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The Leadership Quarterly 21 (2010) 144–158

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The Leadership Quarterly

j o u r n a l h om e p a g e: www. e l s e v i e r . c o m / l o c a te / l e a q u a

Entrepreneurial leadership vision in nonprofit vs. for-profit organizations

Ayalla Ruvio a,⁎, Zehava Rosenblatt b, Rachel Hertz-Lazarowitz b
a
Fox School of Business, Temple University, Philadelphia, PA, USA
b
University of Haifa, Mount Carmel, Haifa 31905, Israel

a r tic l e i n f o a b s t r a c t

Keywords:
This paper explores the role that entrepreneurial leadership vision plays in the
Vision
entrepreneurial process of nonprofit and for-profit ventures. The results indicate significant
Entrepreneur
Social entrepreneurship differences in the meaning of vision articulated for each type of venture. Differences
Comparison between ventures were also found with regard to the relationship that vision has with the
ventures' strategies and performance. In the nonprofit organizations vision was associated
with a wide-range strategy as well as the ventures' performance and growth. In addition,
wide-range strategy partially mediated the relationship between the ventures' vision and its
performance and growth. In business enterprises, vision directly predicted only a
differentiation strategy, which also mediated the relationship between vision and the
ventures' performance and growth. In contrast, a wide-range strategy in these organizations
actually reduced growth. These findings contribute both to the literature on vision as well as
to the literature on entrepreneurship.
© 2009 Elsevier Inc. All rights reserved.

Vision guides entrepreneurs' long journeys to establishing new ventures (Baum & Locke, 2004; Dees, 1998; Ensley, Carland, &
Carland, 2000; Ensley, Pearson, & Pearce, 2003; Greenberger & Sexton, 1988). At the incubation stage, all the entrepreneur has is
a mental image of what the venture should look like, its place in the business world, and a roadmap for reaching the goal. Vision is
so central to the entrepreneurial process that Gupta, MacMillan, and Surie (2004) based their entrepreneurial leadership
definition around it. For them entrepreneurial leadership is “leadership that creates visionary scenarios that are used to assemble
and mobilize a supporting cast of participants who become committed by the vision to the discovery and exploitation of strategic
value creation” (p. 242). Similary, Yukl (2006) stressed the multiple roles of the desired vision as “simple and idealistic, a picture of
a desirable future” that “should appeal to the values, hopes and ideals for organizational members and other stakeholders whose
support is needed. The vision should emphasize distant ideological objectives rather than immediate tangible benefits” (p. 295).
The histories of many well-known organizations reveal a variety of visions. UNICEF's vision is, “For every child health,
education, equality, protection. ADVANCE HUMANITY.” This definition expresses a broad vision coupled with an ideological
objective (helping all children). Microsoft's vision, “to enable people and businesses throughout the world to realize their full
potential,” also expresses a wide-ranging ideal with future-oriented characteristics. The USDA Forest Service's vision is one of
“caring for land and serving people,” and Ashoka's vision is to “develop the profession of social entrepreneurship around the
world.” Both of these visions express the values, hopes and ideals of the organization with no immediate tangible bene fits. These
examples illustrate the scope and depth of vision and the important role it plays in the organization's activities.
The literature on entrepreneurial vision (EV) generally focuses on its importance for the venture's creation and growth ( Baum
& Locke, 2004; Dees, 1998; Baum, Locke, & Kirkpatrick, 1998; Ensley et al., 2000, 2003; Greenberger & Sexton, 1988; Moore,
1986; Naffziger, Hornsby, & Kuratko, 1994) and the ways in which EVs differ from those of executives (Kirkpatrick & Locke, 1996;
Kirkpatrick, Wofford, & Baum, 2002; Fable & Larwood, 1995). These studies assume (explicitly or implicitly) the existence of a
coherent construct of EV, with consistent characteristics across types of ventures that distinguish it from other types of vision
(e.g., managerial vision). Fable and Larwood (1995) provided empirical evidence for the difference between the vision of
entrepreneurs

⁎ Corresponding author. Tel.: + 972 4 8288491.

E-mail address: aruvio@gsb.haifa.ac.il (A. Ruvio).
 Author's personal copy
1048-9843/$ – see front matter © 2009 Elsevier Inc. All rights reserved.
doi:10.1016/j.leaqua.2009.10.011
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 145

and non-entrepreneurs (entrepreneurs scored higher on risk taking and proactive adoption and lower on vision formulation).
They attributed these differences to the way entrepreneurs envision their venture strategically as an extension of themselves and
their needs (Bird & Jelinek, 1988; Fable & Larwood, 1995; Hornaday, 1992; Timmons, 1994).
However, although the difference between entrepreneurs and non-entrepreneurs' vision has been established, to the best of
our knowledge, the differences between the EV of different types of entrepreneurs has not yet been tested. Thus, the main focus of
this study is on the organizational context of EV. In their model of venture initiation, Greenberger and Sexton (1988) regarded
vision as related to the underlying cause of the venture and/or the type of venture imitated. Fable and Larwood (1995) suggested
that since vision reflects the uniqueness of the organization, it may be developed and utilized in different ways in different types of
organizations (see also Cossette & Audet, 1992; Naffziger et al., 1994; Nanus, 1992). Based on these theoretical arguments, this
study will examine the differences in EV between nonprofit entrepreneurs in the educational sector and for-profit, service oriented
business entrepreneurs. The study will also test the differences in the effect of EV on the new venture's strategy and performance.
Consequently, the study will consider several questions. Are differences between EVs systematic? Do they reflect differences in the
nature of their corresponding entrepreneurial organizations? Does EV have a different effect on the new venture's strategy and
performance in different types of ventures?
In sum, the main purpose of this research is to advance the knowledge regarding cross-sector differences in EV and its role in
the process of establishing new ventures. The paper begins with a review of the extant literature, posits a series of research
hypotheses, moves to a discussion of the methodology, and concludes with an analysis of the findings and their implications for
research and management.

1. What is entrepreneurial vision?

Vision is a seminal concept in leadership literature (e.g., Avolio, Zhu, Koh, & Bhatia, 2004; Awamleh & Gardner, 1999; Baum
et al., 1998; Bennis & Nanus, 1985; Conger, 1989; Elenkov, Judge, & Wright, 2005; Groves, 2006; Strange & Mumford, 2002) and
a key component in the leadership style of all leaders — social, political or organizational. While the definition of vision varies, it
is generally an idealized goal to be achieved in the future (Conger, 1999; Conger & Kanungo, 1987; Elenkov et al., 2005;
Kirkpatrick et al., 2002) or an ideal and unique image of the future that articulates the values, purposes, and identity of its
followers (Boal & Bryson, 1988). In the organizational arena, Shamir and colleagues (1993) define vision as an ideal statement
that reflects the shared values to which the organization should aspire. Bennis and Nanus (1985) offer a more practical definition,
regarding vision as the projected mental image of the product, services, and organization that a business leader wants to achieve.
These definitions highlight the future-oriented nature of vision and its role in motivating followers toward that future.
The definitions in the entrepreneurial literature reflect the general nature of the role of vision in entrepreneurial contexts, as
well as its unique characteristics. Greenberger and Sexton (1988), for example, argue that “entrepreneurs are likely to have
some abstract image in mind about what they intend to accomplish, ” and entrepreneurs “must be able to create a similar image
in the minds of others.” (p.5). Here again, these definitions of vision are future-oriented and describe the role of vision in
motivating followers toward this future. According to Ensley et al. (2000), EV is a result of the entrepreneur's intuitive and
holistic thinking and bridges the current situation and the future state. They focus on entrepreneurs' exceptional ability to
formulate a suitable EV for their ventures. Fable and Larwood (1995) address the differences between managerial and
entrepreneurial vision. Given that at the beginning of the entrepreneurial process the entrepreneur is actually the venture itself,
he or she “may be more likely to envision the organization strategically as an extension of his/her needs ” (Fable & Larwood,
1995; no page numbers available). Some researchers argue that entrepreneurs do not have a vision or that if they do, it is not
formal or stated explicitly (Baum et al., 1998). We follow the majority of the leadership and entrepreneurial literature, which
emphasizes the existence and importance of vision in the entrepreneurial context (e.g., Cogliser & Brigham, 2004; Gupta et al.,
2004; Larwood, Falbe, Kriger, & Miesing, 1995).
This study defines EV as a future-oriented image of the new venture, intended to motivate both the entrepreneurs and their
followers (investors, future employees) toward this desirable future.

