Dr. Marc J. Dollinger is assistant professor of management at the College of Business and Economics at the University of Kentucky, USA, and currently is co-ordinator of the Small Business Institute. This paper discusses the problems of measuring effectiveness in entrepreneurial organisations and tests the validity of an effectiveness scale. A sample of 82 owner/operators completed a scale for organisational effectiveness and submitted financial data. The effectiveness scale was subjected to tests for internal reliability and concurrent and predictive validity. The results indicate that the effectiveness measure appears valid and reliable for the retailers in the sample but fails the test of concurrent validity for the manufacturers. Financial performance was inversely related to effectiveness for manufacturers. This suggests that no single measure of effectiveness is appropriate for all entrepreneurial firms.
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