Impact of Entrepreneurial Style and Managerial Characteristics on SME Performance in Macao S.A.R., China

Abstract

This article presents a comprehensive, integrative model linking entrepreneurial style and managerial characteristics to small-to-medium-sized-enterprises' (SMEs') performance in Macao S.A.R., China. Macao has a unique and vibrant economy, arguably the fastest growing economy in the world from 2004 to 2012, driven by both Western and Eastern managerial practices. A self administered questionnaire from 232 managers of SMEs in Macao S.A.R., China, indicates the demographic managerial characteristics of age, formal education, and breadth of managerial experience, as well as the entrepreneurial styles of risk taking and proactiveness, are positively related to SME performance. [PUBLICATION ABSTRACT]

Headnote

Abstract

This article presents a comprehensive, integrative model linking entrepreneurial style and managerial characteristics to small-to-medium-sized-enterprises' (SMEs') performance in Macao S.A.R., China. Macao has a unique and vibrant economy, arguably the fastest growing economy in the world from 2004 to 2012, driven by both Western and Eastern managerial practices. A self administered questionnaire from 232 managers of SMEs in Macao S.A.R., China, indicates the demographic managerial characteristics of age, formal education, and breadth of managerial experience, as well as the entrepreneurial styles of risk taking and proactiveness, are positively related to SME performance.

Keywords

entrepreneurial style, SME performance, Macao, China

Introduction

SMEs are critical to economic growth and job creation (Carland, Hoy, Boulton, & Carland, 1984; Mulhern, 1995). However, while SMEs play an important role in the economic development of a nation, they are vulnerable due to limited resources when in contrast to larger corporations (Carland et al., 1984).

Entrialgo (2002) showed the owner-managers' demographic managerial characteristics have a direct impact on the development of entrepreneurial style in a firm. In addition, most research studies demonstrate a positive correlation between entrepreneurial style and firm performance (Salder-Smith, Hampson, Chaston, & Badger, 2003; Inmyxai & Takahashi, 2009; Sam, Tahir, &Bakar, 2012).

The individual development of an entrepreneur is a complex amalgamation of educational training, societal impacts, sub-culture impacts, business experience, and psychological predispositions that are innate as well as developed. However, previous research tended to either examine the relations between managerial characteristics and entrepreneurial styles or between entrepreneurial style and firm performance. The main contribution of this study is the exploration of these relationships and the integration of them into our combined model - Impact of Entrepreneurial Style and Managerial Characteristics on SME Performance.

This research attempts to replicate measures of entrepreneurial style (Miller 1983) and the corresponding impact upon performance while mediating for several managerial characteristics, some of which are developmental, in a unique setting, which is Macao S.A.R., China. What makes Macao so unique is the almost controlled aspect of several of the managerial characteristics under investigation. In many ways, it is a real world laboratory frozen in time.

Until recently, in Macao S.A.R., China, a former Portuguese colony, business and educational development lagged behind the rest of the world due to its isolation, lack of human as well as financial capital, and lack of financial support and developmental guidance from its governing bodies. Macao opened its first university 30 years ago, thus making the educational differences of young entrepreneurs and old entrepreneurs bi-polar. In addition, the multinational world discovered Macao only eight years ago when it opened up its gaming market. The virtual void of educational and managerial training of Macao's older entrepreneurs when studied and contrasted with the USA and Europe or even Macao's younger entrepreneurs provides, in effect, a longitudinal examination of the managerial characteristics of (1) education, and (2) breadth of managerial experience.

The most exciting part, from the entrepreneurial standpoint, is that Macao's business culture is steeped with entrepreneurial spirit and is the fastest growing economy in the world with an annual growth rate in excess of 20 percent from 2004 to 2012 ("Gross Domestic Product (GDP) and per-capita GDP," 2012). Until 2002, only one local casino was operating in Macao. Therefore, with only one large firm operating in Macao, the casino, in a business field that many consider to be undesirable (i.e., gambling) along with the notoriously low wages found in southeast Asia, the citizens of Macao had very few financially rewarding employment opportunities. In the end, many of Macao's citizens found that if they wanted to provide a reasonable lifestyle for their family, they needed to open their own business, thus providing a plethora of SMEs and entrepreneurs in Macao.

This article theorizes that managers can develop themselves through education, managerial experience, and preferential entrepreneurial styles to enhance SME performance.

