Critical entrepreneur knowledge dimensions for the SME performance
| Pages | 1182-1199 |
| Date | 31 October 2008 |
| Published date | 31 October 2008 |
| DOI | https://doi.org/10.1108/02635570810914883 |
| Author | Doris Gomezelj Omerzel,Boštjan Antončič |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Critical entrepreneur knowledge
dimensions for the SME
performance
Doris Gomezelj Omerzel and Bos
ˇtjan Antonc
ˇic
ˇ
UP Faculty of Management Koper, Koper, Slovenia
Abstract
Purpose – The purpose of this paper is to illustrate the entrepreneurship knowledge construct with
its dimensions and its significance for the firm performance via a model. This research attempts to
comprehensively examine the criteria for measuring entrepreneurial knowledge performance
outcomes in small and medium enterprises. To date no studies developed a set of widely accepted
measurement criteria associated to entrepreneur knowledge and firm performance. This paper,
therefore, aims to fill the gap.
Design/methodology/approach – Existing studies on entrepreneurial knowledge were reviewed
and their limitations were identified. Mailed structured questionnaire data for this study were collected
from SME in Slovenia (168 usable responses). Exploratory and confirmatory factor analysis with
structural equation modelling was used to estimate the model.
Findings – The model hypothesis on the relationship among entrepreneurial knowledge and
performance were mainly supported, thus reflecting the positive effect of entrepreneurial knowledge
and all its dimensions on SME performance.
Research limitations/implications – The studyis limited to Slovenian SME,but can be generalised
to other regions.
Practical implications – Entrepreneurial knowledge can have beneficial effects on the firm’s
growth and profitability. The findings can be used to guide entrepreneur in developing different
dimensions of knowledge.
Originality/value – This study proved latent elements of entrepreneurial knowledge model. It gives
valuable information, which hopefully will help SMEs to respect more the meaning of knowledge.
Keywords Knowledge managem ent, Small to medium-sized e nterprises, Business perform ance
Paper type Research paper
Introduction
Knowledge is an important asset for small and medium-size firms in the time of global
competition. Even if many entrepreneurs do not pay enough attention on the
importance of knowledge, this source can be determined an important determinant of
success of small and medium-size firms and undoubtedly one of the sources of
sustainable competitive advantage. Organisations are becoming more knowledge
intensive and they are hiring “minds” more than “hands”. In this paper, we have
focused at the entrepreneur knowledge. We have thus developed a know ledge model in
entrepreneurship, tested it empirically on a sample of Slovenian small and medium-size
companies and thus proved its multidimensional character. The model unites
entrepreneur knowledge dimensions with performance ratios. For the purpose of the
model design we have developed a model of the factors which constitute and measure
entrepreneur knowledge, as well as a company’s performance. By using the final model
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IMDS
108,9
1182
Received 26 March 2008
Revised 3 July 2008
Accepted 21 July 2008
Industrial Management & Data
Systems
Vol. 108 No. 9, 2008
pp. 1182-1199
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810914883
in our research we have proved that almost 18 per cent of the variability in a
company’s performance can be accounted for with entrepreneur knowledge.
Research dealing with the study of the importance of knowledge, has lately often been
carried out in entrepreneurial environment. In the process dealing with knowledge
enterprises have to face the varying conditions of organisation culture and t hey need a
strong support from top management. Studies that deal with the concept of human
capital of entrepreneurs most often focus on the effects of entrepreneurs’ education, their
past experience and family and professional background of entrepreneurs (Bru
¨derl et al.,
1992; Boswell, 1972; Bates, 1985, 1990; Preisendo
¨rfer and Voss, 1990; Cooper et al., 1994).
Bru
¨derl et al. (1992) agree that a higher level of entrepreneur education has a positive
effect on productivity, which subsequently leads to higher profitability.
Knowledge is the factor with which entrepreneurs can distinguish themselves from
their competitors and the means with which the poorly org anised business
environment can become well organised (uit Beierse, 2000). Entrepreneurs with more
knowledge will be less uncertain regarding their effectiveness and they will be able to
learn and notice changes on the market faster. In-depth research on different
dimensions of the knowledge of entrepreneurs in companies and analyses of the
influence of individual dimensions on business success of companies is difficult to find.
Thus, our research represents a new approach, both from the point of view of the
content studied and the methodology used. We developed a multidimensional model of
entrepreneurial knowledge, which has been empirically tested on a sample of Slovenian
small and medium-sized enterprises and proved its multidimensional nature. In our
research, we analysed small and medium-sized enterprises, because they have an
important role in the national economy. Their role in economy continues to be crucial
for boosting economic performance, particularly in light of the recent slowdown seen in
economic growth (Ruzzier and Konecnik, 2006).
The importance of the role of entrepreneurship has been identified in Slovenia after
1990, when increased competition caused serious economic problems to some large and
cost-ineffective companies that were not adapted to the market economy. Sm all
enterprises helped to stabilise the economic situation, which once again speaks in
favour of the important role small and medium-sized enterprises play in the economic
development of Slovenia (Tajnikar, 2000). Entrepreneurial activity has an important
influence on the economy of a certain area, because it represents the economic
foundation and ensures new jobs (Antoncic et al., 2002).
Theoretical framework and hypotheses
Company successis frequently conditionalon the knowledge of entrepreneurs(Hambrick
and Mason, 1984),which mainly depends on their education and past experience(Barker
and Mueller, 2002; Hadjimanolis, 2000). Veblen (1904) emphasises the importance of
knowledge in companies. Drucker (1959)defined knowledge as an importance sourcefor
the company. Nonaka and Takeuchi (1995), in their theory on knowledge-based
organisations, further emphasised the importance of knowledge. Their thesis is that
knowledge represents one of the sources of sustainable competitive advantages and
that knowledge is the basic foundation for economic performance. Research has shown
that knowledge has become an important tool for strengthening an enterprise’s
competitive advantage (Hsu et al., 2007). Novak and Bojnec ( 2005) emphasised t he
significanceof knowledge for economicgrowth of the Slovenian economy. In ourresearch,
Entrepreneur
knowledge
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