Héctor Montel Campos, Ph.D., Universidad de las Américas Puebla, Sta. Catarina Mártr. Cholula, Puebla. C.P. 72810. México, This email address is being protected from spambots. You need JavaScript enabled to view it..
Luis S. Alvarado Acuña, Ph.D., Universidad Católica del Norte, This email address is being protected from spambots. You need JavaScript enabled to view it..
José Pablo Nuño de la Parra, Ph.D., Universidad Popular Autónoma del Estado de Puebla, This email address is being protected from spambots. You need JavaScript enabled to view it..
Ph.D. student. Francisco A. Aguilar Valenzuela, Centro de Investgación en Alimentación y Desarrollo, This email address is being protected from spambots. You need JavaScript enabled to view it..

Abstract

Over the past 30 years research on Entrepreneurship Orientaton (EO) has provided valuable informaton regarding strategy, entrepreneurship and aspects of performance at the frm-level. In the entrepreneurial universe, microenterprises play a very special role in the business context of the economy. However, they have not been relatvely present in the EO research. This paper studies the EO-performance relatonship in a group of microenterprises in Mexico and includes the Dominant Logic (DL) as a variable that moderates this relatonship. The results indicate that risk taking, proactveness and compettve aggressiveness variables from the EO influence the microenterprise performance. In additon, the external DL conceptualizaton moderates the EO-performance relatonship. This paper shows the conclusions of the investgaton as well as the limitatons and identfes future research methods.

Introducton

In recent years enormous progress has been made in the feld of Entrepreneurship, which has helped strengthen some of its paradigms. The cross-disciplinary nature of this research feld causes an exchange of knowledge and that which occurs within the feld of strategy is of partcular interest for this research. This exchange recognizes that entrepreneurship can be studied not only individually but also organizatonally (Dess, Lumpkin and McGee, 1999).

The concept that causes the rapprochement between the strategy and entrepreneurship disciplines is called Entrepreneurial Orientaton (EO). This construct is based on different variables to identfy the organizaton’s entrepreneurial behavior. EO has its origins in the literature on strategy and its importance lies in previous research which has shown that the greater the EO, the beter the frm’s performance (Rauch, Wiklund, Lumpkin and Freese, 2009). EO in a business is geared towards the recogniton, evaluaton and exploitaton of business opportunites. However, research has shown that the EO-frm performance requires consideraton of other variables. It is important to include contngent internal or external factors, to help a beter understanding of the EO-frm performance relatonship (Covin, Green and Slevin, 2006). In this regard, we have atempted to analyze the EO-performance relatonship in microenterprises including Dominant Logic (DL) as an internal contngent variable to moderate the relatonship.

This research is part of a project that studies the EO-performance relatonship in Mexican companies. Regarding the DL, the relatonship EODL-performance in new companies was initally investgated (Montel, Nuño and Solé, 2012), i.e., EO had a positve impact on DL which, in turn, had a positve impact on frm performance. Now, on this occasion, the EO’s and DL’s combined effect on microenterprise performance, was investgated. To be more precise, this work’s aim was to determine if in the Mexican microenterprises’ context the EO-performance relatonship is moderated by the DL. To achieve this goal, 302 microenterprises in central Mexico were investgated and, therefore, it is believed that this work makes three important contributons. First, it identfes whether the microenterprise’s DL moderates the relatonship that may exist between EO and its performance. Second, it contributes to the future development of a DL assessment scale, to beter understand the strategic decision making style. Finally, the microenterprise, due to its size, is the type of organizaton that is not always of great interest as an object of study. Therefore, it is believed that this work helps to understand the compettve arena of these businesses.

The next secton of this paper offers review of the literature and hypotheses that guide this work. The methodology secton describes the various actvites that took place during the research. The main results are also discussed as well as the limitatons of this research. Future research is suggested and, fnally, the conclusions of this work are developed.