Entrepreneurial Style

The scholarly literature discusses extensively how entrepreneurs think and act (Covin & Sie vin, 1991). Entrepreneurship is an essential feature of high performing firms (Lumpkin & Dess, 1996). This is especially true for SMEs where entrepreneurial style is significantly more important than other managerial styles in terms of its impact on SME performance (Chandrakumara, De Zousa, & Manawaduge, 2011; Sam et al., 2012.)

Miller (1983) described entrepreneurial style as a three dimensional concept comprised of product-market and technological innovation, risk taking, and proactiveness. Covin and Slevin (1989) labeled these three dimensions as a basic, unidimensional strategic orientation, which implies that only firms that exhibit high levels of all three dimensions be as entrepreneurial. Numerous researches have adopted the approach conceptualized by Miller (1983), for example, Covin and Slevin (1988, 1989), Salder-Smith et al. (2003), and Yusuf (2002). Although some studies have yielded mixed results (Yusuf, 2002), most have presented evidence that there is a positive and significant relationship between entrepreneurial style and performance (e.g., Covin & Slevin, 1986; Ñaman & Slevin, 1993; Wiklund, 1999; Inmyxai & Takahashi, 2009; Chandrakumara et al., 2011; Sam et al., 2012).

Risk Taking. Baird and Thomas (1985) identified risk into three types: (a) venturing into the unknown, (b) committing a relatively large portion of assets, and (c) borrowing heavily. On the aspect of financial analysis, risk refers to risk-return trade off, the probability of a loss or a negative outcome (Lumpkin & Dess, 1996). Miller and Friesen (1978) defined risk taking as the degree to which managers are willing to make large risky resource commitments.

Meyer, Walker, and Litwin (1961) found the managers selected to cultivate entrepreneurial endeavors within a firm exhibit a greater preference for risk taking. Lumpkin and Dess (1996) stated the principal factor that separated entrepreneurs from hired employees was the uncertainty and riskiness of self-employment. Moreover, Liles (1974) suggests entrepreneurial pursuits lead to more than personal financial risks, such as missed career opportunities, strained family relations, and reduced mental health.

Atkinson (1957) extensively studied the relationship between risk preferences and firm performance. He argued that performance level should be higher when there is greater uncertainty about the outcome. Wiklund and Shepherd (2003) suggested organizations with higher preference for risk taking focus on seeking opportunities. Covin and Sie vin (1991) state that an entrepreneur's willingness to execute high-risk projects results in superior return probabilities.

Innovation. Schumpeter (1934, 1942) emphasized the role of innovation in the entrepreneurial process. In his theory of Creative Destruction, the creation of wealth occurs as existing market structures evolve when new goods or services shift resources away from existing firms to new firms. Thus, innovativeness is a critical characteristic of entrepreneurship.

Innovativeness occurs when a firm engages in and supports new ideas, experimentation, and creative processes that may result in new products, services, or technological process. Researchers tend to measure innovation differently. One example is investigating the number of new product or service introductions and the frequency of changes in services or product lines (Covin & Slevin, 1989; Miller & Priesen, 1982). Zahar and Covin (1993) focused on the firm's commitment to acquiring, developing, and deploying technology. Covin and Slevin (1991) suggested firms with a higher emphasis on product innovation such as new product introduction are likely to achieve better performance. Georgellis et al. (2000) state that innovation in products and services is a key component of entrepreneurial actions the firm's desire to grow drives. They pointed out that successful innovation in a small business depends on specific competencies: (1) the capacity to innovate, and (2) the willingness to take risk. Moreover, the results of Georgellis et al. indicate that innovative firms, in terms of new products or services, are more entrepreneurial as well as more prosperous. Thus, innovation is a key characteristic of a business that ultimately will affect business performance.

Proactiveness. Proactiveness refers to anticipating and acting on future needs by seeking new opportunities that may or may not be related to the present line of operations, or the introduction of new products, or brands ahead of competitors. A firm does so by seizing initiative to shape the environment, influence trends, and create demand.

Bateman and Crant (1993) defined proactiveness as action to influence environmental change. Miller (1983) described the entrepreneurial firm as first firm to deliver proactive innovations. A proactive firm is an opportunity-seeker with a forward-looking perspective as well as a leader and not a follower because it has the will and foresight to seize new opportunities, even if it is not always the first to do so (Lumpkin & Dess, 1996). Scholars have long been emphasizing the importance of proactiveness and first mover advantages. Numerous previous studies often have found positive relationships between proactiveness and performance (e.g., Miller, 1983; Miller & Friesen, 1983; Lumpkin & Dess, 2001). Penrose (1959) argued entrepreneurial managers are important to the growth of firms because they provide the vision and imagination necessary to engage in opportunistic expansion. Taking initiative can capture unusually high profits and jump start brand recognition. A proactive firm has the ability to anticipate change or needs in the market and is usually the first to respond to market deviations (Lumpkin &Dess, 1996, 2001).

