Testing the demarcation between EO and SBO type enterprises.

Carland et al (1984) first presented the argument that Entrepreneurial Orientation (EO) and Small Business Owners (SBO) are separate groups of SMEs. The EO type of enterprise has been measured looking at ‘innovativeness, proactiveness and Risk taking attributes’ while for the SBO type of enterprise the measurement employed has been to observe and examine their ‘Emotional attachment’ and ‘Purpose’ attributes. Prior research however, does not point to how this demarcation can be achieved before the separate sets of internal attributes (EO or SBO) can be measured. In short, how do we decide which is an EO type enterprise and which is an SBO type enterprise before we measure them separately? The answer as argued in the preceding chapters is that this separation is possible by looking at the underlying ethos of the firm. Accordingly, the respondents were asked to select one of the 'General Statements' discussed in section 4.4.3. Respondents who chose Statement 1 was categorised as EO disposed enterprises and included in this research. Respondents who chose Statement 2 were categorised as SBO type enterprises and were not included in this research other than to validate that the two groups were separate and independent.

An independent T-Test was used to establish whether the two groups derived from the above two questions (EO & SBO) were indeed distinct, separate and

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independent. In section 5.2.1, we were able to show that in terms of 'years of operation' or age of the firm the EO and SBO groups derived were indeed independent. In the preceding section 5.2.3, we were able to show that there was no non-response bias when the total 165 responses were split into the two groups. Here we want to test if the two groups are indeed independent in terms of the SVA value computed as a measure of performance. It will be recalled from section 4.3.4 that in order to ensure a normal distribution and that the principle of homogeneity of variance (Levene's test) had not been violated the 'value' was given a reciprocal transformation and renamed as Value_RECIP. In order to establish that the two groups are indeed independent in terms of this performance measure then the difference in the means of the dependent variable (Value_RECIP) between the two groups was anticipated to be non-significant (p>0.05). It was also assumed that the variances in the two groups would be equal (i.e. non-significant Levene’s Test).

While on average, the Performance (Value_RECIP) of the SBO group was higher (M= .0000123, SE=.00001391) than the EO group (M= -.0000006, SE= .00000835), the difference was not significant: t (163) = -.729, p>0.05. Additionally, it was observed that the principle of equal variances in the two groups has not been violated. Bootstrapping it with resample of 1000, 2000 or 5000 still showed non-significant (p>0.05) results implying that the two groups were independent despite these larger sample sizes.

With a very low sized effect (r = 0.05) we can be confident that the difference in the value creating potential for both the EO or SBO type microenterprises is at best marginal. As argued in the introduction (please refer to Chapter 1) the vitality or dynamism of an economy is dependent on nurturing and encouraging 'high performing' microenterprises who could act as possible 'anchor firms' or 'strategic centres' around which other firms can cluster or emulate. It has been argued that only certain types of microenterprises can fulfil this role and they have been defined as EO type (Type 1) microenterprises. This research focuses on these

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microenterprises and aims to identify the 'high performers' amongst this group. This research is not trying to argue that EO creates more or less value when compared to the SBO group. The difference lies in the 'process' used to create this value. A microenterprise with an EO disposition (EO type) is more innovative, proactive and risk-taking. ACAP assists in this process. This provides the necessary dynamism and change (creative destruction) for an economy to achieve sustainable growth. The underlying premise of this research is that 'creative destruction' as espoused by Schumpeter (1934) and the Neo-Schumpeterian (Hanusch, et al 2006) is a prerequisite for a healthy economy.

An SBO can also create value and as the above results show on average the SBO type create higher levels of value when compared to the EO type but this is more through non-innovative, repetitive and non risk initiatives (Carland, et al., 1984). In short, as Baumol (2010) termed them they are 'replicative'. They may provide the sustenance, livelihood and life style for the concerned entrepreneur (Runyan, et al., 2008) but they have limited contribution in terms of innovation, change or dynamism to the economy. In short, they lack the power of 'creative destruction'. That is why this research focuses on the EO type and is trying to demarcate between the EO and SBO type. In Chapter 3 the following alternative hypotheses had been presented

H1(1): That the EO and SBO type subgroups are independent of each other when measured in terms of potential value creation .

Here we have established that the two groups are indeed two distinct and separate groups even when looking at it in terms of performance. On that basis the Null hypothesis H1 (0) can be rejected and the alternative hypothesis H1 (1) can be accepted. Therefore, selecting only the EO type of microenterprises is valid and justified.

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