Entrepreneurship posture and new venture performance in Pakistan

Abstract

This study investigates entrepreneurship posture and new-venture performance in Pakistan, by assessing the impact on the performance of newly-established ventures, of two major constructs: entrepreneurial predisposedness, including its dimensions of innovativeness, proactivity and risk taking, and entrepreneurial motivation. The research model and its pertinent hypotheses are tested through structural equation modeling, applied on the data gleaned from 408 small and medium enterprises (SMEs) upstarts. The results show that two entrepreneurial-predisposedness dimensions, i.e., proactivity and risk taking, might have a significant positive effect on new-venture performance, with innovativeness showing an insignificant positive effect. Entrepreneurial motivation also seems to have a significant positive effect on new-venture performance. Despite its limitations, the study contends that uplifting the entrepreneurial motivation and predisposedness of SMEs upstart owners, partners and managers will enhance new-venture performance in Pakistan, while also discussed are implications for future research and practice.

Keywords

Entrepreneurship posture new venture performance entrepreneurial predisposedness entrepreneurial motivation small and medium enterprises (SMEs)

Sher Zaman Khan, is a PhD candidate at School of Economics and Management, University of Science and Technology Beijing (USTB). He has been working as a Lecturer in Institute of Business Administration, Gomal University D.I.Khan, Pakistan since 2007. His papers are under review in Asia Pacific Journal of Management, Systemic Practice and Action Research and Review of International Business and strategy journals. His research interests include: Transnational Entrepreneurship, Corporate Social Responsibility, Intellectual Capital, New Venture Performance, China Pakistan Economic Corridor.

Qing Yang received the B.E., M.E. and Ph.D. degrees from Northwestern Polytechnical University (NWPU), Xi’an, China. Qing Yang is a professor in the School of Economics & Management at University of Science & Technology Beijing (USTB). He is an executive member of Project Management Research Committee of China. He previously worked as a senior project manager in an aerospace company. He also worked as a post-doctor in the School of Economics & Management at Beihang University during 2003–2005 and served as a visiting scholar in the Marcus Department of Industrial and Manufacturing Engineering at Pennsylvania State University in 2010. His research involves managing the new product development projects, entrepreneurship, product innovation, the design structure matrix, and design process modeling. He has more than 30 articles published in refereed journals such as IEEE Transactions on Engineering Management, International Journal of Project Management and so on.

Najib Ullah Khan is a PhD candidate at College of Economics and Management Science, Beijing University of Technology, China. He has obtained his master degree from Gomal University D.I.Khan Pakistan. His research interests include: Human capital, refugees entrepreneurship, Econometrics, Micro and Macroeconomics and One Belt One Road project.

Abdul Waheed is a PhD candidate at School of Economics and Management, University of Science and Technology Beijing, China. Waheed has performed the duties as lecturer marketing for two years at Mohi-Ud-Din Islamic University, AJ&K, Pakistan. He was appointed as a principal for one year at Mohi-Ud-Din Islamic Inter-College, AJ&K, Pakistan. Despite, Waheed is an honorary Director marketing & promotions in more than five educational institutes of Pakistan. His teaching and research interests include strategic marketing, promotion management, digital marketing, consumer behavior, and supply chain management.

1 Introduction

Small and medium enterprises (SMEs) have become the core target of research since the mid of nineties [1, 2] because they contribute a tremendous part in the economic development of every country [3, 4]. However, on the same time, upstart SMEs encounter resilient series of challenges include, tough competition, limited resources, financial, technological and human capital deficiencies, insufficient market knowledge and lack of grip over diverse market trends [5, 6]. Upstart ventures are suffered from higher rate of failure [7] for instance, [8] argued that survival among newly established firms in Pakistan is as serious challenge as 19 percent firms have a life lesser than five years and only four percent firms have a life greater than 25 years, which reflects the higher failure rate among upstart firms, whereas, in the line with this evidence, the frequency of failure among upstart firms is as higher as it is 67% in the first year and 85% in the first ten years of its establishment in China [9].

In manifestation of rapidly changing environment, SMEs are consciously looking for all sorts of available sources to ensure their success and survival, consistent growth and superior performance. Currently majority of entrepreneurs and researchers focus on exploring the less risky sources, where, neither they need to invest huge money nor they have to face higher probability of irrecoverable losses. Among various initiatives taken by upstart entrepreneurs, entrepreneurship posture [10] might be one of the conspicuous marks for researchers and academicians, due to its less riskiness and higher potentials toward firm’s success and survival [11, 12]. However, still very little is known about the contribution of entrepreneurial posture especially in emerging markets.

Entrepreneurship posture is a mindset that visualizes challenges as opportunities. According to [11], entrepreneurial posture is referred as a set of qualities and characteristics consists of proactiveness, creativity, innovation, risk-taking and plentiful level of motivation toward successful initiation and operation of ventures [13]. Entrepreneurial outlook is a gift, inspires managers and entrepreneurs to be the best amongst all. Entrepreneurship posture is not only a mindset to be achieved by owners, but it is equally important for firms’ employees. Hence, rational managers always prioritize the employees with higher entrepreneurship posture.

The entrepreneurship posture is an intangible asset, when it converted into observable behavior, it has become an interesting topic of measurement and analysis. Entrepreneurship posture assists firms to evolve and grow rather than to be stale and stagnant. It comprises of two essential psychological factors of an entrepreneur i.e. entrepreneurial predisposedness and entrepreneurial motivation [14]. Previous studies elucidated the involvement of entrepreneurship posture in new venture creation and start-ups intentions [15 –19]. But very few studies can be found that elaborate the importance of the similar factors in new venture performance or success [20, 21]. This article fills the gap by examining the influence of each of the dimensions of entrepreneurial predisposedness include innovativeness, risk taking and proactiveness and entrepreneurial motivation on new venture performance. Entrepreneurship posture is mainly concerned with top management psychological factors that may lead the firms toward superior performance. The upper echelon theory [22] indicates that top management personality and demographic factors have a significant influence on organization outcomes.