Entrepreneurial style entails a focus by a firm on radical innovation in problem solving, proactive strategic initiatives toward environmental factors, and risk taking in the face of indeterminate outcomes to achieve objectives. It can be a source of competitive advantage for firms that inculcate the practice in their organizational processes and decision-making styles (Lumpkin &Dess, 1996).

HI: Risk taking, innovative, and proactive entrepreneurial styles are positively related to S ME performance.

Demographic Managerial Characteristics

According to Minzberg's Taxonomy of Organization Forms (1979), direct supervision influences primarily an organization's entrepreneurial structure. Hambrick and Mason (1984) attribute company performance differences to management. They developed a framework referred to as an upper echelons perspective that investigated the relationship between managerial characteristics and the firm's key decisions to firm performance. They provided a foundation and stimulus for empirical research based on managerial characteristics and suggested the managerial characteristics may be potent predictors of firm performance.

In Macao S.A.R., the first university was established in 1981. In addition, approximately 80 percent of all Macao educational establishments, including universities, kindergartens, primary schools, and secondary schools are privately owned and operated. Prior to the launch of the 7-year free education program in 1995, lower income students who could not enroll in the limited number of public schools started working as teenagers and never returned to further their education. Under these circumstances, tenured managers typically have lower levels of education when compared to their younger counterparts.

It is likely that the entrepreneurial style of an individual is a result of his or her personal development. In Macao, experienced older managers tend to have lower levels of formal education, versus inexperienced younger managers. Therefore, we have chosen to investigate the managerial development characteristics of formal education, depth of managerial experience, and breadth of managerial experience across age groups.

Developmental Characteristics

Education. Sapienza and Grimm (1997) suggested higher education can provide the necessary training in mathematics, communication, and other skills in managing a business. Their analysis suggested that the higher the entrepreneur's general level of education, the more he or she will be equipped to achieve the firm's goals. In addition, the ability to process information and to discriminate between alternatives associates with higher education (Rubenson & Gupta, 1996; Entrialgo, 2002); Norburn and Birley (1988), and Inmyxai and Takahashi (2009), both reported a positive correlation between firm performance and the amount of formal education of the entrepreneur. Chan et al. (2003) suggest a positive relationship between the performance of the SMEs and the level of formal education in Macao S.A.R. Pfeifer and Borozan (2011) state that implementation of an appropriate style of learning results in desirable entrepreneurial behaviors.

H2: Management's level of formal education is positively related to S ME performance.

Previous Managerial Experience. In Macao S.A.R., before the government opened up the gaming market in 2002, there were only a few multinationals operating. Besides being the ownermanagers of small firms, Macao's populous had few opportunities to obtain proper managerial training or experience.

Chandler and Hanks (1998) suggested entrepreneurs with experience from other companies would bring new knowledge and skills to their current firm. This knowledge, human capital, is an asset that will supplement the total resources of the firm. The more experience entrepreneurs have, the better they are in creating an environment in which their businesses can thrive by establishing networks with suppliers, customers, and other relevant parties (Lin, 1998). The human capital resources of a company can substitute for a lack of financial capital (Rubenson & Gupta, 1996). Since SMEs tend to have very limited resources, Rubenson and Gupta argued the efficient allocation of resources is essential to an SME's survival. Lin (1998) suggested entrepreneurs with more experience tend to make the right decisions at the right time, create resources, and accurately interpret market trends thus leading to improve business performance.

Reuber & Fischer (1999) present a framework to depict relationships between experience and firm performance. This framework reveals that experientially-acquired skills or expertise lead to better decisions or actions, and thus better firm performance. Moreover, they grouped experience into two categories, which were depth and breadth of experience. The use of duration-based measures reflecting the depth of experience emphasizes that extensive repetition of the same task over time cultivates expertise. In constrast, diversity-based measures reflect the breadth of experience. Entrepreneurs need to perform a variety of activities, such as preparing strategic plans, capital budgeting, sales forecasting, managing change, dealing with complex business situations, etc. They also need to deal with diverse personalities, manage high-stress situations, and handle adversarial business conditions. Given the diverse nature of these tasks, the breadth of experience that the owner-managers possess can reflect his or her ability to adapt to changing environments thus enhancing firm performance (Chandler & Hanks, 1998).

