Determinants of Small Firm Performance: the Importance of Selected Managerial Personality Traits, Perceived Environmental Uncertainty, Scanning Activities, and Managerial Goal Setting Activities

Much of the previous research on organizational performance deals with the larger businesses. As such, the owner/managers of small firms and researchers interested in small businesses have had to work with planning models which were not formulated with small businesses in mind. Therefore, the general purpose of this study is to help correct this deficiency and add to the body of knowledge concerning the contributions specific factors make toward increasing the performance of small firms. Specifically, selected managerial personality traits, managerial perceived environmental uncertainty, managerial scanning habits, and managerial goal setting activities are utilized to develop three models. The three models are used to determine the relationship the factors have to each other and the contribution the variables make toward the performance of the firm. The firms included in this study are located in a South Central metropolitan area. The firms have between 2 and 100 employees, sales of less than 3 million dollars, and have been in operation 2 years or longer. This study utilizes regression analysis and path analysis to determine the effects the factors have on each other and their contribution to the firm's performance. The Statistical Package for the Social Sciences (SPSSx) is utilized to run the regression analysis. An Analysis of Linear Structural Relationships by the Method of Maximum Likelihood (LISREL) is utilized for the path analysis. Using path analysis, the third model demonstrates a total coefficient of determination for structural equations of 0.09. However, only two of the four factors have a t value of 2.0 or greater. The study also indicates the personality trait of dogmatism is inversely related to managerial scanning -.349 p <.01. Perceived environmental uncertainty is negatively correlated to performance at -.215 p <.05. None of the remaining factors demonstrated significant relationship to the firm's performance