Entrepreneurial predisposedness: We relied on innovative, risk taking and proactive predisposition of an entrepreneur because performance, success and growth of new ventures are significantly influenced by such factors. Top manager’s disposition toward risk-taking, innovativeness and pro-activeness has a positive influence on venture’s performance [23]. Specifically, innovative, proactive and risk taking entrepreneurial predisposedness contribute an indispensable part in the success of new ventures [13, 24]. These factors work as the crucial antecedents for newly established ventures to ensure their performance and survival amongst competitors [11 , 26]. Nonetheless, upstart ventures have limited financial resources and low managerial and networking skills, so they rely on entrepreneurial orientation and strategic behavior [27] because majority of the dimensions of entrepreneurial orientation have positive significant influence on venture performance and success [28].

Entrepreneurial motivation: In entrepreneurship study, motivation is normally conceptualized as a disposition that motivates an individual (owner and manager) to face challenges in a race of achieving success and superiority. This disposition leads the firms toward transfiguration of challenges into opportunities, encouraging efforts for better performance, to face uncertainties and tolerate ambiguities, to explore new and stimulated solutions for problems, and to adopt personal obligations for the magnitudes of behaviour [21]. Entrepreneurial motivation demonstrates management motivation toward ventures performance. It is still unclear that how motivation influences SMEs’ growth and how it transpires SMEs [29]. Entrepreneurial motivation is one of the ignored areas of research since last two decades which needs further discussion [17]. However, existing researches have proved that entrepreneurial motivation is a highly significant factor of SMEs’ performance and growth [30, 31]. Meta-analysis has resulted that entrepreneurial motivation has a significant positive impact on ventures foundation and ventures success [32].

Since, this study investigates the impact on new venture performance of entrepreneurship posture (entrepreneurship predisposedness and motivation) in Pakistan. We targeted Pakistan as it is an emerging country, located on the best trade route between Europe and Asia [33] and SMEs are considered as an engine for boosting its economy. SMEs contribute a crucial part in the reduction of unemployment and poverty as this sector provides employment to 70% people of Pakistan and deliver more than 40% to Pakistan’s GDP [34]. According to the World Bank report (2009) there are more than 3.2 million registered enterprises in Pakistan, of which 93% of businesses are SMEs. To incubate SMEs and particularly for inculcating new venture creation, Government of Pakistan has established Small and Medium Enterprises Development Authority (SMEDA) in 1998. SMEDA not only works as advisory body for venture creation but also provides financial and non-financial support to SMEs so as to enhance their survival and performance.

This article contributes theoretically by adding new insights and meaningful evidences to the existing literature on entrepreneurship and new ventures’ success and performance. For instance, this research addresses theory of entrepreneurship and upper echelon theory by highlighting the influence of entrepreneurs’ characteristics and predisposedness in enhancing new venture performance through testing the model empirically. The findings of this article inculcate the practicing managers and entrepreneurs toward focusing on improving their entrepreneurial predisposedness and motivation to make ensure their firms’ superior performance and successful survival in dynamic markets.

2 Theoretical background

This article addresses two major theories; theory of entrepreneurship and upper echelon theory. However, first we provide the basic concept that can help readers to understand the phenomena. For instance, [35] argued that entrepreneurial characteristics influence new venture performance. Sandberg [36] empirically tested a model showing entrepreneurial characteristics, strategy and industry structure and their impact on new venture performance and confirmed that these factors drastically affect upstart ventures’ performance.

In this article we advocate the [37] definition of entrepreneurship, which covers both the initiation of new venture and the adoption of successful innovative strategies in existing ventures. According to [38] theory of entrepreneurship: entrepreneurship will occur under the following conditions in an organization: 1) Task related motivation (some intentions, vision or sense of social value inserted in the basic task itself that inspires the inventor to act for achievement). 2) Expertise (current know-how and strong confidence about know-how for future). 3) Expectations of personal gains (financial and non-financial benefits). 4) Friendly environment (a situation which offers comfort and facilitates the system in future endeavors or which eases discomfort from previous attempts). Entrepreneurship is a mindset that encourages innovation and competition and strive for fit, keeping the entrepreneurial posture alive despite of the firms’ size and nature of industry.

Hambrick [39] initially recognized the “upper echelon theory”. This theory demonstrates the contribution of top management demographic and psychological factors toward organization outcomes. In this article, demographic characteristics such as experience and background have minor contribution while the major apprehension of this article is with psychological factors of owners and managers. Related studies have argued that top management predisposedness has significant influence on organization performance [39 –41]. Nonetheless, both the theories elucidated the psychological aspects of entrepreneurs toward outcomes. For instance, existing literature argued that motivation and predisposedness of owners and managers lead them to struggle for success, survival and achievement of superior performance. Owners and managers of new ventures have relatively higher ambition and motivation. Hence, they are more motivated toward intangible features [26 , 43].

2.1 Entrepreneurship posture

Entrepreneurial posture corresponds to retention of entrepreneurial predisposition in productive direction. However, no common definition of entrepreneurial posture exists in entrepreneurship literature, because the expression is imprecise and has a larger capacity to be defined in different words depending on its context of application. The aspiration toward exploitation of opportunities by undertaking value-adding and wealth-creating activities emerges several predisposedness and motivation characteristics. Entrepreneurship is an approach of availing opportunities where entrepreneurs/managers feel motivated, empowered and capable of getting every single target in their hands. Entrepreneurship occurs at strategic level rather than tactic level, and leads a firm towards competitiveness over an extended period of time [12].