2. The content of entrepreneurial vision

The theoretical and empirical literature characterizes vision as optimistic ( Berson, Shamir, Avolio, & Popper, 2001; Devanna &
Tichy, 1990), desirable (Baum et al., 1998; Conger, 1989), challenging (Baum et al., 1998; Nanus, 1992; Sashkin, 1988), clear
(Baum et al., 1998; Nanus, 1992), brief (Baum et al., 1998), and achievable (Conger, 1989; Levin, 2000).
Larwood and colleagues conducted the first large-scale sample empirical study of vision content and attributes among
entrepreneurs in 1995. They asked corporate executives to describe their vision for their respective organizations in a single
sentence. Respondents then evaluated their own visionary statements using a 26-item list. These items reflect a positive
characterization of vision in theoretical and applied discussions, using terms such as risky, action-oriented, inspirational, focused,
and purposeful. The authors assert that “the items on the self-evaluation list were representative of many definitions and
descriptions of vision available in the literature; the study intentionally avoided focusing on or selecting any one theoretical
perspective” (Larwood et al., 1995).
Next, the authors subjected the 26-item list to an exploratory factor analysis. The respondents' ratings form seven independent
factors. The main ones are vision formulation, indicating a strategic emphasis; implementation, stressing successful
communication of the vision; and innovative realism, focusing on tactical responsiveness to both internal and external events.
The four minor
146 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158

factors are general, reflecting the ambiguous side of vision; detailed, the opposite of general; risk taking, emphasizing the risky
and non-conservative nature of vision; and profit oriented, assessing whether the vision is bottom-line oriented.
Larwood et al.'s (1995) dimensions of vision derive from the general literature of business and management. The notion of
formulation reflects the perception of vision in strategic planning research as a long-term perception that guides the
organization's planned behavior, thus formulating its specific strategy and goals. According to the new venture initiation model
(Greenberger & Sexton, 1988), EV is the first stage of the venture; later, once the venture is launched, it will be transformed into a
full-fledged strategic orientation.
Implementation, generally conveyed through communication skills, is an essential part of vision in charismatic leadership
theories (e.g., Avolio et al., 2004; Baum et al., 1998; Bennis & Nanus, 1985; Conger & Kanungo, 1987; Groves, 2006). According
to these theories, the perception of leaders as charismatic and inspirational depends on their ability to communicate their vision
to their followers (Awamleh & Gardner, 1999; Baum & Locke, 2004; Berson et al., 2001; Hunt, Boal, & Dodge, 1999; Strange &
Mumford, 2002). In relation to entrepreneurship, Baum et al. (1998) and Baum and Locke (2004) demonstrate empirically the
importance of communicating vision for the growth of a new venture.
Finally, innovativeness and risk taking are perhaps the most characteristic attributes of entrepreneurship in general (Covin &
Slevin, 1991; Kreiser, Marino, & Weaver, 2002; Lumpkin & Dess, 1996) and of EV in particular. Still, like other dimensions
delineated by Larwood et al. (1995), these two attributes are also important features of leadership in organizations. Although they
represent unique characteristics of entrepreneurship, various aspects of EV echo similar concepts in management literature.

3. Types of venture and types of vision

Gartner (1985) notes that the differences between entrepreneurs and their ventures are much greater than the differences
between entrepreneurs and non-entrepreneurs or between entrepreneurial and non-entrepreneurial firms. This insight is
reflected in the social entrepreneurship paradigm. The literature on social entrepreneurship mirrors this perception as
researchers conceptualize social entrepreneurship in a variety of contexts (Alvord, Brown, & Letts, 2004; Dees, 1998; Thompson,
Alvy, & Lees, 2000; Witt, 2007), including non-governmental not-for-profit organizations (Weerawardena & Mort, 2006), for-
profit activities within social organization that support social causes (Cook, Dodds, & Mitchell, 2003; Wallace, 1999), and
innovative actions within for-profit organizations that promote social causes (Thompson et al., 2000).
Greenberger and Sexton (1988), in their model of venture initiation, argue that EV is related to the underlying cause or type of
venture. Hence, the venture's vision statement will vary depending on the type of venture. Naffziger et al. (1994) support this
notion and believe that different entrepreneurs have unique sets of goals for their ventures, which are in fluenced by the context.
Their model of entrepreneurial motivation associates this set of goals with the venture's idea, namely its vision.
Thus, variation in EV should be a function of entrepreneurs' goals and aspirations and of the venture's organizational context.
One of the foremost distinctions that separates entrepreneurs' goals from the organizational context concerns the venture's
purpose. The distinction between nonprofit and for-profit organizations is a prime example of such a contextual difference. The
social mission is an important distinction between the two organizational types. Nonpro fit, social organizations seek to do good by
providing new services or promoting social goals for the community in which they operate (Dees, 1998). Profit for these
organizations is more a means to an end than an end in itself. On the other hand, in for-pro fit (business) organizations, the
opposite is true. For-profit organizations focus on business goals, such as making money. Even when for-profit organizations
become involved in social activities, their prime purpose is usually to make a profit.
Some researchers argue that EV reflects this profound difference between the two organizational contexts. In a study not
directly related to entrepreneurship, Larwood et al. (1995) address the issue empirically by comparing the vision of corporate
executives with those of business school deans. Cluster analysis of self-evaluation items reveals that the executives' pattern is
similar but not identical to that of the business school deans. Furthermore, an item-by-item comparison between the executives
and the deans for the 26 items noted above identifies significant differences for most items. Factor analysis yields six factors for
the deans' group, compared with seven for that of the executives. Larwood et al. (1995) conclude, “the results suggest the need to
use caution before developing any universal concept of vision” (p.758).
Studies show that vision is a primary factor that distinguishes nonpro fit social entrepreneurs from for-profit business
entrepreneurs. For example, Prabhu (1999) argues that although social entrepreneurs may display many of the characteristics and
behaviors of business entrepreneurs in the process of creating and managing their ventures, their vision and ideologies may differ.
For Prabhu (1999), core issues in the social venture and its performance are ideologies and values, which guide social
entrepreneurs' choices of mission, means, and ends; they play a smaller part in most business ventures.
Thompson et al. (2000) support this notion of vision as a major difference between social and business entrepreneurs. They claim
that although many traits and behaviors of social entrepreneurs mirror those of business entrepreneurs (e.g., leadership style, personal
qualities, ambition, and drive), the vision of social entrepreneurs holds an added value for the underprivileged sections of the
community. In light of this evidence, this study posits that the content of vision in nonprofit and for-profit sectors will have
different meanings. Given that nonprofit organizations stress ideology and social values, the study hypothesizes that their leaders
will need to use a more inspirational vision and stronger communicative tools to influence their followers. In contrast, the study
expects that for-profit entrepreneurs, whose messages typically include economic and business-like factors, will convey their
vision in practical and down-to-earth terms to convince their audience. Thus, the study expects a relationship between the
type of organization
(nonprofit vs. for-profit) and the method used to convey its mission.
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 147

H1. Nonprofit entrepreneurs will convey their EV in more inspirational and communicative terms than for-profit entrepreneurs.

