The impact of referents on entrepreneurship : growth of small and medium sized software companies in three Finnish regions

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The foundation of this study is the assumption that social constructionism offers a fruitful theoretical perspective within which growth phenomena of small companies in information intensive industries can be understood. The perspective helps us to understand where the growth oriented mindset that guides the managers of entrepreneurial companies originates from. The study applies the perspective and other complementary cognitive and motivational theories upon the question of how the growth orientation of management is born and further how growth orientation together with management mental models affect growth of small software companies. Based upon literature analysis of the major theories in the area, a model upon factors affecting growth orientation as well as growth is built. The empirical part of the study tests 12 hypothesis derived from the theoretical model. They are related to birth of growth orientation, regional cultural effects upon the orientation, and relationship between orientation, mental models and growth. The empirical part is based upon structured interviews in 76 software companies in three Finnish regions. Analysis of the results is done both with hierarchical regression analysis as well as structural equation modeling. The results support following hypothesis: The growth orientation of Finnish (socially linked) referents has a positive impact on growth orientation. The impact of Finnish referents on growth orientation is stronger than a foreign referent. Outside owners increase growth orientation. Management experience reduces growth orientation. There are regional effects on the growth orientation of that are mediated through reference persons. Previous growth experience has a positive effect upon growth. There are regional effects on the growth orientation of that are mediated through reference persons. Growth orientation has a positive effect upon growth. Previous experience moderates the effect of growth orientation upon growth. In a discussion based upon the empirical results, it is concluded that view of social constructionists can help understanding of the behavior of small business managers. Also social learning theory and its concept of self-efficacy seem to help understanding.
entrepreneurship, social constructionism, software companies, small companies, medium sized companies, Finland, growth, regional aspects, management, firms
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