Nonetheless, an entrepreneur is one who initiates innovative, risky and unique ventures (hereby referred as entrepreneurial predisposedness) which are the most crucial antecedents of entrepreneurship [14, 44]. But alone entrepreneurial predisposedness characteristics are not enough to develop entrepreneurship posture in upstart SMEs’ managers [45]. In addition to entrepreneurial predisposedness, there are some motives such as passion for money, status and security (hereby referred as entrepreneurial motivation), which insist practitioners to be entrepreneurially ambitioned. This article addresses two major dimensions of entrepreneurship posture (entrepreneurial predisposedness and motivation) suggested by [14]:

2.1.1 Entrepreneurial predisposedness

Entrepreneurial predisposedness demonstrates the entrepreneurial orientation of SMEs, whose prime characteristics are to follow the main traits of innovativeness, risk taking and proactiveness [46]. In SMEs, owners and managers’ predisposedness contributes vital part and is closely associated with firms’ performance [47]. In this context, researchers explored several dimensions of entrepreneurial predisposedness for instance, need for achievement, self-efficacy, extroversion, the humility, locus of control, the capability of sacrifice and self-reliance etc. [20, 48]. However, some prominent scholars recommended that innovative, risk tanking and proactive predisposedness have tremendous contribution in successful entrepreneurship [14 , 50]. Following are the sub-dimensions of entrepreneurial predisposedness:

Innovativeness: a perceptive style where individual tends to squeeze newness and agreeable to breakdown the patterns of currently conventional alleged in order to improve problem solutions. In the context of entrepreneurship, innovativeness refers to predisposition of individuals (owners and managers) to be engaged in creativity and experiments through introduction of new products and services in latest ways (technological styles and processes) [51, 52]. Innovation keeps the firms competitive and emergent.

Risk-taking: risk taking predisposedness refers to manager’s tendency and willingness toward challenging uncertainties, to act brazenly on clutching opportunities even if there is no surety to victory [50]. Entrepreneurship posture insists managers to be connected with accepting calculated risks.

Proactiveness: an opportunity-seeking and forward-looking attitude that encompasses and observing recent tendencies, recognizing future market demand and antedating industrial modifications is termed as proactive predisposedness [52, 53]. Managers with stable entrepreneurial posture strive for learning, experiencing, applying and sharing their exposure in diversified opportunities. They accept every challenge as an opportunity.

2.1.2 Entrepreneurial motivation

Entrepreneurial motivation is the crux of firms’ successful survival. A person may have sufficient technical skills and money to start a business, but without motivation nothing happens”. [54] stated that building of entrepreneurship theory requires attention for motivation of people entrepreneurial decisions making. One of the zones in entrepreneurship study, where motivation is potentially of lavish reputation corresponds to firm growth. Some motivational factors insist an individual to be a successful entrepreneur.

In this article we focused on the major motives including love for money, desire for status and desire for security suggested by [14]. Love for money motivates an individual toward economic benefits by putting his/her every effort in enhancing firms’ performance [55]. In addition to financial motives some social motives influence individual’s efficiency in firms’ performance such as security [56]. Furthermore prestige and status significantly motivate an individual toward creation and successful operation of firms [56].

2.2 New venture performance

According to [57] performance is “the capability of an organization to produce results in predetermined dimensions in relation to a target”. Unlike [58] this article defines new ventures having age less than ten years since its creation. A venture is considered in initial stage when it is established since last three to five years, but most commonly it is considered as a new venture in the age from eight to twelve years [59].

3 Hypotheses development

In presence of limited literature on entrepreneurship posture and new venture performance, we relied on the studies conducted on related concepts in different countries and regions to completely reflect the understanding of the target issues. Meta-Analysis concluded that the dimensions of entrepreneurship posture are diligently associated with venture performance. However, all the dimensions have no similar impact on venture performance but they have varied influence on venture performance and success [24, 60]. Based on the chronicles of [22] several dimensions of entrepreneurial predisposedness have positive influence on NVP, [20 , 47] while its few dimensions have negative impact on venture growth and success. To extract prolific results, this article investigates an individual relation of each dimension of entrepreneurial predisposedness with upstart SMEs’ performance.

3.1 Innovativeness and new venture performance

The basic attribute of entrepreneur is “innovativeness”. Entrepreneur is typically creative and finds newfangled ways of product and production, adopts latest technology and explores new markets. Venture’s success is related to numerous entrepreneurial predisposedness traits amongst which innovativeness is a stronger predictor for venture success [61]. Innovativeness is vital for ventures operation either technological (product & process) or non-technological based (marketing & organizational) and should not be only limited to few departments. In reality, technology is a societal human system, with multiple causal and mutual interdependencies among its hardware, software, brain ware and support network or net components [62, 63]. Leading innovators compete effectively in markets and obtain superior corporate performance. Higher the level of innovative mindset of entrepreneurs will enjoy the higher level of profit and revenue from business. Managers with innovative mindset create distinctive and novel ideas and new approaches [53] which are the crucial factors of survival and cause positive change in performance [64]. Hence, we posit the hypothesis:

H1: Higher the level of innovative predisposedness of owners and managers, higher will be the new venture performance

3.2 Risk taking and new venture performance

Risk taking is one of the core physiognomies of an entrepreneur. An entrepreneur is someone who bears risk and enjoys the profit of his firm [51]. Unlike conservative businessmen, entrepreneurs are taking risks toward creative things for instance, product development strategies, decision making and new market entry [51, 65]. Existing literature elaborates that risk taking propensity has positive impact on new venture performance [66]. However, in contrast, some studies have documented that risk taking has a negative relation with new venture performance [49, 67] as well as a meta-analysis concluded no relation between risk taking propensity and venture success [32]. Keeping in view maximum positive results from a plethora of literature, we propose the hypothesis:

H2: Higher the level of risk – taking predisposedness of owners and managers, higher will be the new venture performance