H2. For-profit entrepreneurs will convey their EV in more practical terms than nonprofit entrepreneurs.

4. Consequences of entrepreneurial vision

Organizational strategy and performance are the most discussed consequences of vision in general and EV in particular (e.g.
Barling, Weber, & Kelloway, 1996; Filion, 1991; Howell & Avolio, 1993; Kirkpatrick & Locke, 1996; Larwood et al., 1995; Westley &
Mintzberg, 1989).
According to the leadership literature, charismatic leaders gain the admiration, confidence, and trust of their followers by
communicating a strong sense of vision and by their ability to transform this vision into specific missions and strategies (Gardner
& Avolio, 1998).
Scholars argue that vision is related to the venture strategy (Greenberger & Sexton, 1988; Naffziger et al., 1994; Van Slyke &
Newman, 2006). As an ideal picture of the shared values to which the organization should aspire, vision is considered a central
element of a business strategy (Ireland & Hitt, 1999; Kirkpatrick et al., 2002). Specifically, Mintzberg and Waters (1982) refer to
entrepreneurial strategy-making as the product of a clear and complete vision. Bird (1988) strengthens the concept of vision
within strategic entrepreneurship by describing it as a focus on the present with a firm picture of the future. However, most of
these studies have considered the relationship between vision and strategy from a theoretical point of view, and the empirical
studies supporting this relationship are scarce.
Entrepreneurial strategies have become one of the most dominant issues in the entrepreneurship discipline. Most of the
studies have relied on the broader strategy literature in their conceptualization and measurement. The theories developed by
Porter (1980) and Miles and Snow (1978) have been particularly influential in the study of entrepreneurial strategies. However,
although some parts of these theoretical frameworks can be employed within the context of entrepreneurial strategies,
entrepreneurial scholars agree that these established classifications (as well as others borrowed from the general strategy
literature) must be adjusted in order to fully comprehend the nature of the strategies used by new ventures (Carter, Stearns,
Reynolds, & Miller, 1994; Hitt, Ireland, Camp, & Sexton, 2001; McDougall & Robinson, 1990).
In this paper, the relationship between two types of strategies, namely, market breadth and differentiation will be explored.
These dimensions have been identified in many studies as the most characteristic types of entrepreneurial strategy (Carter et al.,
1994; McDougall & Robinson, 1990; Mullins & Cardozo, 1993). The first, market breadth, refers to the scope of organizational
activities and distinguishes between narrow (niche) and wide, multi-segmented breadth. The second, differentiation, distinguishes
between aggressive competition and differentiation and refers to the depth and frequency of operating in narrow or wide segments.
In some cases, differentiation implies a narrow focus based on exclusivity that does not mesh with a wide focus (Porter, 1980). The
entrepreneurial strategy literature generally advises new ventures to implement a narrow breadth and differentiation strategies,
because they suffer from the “liability of newness” (Stinchcombe, 1965; Tsai, MacMillan, & Low, 1991). In other words, due to the
fact that new ventures have limited resources, they need to establish themselves in a niche market first, as well as avoid direct
competition with more established organizations. Thus, we hypothesize that:

H3a. EV will be positively related with a differentiation strategy.

H3b. EV will be negatively related with a wide-ranging strategy.

A substantial amount of theoretical and empirical literature from the business strategy and entrepreneurial context supports
the importance of vision and its effects on performance, both at the individual and organizational levels (e.g. Baum et al., 1998;
Bird, 1992; Filion, 1991; Kirkpatrick & Locke, 1996; Larwood et al., 1995; Westley & Mintzberg, 1989). The most extensive work
on the vision-performance relationship in the entrepreneurial context was conducted by Baum and his colleagues in a series of
studies (Baum et al., 1998, 2001; Baum & Locke, 2004; Kirkpatrick et al., 2002; Kirkpatrick & Locke, 1996 ). Concentrating on the
communicative aspect of vision, they established a positive relationship between vision and venture growth. Thus,

H4. EV will be positively related with new venture performance.

Although it is outside the scope of our paper, the relationship between new venture strategies and performance will also be
tested, in order to complete our model. Previous research suggests that strategies emphasizing quality, service, and a narrow
market enhance the performance of new ventures, particularly in the service industry (Stearns, Carter, Reynolds, & Williams,
1995). Baum et al. (2001) find that a differentiation strategy enhances performance in their sample of for-pro fit entrepreneur-
ships. However, they are surprised by the negative relationship between a focus strategy and venture performance, a finding they
attribute to the nature of their industry (geographically concentrated craft manufacturers). In contrast, Miller and Toulouse
(1986) find that both focused and differentiated strategies affect return-on-investment for for-pro fit entrepreneurships. In a
context similar to this paper's, Van Slyke and Newman (2006) argue that a link exists between the strategies used by social
entrepreneurs and their ventures' outcomes. Since most of the entrepreneurial literature supports the implementation of narrow
breadth and differentiation strategies for new ventures (Stinchcombe, 1965; Tsai et al., 1991), we hypothesized that:
148 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158

H5a. Differentiation will affect the venture's performance positively.

H5b. A wide-ranging strategy will affect the venture's performance negatively.

5. Method

5.1. Study context

The initiative for the present study is the fundamental change in the higher education system in Israel in the 1990s. In the
past, this system has been homogeneous, elitist, and research oriented and served students primarily interested in academic
careers. Growing public demand for higher education caused a dramatic expansion of existing institutions as well as the
establishment of new ones. Unlike the old schools of higher education, the new institutions addressed a wider spectrum of the
population and stressed teaching over research. More than 150 higher education institutions were founded during this time.
These new institutions meet conventional definitions of entrepreneurship, which, in general imply, the creation of new
organizations (Gartner, 1985). Consequently, the rise of these new institutions constitutes a form of entrepreneurship in the
sphere of higher education.
The study compares the vision of a sample of Israeli entrepreneurs from various service sector businesses with that of leaders
from the field of higher education. The rationale for this sampling strategy is that education is part of the service sector in Israel,
and that stratifying the sample based on service would help to control for major industry differences.

5.2. Sample

This study focuses on the vision of entrepreneurs. Over the years, many de finitions have been used for the concepts of
entrepreneurs and entrepreneurship. The classical definition regards entrepreneurs as the founders of a new venture (e.g., Begley,
1995; Begley & Boyd, 1987; Gartner, 1989; Mair & Marti, 2006). In its simplest form an entrepreneur is an individual with an idea
for an organization who then makes this idea a reality. Thus, we can regard entrepreneurship as the creation of new organizations
(Gartner, 1985, 1989; Lee & Venkataraman, 2006).
However, expanded definitions expect entrepreneurs and their new ventures to introduce new goods or services or to open
new markets (Schumpeter, 1934; Vesper, 1980). According to the strategic planning and the entrepreneurial literature, such a
new venture (new organization) should be an independent entity, hire it own employees, must evolve over time (more than a
year), must be considered a new market entrant by its competitors, and be regarded as a new source of supply by its potential
customers (Gartner, 1989; Weick, 1978). Our sample includes individuals who meet all of these criteria.
The study includes 158 Israeli entrepreneurs who were the founders and private owners of their businesses between 1994 and
1999. The study sample does not include any form of franchising or branches of existing organizations. Two sample sets from two
different sectors are included:
1) The nonprofit sector: 78 entrepreneurs from various higher education institutions.
2) The for-profit sector: 78 entrepreneurs from various service sector businesses.