Literature review

Entrepreneurial orientaton and performance

Although the literature in the feld of entrepreneurship demonstrates the existence of multple paradigms, none of them is dominant (Montel, Solé and Palma, 2012). In past decades, the EO study has become a central theme in the literature on entrepreneurship and strategy, as several authors consider entrepreneurship a phenomenon at the organizatonal level (Covin and Wales, 2012). The EO helps to characterize the company’s behavior along a contnuum that ranges from highly conservatve to highly entrepreneurial and the company’s positon in this contnuum describes its EO (Basso, Fayolle and Bouchard, 2009). This original construct can be found in Miller’s work (1983), although he admits that he never used the EO term in his inital ideas (Miller, 2011). Originally, Miller (1983, p. 771) mentoned that, “An entrepreneurial frm is the one that engages in product market innovaton, undertakes somewhat risky ventures, and is frst to come up with proactve innovatons, beatng compettors to the punch”. For Stevenson and Jarillo (1990), a company has entrepreneurial behavior if their actons and processes are oriented to the recogniton and exploitaton of entrepreneurial opportunites. From a more general approach, EO refers to the trends, processes and behaviors that lead a company to enter new markets, whether with new or with existng products (Lumpkin and Dess, 1996). On the other hand, there is interest in the EO because it is considered a predictve variable of company performance, i.e. if a company adopts EO and becomes more Entrepreneurially Oriented it will have a beter performance (Rauch et al., 2009).

Miller’s (1983) inital approaches were adopted in the academic literature, so that Covin and Slevin (1989) conceptualized the company’s entrepreneurial behavior based on three variables: innovatveness, risk taking and proactveness. These authors stated that these variables covariated and that the covariance source was a construct which they called entrepreneurial posture. At this point the Miller/Covin and Slevin’s (1989) scale emerged. Subsequently, Lumpkin and Dess (1996) postulated that these variables are insufcient to explain entrepreneurship at the organizatonal level, as the business posture would require other dimensions. Lumpkin and Dess (1996) assured that the original variables could independently covariate among them, contradictng what had been established by Covin and Slevin (1989) and should be modeled in a combinaton of new variables called EO. In additon to the inital variables, the compettve aggressiveness and autonomy variables were included. To Lumpkin and Dess (1996), the innovatveness indicates the company’s trend of supportng new ideas and fostering creatve processes. Risk taking is the company’s tendency to work on projects whose benefts are uncertain. Proactveness is about taking initatves and pursuing new business opportunites in emerging markets. Compettve aggressiveness is facing competton in order to enter new markets or to improve the compettve positon. Finally, autonomy is the degree to which organizatonal factors (people and team) act independently, making decisions and pursuing opportunites.

The relatonship between EO and frm performance has been studied for several years and has shown that companies that adopt an EO have beter performance than those with a more conservatve orientaton (Rauch et al. 2009). Companies, as they are smaller in size, are more vulnerable because of their limited access to capital, debt capacity, market share, technology acquisiton, among others (Auto, 1997). This may cause the company to adopt a more conservatve posture. In additon to this, the aggressive compettveness they might experience requires them to seek new business opportunites and make the necessary changes in order to stay in business. This leads us to consider that a microenterprise, i.e., the smaller business organizaton, can be an interestng scenario in which to analyze the EO effect on performance. Therefore, the following hypothesis is proposed:

H1: The more EO the microenterprises have, the beter their performance.

Dominant logic

In 1986, Prahalad and Bets introduced the Dominant Logic (DL) concept and they refer to it as a way in which managers conceptualize the business and make important decisions based on the allocaton of resources. Prahalad and Bets menton that the way in which business managers make strategic decisions, depends heavily on cognitve orientaton, i.e. previous experiences influence how managers solve dilemmas they face in the business. That is why many strategic initatves fail because management has a rather rigid cognitve orientaton and it cannot enrich its DL in order to impact new business opportunites or structural changes in the business (Prahalad and Bets, 1986).

In a reflecton on their original ideas, Bets and Prahalad (1995) conceive the DL as a flter through which managers choose the informaton that is important for making decisions. This fltering mechanism influences the strategic development in the company’s directon. Authors recommend that managers should enrich that flter or adjust it to a new patern, given the changing environment in which the company competes. The DL concept provides an explanaton of this phenomenon, and the reason why some frms are able to antcipate fundamental changes in their main line of business or why they are skillful in reactng to those changes earlier than other companies in the same industry, thus becoming more successful (Von Krogh, Erat and Macus, 2000). In this sense, the DL can also limit the company’s ability to adapt to environmental changes (Cotê, Langley and Pasquero, 1999). When managers decide what strategies to follow in the future, DL acts as a lens that allows them to visualize the future and thus allows them to restrict the range of strategic optons (Grant, 1988). If the results are positve, the DL’s validity is confrmed, otherwise, the DL is questoned and should be changed (Bets and Prahalad, 1995).