3.3 Proactiveness and new venture performance

Owners and managers of ventures with proactive predisposedness enjoy superior and stable positions in dynamic markets unlike those who have no proactive abilities [23]. Individual employees in firms might be proactive if they desire to see their ventures successful in global and competitive environment. Proactiveness is an indispensable dimension of entrepreneurial orientation which has significant impact on venture success [68]. Manager’s disposition toward proactiveness has positive association with superior performance of ventures [50]. Pro-activeness is a prime characteristic of entrepreneurial posture and it is affianced as a strong predictor of venture’s environmental and sustainable performance [69]. Henceforth, owners and managers with proactive predisposedness deliver better results [70]. The proactiveness trait is strongly related with business creation and business success [24]. Thus, we propose hypothesis:

H3: Higher the level of proactive predisposedness of owners and managers, higher will be the new venture performance

3.4 Entrepreneurial motivation and new venture performance

As conferred earlier, entrepreneurial motivation is debated extensively in entrepreneurship research in the context of venture creation and startup intention [15 , 71]. However, majority of the studies are conducted to check the significance of entrepreneurial motivation in creation of new ventures rather than its implication in venture success and performance [20 , 31]. Without motivation, resources cannot be put in a usable form and it tends to be difficult to gain the most productive use of organizational resources. Motivation is classified as achievement motivation, growth motivation and status motivation in entrepreneurship studies [14 , 72]. Entrepreneurial motivation is an important element of small firms’ growth and contribute a significant part in firm’s success and survival [72]. Entrepreneurial motivation has positive impact on venture performance [67]. Meta-analysis has summarized that entrepreneurial motivation has positive relation with entrepreneurial performance [73]. Hence, we propose hypothesis:

H4: Higher the level of entrepreneurial motivation of owners and managers, higher will be the new venture performance

4 Methodology

4.1 Data collection and sample size

To check the influence of entrepreneurship posture on new venture performance, data were collected from owners and top managers of upstart SMEs in Pakistan through self-reported questionnaire. However, where managers were surrogated by owners, we requested them to participate in the survey [74]. By following the concept of [59], those ventures were chosen as our study sample, that started their operation since last ten years. We selected 3 big cities of Pakistan including Islamabad, Rawalpindi and Peshawar as these cities host maximum number of head offices of SMEs [5].

We distributed 300 questionnaires among upstart ventures operating in Islamabad, and Peshawar each and 400 in Rawalpindi. We received back 143 usable questionnaires from Islamabad with response rate of 47.67 percent, 121 from Peshawar with response rate of 40.33 percent and 144 from Rawalpindi with response rate of 36 percent. After distribution of 1000 questionnaires of which 437 questionnaires were received back. Few questionnaires were not properly filled and couldn’t fulfill the requirements of our article, so we excluded those questionnaires from analysis and finally 408 questionnaires were included in the analysis with average response rate of 40.8 percent.

The response rate is relatively higher due to several reasons: first we used a special reference of an officer in SMEDA, whose personal contacts with owners and managers helped us in collection of data, secondly, we used self-reported questionnaire for data collection which has higher response rate as compared to email and postal survey, email and postal survey takes longer time and show lower response rate. Thirdly, we didn’t ask owners and managers about their exact financial records, ergo they responded openly while providing their financial and non-financial positions.

4.2 Variables measurement

4.2.1 New venture performance

Measurement of SME’s performance is a challenge for researchers. In previous studies, scholars used two types of measures for venture performance: objective measurement focuses on return on investment (ROI), return on equity (ROE) and return on assets (ROA) based on financial records. Objective measurement is suitable in case of measuring the large firms’ performance because they publish financial data and keep proper financial records. Subjective measurement focuses on self-reported and survey-based measures. Ergo, it is more applicable in case of SMEs [43], because neither these firms are required to publish their financial information nor they are bound under any legal obligation to declare their results.

In this article, new venture performance is assessed with self-reported measures based on the recommendations of [42, 43] due to following reasons: financial data of new ventures are not publicly available and entrepreneurs also feel reluctant to provide financial information [75]. Self-reported measures prove higher validity and reliability in statistical analysis and self-reported measures are used extensively by researchers in determining new venture performance [24, 75]. Previous researches suggested that subjective measures provide better results as compare to financial statement and archive based data [43] in emerging markets such as China, India and Pakistan etc. [76].

We adopted the measures used by [75] to assess new venture performance: (three items were used to extract financial performance of the venture while four items were used for non-financial performance). To know about financial performance, respondents were asked to rate their venture performance relative to their competitors since last three years based on profitability and growth, while non-financial measures capture the customers, employees as well as owners/managers’ satisfaction.

4.2.2 Entrepreneurial posture

According to [10, 14], entrepreneurial posture can be measured by focusing on its major dimensions (entrepreneurial predisposedness and entrepreneurial motivation). Entrepreneurial predisposedness refers to innovative, risk taking and proactive predisposition of owners and managers. [48, 50] used several dimensions of predisposition e.g risk-taking, propensity to innovate, self-efficacy, the leadership, need for achievement proactiveness, independence etc. But to get reminiscent results and inclusive interpretations, we relied on the items used by [77] to measure entrepreneurial predisposedness (innovativeness, risk taking and pro-activeness) among owners and top managers of upstart SMEs, as these measures are already confirmed by previous studies in developing countries and found good reliability and validity [28, 68]. In this article we used six items for innovativeness, seven for risk taking and four for proactiveness. As per our study requirements, we slightly modified the items to be more suitable for the data collection purpose from owners and managers.

Entrepreneurial motivation is extensively debated in management research. In entrepreneurship research, it is linked with achievement motivation where owners and managers are motivated to achieve higher growth. In this article we measured entrepreneurial motivation uni-dimensionally and relied on items used by [21] and [67] to check achievement motivation’s impact on new venture performance. We used five items for measuring the level of entrepreneurial motivation among owners and managers of upstart SMEs. Moreover, [11] summarized the crucial antecedents of entrepreneurship as risk-taking, innovation, proactiveness and substantial motivation toward success and survival of ventures.