Data were collected in 1999 by questionnaires administered at the entrepreneurs' premises. Each questionnaire took
approximately one hour to complete.
Initially, the study used various data sources (higher education council publications, yellow pages, student manuals, educational
conferences, etc.), covering practically all the new educational institutions established in Israel between 1994 and 1999 to identify the
educational entrepreneurs. The researchers selected and approached 105 educational entrepreneurs. Of these, 78 completed the
questionnaire, for a response rate of 74.3%. Most non-respondents cited the questionnaire's length as their reason for failing to
complete it. In short, the non-response bias for this group should be minimal and the results obtained should apply to the
population at large. The researchers selected for-profit entrepreneurs from four main industries of the service sector: food
services, business services, communication services, and personal services. They identified these potential study candidates by
two methods: approximately half through referral by a business enterprise promotion agency and the others by a snowball
approach. A snowball sampling approach (also known as network sampling) refers to the process of identifying a few
respondents who fit the research criteria and asking them to propose others who fit the criteria as well. The proposed participants
are then interviewed and asked to point out others. This process is repeated, ideally until a saturation point is reached, that is, no
new nominations are made, or when
the researcher has the number of participants he/she needs.
Out of the 95 service entrepreneurs asked to participate in this study, 78 completed the questionnaire, for a response rate of
82.1%. Given that this was a convenience sub-sample, the researchers made an effort to establish how representative of the
general population it was. Data on for-profit entrepreneurships are scarce, so the researchers relied on the Bureau of Statistics
(2002) to generate an average number of employees in the relevant service sectors and compared that number with the average
number of employees in the sample. The means, 7.51 for the sample and 6.56 for the relevant population, are very close,
confirming the representative nature of the convenience sample.
The mean age of the nonprofit educational entrepreneurs is 47 years, compared with 39 years among for-pro fit service
entrepreneurs. This difference might be due to the fact that among the former group, some are established academicians in the
prime of their careers. Of the nonprofit entrepreneurs, 70% are males, compared with 78% of the for-profit entrepreneurs. About
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 149

half (48%) of the educational entrepreneurs have graduate degrees, compared with 21% of the business entrepreneurs. This
difference is not surprising, given that the former individuals come mostly from established universities in Israel.

5.3. Measurement

Given that the original scales were developed in English, a back-translation method was used to prepare the Hebrew version
for this study. One bilingual individual translated the questionnaire from English into Hebrew. Then, the Hebrew version of
questionnaire was translated back into English by another bilingual individual, who had not seen the original questionnaire. The
final step was a comparison of the three versions of the questionnaire and an assessment of the translation and its cultural
accuracy by the two translators and a third bilingual individual. Disagreements were resolved through a discussion to arrive at the
final Hebrew version for the study.

5.3.1. Entrepreneurial vision

EV represents an abstract image of the kind of organization the entrepreneur intends to create ( Greenberger & Sexton, 1988).
EV was measured using the survey procedure developed by the Vision Research Group ( Larwood, Kriger, & Falbe, 1993; Larwood
et al., 1995) and focused on the content of vision. The instrument asks respondents to describe their EV in a few short sentences.
Next, they were asked to analyze their statements using the list of 26 self-evaluation descriptive attributes (e.g., understood,
planned, risky, formulized, focused) on 5-point scales (1 — very little, to 5 — very much). Means and standard deviation were
then calculated for each item. In our final analysis, one item (changing) was dropped due to a low level of internal consistency.
According to Larwood and her colleagues (1993) “the items were intended as broadly representative of the most widely
circulated views of vision” (p. 218). They chose a self-evaluation procedure that follows the psychological literature on naive
analysis (Bettis, 1991; Westley & Mintzberg, 1989). This method has advantages over other ways of measuring statements about
vision (e.g., closed questionnaires) in that no constraints are forced on the responders when they write down their vision, and they
can express their thoughts openly. Furthermore, the self-evaluating procedure that follows the articulation of the vision also
intentionally avoids a predetermination of what a vision is or what it means to the responders. Ultimately, this instrument enables
us to get a sense of what vision is in the eyes of those who use the term.
Like Larwood et al. (1995), we found that vision is a multi-dimensional construct. Using factor analysis, we identified six
factors for EV (see the Results section for more details). The first and most important factor in terms of explained variance
combines two factors of Larwood et al.'s (1995) research and reflects the most common characteristic of vision — its
communicative nature. This factor expresses the manner in which vision is imparted to the venture's followers and is considered
the most important aspect of implementation. The leadership literature has frequently discussed the importance of getting
followers to support the organizational vision by communicating it in a variety of ways (Baum & Locke, 2004; Baum et al., 1998;
Conger & Kanungo, 1987; Groves, 2006; Kirkpatrick et al., 2002). This study confirms that entrepreneurs regard their EV as
having a communicative nature and as being understood, widely accepted, focused, and detailed.
The second dimension of the EV, inspirational, emphasizes the potential of the EV to lead and to innovate (Larwood et al.,
1995). This factor represents yet another very distinctive characteristic of vision as re flected in leadership theory (Awamleh &
Gardner, 1999; Baum & Locke, 2004; Berson et al., 2001; Hunt et al., 1999; Strange & Mumford, 2002). The results indicate that
this element of EV conveys a common element in entrepreneurial orientation (innovativeness, risk taking, and pro-activeness:
Covin & Slevin, 1991; Kreiser et al., 2002; Lumpkin & Dess, 1996) and the transformational form of leadership (inspirational,
product of leadership, and strategic: Avolio et al., 2004; Awamleh & Gardner, 1999; Baum & Locke, 2004; Baum et al., 1998;
Bennis & Nanus, 1985; Berson et al., 2001; Conger, 1989; Groves, 2006; Strange & Mumford, 2002). This finding may imply that
entrepreneurs are a special case of leaders, as reflected in their vision (Vecchio, 2003).
The third factor contains three items — bottom-line orientation, integrating with visions of others and direct effort. In
Larwood et al.'s (1995) study, the latter two elements indicate the realism of the vision, while the first item was singly loaded on
their last factor (profit oriented), unrelated to all other factors. Since our study combined those three items into one factor, we
labeled this factor the realistic factor, highlighting the practical aspect of vision (Greenberger & Sexton, 1988).
Each of last three factors contained only two items. The flexibility dimension of the EV articulates the strategic aspect of EV as
flexible and responsive to competition. Flexibility represents the entrepreneurs' awareness of competitors. Singh and colleagues
(1986), among others, note the “liability of newness,” that plagues young companies. The youth and the small size of these
organizations contribute to this situation. One of the ways to cope with the newness problem is to maintain flexibility and to avoid an
aggressive strategy in the form of direct encounters with competitors. The fifth factor includes the items: conservative and formulized,
the latter being a term coined by Larwood et al. They were labeled as conservative because this term expresses the formal and
representational side of the EV (Greenberger & Sexton, 1988). Finally, the last factor was labeled general. This factor is identical to
the general factor reported in Larwood et al.'s (1995) study and represents the ambiguous aspect of EV. The overall Cronbach's alpha
reliability of the scale was .84.

5.4. Consequences of vision

The consequences of EV in this study include entrepreneurial strategy and venture performance.
Entrepreneurial strategy was measured by 16 items from several sources that were adjusted in order to reflect the nature of
the strategies used by social entrepreneurs (Carter et al., 1994; McDougall & Robinson, 1990; Mullins & Cardozo, 1993 ). We
selected these 16 items based on the responses to an initial exploratory study. Our exploratory study was designed to capture the
nature of
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strategies used by social ventures. It included in-depth interviews with five social entrepreneurs in order to understand their
chosen strategies. Afterwards, we went back to the literature, and based on the knowledge gleaned from the interviews, we
composed a list of 19 items that reflected the strategies used by social entrepreneurs. Then, we went back to our interviewees and
asked for their evaluation of our adjusted scale. Once again, we adjusted the items accordingly. The final scale included 16 items
representing two aspects of new venture strategies. Eight items operationalize as a [wide market focus with a reliability of α=.70,
and eight measured differentiations. Both measures in this study achieved the reliability level of α=.70.
Venture performance was evaluated by two different measures — perceived success and growth. Perceived success represents
a subjectively personal evaluation by the entrepreneurs regarding their businesses' performance compared to the performance of
their competitors. Comparisons to competing businesses were evaluated using Chandler and Hanks' (1994) 8-item scale. The
reliability level achieved in the present study was α=.89. Like Baum et al. (1998), we tested growth as an indicator of venture
performance, as it is a key focus of entrepreneurial firms (Gartner, Bird, & Starr, 1992; Hood & Young, 1993). Growth was
measured by examining the increase in the percentage of clients per year in each of the organizations. Coming as they did from
the organizations' records, these figures serve as an objective measure of the ventures' performance.

