Counseling assistance, entrepreneurship education, and new venture performance
| Date | 20 April 2012 |
| Published date | 20 April 2012 |
| DOI | https://doi.org/10.1108/20452101211208362 |
| Pages | 63-83 |
| Author | James J. Chrisman,W.E. McMullan,J. Kirk Ring,Daniel T. Holt |
| Subject Matter | Strategy |
Counseling assistance,
entrepreneurship education, and
new venture performance
James J. Chrisman
Department of Management and Information Systems,
Mississippi State University, Mississippi State, Mississippi, USA
and Centre for Entrepreneurship and Family Enterprise,
University of Alberta, Edmonton, Canada
W.E. McMullan
Haskayne School of Business, University of Calgary, Calgary, Canada
J. Kirk Ring
Department of Management, W. Frank Barton School of Business,
Wichita State University, Wichita, Kansas, USA, and
Daniel T. Holt
Department of Management and Information Systems,
Mississippi State University, Mississippi State, Mississippi, USA
Abstract
Purpose – The purpose of this paper is to apply the theory of guided preparation to investigate the
relative impact of outside counseling assistance and entrepreneurship courses on new venture creation
and performance.
Design/methodology/approach – To attain a sample of nascent entrepreneurs who had been
impacted by entrepreneurship education and entrepreneurial counseling, 256 individuals who received
counseling from the Pennsylvania Small Business Development Center in 1996 or 1998 were surveyed.
The authors ran a logistic regression model using venture start-up as the categorical dependent
variable to investigate whether entrepreneurial education and counseling had an influence on the
creation of new ventures. To test whether entrepreneurial education or counseling had a long-term
impact on the growth of new ventures, hierarchical regression analyses were run using employment in
2003 as the dependent variable. Various control variables were used for both sets of analyses.
Findings – Findings indicate that counseling has a significant imp act on venture performance but
entrepreneurship courses do not. In contrast, entrepreneurship courses are related to venture creation
while counseling is not.
Research limitations/implications – Consistent with theory, the results suggest that counseling
programs allow entrepreneurs to develop context-specific tacit knowledge about their ventures and are
best delivered immediately prior to venture start-up. Entrepreneurship courses appear to indirectly
influence new venture performance by increasing the odds of start up.
Originality/value – This comparative test of the theory of guided preparation contributes to the
understanding of the effects of education and counseling on the creation and long-term performance of
new ventures, informing how the delivery of such programs can be improved.
Keywords Education, Counselling, Venture performance, Knowledge, Start-up,
United States of America
Paper type Research p aper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2045-2101.htm
Journal of Entrepreneurship and
Public Policy
Vol. 1 No.1, 2012
pp. 63-83
rEmeraldGroup Publishing Limited
2045-2101
DOI 10.1108/20452101211208362
The authors would like to thank Karl Vesper for his comments on an early draft of this paper.
63
New venture
performance
1. Introduction
Entrepreneurship, the creation of new organizations (Gartner, 1988), is essential in the
struggle to build economies and create jobs (Acs and Armington, 2006; Birch, 1987;
Schumpeter, 1934) but unfortunately many new firms do not su rvive long enough to
leave a lasting impact (Boden, 2000; Phillips and Kirchhoff, 1989). The importance of
entrepreneurship coupled with the low rate of long-term venture survival has led
scholars to consider the initial conditions necessary for the crea tion of successful
ventures. For example, one of the initial conditions identified by Minniti and Bygrave
(1999) is the personal assessment of an individual’s ability to be an entrepreneur.
Fortunately,over time both ability and perceptions of ability can be altered and, in fact,
several studies show that education and counseling assistance programs can
contribute to new venture formation and success (e.g. Henry et al., 2004; Kolvereid
and Moen, 1997; Osborne et al., 2000; Vodopivec, 1998). Drawing on this idea,
entrepreneurship interfaces closely with public p olicy as policy makers introduce
programs to provide education and training to entrepreneurs with the goal of assisting
entrepreneurs to develop enduring, successful, growth-o riented enterprises. In the
USA, these would include the Small Business Development Center (SBDC), Service
Corps of Retired Executives, and Small Business Administration, among others.
In further recognition of the importance of preparing entrepreneurs for the
challenges of launching and sustaining a new venture, research is beginni ng to explore
how the counseling assistance and education provided through these programs
might be improved (e.g. Clouse, 1990; Hansemark, 1998; Hatten and Ruhland, 1995;
Peterman and Kennedy, 2003). Relevant to this study, an emerging theory of guided
preparation (Chrisman and McMullan, 2000, 2004; Chrisman et al., 2005) has begun to
explain how informed self-selection, trained counselo rs, just-in-time delivery, and a
process that generates both tacit and explicit knowledge can improve the p erformance
of new ventures. What is not known is if and how formal education fits within this
theoretical framework. As Charney and Libecap (2000) suggest, further investigations
of the effects of education on the success of new ventures would be useful, especially
during the post start-up phase (Sardana and Scott-Kemmis, 2010).
We answer these calls for further research by reporting the results of a study
designed to assess the relative impact of outsider counseling and entrepreneurship
courses on new venture creation and their long-term performance, measured by the
absolute, aggregate growth in employment approximately six years after start-up.
This comparative test of the theory of guided preparation should contribute to the
understanding of the effects of education and counseling on the creation and long-term
performance of new ventures, informing how the delivery of such prog rams can be
improved.
Specifically, we argue that two central aspects of counseling and educatio n vary and
that these variations will influence the degree to which performance is affected. First,
entrepreneurial counseling – which includes guidance , mentoring, and other direct
and indirect assistance – is usually provided during the period in which entrepreneurs
are preparing for, or in the early stages of venture launch, whereas the time betwe en
entrepreneurial education and venture start-up is generally much longer. Second,
although both counseling programs and entrepreneurship courses can provide
entrepreneurs with the know ledge needed to start a business, the for mer tends to
provide greater emphasis on the knowledge gained through contextual experience
during the start-up process. We hypothesize that programs that help entrepreneurs
develop context-specific tacit knowledge and which are delivered just-i n-time will be
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