4.2.3 Control variables

Ventures’ age, size, and nature of industry (manufacturing, trading and services) have dissimilar influences on firms’ performance [26]. To reduce spuriousness from results of the study, it is endorsed to use firms’ age and size and the nature of industry as independent control variable towards firm performance. Commonly, these three variables have significant impact on firm performance [76], hence we controlled these three variables in our article. However, industry is a categorical variable, thus we created separate group for manufacturing, trading and services ventures to check for group difference among nature of industry. After comparing all the groups with manufacturing (test1), then with trading (test2) and finally with services (test3), we found no significance difference. Hence, we ensured that industry as a control variable has no significant influence on new venture performance and we dropped it.

Table 1 shows the profile of the firms, where 159 out of 408 (39 percent) of Owners and managers from manufacturing sector participated in the survey. Owners and managers from trading firms accounted for 182 with 44.6 percent while 67 with 16.4 percent were from firms engaged in services activities. We divided firm size into three major sections based on the number of employees. In this study, 180 with 44.1 percent of the samples were owners and managers from firms having 20 to 50 employees, followed by 122 with 29.9 percent were from firms having 51–100 employees and successively 106 with 26 percent were having 101–250 employees. 265 (65 percent) owners and managers whose firms were established since last three years, 110 (27 percent) firms were in the age between four to six years while only 33 (8 percent) firms’ age shown 7–10 years in the present study sample.

Table 1
Profile of the ventures

Description No. of firms Percentage

Industry

1. Manufacturing 159 39.0

2. Trading 182 44.6

3. Services 67 16.4

Size of firms

1. 20–50 employees 180 44.1

2. 51–100 employees 122 29.9

3. 101–250 employees 106 26.0

Age of firm

1. 3 years and less 265 65.0

2. 4–6 years 110 27.0

3. 7–10 years 33 8.0

4. Total (N) 408 100

Description	No. of firms	Percentage
Industry
1. Manufacturing	159	39.0
2. Trading	182	44.6
3. Services	67	16.4
Size of firms
1. 20–50 employees	180	44.1
2. 51–100 employees	122	29.9
3. 101–250 employees	106	26.0
Age of firm
1. 3 years and less	265	65.0
2. 4–6 years	110	27.0
3. 7–10 years	33	8.0
4. Total (N)	408	100

4.3 Statistical analysis

In this article, data were passed through several stages. We used confirmatory factor analysis (CFA) based on structural equation modeling (SEM) in AMOS 21 to test the hypotheses as suggested by [78] that the results of AMOS are more reliable than simple regression as it separates the measurement errors of the observed variables while regression analysis provides only the true association between the constructs. In addition, AMOS provides different validity and reliability tests that lead toward reliable insights.

In the first stage, we used data normality test by following skewness and kurtosis, the values for each of the study variables shown in Table 3, exposed in normal range ±1 as recommended by [79]. The Table 3 shows mean, standard deviation, correlation, average varinace extracted (EVE) and descriminants validity. All the variables have mean above 3 (minimum mean = 3.71, maximum mean = 3.90), S.D is above 0.4 (minimum S.D = 0.40, maximum S.D = 0.492).

Table 2
Factor loading for items

Item No. Description Factor loading

Innovative predisposedness

inn1 Our firm frequently tries out new ideas 0.66–0.67

inn2 Our firm is creative in its methods of operation Dropped

inn3 Our firm seeks out new ways to do things 0.76–75

inn4 Our firm’s emphasis is on developing new products 0.80–82

inn5 Our firm is spending continuously on new product development activities 0.63–64

inn6 Our firm makes Investment in developing proprietary Technologies Dropped

Risk-taking predisposedness

rt1 Relative to our competitors, our firm has higher propensity to take risks 0.71–0.71

rt2 Our firm has shown great deal of tolerance for high risk projects 0.76–0.76

rt3 In general, we are bold, having aggressive posture in order to maximize the probability of exploiting potentials when faced with uncertainty 0.71–0.71

rt4 Most people in our firm are willing to take risks 0.76–75

rt5 Our firm supports many small and experimental projects realizing that some of them will undoubtedly fail 0.74–0.75

rt6 The term “risk taker” is considered as a positive attribute for us Dropped

rt7 We encourage our managers to take calculated risks with new ideas around here 0.76–0.77

Proactive predisposedness

pa1 We typically initiate actions to which competitors then respond 0.80–0.81

pa2 In dealing with competitors, our firm has a strong tendency to be ahead of competitors in introducing novel ideas or products 0.55–0.56

pa3 Our firm is very often the first one to introduce new products/ services operating technologies, etc. 0.76–0.77

pa4 Our firm shapes the environment by introducing new products, technologies, administrative techniques than merely react Dropped