The academic debate on DL concentrates on its difculty to operatonalize this construct. The different formulatons that have been raised are linked to the way in which managers conceptualize the business and Von Krogh et al.’s (2000) proposal makes a good assessment of this. Von Krogh et al. (2000) writes about DL’s internal and external conceptualizaton. The internal conceptualizaton examines the extent to which the manager’s beliefs, values and assumptons have been impregnated throughout the organizaton. Included in the internal conceptualizaton are people, culture, as well as product and brand. The external conceptualizaton focuses on the manager’s positon to deal with the market’s complexity in which the organizaton operates to stay compettve. The external conceptualizaton includes compettors, customers, consumers and technology. The Von Krogh et al. (2000) proposal is in the spirit of defning Prahalad and Bets (1986) DL and is consistent with the Grant (1998) and Ginsberg (1990) proposed formulatons.

Since the DL represents the manager’s preferences, opinions and assumptons under which the manager runs the business, it is important to raise the possibility that the DL also influences frm performance. Under this approach, previous works show that frm’s performance can be enhanced when key variables are properly aligned (Naman and Slevin, 1993). In the same perspectve, the contngency theory states that the relatonship between two variables can be improved with the interventon of a third variable (Rosenberg, 1968). The literature discusses different variables that influence the EO-performance relatonship, such as the founder-director’s psychology (Poon, Ainuddin and Junit, 2006), knowledge (Wiklund and Shepherd, 2003), learning (Wang, 2008), social networks (Walter, Auer and Riter, 2005), strategic processes (Covin, Green and Slevin, 2006), access to fnancial resources (Wiklund and Shepherd, 2005) and the environment’s influence (Zahra and Garvis, 2000; Marino, Stradholm, Steensma, and Weaver, 2002). However, in this series of studies the DL was not included as a contngent variable of EO-performance relatonship, since decisions made by the founder-manager are essental due to the dominant effect it has on the company’s performance. From the above, the following hypothesis is proposed:

H2: The relatonship between the microenterprise’s EO and their performance is moderated by the founder-manager DL.

Methodology

Sample and data collecton

This research focused on the entrepreneurship study in the business sector with low growth potental, partcularly those frms developed as income substtute frms (Kunkel, 2001). The main purpose of this kind of business is not to achieve rapid growth to reach the large corporatons’ level, but to generate an income comparable to what entrepreneurs involved in business could expect to earn if they worked as employees in an established company. The reason for this approach is that microenterprises in Mexico represent an important source of employment and wealth creaton (Naranjo and Campos, 2011).

The sample from its design was considered as not probabilistc due to the purpose of the investgaton to identfy microenterprises located in the central region of Mexico. With the Natonal Chamber of Commerce’s support frms in the states of Mexico, Puebla, Tlaxcala and Hidalgo that met the following criteria were identfed: 1. Having no more than 10 employees and a maximum of $300,000 in annual sales, according to the classifcaton of the Ministry of Economy in Mexico. 2. a frm more than fve years old, for it is not considered as start-up. 3. a company that belongs to the commercial sector with at least one branch. 4. Not franchising.

Since the purpose of this study was to explore the relatonship between variables, a survey was used for data collecton. a pilot test was conducted to eliminate any doubts or confusion of the instrument, so that the fnal design incorporated the comments received. This resolved the validity of the external instrument. Initally 1,346 surveys were sent electronically and subsequently the process of obtaining informaton was reinforced through interviews. The fnal surveys were received between October 2011 and July 2012. Of a total of 317 surveys, 15 were rejected for not meetng any of the criteria, leaving a total of 302 surveys. The 302 microenterprises can be divided into the following business actvites: grocery (21%), restaurant (15%), footwear (14%), furniture (13%), drugstore (11%), bakery (9%), clothing (7%), bookstore (5%), jewelry (3%), and other (2%).

Measurements

The frst independent variable was the EO. This work used the Lumpkin and Dess (1996) proposal to measure the EO. This scale measures the company’s tendency towards innovaton, risk taking, proactveness, compettve aggressiveness and autonomy. Rauch et al. (2009) suggests that this scale represents a valid means to measure the decisions and actons at the organizatonal level. The scale contains 14 items, which are evaluated using a 7 points Likert’s scale and their average indicates the company trend towards the EO, therefore, the higher the average the greater the company’s EO. In this scale the alpha coefcient was 0.82.