5.4.1. Control variables

Several control variables were tested in regards to the six dimensions of EV, strategy and venture performance, including:
gender, entrepreneur's age, previous experience as an entrepreneur, previous experience as a manager, and maturity of the
venture. None of the control variables was found to be associated with EV, strategy or venture performance, with the exception of
a significant positive correlation between venture maturity and growth. However, this signi ficant relationship was expected due to
the fact that the estimation of growth is constructed relative to the venture's maturity. Similar results were reported by Fable and
Larwood (1995) in their study on vision among entrepreneurs vs. non-entrepreneurs using the same measure as in this study.
They found that neither the firm's age nor its size was a significant predictor of the vision's dimensions.

6. Results

Table 1 presents the means and standard deviation for the 26 vision items for the total sample and the educational and
business entrepreneurs' sub-samples.
As Table 1 demonstrates, both types of entrepreneurs score high in the long-term and action-oriented categories, and both
groups score low in the difficult to describe, conservative, and formulized categories. Educational entrepreneurs score high in the
category of purposeful vision, while business entrepreneurs score high in the category of well-communicated vision.

Table 1
Means ⁎ (Standard Deviation) for vision items for the total sample and the educational and business entrepreneurs' sub-samples.

Total sample ( = 156) Educational Business entrepreneurs

n entrepreneurs ( = 78) (n = 78)
n
Mean SD Mean SD Mean SD
1. Difficult to describe 1.94 1.21 1.83 1.18 2.03 1.23
2. Risky 2.91 1.29 3.06 1.20 2.76 1.37
3. Bottom-line oriented 3.49 1.40 3.71 1.30 3.27 1.47
4. Flexible 3.32 1.30 3.25 1.30 3.39 1.30
5. Changing 3.14 1.36 3.26 1.28 3.03 1.42
6. Conservative 2.10 1.25 1.84 1.05 2.32 1.37
7. Formulized 2.53 1.38 2.36 1.28 2.68 1.45
8. Describes what is taking place 3.91 1.26 4.13 1.13 3.70 1.34
9. Widely accepted 3.56 1.38 3.32 1.32 3.79 1.40
10. Well-communicated 4.03 1.14 3.99 1.09 4.07 1.19
11. Understood 4.11 1.09 4.20 0.96 4.02 1.21
12. Detailed 3.78 1.23 4.00 1.05 3.57 1.35
13. Tactical 3.39 1.29 3.61 1.16 3.17 1.38
14. Innovative 3.60 1.38 4.10 1.03 3.12 1.50
15. Product of leadership 3.43 1.46 3.84 1.35 3.06 1.47
16. Focused 4.08 1.07 4.25 0.80 3.93 1.24
17. Planned 4.04 1.09 4.29 0.84 3.80 1.24
18. General 2.78 1.39 2.90 1.40 2.68 1.39
19. Inspirational 3.58 1.35 4.21 1.09 2.99 1.31
20. Integrated with visions of others 3.15 1.42 3.47 1.39 2.85 1.40
21. Direct effort 3.84 1.21 4.18 0.93 3.54 1.35
22. Responsive to competition 3.95 1.23 3.98 1.27 3.91 1.21
23. Purposeful 4.19 1.03 4.47 0.67 3.94 1.22
24. Strategic 4.00 1.17 4.27 1.03 3.75 1.24
25. Long-term 4.49 0.93 4.75 0.51 4.26 1.15
26. Action-oriented 4.33 0.99 4.54 0.71 4.14 1.15
⁎ Highest score in boldface, lowest score in italics.
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 151

Table 2
Factor loadings ⁎ of vision items.

Communicative Inspirational Realistic Conservative Flexible General

Difficult to describe −0.03 0.00 − 0.13 0.28 0.01 0.73
Risky −0.15 0.61 0.10 0.20 −0.25 0.24
Bottom-line oriented 0.15 0.06 0.62 0.10 −0.08 0.15
Flexible 0.15 −0.14 0.13 −0.12 0.67 0.14
Conservative 0.02 0.05 − 0.02 0.85 −0.02 0.00
Formulized 0.15 −0.05 0.16 0.76 −0.03 0.07
Describes what is taking place 0.50 −0.10 0.28 −0.00 −0.30 −0.06
Widely accepted 0.40 −0.07 0.31 0.33 0.18 0.06
Well-communicated 0.72 −0.02 − 0.16 0.09 0.40 −0.09
Understood 0.73 0.00 − 0.02 0.12 0.34 0.10
Detailed 0.65 0.19 − 0.03 0.04 0.18 0.05
Tactical 0.49 0.20 0.15 −0.03 0.29 0.25
Innovative 0.21 0.65 0.10 −0.34 −0.16 0.24
Product of leadership 0.21 0.63 − 0.04 0.10 0.13 −0.05
Focused 0.69 0.14 0.28 0.23 0.01 −0.12
Planned 0.75 0.03 0.13 0.08 −0.13 0.05
General 0.05 0.06 0.29 −0.23 0.11 0.74
Inspirational 0.07 0.66 0.29 −0.27 −0.05 −0.26
Integrated with visions of others 0.02 0.08 0.69 0.09 0.26 −0.22
Direct effort 0.24 0.14 0.77 −0.06 0.06 0.14
Responsive to competition 0.12 0.32 0.39 0.31 0.51 −0.17
Purposeful 0.67 0.21 0.27 −0.04 0.02 0.04
Strategic 0.32 0.47 0.40 0.19 0.36 0.17
Long-term 0.64 0.28 0.19 −0.15 0.04 −0.12
Action-oriented 0.42 0.56 0.012 0.02 0.43 −0.05
Explained variance (%) 18.28 10.29 9.84 8.27 7.05 6.28
⁎ Highest loading in boldface.