Entrepreneurial motivation

em1 To achieve a higher position for ourselves in society 0.65–0.65

em2 To add challenge to our life Dropped

em3 To improve our own abilities, 0.79–0.79

em4 To improve the quality of life for our families and ourselves 0.81–0.87

em5 Desire to have high personal earnings 0.69–0.69

New venture performance

fp1 Return on sales 0.72–0.72

fp2 Return on equity 0.87–0.87

fp3 Return on assets 0.88–0.88

fp4 Quality of products 0.84–0.84

fp5 Employees satisfaction 0.65–0.65

fp6 Employees loyalty 0.56–0.56

fp7 Customer satisfaction 0.52–0.52

Item No.	Description	Factor loading
	Innovative predisposedness
inn1	Our firm frequently tries out new ideas	0.66–0.67
inn2	Our firm is creative in its methods of operation	Dropped
inn3	Our firm seeks out new ways to do things	0.76–75
inn4	Our firm’s emphasis is on developing new products	0.80–82
inn5	Our firm is spending continuously on new product development activities	0.63–64
inn6	Our firm makes Investment in developing proprietary Technologies	Dropped
	Risk-taking predisposedness
rt1	Relative to our competitors, our firm has higher propensity to take risks	0.71–0.71
rt2	Our firm has shown great deal of tolerance for high risk projects	0.76–0.76
rt3	In general, we are bold, having aggressive posture in order to maximize the probability of exploiting potentials when faced with uncertainty	0.71–0.71
rt4	Most people in our firm are willing to take risks	0.76–75
rt5	Our firm supports many small and experimental projects realizing that some of them will undoubtedly fail	0.74–0.75
rt6	The term “risk taker” is considered as a positive attribute for us	Dropped
rt7	We encourage our managers to take calculated risks with new ideas around here	0.76–0.77
	Proactive predisposedness
pa1	We typically initiate actions to which competitors then respond	0.80–0.81
pa2	In dealing with competitors, our firm has a strong tendency to be ahead of competitors in introducing novel ideas or products	0.55–0.56
pa3	Our firm is very often the first one to introduce new products/ services operating technologies, etc.	0.76–0.77
pa4	Our firm shapes the environment by introducing new products, technologies, administrative techniques than merely react	Dropped
	Entrepreneurial motivation
em1	To achieve a higher position for ourselves in society	0.65–0.65
em2	To add challenge to our life	Dropped
em3	To improve our own abilities,	0.79–0.79
em4	To improve the quality of life for our families and ourselves	0.81–0.87
em5	Desire to have high personal earnings	0.69–0.69
	New venture performance
fp1	Return on sales	0.72–0.72
fp2	Return on equity	0.87–0.87
fp3	Return on assets	0.88–0.88
fp4	Quality of products	0.84–0.84
fp5	Employees satisfaction	0.65–0.65
fp6	Employees loyalty	0.56–0.56
fp7	Customer satisfaction	0.52–0.52

Table 3

Mean, SD, correlation, and validity

Construct	Items	Mean	SD	CR	AVE	1	2	3	4	5
1. Innovativeness	4	3.77	0.472	0.809	0.517	0.719
2. Risk taking	6	3.71	0.457	0.879	0.549	0.669	0.741
3. Proactiveness	3	3.78	0.492	0.755	0.514	0.715	0.697	0.717
4. Motivation	4	3.90	0.404	0.824	0.541	0.550	0.616	0.620	0.736
5. NVP	7	3.82	0.427	0.888	0.539	0.637	0.681	0.716	0.732	0.734
Skewness	–	–	–	–	–	0.192	0.347	0.405	0.157	0.151
Kurtosis	–	–	–	–	–	–0.156	0.430	0.464	0.403	0.348

Note: AVE = Average variance extracted, CR = Composite reliability.

4.3.1 Measurement model

Figure 1 depicts the measurement model, where all the items were encompassed to check factor loading, model fits, validity and reliability. The value for factor loading suggested to be higher than (0.70) is good [79]. Table 2 shows factor loading, majority of the items have values above (0.70) at significant level (p = 0.001) except few items that were quite close to (0.70), ergo, we did not drop those items because of their impact on the other items and model fitness. In existing studies the value closer to (0.70) has also been considered as acceptable [75]. On checking modification indices (MI), we found redundancy in few items (between fp3 and np1, and fp4 and np3), we elicited covariance and introduced free parameter to eliminate the problem of redundancy. After rectification, the results reproduced better output on follow up of MI checking. Table 4 revealed an acceptable model fit, such as chisq/df = 1.933, GFI = 0.89, AGFI = 0.86, CFI = 0.94, TLI = 0.93, NFI = 0.89, RMR = 0.16 and RMSEA = 0.057 as recommended by [79].

Fig.1

Measurement model.

Table 3 exhibted convergent validity (CV), descrminant validity (DV) and composit reliability (CR). We calculated CV by taking square of factor loading of each item’s load on latent variable and obtained average variance extracted (AVE). All the values found to be greater than (0.50) designated reliable CV, similarly, after taking square root of AVE we found DV, where all the values to be greater than (0.70) indicate good values. CR of the factors is more or less greater than (0.80) except proactivenss. Hence, we ensured the requirements of measurement models before going to test structure model [80].

4.3.2 Common method biases (CMB)

Since data collected through self-reported questionniare on the same time and from same respondents may have potential problem of CMB which can affect validity of the construct [81]. Previous studies recommended Harman’s One Factor Test for CMB. All the items of entrepreneurial predisposedness, motivation and new venture performance were entered into EFA. After running the test, no single factor found to be accounted for majority of the variance in the study variables and the first factor explains only 32.26 percent of total variance. Hence, CMB was not a problem to affect validity of the study.

However, Harman’s one factor test is criticized to check CMB. Thus, we also checked CMB to measure the influence of common latent factor in the measurement model by using AMOS. After checking the influence of common latent factor on all the constructs of the study, the results indicated significant relation among all the hypothesized measurement items and their respective constructs. Moreover, the AVE of the common latent factor items found 0.17 that is less than the substantive constructs under this research as (0.70). Thus, analyzing the results collectively and individually, we ensured that CMB problem does not exist in this study.

4.3.3 Structural model

We checked structural model to test the relation between latent variables which is shown on Fig. 2. Table 4 shows model fitness such as chisq/df, GFI value, AGFI, TLI, NFI to be in the acceptable ranges as suggested by [82] and [83] that the values above (0.90) for GFI, NFI and CFI indicate better model fit. In structural model, the values for NFI (0.89), CFI (0.94) and TLI (0.93) are in the scope of good model fitness recommended by [84] that the value of NFI, CFI and TLI greater than (0.90) indicates strong output.

Fig.2

Structural model of the study.