Chandler and Jansen (1992) tested and showed that both depth and breadth of managerial experience were positively associated with firm performance. The impact of managerial experiences on performance is more dramatic in Macao due to Macao's historical lack of meaningful managerial opportunities. We therefore hypothesize that in Macao:

H3: The depth of managerial experience tends to enhance SME performance.

H4: The breadth of managerial experience tends to enhance SME performance.

Fundamental Characteristics

Age. A number of previous studies have examined the relationship between age, leadership style, and managerial behavior. There is evidence that both youth and seniority have advantages as well as disadvantages and correspondingly the results are conflicting regarding the relationship between age and firm performance.

Oshagbemi (2004) argued older leaders tend to be rigid, less likely to learn new ways of working, and are prone to resist change and innovation. In contrast, because of their years of experience, older managers tend to anticipate problems and respond to them calmly with confidence. Older entrepreneurs are less likely to fail because they often get better treatment from banks, have extensive experience, more business contacts, and more assets (McCarthy, 2004). These accumulated experiences potentially can improve firm performance (Bonn, Yoshikawa, & Phan, 2004).

However, their counterparts, the younger managers, tend to pursue more risky and innovative growth strategies and seem to handle new and creative ideas better than older managers (Campbell, 1987). Hambrick and Mason (1984) suggest younger managers tend to bring better cognitive resources for decision-making tasks, while older managers may have less physical and mental stamina and as such less able to grasp new ideas or learn new behaviors. In addition, older owner-managers have greater psychological commitment to the organizational status quo and may be at a point in their lives where financial and career security is more important than growth.

Norburn and Birley (1988) found younger management team growth rates tended to surpassed older management team growth rates. This is consistent with Child (1974) who found managerial youth positively related to corporate growth. Particularly in the entrepreneurial business environment, innovation, creativity, and quick responses are vital to achieve superior performance (Reuber & Fischer, 1999). Thus, younger managers' innovativeness and learning abilities are more important than older managers' experiences (Bonn Yoshikawa, & Phan, 2004). Thus, in Macao we hypothesize that:

H5: Age tends to be inversely related to SME performance.

Age, Education and Firm Performance

Education levels are important determinants of generational differences in attitudes and behavior (Mitchell, 2000). The level of education influences one's values, wants, needs, and behaviors.

Negandhi and Prasad (1971) suggest managerial education as well as the age of academic immersion impacts effectiveness. In addition, we already know that younger managers in Macao are more likely to have received up-to-date higher education, since the availability of affordable university education is a very recent. Up-to-date skill sets foster success in business environments (Bantel & Jackson, 1980). Thus, in Macao we hypothesize that:

H6: Younger managers who possess higher levels of formal education will tend to improve firm performance.

Age, Entrepreneurial Style and Firm Performance

Reilly and Brown (2002) suggested individuals in the early-to-middle years of their working careers are in the accumulation phase. They are attempting to accumulate assets to satisfy fairly immediate needs, and they are willing to make relatively high-risk investments in the hopes of making above average nominal returns over time. Under the different conditions of mental and physical status quo, younger managers tend to have more creative and innovative approaches and superior learning ability and memory (Bonn Yoshikawa, & Phan, 2004). Younger managers tend to have superior abilities in risky environments (Lumpkin & Dess, 1996). In this way, we can argue younger managers are more likely to pursue a more effective entrepreneurial style (risk taking, innovativeness, proactiveness) in their business operation.

H7: Younger managers will tend to improve firm performance via risk taking, innovative, and proactive entrepreneurial styles.

Research Method

Sample

The research data is from self-administered mail questionnaires via a random sample of 1,047 companies from the Macao Commercial Telephone Directory and the membership directory from the Associacao de Requenas e Medias Empresas de Macao (Macao SMEs Association). To improve the response rate and to test for non-response bias, a dissemination of identical questionnaires took place with the same sample.

A response rate of 24-7 percent yields 259 questionnaires out of the original sample of 1,047. A total of 245 responses were complete and usable. To avoid large firm managerial differences and their corresponding effect on the results, the study did not use firms with more than 100 employees. The final response rate was 22.2 percent yielding 232 replies per question.

The non-response bias T-tests comparing the first wave with the second wave show no significant differences among the variables. The results indicate no evidence of non-response bias in this study.

Variables and Measures

In order to test the hypothesis, the authors examined measures of entrepreneurial style, managerial characteristics, and performance to create an appropriate questionnaire. A pre-test of the questionnaire from a small sample of five SMEs in Macao ensured all directions and items are clear. All items use five-point scales.