An exploratory factor analysis with Varimax rotation was used (Hair, Anderson, Tatham, & Black, 1998) to analyze the 25
items. Given that this sample varies substantially from that of Larwood et al. (1995) – entrepreneurs rather than executives, and
Israelis rather than Americans – the exploratory procedure is more suitable than a confirmatory procedure. Table 2 presents the
results of the factor analysis. Even though the two sub-samples do not obey the five-cases-per-variable rule (Hair et al., 1998), the
researchers still explored their factor structure, taking into account the results' potential instability. Given that the results were
substantively similar to those of the unified sample, the researchers examined the results of the unified factor analysis and used its
factor structure for subsequent analyses as well.
The researchers extracted six factors with eigenvalues higher than 1 (a total explained variance of 60%): communicative, in-
spirational, realistic, conservative, flexible, and general. All items' loadings exceeded 0.40 (Hair et al., 1998).
The first factor, communicative, focuses on how vision is transferred to others, emphasizing its clarity and brevity (Baum et al.,
1998). It includes items measuring how well the entrepreneur succeeds in describing what is taking place, communicates his or
her vision, and makes subordinates accept the vision. Explained variance for this factor is over 18%, with Cronbach's alpha
reliability coefficients of .85. The second factor, inspirational, includes items such as inspirational, strategic, and action-oriented.
It highlights the entrepreneur's leadership skills in formulating an inspirational and pioneering vision. The explained variance of
this factor is over 10%, with Cronbach's alpha reliability coef ficients of .74. The third factor is realistic, with items such as bottom-
line oriented and integrated with others' visions. It stresses the usefulness of the vision in terms of its function as a roadmap to a
goal. The explained variance of this factor is nearly 10%, with Cronbach's alpha reliability coef ficients of .61. The next factor, with
explained variance of over 8%, and with Cronbach's alpha reliability coefficients of .71, is conservative. It includes two items
(conservative and formulized) and expresses the formal side of the EV. Next, the flexible factor emphasizes the role of competition
in shaping the EV. It consists of two items, flexible and responsive to competition, with an explained variance of 7% and
Cronbach's alpha reliability coefficients of .69. The last factor is general, describing the somewhat blurred aspect of the EV. It has
two items, difficult to describe and general, with an explained variance of 6% and with Cronbach's alpha reliability coef ficients of .
67. These findings reconfirm the multi-dimensional nature of vision established in previous research.
Table 3 presents the means and standard deviation of the six factors for the total sample and the educational and business
entrepreneurs' sub-samples, as well as those of the consequential constructs. It also presents t-values for differences between the
two groups.
Importantly, multiple discriminant analysis (discussed below) does not provide estimates of group differences in the
independent variables; it only provides estimates for the contribution of these variables to classi fication accuracy. Thus, the
researchers used t-tests to assess mean differences across the two groups. In general, an EV is high on the communicative
dimension and low on the conservative and general dimensions. However, the two groups differ significantly on four of the six
dimensions (except flexible and general), with the largest difference being in the inspirational dimension. The educational EV is
more communicative, inspirational, and realistic. The business EV scores higher on the conservative dimension. These results
support H1, positing that social entrepreneurs would be more communicative and inspirational in conveying their vision than
business entrepreneurs. H2, however, is not supported, as social, not business, entrepreneurs exhibit the realistic dimension,
which
152 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158

Table 3
Vision dimensions — means ⁎ (standard deviation) and t-tests for entrepreneur types.

Total sample (N= 156) Educational Business entrepreneurs

entrepreneurs (N= 78) (N= 78)

Mean SD Mean SD Mean SD t-test (p-value)

Communicative 3.98 0.77 4.13 0.63 3.83 0.86 2.35 (.02)
Inspirational 3.62 0.87 3.98 0.74 3.28 0.84 5.19 (.00)
Realistic 3.53 1.01 3.79 0.81 3.29 1.13 3.02 (.00)
Conservative 2.31 1.16 2.10 0.94 2.50 1.31 −2.05 (.04)
Flexible 3.63 0.98 3.62 0.93 3.64 1.03 −0.14 (n.s.)
General 2.30 1.06 2.28 1.07 2.31 1.05 −0.15 (n.s.)
Differentiation strategy 3.40 0.86 3.45 0.74 3.34 0.96 −0.80 (n.s.)
Wide range strategy 3.10 0.79 3.10 0.79 3.10 0.80 −0.02 (n.s.)
Venture performance 3.46 0.89 3.56 0.89 3.36 0.89 −1.09 (n.s.)
Growth 94.69 141.64 95.07 131.21 94.15 156.78 −0.03 (n.s.)
⁎ Highest score in boldface.

is close in meaning to practicality. Note that the standard variations of all four dimensions are lower for the social entrepreneurs
than for their business counterparts. These findings indicate a stronger similarity within the first group than the second group.
The researchers then used stepwise discriminant analysis to identify the vision dimensions that best differentiated educational
entrepreneurs from business entrepreneurs in one comprehensive model. Discriminant analysis has an advantage over the t-test
in that it compares the two groups in terms of group categories, thereby taking into account the interactions between the
individual variables entered. The researchers performed a stepwise discriminant analysis to select the most useful discriminating
variables. This procedure is particularly suitable in the case of an exploratory study (Klecka, 1980), such as the present study.
Table 4 shows the results of the discriminant analysis, ordered by standardized correlation size. The researchers also ran a
discriminant analysis with all variables entered. The results are substantively similar, with only minor discernible changes.
Classification accuracy improved only marginally. Therefore, only the findings from the stepwise analysis were reported.
The researchers found a significant canonical discriminant (χ² = 33.9, df = 4, p b 0.001). The function correctly classifies
76.7% of the cases into their original groups. The classification is higher for educational entrepreneurs than for the business
entrepreneurs (82% vs. 73%), but both are high, indicating excellent discrimination (Hair et al., 1998). Moreover,
classification accuracy exceeds Cpro (0.50) by a large margin. Furthermore, Press's Q (45.23) exceeds the threshold (6.63) at
p b 0.001 (1 df). Both Cpro and Press's Q suggest more accurate classifications than expected by chance or by sub-sample
sizes (Hair et al., 1998). The researchers assessed classification accuracy in two additional ways. First, they examined cross-
validated accuracy, classifying each case by the functions derived from all cases other than the one classified. For both sub-
groups (75% and 71% for education and business entrepreneurs, respectively) and as a whole (71%), cross-validated
accuracy is not discernibly less than without cross- validation, and all three exceed Cpro. Second, the researchers conducted
the analysis with a holdout sample. Specifically, they selected 75% of the sample, conducted the discriminant analysis, and
treated the remaining 25% as a holdout sample. Then, they applied the discriminant function from the analysis sample to
the holdout sample (Hair et al., 1998). The discriminant function classified 76% and 81% of educational entrepreneurs and
68% and 83% of the business entrepreneurs in the analysis and holdout samples, respectively. In total, it classified 72% and
82% of the total analysis and holdout samples, respectively. These results provide further support for the classification
power of the discriminating variables used in the original analysis.
Four of the six dimensions discriminate between educational and business entrepreneurs: inspirational, realistic,
conservative, and flexible. In line with Hair et al.'s (1998) recommendation, the researchers interpreted the discriminating
variables' loadings.

Table 4
Discriminant analysis.

Wilks' Lambda F Standardized weight

Inspirational .86 21.6⁎⁎ .75
Realistic .83 13.8⁎⁎ .56
Conservative .80 11.0⁎⁎ −.44
Flexible .77 9.6⁎⁎ −.43
Wilks' Lambda .77
Eigenvalues .30
Canonical correlation .48
Chi-square 33.9, df= 4,(.00)

Predicted Group Membership

Educational entrepreneurs 81%
Business entrepreneurs 735%
Total Predicted Group Membership 77%

Notes: p b 0.001; Cpro = 0.50; Press's Q = 45.23 N 6.63 [p b 0.01, one df].
⁎p b 0.05.
⁎⁎p b 0.01.
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 153

The loading is highest for inspirational (0.75), followed by realistic (0.56), conservative (−0.44), and flexible (−0.43). These
loadings imply that the educational entrepreneurs view their EV as more inspirational and realistic in nature than do the
business entrepreneurs. Conversely, the business entrepreneurs seem to emphasize conservatism and flexibility in their EV more
than the educational entrepreneurs do.
These results provide further partial support for H1 (educational entrepreneurs are more inspirational, but not more com-
municative) and do not support H2 (educational, not business, entrepreneurs are more realistic). The t-tests and the discriminant
analysis both show that the two groups of entrepreneurs are distinct, but different from the manner the study hypothesized.
Finally, we wanted to test the nomologic validity of the sixth dimensional construct of EV. As an initial testing, we looked at
the correlation between the six dimensions of EV and the rest of the research constructs. The results are presented in Table 5.
Next, we placed EV in a nomologic model, which was tested using multiple group comparisons with Structural Equation Modeling
(Kline, 1998) with AMOS software. Following Anderson and Gerbing's (1988) two-step approach, the measurement model and
then the structural model were tested.