The DL was the second independent variable. For this job, the Krogh et al. (2000) proposal was used to develop a unique measuring scale. The measurement scale had an internal and external conceptualizaton, so it was decided to respect this difference and not to obtain an overall average. From this, a 3 items measurement scale was developed, which was assessed using a 7 points Likert’s scale and their average assessed the internal conceptualizaton. Also a 4 items measurement scale was developed, which was also evaluated using a 7 points Likert’s scale and their average assessed the external conceptualizaton. The greater the average, the greater DL use, either in internal or external conceptualizaton. The alpha coefcient was 0.72, which is enough to categorize this as a job of an exploratory nature (Wiklund and Shepherd, 2005).

With respect to the dependent variable, frm performance was assessed using subjectve measures which serve as good substtutes in the absence of hard data (Brush and Vanderwerf, 1992, Cooper, 1993). The surveys were applied to asking the founder-manager to assess their frm’s performance compared to its main compettors over the previous three years (Wiklund and Shepherd, 2003). Performance criteria were: cash flow, return on capital employed and sales growth. Performance was calculated using the average of the three items measurement scale and if the average was greater, the frm’s performance was beter. The alpha coefcient was 0.84.

The frm’s age and the environment hostlity were included as control variables, since previous studies have shown to have an influence on frm’s performance (Lumpkin and Dess, 2001; Miles, Covin and Heeley, 2000). The company’s age was measured using the number of years since the company began commercial operatons. Hostlity was assessed using the Covin and Slevin (1990) 7-point semantc differental scale. The scale contains 3 items and as the average was greater, the company‘s compettve environment was more hostle. The 0.75 alpha coefcient was acceptable (Wiklund and Shepherd, 2005).

Data analysis

The informaton analysis was carried out gradually in order to improve the investgaton results. First, the appropriateness of the scales was analyzed for the type of frm being investgated. a principal components analysis was conducted using 24 items to assess the 8 variable identfcaton by respondents (innovatveness, risk taking, proactveness, compettve aggressiveness, autonomy, internal conceptualizaton, external conceptualizaton and performance). Following this, a confrmatory factor analysis was conducted in order to determine whether the variables that comprised the EO and DL constructs represented different variables, otherwise to confrm the need to eliminate some variables to best ft the results. The model was evaluated using χ2/df, Goodness-of-Fit Index (GFI) (Jöreskog and Sörbom, 1996), and the Comparatve Fit Index (CFI) (Bentler, 1992). The threshold for χ2/df should be less than three or less than two in a more restrictve sense (Premkumar and King, 1994). The GFI and CFI values should be above 0.90 (Jöreskog and Sörbom, 1996). The hypotheses were tested using the correlaton analysis and multple regression analysis.

Results and discussion

The principal component analysis showed that innovatveness, risk taking, proactveness, compettve aggressiveness, autonomy, internal conceptualizaton, external conceptualizaton and performance were identfed by respondents. Moreover, the inital results of the confrmatory factorial analysis suggested that it was necessary to eliminate three variables, as they did not improve the fnal results and made the analysis more complex. This demonstrates that the measurement of these variables was already covered by other variables already in the model. The EO’s variables innovatveness and autonomy were eliminated, as well as the DL’s variable internal conceptualizaton. Once these variables were eliminated, the analysis to estmate the model size was done again. The results suggested that it was not necessary to remove more items to improve the ft of the model.

It is necessary to make some comments regarding the variables that were removed from the analysis. First, the autonomy and internal conceptualizaton variables were eliminated as it was clear that these two variables are irrelevant since the sample design is based on the founder-manager leading role in decision-making. That is, there is no room to share decision-making due to the small size of the organizaton being investgated. In relaton to innovatveness, this is a variable that simply does not add anything to the strategic commitment of the microenterprise being investgated. This may indicate that the frm’s compettveness may be more obvious in its market share defense, hence, the frm must antcipate or react quickly to the actvites and responses of compettors.

Regarding the EO, the model resulted in a good ft: χ2/df = 2.48, GFI = .901, CFI = 0.932. All the factor loadings are in acceptable ranges and signifcant at p = 0.001, ranging from 0.71 to 0.83 indicatng convergent validity (Anderson and Gerbin, 1988). The average variance obtained for the measurement of EO was 0.72, which is slightly higher than the threshold suggested by Bagozzi and Yi (1988). In relaton to the DL, the model also showed a good ft: χ2/df = 2.95, GFI = .893, CFI = 0911. All the factor loadings are in acceptable ranges and signifcant at p = 0.001, ranging from 0.63 to 0.79 indicatng convergent validity and the average variance obtained for the measurement of DL was 0.67. Finally, the performance model also showed good ft: χ2/df = 2.66, GFI = .941, CFI = 0.922. All the factor loadings are ranging from 0.73 to 0.84 and the average variance obtained for the measurement of performance was 0.82.