Managerial characteristics included age, level of formal education, depth of managerial experience, and breadth of managerial experience. Entrepreneurial style measures assessed the elements of risk, innovativeness, and proactiveness. The measures were modifications of Miller (1983)'s original scale, which is a common foundation for numerous entrepreneurial studies (Yusuf, 2002). In every instance, the Cronbach's alphas exceeded the guidelines of Van de Ven and Ferry (1980). The results are in Table 1.

Most Macao SMEs are privately held firms, and owners are reluctant to release any performance-related data, such as revenue or profit. Financial statements also may be unreliable since they are unaudited. Performance measurements rely on a modification of Gupta and Govindarajan's (1984) firm performance instrument common throughout SME research (Beal, 2000; Ñaman & Slevin, 1993; Analoui & Karami, 2002; Miller & Toulouse, 1986). Respondents must indicate on a five-point Semantic Differential scale, ranging from highly satisfied to highly dissatisfied, regarding their firms' performance on growth of sales, growth of profit, net profit, and market share. Along with the satisfaction measurement, respondents also must indicate on a fivepoint Semantic Differential scale, ranging from extremely important to of little importance, to show the degree of importance for each of these performance criteria. This composite measure can provide an aggregate view of performance based on the level of the respondent's satisfaction with the firm's performance weighted by the perceived importance (Beal, 2000).

Dess and Robinson (1984) support the validity of measuring firm performance through subjective measures that claim subjective measures of performance correlate significantly with objective measures and serve as acceptable substitutes when reliable objective data is unavailable. In addition, the interpretation of small firms' financial data is difficult to access, even if we assume the financial data are accurate (Covin & Slevin, 1989). For example, a certain percentage annual growth rate for one industry may be excellent but very poor in another industry.

The VIF for the measures demonstrate there were no signs of multi-collinarity.

Results

Means, standard deviations, and inter-correlations for all variables in the study are in Table 2. Except for the depth of managerial experience, all independent variables are significantly correlated with the dependent variable - firm performance. Surprisingly, breadth of experience does not correlate with age. However, depth of managerial experience significantly and positively correlates with age. Education has a negative correlation with age. These results support our assumption that younger managers possess less experience but have higher education levels. In addition, older managers possess more experience but have lower education levels.

Tables 3 & 4 summarize the results from regression analysis. Table 3 depicts the results from HI to H5, and Table 4 shows the mediating relation between age, education, entrepreneurial style, and performance by using path A, B, and C in Figure 2. Path A tests entrepreneurial style and education, and path B and C test for firm performance as the dependent variable.

The models are significant at the p < 0.10. Sauley and Bedeian (1989) have demonstrated that, for relatively smaller samples such as the final sample in this study, a p <0.10 is satisfactory. Several previous studies also have adopted this level of significance (e.g., Covin, Slevin, & Schultz, 1994; Georgellis, Joyce, & Woods, 2000; Miller, 1983; Miller & Priesen, 1982; Sapienza & Grimm, 1997).

Besides H3, the depth of experience to performance, all hypotheses are statistically significant with positive relations between SMEs performance and entrepreneurial style (HI), level of education (H2), and breadth of experience (H4) with a p < 0.01. These significant relationships imply that companies could benefit from having a manager with stronger entrepreneurial style, higher level of formal education, and more breadth of managing experience. As mentioned earlier in the study, relatively few older owners-managers in Macao have more than a high school education. Therefore, older owner-managers will benefit from advanced education and training to enhance their entrepreneurial style and breadth of managerial experience.

In this study, we hypothesized two mediators, entrepreneurial style and education, that influence the relationship between age (independent variable) and firm performance (dependent variable). According to Baron and Kenny (1986), as in Figure 2, a mediation function must meet the three of the following conditions. First, the independent variable has a significant relationship with the presumed mediator (path A, Figure 2). Second, the mediator has a significant relationship to the dependent variable (path B). Third, when controlling for paths A and B, the previously significant relation between the independent variable and dependent variable is no longer significant with the strongest demonstration of mediation occurring when reducing the beta of path C reduces to zero. However, if the beta of path C is not zero, this indicates the operation of multiple mediating factors.

In order to test whether the hypotheses were significant, Table 3 examines the three paths (Baron & Kenny, 1986). Path A, that tested the relationship between the independent variable age and the mediators' entrepreneurial style and education, was significant. Path B examined the direct relationship between the dependent variable, firm performance and five variables, which are three components of entrepreneurial style (HI), level of education (H2), and age (H5) respectively. Path C was the main effect between firm age and performance with the mediators - entrepreneurial style and level of education added in one at a time.