6.1. Measurement model

The measurement model assessed whether all items on a given scale represent the same latent construct. Since most of the
constructs were measured with more than five items, a parceling procedure was used (Bagozzi & Heatherton, 1994).The items in
each construct were randomly parceled into three composite indicators, which were entered into the measurement model as
multiple indicators to estimate the latent constructs.
The measurement model fit the data well. While a significant χ2 (264.87; df = 162; p =.00) was expected, given the small
sample size, other fit statistics were good (normed-χ2 = 1.63; CFI= 0.98, NFI= 0.95, NNFI=.97, RMSEA= 0.06). In addition,
factor loadings ranged from 0.49 to 0.85 in support of the model's measurement properties. All these measures indicated a good
model fit with satisfactory convergent and discriminant validity, enabling the authors to proceed to the next step.

6.2. Structural model

Table 6 shows regression weights, correlations, and fit measures of the hypothesized structural model. The hypothesized model
fit the data well: all fit indexes exceeded 0.90 and RMSEA was 0.06, which is somewhat higher than the recommended level of
0.05. Notably, the total explained variance for both of the performance variables was also satisfactory in both samples.
According to H3a and H3b, vision should exhibit a positive relationship with differentiation strategy and a negative relationship
with a wide-ranging strategy. Mixed results were obtained in the two samples. While in the business sample a signi ficant positive
relationship was established between vision and differentiation (β= 0.56; p b.01), no significant relationship between vision and a
wide-ranging strategy was found. The educational sample reveals an opposite picture: the relationship between vision and
differentiation was found not to be significant, while the relationship between vision and a wide-ranging strategy was positive and
significant (β= 0.40; p b.01). Thus, hypothesis H3a was supported only in the business sample, and H3b was not supported in
either sample.
H4 posited a positive association between vision and performance. Again, mixed results were found in the two samples. In the
business sample no significant relationships were found between vision and both indicators of venture performance. In the
educational sample a significant positive association was established between vision and subjective evaluation of the venture's
performance (β= 0.38; p b.05), and between vision and venture growth (β= 0.30; p b.05). Thus, H4 was supported only in the
educational sample.
Finally, H5a and H5b focus on the relationships between the venture strategy and its performance. The differentiation–
performance relationship was only supported in the business sample regarding subjective evaluation of the venture's performance

Table 5
Pearson correlations of the study's constructs.

1. 2. 3. 4.
Business entrepreneurs
1. Vision
2. Differentiation strategy .39 ⁎⁎
3. Wide range strategy .07 −.04
4. Venture performance .19 ⁎ .35 ⁎⁎ −.01
5. Growth .05 .18 ⁎ −.30 ⁎⁎ .16

Educational entrepreneurs
1. Vision
2. Differentiation strategy −.03
3. Wide range strategy .34 ⁎⁎ −.15
4. Venture performance .35 ⁎⁎ .18 ⁎ .26 ⁎⁎
5. Growth .19 ⁎ .23 ⁎⁎ .20 ⁎ .05
⁎ Significant at p b 0.05.
⁎⁎ significant at p b 0.01.
154 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158

Table 6
Regression weights and fit measures of the structural model.

Standardized regression weight Business entrepreneurs Educational entrepreneurs

From To
Vision Differentiation strategy .56 ⁎⁎ −.05
Vision Wide range strategy .03 .40 ⁎⁎
Vision Venture performance −.21 ⁎ .38 ⁎⁎
Vision Growth −.10 .30 ⁎⁎
Differentiation strategy Venture performance .52 ⁎⁎ .07
Differentiation strategy Growth .20 ⁎ .18
Wide range strategy Venture performance −.13 .48 ⁎⁎
Wide range strategy Growth −.36 ⁎⁎ .44 ⁎⁎

Correlations
Venture performance Growth .36 ⁎⁎ .23 ⁎⁎
Explained variance Differentiation strategy 32% 0%
Wide range strategy 0% 18%
Venture performance 21% 44%
Growth 16% 23%
Fit measures χ²(df) 268.7 p = 0.00
(164)
NFI .95
NNFI .97
CFI .98
RMSEA .06
⁎ Significant at p b 0.05.
⁎⁎ Significant at p b 0.01.

(β= 0.52; p b.05). As with the wide-ranging strategy, positive and significant associations were established with both
subjective evaluation of the venture's performance (β= 0.48; p b.05) and with growth (β= 0.44; p b.05) in the educational
sample. Also, a significant negative relationship between wide-ranging strategy and growth were found in the business
sample. Thus, H5a and H5b were only supported in the business sample with regard to subjective evaluation of the venture's
performance. H6 was fully supported in the educational sample only.
Finally, in order to determine whether the differences in the relationships between the constructs across samples are
significant, the hypothesized model was compared to a constrained model (Kline, 1998). In the constrained model the
relationships between the constructs was constrained to be equal across samples. Then, the chi-square values of the two models
were compared (unconstrained vs. constrained). The constrained model yielded χ² = 289.58 (df = 173), normed-χ2 =
1.67, NFI= 0.95, NNFI= 0.97, CFI= 0.98, and RMSEA= 0.07. The χ² difference between this model and the unconstrained
structure model was significant [Δχ² = 20.8; 9 df] at the level of p b 0.05, supporting acceptance of the unconstrained model in
favor of the constrained model and indicating significant differences between the two samples.

7. Discussion and future research

Vision guides entrepreneurs' behaviors in the long journey of establishing a new venture. This study explores whether there
are different visions for different types of ventures. The study also looks at the differences in the effects of these variations in
visions on the new ventures' strategies and performance. In particular, this study examines the nature of EV in two groups of
entrepreneurs, nonprofit educational institutions and for-profit service organizations. As a starting point, Larwood and
colleagues' self-evaluation instrument of vision (Larwood et al., 1993, 1995) was used to identify six dimensions of EV:
communicative, in- spirational, realistic, conservative, flexible, and general. Like the dimensions developed by Larwood et al.
(1995) and by Fable and Larwood (1995), the dimensions advanced here are well accepted in the leadership, management, and
entrepreneurial literature. The findings of this study hold theoretical and practical implications.

7.1. Theoretical implications

First, this study confirms the findings of Larwood and her associates (1995) that the most significant aspects of EV are
communication and inspiration, reflecting formulation, innovation, and risk taking. These findings also corroborated other
studies suggesting that vision is a comprehensive construct that plays multiple roles in the venture creation process (Baum et al.,
1998; Larwood et al., 1995; Lichtenstein, Dooley, & Lumpkin, 2006; Strange & Mumford, 2002 ). The findings also partially
support the study's hypotheses and indicate significant differences between the entrepreneurial leadership vision of educational
and business entrepreneurs. The most discriminating factors are inspiration, realism, conservatism, and flexibility. The EV of the
educational entrepreneurs is more inspirational and realistic, and that of the business entrepreneurs is more conservative and
flexible. T-tests also show that educational entrepreneurs are more communicative, but this trait is not a significant
discriminator.
These findings present a unique image of EV in each group. For nonpro fit entrepreneurs, the finding related to their
inspirational character is consistent with their image as more social and ideal-driven. As noted earlier, the emergence of new
 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158 155

