Does Ownership Matter: Nexus Between Entrepreneurial Orientation, Network Capability, Financial Resources Diversity and Financial Performance of HGCs

Abstract

Background/Purpose: This paper aims to analyse the nexus between selected growth determinants and the financial performance of high-growth companies (HGCs) in relation to their ownership. In line with principal-agent theory, we try to determine if the differences exist between managers who are also (co)owners and those managers who are not (co)owners. Also, we analysed if additional equity-based compensation, through different growth determinants, could increase HGC’s financial performance.
Methods: The study was conducted on a sample of 119 HGCs from the Republic of Slovenia and was carried out in 2022. The empirical analysis was performed using regression analysis based on exploratory factor analysis (EFA). Analysis was performed using IBM SPSS Statistics 27 software.
Results: Results showed that considering the importance of organisational networking capability for HGC’s financial performance, there are statistically significant differences between owner-managers and managers, implying that ownership (and equity-based compensations) could positively shape HGC’s financial performance. In addition, results show that when analysing the owners-managers group of HGCs, risk-taking and organisational networking capability positively and statistically significantly impact HGC’s financial performance.
Conclusion: Our paper highlights the importance of organisational networking capability as a growth determinant through which equity-based manager compensations can positively influence HGCs’ financial performance. The study contributes to diverse literature related to HGCs and contributes to relevancy for the policymakers aiming at enabling better financial performance of HGCs.

Keywords: High-growth company, Entrepreneurial orientation, Network capability, Financial performance, Principal-agent theory, Equity-based compensation