The previously significant relation between age and performance became insignificant after the addition of the mediators. Moreover, the ß of age drops from -.098 to -.070 and from - .098 to -.056 after including entrepreneurial style and education respectively. Since the betas of age did not reduce to zero, these results indicated multiple mediating factors.

Discussions and Conclusion

Owner-managers who implemented superior entrepreneurial styles in his or her business have better firm performance (HI). Superior entrepreneurial style increases when the preference of risk-taking, innovativeness, and proactiveness increase. The results agree with studies from previous research, which is entrepreneurial style's positive effect on firm performance (Covin & Slevin 1988; Wiklund 1999; Sam, Tahir, &Bakar, 2012).

Although the entrepreneurial style construct has a positive relationship with SME performance in Macao, the findings show the preference of innovativeness did not independently have an impact on firm performance. Perhaps this is due to Macao's tradition of not honoring intellectual property rights. Thus, innovations have no value, and firms tend to employ a copy and paste attitude. Another possible reason for Macao's lack of innovation is the relatively small Macao market that limits the ability to recoup research and development (R&D) costs. However, the impact of risk taking and proactiveness on S ME success is significant.

Age has a negative relationship with firm performance (H5). This implies younger managers would tend to surpass their older peers. Nevertheless, the problem remains how to interpret this relationship and act upon it. Most of the SMEs in Macao are family businesses in which the mother or father is the owner and the children are subordinates. Macao's owner-managers tend to delegate more to their children - or recruit younger managers who will take more risks or be more proactive (H7), have higher education levels (H6), and tend to improve S ME performance. Unfortunately, the delegation of authority to a subordinate is unwise in Macao's business culture. In addition, from the viewpoint of a sole owner of a SME, growth of the company at the expense of risk taking and change is not always desirable.

Moreover, breadth of previous managing experience (H4) has a positive relationship with firm performance. The result is concurrent with other findings that firms benefit from having owner-managers with more experience in handling labor relations, making right decisions at the right time, creating and allocating resources, resolving disputes, accurately interpreting market trends, and establishing networks (Lin, 1998). Although the two forces - age and experience - could counterbalance one another, the findings show there was no correlation between age of owner-managers and breadth of managing experience, but only with depth of managing experience. The depth of managerial experiences' impact on firm performance (H3) was not significant. Perhaps owner-managers with tenured experience in one particular area lose the ability to adapt to new ideas or environments, and this ability is vital in the rapidly changing business environment of Macao.

Limitations and Future Studies

The study contains some limitations. Most of the literature in this study is from sources disseminating from other countries and, as such, may not depict the actual situation in Macao due to cultural, economic, and societal differences. The present study is cross-sectional, and performance is a function of past and, not current, management practices. Therefore, longitudinal studies would be a better predictor of casual relationships. The questionnaires are sent to the SMEs' owners' addresses, who typically manage their own firms. However, since these were self-administrative questionnaires, it is impossible to verify whether the information came directly from the owner-managers. Furthermore, many other moderating factors (environment, culture, organizational infrastructure, strategy, etc.) influence the impact of entrepreneurial style on firm performance. Thus, it may not be possible to generalize completely the findings from this study. Another concern is the study does not provide objective measures of performance to support the perceptual measures. It would be beneficial if future research obtains objective performance data to verify the perceptual measures.

Acknowledgments

The authors thank Helena Fong Ka Pou and Hannah Lei Ut Han for their significant assistance, contributions, and support in this research effort.

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Sidebar

Discussion Questions

1. Since the breadth of previous managing experience (H4) has a positive relationship with firm performance, while the depth of managerial experience does not, experience in one particular area may reduce, rather than foster, the ability to adapt to new ideas or environments. What implications does this finding have on managerial development, managerial cross training, and S ME survival?

2. In the managerial culture of Macau as well as in many parts of the non-Western world, the delegation of authority or even training to a subordinate is foolish. How can Western expatriate executives effectively deal with this cultural difference in order to maintain firm efficiencies?

3. In much of Asia, innovations have little value. Yet, this research firmly supports the impact of risk taking and proactiveness on SME success. So, innovative managerial attitudes do enhance firm performance. How can SMEs, as well as larger Asian firms, foster intra-firm innovation and innovative managerial attitudes in light of this negative stereotype regarding innovation?

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