A Comparison of Methods and Sources for Obtaining Estimates of New Venture Performance

This review evaluates different methods of measuring firm performance and highlights the cost, time and accuracy of various data collection methods. Data were gathered from 66 manufacturing firms in Massachusetts that had formed within the 4-6 years prior to the research and were listed in the 1987 edition of the Massachusetts Directory of Manufacturers. In order to collect data from these firms, they were either sent a mail survey or contacted for a telephone interview. Generally, responses provided were from the owner/manager. In addition, performance information was obtained from an archival source, the Massachusetts Directory of Manufacturers, and from competitors. The performance information captured in this study included annual sales, number of employees, return on sales, growth in sales, and growth in employees. In reviewing the results, there was a high and significant correlation for the annual sales information obtained from the archival source and the direct questioning by mail or phone. Most of these firm owner/managers preferred to be contacted by phone. This method also yielded a higher response rate and took less time to complete. The focus of this research is not to prescribe what method is best, but rather, it is to discuss the advantages and disadvantages of these methods. (SRD)