Table NO.
 VariableMeanSD12345
1 Age 11.4 2.74 1.00        
2 Environmental hostlity 5.11 1.95 -0.09** 1.00      
3 Dominant logic 3.43 1.08 0.24** 0.32** 1.00    
4 Entrepreneurial orientaton 4.14 0.89 0.10*** 0.07*** 0.22** 1.00  
5 Firm performance 4.75 1.54 0.18** -0.14** 0.19** 0.26* 1.00
N = 302 * p < 0.10; **p < 0.05; ***p < 0.01

The averages, standard deviatons and Pearson’s correlatons between the frm’s performance, EO, DL and the control variables can be seen in Table 1. The correlaton analysis can be used as a preliminary evaluaton for the subsequent hypothesis confrmaton, which requires a different type of analysis. Initally, it can be said that there is a positve relatonship between EO and frm’s performance (ρ = 0.26), and a slightly lower relatonship between DL and frm’s performance (ρ = 0.19). With respect to the age variable, there is a positve relatonship (ρ = 0.18), which may indicate that the older the company is, the beter its performance; that is, it may be taking more risks and be more proactve than their compettors. Also, another interestng aspect to analyze is the relatonship between EO and DL, which is signifcant (ρ = 0.22). This may indicate that these two variables’ combined effect may represent a beter frm performance, but this is yet to be confrmed. Finally, the positve relatonship between environmental hostlity and the DL (ρ = 0.32), may reflect the sensitvity of the founder-manager to the actons of their main compettors.

A hierarchical moderated regression analysis was conducted to test the hypotheses (Cohen & Cohen, 1983), with a process centered on the independent and control variables’ mean in order to minimize multcollinearity (Aiken and West, 1991). The results indicate that multcollinearity was not a problem in the analysis. Table 2 shows the results for different regression models. Model 1 shows only the control variables. Model 2 adds the effect of the EO and Model 3 adds the DL’ direct effect. The Model 2 results are consistent with previous studies as they show a positve effect of EO on frm’s performance (β = 0.26, p < 0.01). This proves hypothesis 1 proposed in this research. In Model 3, adding the DL’s direct effect on the frm’s performance results in a small change (β = 0.28, p < 0.01), which indicates that the DL has a direct influence on frm’s performance, although this is not the intent of the investgaton.

The second hypothesis of this study considered a DL’s moderatng effect on the relatonship between EO and frm’s performance. To test the hypothesis, the interacton´s effect between EO and DL was added to the analysis. Model 4 shows a positve and signifcant interacton’s effect of DL and EO on frm’s performance (β = 0.31, p < 0.01), confrming the second research’s hypothesis.

Table 2. Regression results
Independent variableModel 1Model 2Model 3Model 4
Control variables:        
Age 0.217** 0.194* 0.121* 0.138*
Environmental hostlity -0.131** -0.154** -0.101** 0.140*
Main effects:        
H1: Entrepreneurial orientaton   0.263*** 0.213** 0.205***
Dominant logic     0.281*** 0.247***
Interacton effect:        
H2: Entrepreneurial orientaton x dominant logic       0.314***
F 3.018*** 3.844*** 4.622*** 5.128***
R-square 0.101 0.172 0.184 0.225
R-square adjusted 0.098** 0.159** 0.173 0.203
Estmate Standard Error 1.334 1.011 0.988 0.921
* p < 0.10; **p < 0.05; ***p < 0.01

The regression equatons are strong and explain between 16% and 20% of the variaton in the dependent variables, which is acceptable. Moreover, to beter understand the interacton nature, the EO’s effect on frm ‘s performance was ploted for both low and high DL (Aiken and West, 1991), as shown in Figure 1. The graph suggests that when the DL is low, a good frm performance is not obtained, but when the DL is high, there is a beter frm performance.