Table 4

Model fitness indices

Models	Chi sq	Df	Chi sq/df	GFI	AGFI	CFI	TLI	NFI	RMR	RMSEA
Measurement model	478.223	240	1.993	0.89	0.86	0.94	0.93	0.89	0.016	0.057
Structure model	538.77	312	1.727	0.89	0.86	0.94	0.93	0.89	0.017	0.049
Acceptable range*	–	–	1–3	>0.90	>0.80	>0.95^a	>0.90	>0.90	<0.09	<0.08^b

*no specified value for goodness of fit, however studies have recommended accepted range for GFI,AGFI,CFI, NFI to be close to 1 and RMR and RMSEA to be close to 0.05 [79] and [82]. The thresholds listed for accepted range on the table below suggested by [79, 82]. ^aCFI = >0.95 great; >0.90 traditional; >0.80 sometime permissible. ^bRMSEA = <0.05 good fit; 0.05–0.10 moderate; >0.10 bad.

All the criteria reveal good model fitness value except the value of AGFI (0.86) slightly lower, however, studies considered AGFI value greater than 0.85 acceptable when other criteria values are in fitness range [27, 85] suggested that AGFI value above (0.80) indicates good model fit. RMR (0.017) and RMSEA (0.049) are counted into good model fitness, where normal value to be lower than (0.08) as recommended by [82] and [83] that the lower values of RMR and RMSEA represent good model fit.

Hence, the goodness of model fit values in this article are in the line with previous studies, which strengthens the worth of research [64 , 86]. Nonetheless, based on the main criteria and previous researchers’ findings, particularly [79] and [82], the values of CFI, RMSEA, RMR, Chi sq. indicate good model fit.

Table 5 shows regression path coefficient and significance values. In the top of the table, the coefficient value = 0.101, S.E = 0.094, C.R = 1.069, p > 0.05. The hypothesis proposed for the innovative predisposedness is not supported on the basis of the significance value (p > 0.05); hence H1 of the study is not supported. Risk taking predisposedness has coefficient values = 0.151, S.E = 0.071, C.R = 2.136, p < 0.05 which indicate that risk taking predisposition has positive significant relation with new venture performance, since H2 is supported, based on p value of results. Proactive predisposedness shows the coefficient values = 0.278, S.E = 0.078, C.R = 3.568, p < 0.001, So, H3 of the study is supported based on the p value less than 0.05.

Table 5

Hypotheses testing for impact of entrepreneurship on new venture performance

Hypothesis			Estimate	S.E.	C.R.	p	Results	Decision
H1:Performance	<—	Innovativeness	0.101	0.094	1.069	0.285	Insignificant	Not supported
H2:Performance	<—	Risk-taking	0.151	0.071	2.136	0.033	Significant	Supported
H3:Performance	<—	Proactiveness	0.278	0.078	3.568	0.000	Significant	Supported
H4:Performance	<—	Motivation	0.448	0.083	5.393	0.000	Significant	Supported

The values for motivation revealed that coefficient = 0.448, S.E = 0.083, C.R = 5.393, p < 0.001 indicate that motivation has positive and significant path with new venture performance and this result supports H4. R² (0.49) indicates good variation in new venture performance by independent variables. Moving to demographic factors (control variables) where values for age of ventures and size of ventures counted as coefficient = –0.041, 0.001, S.R = 0.022, 0.020, C.R = –1.843, 0.074, p > 0.05 respectively, which indicate that the control factors have no significant path with new venture performance.

4.3.4 Robustness checks

In order to increase validity of the model and to explore more inexhaustible insights, we performed several robustness tests in the study. For instance, in continuation to group difference tests for nature of industry and common latent factor test for CMB that increase robustness of the results, we performed regression analysis in SPSS to check the influence of entrepreneurship posture on new venture performance in the presence of age and size of firms as control variables. We found a bit difference in the results but there was no significant difference between the results generated from AMOS and SPSS. For instance, AMOS indicated that the control factors i.e. age and size of firms have no significant influence on new venture performance that is quite similar to the findings of SPSS. In addition, both findings indicated that the model is significant at all.

5 Discussion

The findings of this article demonstrate that entrepreneurship posture has a significant impact on new venture performance. Existing studies elaborated that owners and managers should be innovative, risk taker and proactive toward acquiring novel info that influences venture performance [87]. This article elucidates that the owners and managers of new ventures with innovative mindset enjoy superior performance. In the line with [88], innovation is a core dimension to bring superior performance, but excessive innovation causes a big risk for ventures. Innovative owners and managers hunt latest information which make them able to generate unique alternative ways of operation, thus the novel and innovative ways enable them to be effective in the market [53] and this novelty yields positive performance for their ventures [64].

Consistent with previous studies, this article demonstrates that owners and managers with risk taking predisposedness make a significant positive change in performance of new ventures. [66] illustrated that risk-taking propensity of owners and managers is positively related to venture performance. Owners and managers with risk-taking predisposedness introduce novel and creative ideas which inculcate them to enter into new markets [51]. [89] scrutinized that higher risk-taking predisposition of owners and managers leads them toward superior firm performance. Hence, our results correlate to previous studies findings [65].

We found that proactive predisposedness makes a significant positive contribution in new venture performance. In the line with existing literature [23] owners and managers with higher proactive propensity enjoy superior venture performance as compare to less proactive owners and managers. Proactive managers accept every challenge as an opportunity. Pro-activeness is an important entrepreneurial posture and one of the most significant dimensions of entrepreneurial predisposedness, owners and managers with proactive mindset show higher venture performance [50 , 70].

Entrepreneurial motivation toward achievement leads the firms to strive and work hard for gaining competitive advantage and superior performance. Because without motivation, resources may not be put in usable manner and it deems to be challenging to expect productive use of resources without motivation. If a person has tons of technical skills, but no motivation, nothing to be expected [31]. Hence, this article’s results are parallel with previous studies [29 , 72] as well as meta-analysis results [73] where it is found that entrepreneurial motivation has significant positive influence on venture performance. Since, entrepreneurs have a desire to achieve superior performance and growth which makes them motivated [72].