higher education institutions in Israel in the 1990s was a response to the growing demand for higher education among the lower
echelons of Israeli society. Educational entrepreneurs, therefore, focused on advancing an important social agenda. This unique
mission naturally went along with inspiration, an attribute also characteristic of transformational leaders. Given that these
leaders function with few resources and in a highly-regulated environment, they have realistic expectations.
The flexibility of for-profit entrepreneurs may come from the nature of their environment. In education, the environment is
generally stable and slow-changing in terms of market demands and student supply, sources of support, and government
regulation. In the business world, on the other hand, these factors change faster, requiring rapid responses and increased
flexibility in the face of environmental changes. Also, the flexibility factor has content reflective of the entrepreneurial orientation
of pro- activeness (Covin & Slevin, 1991) and competitive aggressiveness (Lumpkin & Dess, 1996). These dimensions are often
characteristic of new business ventures.
According to the study, the for-profit entrepreneurs are more conservative than the nonprofit entrepreneurs. Perhaps the
nature of the educational reform as a niche reform in which the new educational organizations were competing against multiple
rivals may explain the less conservative, more competitive stance of the educational entrepreneurs and their willingness to take
risks. However, in both sectors the mean score of conservatism is lower than all other scores in EV dimensions.
Finally, the lower standard variations for social entrepreneurs across the variables distinguishing them from their business
counterparts indicate a stronger cohesion of the social group in regard to their EV. Drawing from the notion of “strong culture”
(Cameron & Freeman, 1991), where organizational members generally share common cultural values, it is possible that here, too,
educational entrepreneurs share their visionary values to a greater degree than the level of value sharing among business
entrepreneurs. Future studies should explore this notion of EV intensity or strength more rigorously.
More importantly, the differences in the meaning of the factors of EV in the two groups support mounting evidence about the
situational nature of vision (Berson et al., 2001; Fable & Larwood, 1995; Kirkpatrick et al., 2002; Sosik & Dinger, 2007; Strange &
Mumford, 2002). These findings advance our knowledge regarding cross-cultural aspects of leadership theory as well as
entrepreneurial theory. Numerous studies in the area of leadership suggest that vision varies across different types of
organizations as well as different types of leaders and is not a uni fied phenomenon. Fable and Larwood (1995), for example,
substantiated differences in the EV of entrepreneurs vs. non-entrepreneurs. Cogliser and Brigham (2004) discussed the
differences and the overlaps between the visions of leaders and entrepreneurs. Bharat and Filiz (2008) pointed out the differences
in vision between founder and non-founder CEOs. Berson et al. (2001) found that different types of leaders convey different types
of vision. These findings were validated later in a study by Sosik and Dinger (2007), who found that charismatic leaders express
inspirational vision themes, whereas contingent reward leaders tend to have more instrumental vision themes. Additional
research is needed to identify the relationships between various facets of vision and different types of ventures or/and leaders. In
general, the findings of this study imply that different people will emerge as leaders, and caution us about global applications of
leadership theory.
Regarding entrepreneurship research, these findings provide empirical evidence for what to date have generally been
theoretical arguments, that the differences between types of entrepreneurs can be as meaningful and signi ficant as the differences
between entrepreneurs and non-entrepreneurs (Gartner, 1985). More research is needed in order to fully understand those
differences in regard to the nature of EV.
Another theoretical contribution of this study is the substantiation it offers about the relationships between EV and the
ventures' strategies and performance. We included two different measures of performance, both the entrepreneur's self-
evaluation of his or her venture's success as well as an objective measurement of the venture's growth demonstrated by the
increase in the number of clients. Here, again, differences were found between the two types of ventures. In the for-pro fit sample
EV was positively related to a differentiation strategy, which serves as a full mediator between vision and subjective evaluation of
the venture's performance. These relationships represent the traditional view of entrepreneurial strategy. Most of the literature on
entrepreneurial strategy suggests that entrepreneurs should choose a differentiation strategy for their venture in order to avoid
direct competition with larger, better established companies (Stinchcombe, 1965; Tsai et al., 1991). This strategy enables them to
gain enough time to accumulate resources and overcome the “liabilities of newness” that characterize new ventures.
The educational nonprofit entrepreneurs translated their vision into a wide-ranging strategy, which was also found to be
positively and significantly associated with the two outcome variables. However, unlike the for-pro fit entrepreneurs, for the
nonprofit entrepreneurs, vision was found to be directly associated with both the venture's growth and the subjective evaluation of
success. These findings raise several theoretical issues. First, these findings suggest that the entrepreneurial vision plays a more
significant role in the entrepreneurial process in nonprofit ventures than in for-profit ventures. Thus, not only does the meaning of
vision vary across venture types, but so does the emphasis given to it. Nonpro fit entrepreneurs aspire to communicate their vision
to as wide a range of individuals as possible. Success to them is directly connected to the number of people affected by their
vision. In addition, these findings challenge the traditional perception about the recommended strategy for new ventures, and
might suggest that different types of ventures require different types of strategies.

7.2. Practical implications

This study has several practical implications, generally concerning the training of entrepreneurs. In most cases, entrepreneurs
receive very formal and very task-oriented training (e.g. writing a business plan). However, the findings of this study suggest that
entrepreneurs' actions are affected by their vision. Furthermore, Bharat and Filiz (2008) stressed that “when evaluating the initial
decision to invest in a start-up, VCs (authors: venture creators) tend to give significant weight to their assessment of the
156 A. Ruvio et al. / The Leadership Quarterly 21 (2010) 144–158

capabilities, career experiences, and track record of the founder CEO and their ability to provide leadership, strategic direction,
and vision to the company as the firm evolves from a start-up to a public company” (p. 28). Downing (2005) suggested that “for
many entrepreneurs there is a fine line between the status of misfit and visionary, ‘failure’ and ‘success’” (p. 199). Nevertheless,
although it is apparent that EV is critical for acquiring resources for the new venture and securing its success, formal training do
not takes this effect into consideration. The majority of business programs do not teach entrepreneurs to be aware of the power
and significance of their vision, to polish it so it will be clear, communicative and “worthy of persistence” (Pinchot, 1994).
The findings also have implications for the uniformity of most training programs for entrepreneurs. The study's results
indicate that different types of entrepreneurs have different perceptions of their venture and act accordingly. However, most
training programs for entrepreneurs do not consider these differences.

7.3. Study limitations

The study suffers from a number of limitations, and the researchers urge caution in interpreting the findings. The first issue
concerns the generalizability of the findings. Given that a large majority of the educational entrepreneur population completed the
questionnaires, the results based on this sub-sample can be safely generalized. However, with regard to the business entrepreneurs,
the study utilizes a convenience sample. Although the sample closely matches the relevant population, additional studies using a
random sampling of the population will increase our confidence in the findings reported here. In addition, a plausible explanation
for the findings might be that the vision content of educational institutions differs from that of general service firms (without
regard to profit/nonprofit status). Future studies should use a representative sample of all nonprofit organizations.
Second, several of the items on the vision scale (widely accepted; responsive to competition, strategic, and action-oriented)
have cross-loadings higher than optimal. A similar pattern was also reported by Larwood and her colleagues (1995). Though
cross- loadings are undesirable, the overall structure of the scale is satisfactory. However further validation of Larwood et al.'s
(1995) scale is needed, particularly in the entrepreneurship sphere.
Third, the fact that this study was conducted within the context of Israeli entrepreneurships raises a question about the extent
to which the findings would hold in other countries. Future studies need to address the question of whether cultural differences
account for EV structures and their effect on new venture strategies and performance.
Fourth, the study uses a single informant on a self-evaluation measure in each organization. This method re flects respondents'
bias and does not permit confirmation of events each informant reports even though the informants will probably play a key role
in each new venture. However, future research should examine the structure this study identifies using multiple informants.
Fifth, the nomologic model tested only the concept of entrepreneurial strategy along with EV as a predictor of venture
performance. Future studies should test other relevant constructs (e.g. environmental factors) as predictors of venture
performance in order to determine the relative importance of EV to the venture's success.
Finally, the researchers believe that this study contributes to the understanding of the nature and context of entrepreneurial
vision. Hopefully it will trigger more research in the directions outlined above.

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