Figure 1. Moderatng effect of dominant logic on the entrepreneurial orientaton-performance relatonship

Limitatons and future research

The results of this research should be seen in the light of their limitatons. First, there is no reason to believe that the results can be extended to frms with other features, including other contexts. For the enterprise’s type (micro) and context (Mexico), the environmental hostlity was signifcant, which may not necessarily occur in other research designs. Another limitaton is the evaluaton of the scales, as those were only made by the founder-manager. This may make sense for small size frms, in which, despite being in operaton for several years, the founder-manager’s dominant logic prevails (Hofstede, 2001). However, the debate contnues over the use of multple answers to ensure the validity of the results. The validaton could come from those who are closely monitoring the operaton and frm’s performance internally, and those outside the company who are familiar with the frm’s performance.

One more limitaton of this work is the lack of previous studies that have used a scale to assess the DL. This paper proposes a scale based on the Von Krogh et al. (2000), proposal; however, the confrmatory factor analysis gave the patern to eliminate internal conceptualizaton. In the scope of this work it is difcult to confrm if the DL can be understood just with the external conceptualizaton.

The limitatons discussed here can be overcome in future research. Development of a DL ratng scale is necessary. The results achieved in this work can be useful in this regard, considering the aspects of internal character and major importance. a research paper focused exclusively on the DL scale development is in its own an important contributon to knowledge creaton. This is evidenced by research papers that have developed scales to assess other constructs, such as entrepreneurial passion (Cardon, Gregoire, Stevens and Patel, 2013), business’ alert (Tan, Kacmar and Busenitz, 2012), and even the reflecton that exists on EO’s assessment scales (Covin and Wales, 2012).

The DL is a construct with a highly cognitve content; however, future research could consider studying it in combinaton with other constructs, such as personality or intelligence. This combinaton could help to beter understand the style, conduct and behavior of strategic decision makers in an organizaton.

Comparatve work can also contribute to a beter understanding of the EO in an organizaton. It would be interestng to know how the organizatonal culture type influences the decision making style (Hofstede, 2001). Finally, whenever possible, it is necessary to include quanttatve variables to measure the frm’s performance. In a microenterprise, the founder-manager has to perform several tasks at the same tme that cannot be delegated. Given this, fnancial frm’s control is virtually impossible, since it is well known that strategic planning of this nature in frms is also nonexistent.

Conclusion

This work result leads us to believe that the microenterprise’s performance is slightly beter when it involves an analysis of the external environment surrounding the frm. In other words, the external conceptualizaton of the DL helps improve the relatonship between EO and frm performance. This result confrms that the relatonship between EO and performance improves when considering other variables involved in this relatonship (Covin, Green and Slevin, 2006, Wiklund and Shepherd, 2003). In the same perspectve, the results support the idea that the context in which the company operates also influences the relatonship between EO and performance (Walter, Auer and Riter, 2006). This conclusion can be seen in the influence that environmental hostlity has as a control variable on EO and performance relatonship, shown in previous works (Parida, Westerberg, Ylinenpää and Roininen, 2010, Wiklund and Shepherd, 2003).

Due to the frms’ size discussed in this paper, it is interestng to comment on the dimensions that were eliminated from both the EO and the DL, which were identfed afer performing confrmatory factor analysis. With respect to EO, innovatveness is not a necessary conditon for maintaining compettveness. In this case, autonomy, as EO’s dimension, is irrelevant due to the decision-making centralizaton. We believe that the same ocurrs with the DL’s internal conceptualizaton.

From the above, we believe that the positon of the microenterprises is based on good external analysis and risky and tmely decision making. The company must take risks constantly and that makes it a proactve frm. The environmental hostlity, as a control variable, was shown to have a negatve relatonship with performance, which is also related to compettve aggressiveness.

These results lead us to conclude that the frm’s own characteristcs, such as size, limited resources and market share, make its environment more compettve, even hostle, so that frms can decide to use aggressive practces. It is important to add that, through the founder-manager relatonship, DL is emphasized among the competton, customers and consumers.

Finally, the results of this work contribute to the propositon that the relatonship between two variables can be improved when incorporatng a third contngent variable. In this case, the DL falls directly on the foundermanager relatonship, so that their skills directly influence the frm’s performance.

As the frm’s structure becomes larger, the founder-manager’s DL influence decreases, due to the incorporaton of new positons, new visions and then the new DL is more inclusive and partcipatory. However, previous studies have also highlighted the fact that the EO is not the only variable that can explain the frm’s performance. In this work, the EO only explains about 16% of the frm’s performance and its combinaton with DL about 20%.

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