The basic purpose of entrepreneurship theory and research is the improvement of new venture performance. However, after numerous studies spanning more than 40 years, there is still no consensus regarding the best measure(s) of new venture performance. Consequently researchers have not adopted, or used in practice, a common set of variables to represent the performance construct. The validity of research studies that use arbitrary dependent measures to represent new venture performance is highly questionable, making extension from one study to the next dubious at best.
Robinson’s 1995 research demonstrated that “return to shareholders” provided the greatest power in new venture performance research. However, since market values are generally not available for private companies, this finding is limited in its applicability for entrepreneurship researchers. This research develops two new composite measures (one annual and one three-year) that do not include market data, but that do explain a significant percentage of the variation in total return to shareholders.
Carton, Robert B. and Hofer, Charles W.
"MEASURING SHAREHOLDER WEALTH CREATION WITHOUT MARKET DATA: THE DEVELOPMENT OF ANNUAL AND THREE-YEAR COMPOSITE MEASURES (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 26
, Article 4.
Available at: http://digitalknowledge.babson.edu/fer/vol26/iss26/4