Nonetheless, the findings of this study confirmed the basic chronicles of entrepreneurship and upper echelon theories, where it is argued that entrepreneurs and managers’ predisposedness and motivation can boost ventures’ involvement in productive and profitable undertakings [11, 13] since it is empirically proved that entrepreneurial predisposedness and entrepreneurial motivation reckoned to be the positive significant contributors toward new venture performance in emerging market Pakistan.

6 Contributions

There are several theoretical contributions emerged in this article. Theoretically, this study adds valuable evidences to the existing literature on entrepreneurship and new venture success and performance. This article investigates the relation between entrepreneurship posture and new venture performance. In previous research studies, entrepreneurship posture and its contribution are extensively highlighted in entrepreneurial intentions regarding start-ups and new venture creation, but very rare study can be found which explores the link between entrepreneurship posture and performance of new venture. This article highlights the significant contribution of sub dimensions of entrepreneurship posture (entrepreneurial predisposedness and entrepreneurial motivation) toward new venture performance, which may be the new insight and topic of academic knowledge and literature on entrepreneurship and new venture performance.

The results of this article support the basic concepts of entrepreneurship theory that entrepreneurship posture leads toward superior performance among newly established firms. In addition, this study supports upper echelon theory by testing the model empirically. Existing literature has reported the deficiency of empirical studies on psychological factors in the context of upper echelon theory. Moreover, we conducted this study in an emerging economy and it is empirically proved that to minimize the frequent number of failure and to ensure superior performance via gaining competitive advantage, owners and managers of upstart SMEs might focus on improving entrepreneurship posture.

The findings of this article also elaborate how entrepreneurial posture improves new venture performance, although new ventures have limited resources and face numerous challenges including low financial capital, lack of management, tough competition and lack of modern technology, which hamper their success and performance. Hence, the upstart ventures that seek success, growth and performance in competitive markets with alternative sources including intangible assets and intellectual capital to compete and enhance their performance might give prime attention to entrepreneurship posture.

Moreover, in this article we targeted the perception of owners and top managers on behalf of their upstart SMEs, which authenticates the findings of research, because in some cases managers are surrogated by their owners [74]. The entrepreneurs and managers may not only focus on strengthening their own entrepreneurship stance, but also to strive for improving the entrepreneurship posture amongst employees so that their firms can gain competitive advantage and to ensure success and survival in today’s competitive markets.

6.1 Managerial implications

The findings of this article have strong managerial implications. The practicing managers and entrepreneurs can get valuable guidelines and support from the results of this study. To overwhelm an increasing number of failures among newly established firms, this article fascinates the attention of managers and entrepreneurs from traditional ways of operation toward entrepreneurial approaches. Managers are suggested to focus on improving their entrepreneurial predisposedness to ensure their firms’ superior performance and success. Innovative, proactive and risk-taking predisposedness contribute a significant part in improving the performance of new ventures as well as entrepreneurial motivation is the crux of successful survival and superior firms’ performance. Moreover, concerned authorities including Government, NGOs and policy makers can gain assistance from results of this article in making policies and strategies regarding strengthening and facilitating the entrepreneurial culture for successful business operation in the region.

The managers are recommended to value the factor of entrepreneurship posture during selection of employees, because, the employees with stronger entrepreneurship posture (entrepreneurial predisposedness and motivation) can boost the upstart venture performance. This article scrutinized that the owners and managers of upstart ventures with stronger entrepreneurship posture perform their duties in a better way and have enabled their firms to compete their counterparts in markets. Although, in comparison with old and large firms, new ventures have not yet taken grip over enough resources as well as they have low networking with customers and suppliers, but still entrepreneurial posture helps them to struggle persistently so as to ensure growth and to enhance superior performance.

7 Limitations and future research direction

Despite having numerous pros, this article has few limitations that can be addressed in future research. This study is conducted in a developing country Pakistan, it can be extended to other emerging economies. Unlike [14] in this study we measured entrepreneurial motivation on unidimensional basis and couldn’t measure the entrepreneurial motivation’s individual dimensions’ influence on new venture performance which is offered as a prime mark for future research. Similarly, other possible variables can be checked as moderators and mediators to get productive results. This article is limited to upstart ventures having age less than ten years, it will be better if the involvement of entrepreneurial posture in old and large firms is checked. Moreover, comparative study on entrepreneurial posture between two or more countries can also be conducted in future to explore more potentials associated with success and survival of firms.

8 Conclusion

To overcome an increasing number of failures and to ensure successful operation and survival of upstarts SMEs, this article investigated the influence on new venture performance of entrepreneurship posture in an emerging economy Pakistan. Despite having limited resources and low managerial and networking skills, upstart ventures face numerous problems and challenges in this cut-throat age of competition [90]. They often seek for less risky sources hereby referred as entrepreneurial posture to gain superior performance and successful survival in the market. Nonetheless entrepreneurial posture obviously captivates a set of entrepreneurs’ quality including risk-taking, innovation, proactiveness and robust motivation intended to successful initiation and operation of new ventures [11].

By using data gleaned from 408 SMEs upstarts, having age less than ten years in an emerging economy of Pakistan; this article concluded that entrepreneurial posture contributes a substantial part in new venture performance. The sub-dimensions of entrepreneurship posture (entrepreneurial predisposedness and entrepreneurial motivation) showed positive relation with firms’ performance. Furthermore, by measuring the influence on of sub-dimensions of entrepreneurial predisposedness, this article concluded that two entrepreneurial-predisposedness dimensions, i.e., proactivity and risk taking, might have a significant positive effect on new-venture performance, with innovativeness showing an insignificant positive effect. However, entrepreneurial motivation has a significant positive impact on new venture performance.

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