin & Slevin, 1 988, 1 989; Dess et aI.,
1 997; Hart, 1 99 1 ; KhandwaUa, 1 976/77; Miller, 1 988; Miller & Friesen, 1 982). The latter reason is important because the results of this study can be compared to the results of previous studies. The items in the survey instrument were designed and improved by subsequent authors to capture data which operationalise propositions similar to those set out in Chapter Four.
All of the relevant sc'ales were mostly developed and used in a North American setting. Therefore it was important to consider issues of functional, conceptual and instrumental equivalence (Singh, 1 995). Functional equivalence implies that a construct serves the same function in different settings. Conceptual equivalence exists when a construct is expressed in similar attitudes and behaviours in different countries. Instrumental equivalence is present when the scale items, response categories and' questionnaire stimuli are interpreted similarly between settings. Although New Zealand is essentially a western, English speaking society like the United States and Canada, and these three issues are less of a threat to equivalence than they would be in a setting that was vastly different- from the North American setting, there was still the chance that equivalence does not exist. Therefore, a few steps were taken to improve equivalence.
The scales that were chosen to be included in the instrument, as well as the compiled instrument, were evaluated by a number of academics from the management and statistics disciplines at two New Zealand tertiary institutions in tenns of content validity. In order to evaluate the face validity of the measurement instrument for the chosen po'pulation in the New Zealand business environment a sample of ten owners/managers was asked to complete the questionnaire and was interviewed, in depth, afterwards to probe for their understanding of the questions. This was done to ensure that the questionnaire tests the constructs that it was intended to test. Issues that were addressed included terminology comprehension, interest, and the flow of the questions and sections within the questionnaire. Two statisticians and four management academics also· examined the questionnaire and provided some suggestions. As a result of the feedback on the in-depth interviews and the suggestions from the academics, several' of the measures were refined to make them more meaningful in a New Zealand context. None of these changes impacted on the intended meaning of any of the scales. Strictly speaking no further testing for validity and reliability was necessary at this stage since ex:isting scales that have received satisfactory levels of validity and reliability in
preVIOUS studies were" used. However, statistical validity and reliability tests were conducted on the data of this study as discussed in Chapter Six.