48 Organizacija, V olume 58 Issue 1, February 2025 Research Papers 1 Received: 20th July 2024; Accepted: 25th September 2024 Does Ownership Matter: Nexus Between Entrepreneurial Orientation, Network Capability, Financial Resources Diversity and Financial Performance of HGCs Blaž FREŠER, Polona TOMINC University of Maribor, Faculty of Economics and Business, Department (Institute) for Quantitative Research Methods, Maribor, Slovenia, blaz.freser1@um.si, polona.tominc@um.si Background/Purpose: This paper aims to analyse the nexus between selected growth determinants and the finan- cial 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 finan- cial 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, Princi- pal-agent theory, Equity-based compensation DOI: 10.2478/orga-2025-0004 1 Introduction HGC research is a heterogeneous and vastly diverse research area to which researchers and government poli- cymakers have paid particular attention in recent years, as HGCs can contribute to prosperous future development. Based on Penrose’s (1959) theory of the firm’s growth, a company’s growth is not inherent and can be constrained (Chen et al., 2019). Penrose (1959) understands growth as a process resulting from a knowledge-based team that 49 Organizacija, V olume 58 Issue 1, February 2025 Research Papers learned how to identify and manage opportunities enabling growth. Due to this, the theory of the firm’s growth has strongly marked the development of later theories, espe- cially the resource-based theory (RBT) (Lau & Michie, 2024). RBT considers the company a set of heterogeneous, valuable, rare and immobile production resources that the competition cannot wholly emulate (Barney, 1991), thus forming a competitive advantage for the company. Addi- tionally, possessing adequate and superior production re- sources will enable them to distinguish themselves from others through efficient and innovative applications of re- sources that will allow economic value creation (Barney et al., 2021), leading to higher financial performance. These resources can also cover social components and other tacit knowledge and could be directly related to our research model determinants – entrepreneurial orientation, network capability, and financial resources obtained. Companies seeking and trying to achieve growth must thus manage several growth determinants affecting their business and financial performance. The research model defined by en- trepreneurial orientation (focus on risk-taking and innova- tiveness with proactiveness), organisational networking capability, external financial resources diversity and finan- cial performance was developed to analyse some of these determinants. Further based on the principal-agent theory and possible differences between owners and managers, already pointed out by Smith (1776), the article aims to answer the main research question: “Do owner-manag- ers and managers have different perspectives regarding selected HGCs growth determinants?” to determine if ownership (owner-manager vs. manager) of HGC could cause different levels of impacts between selected growth determinants and financial performance of HGC. With this, we want to contribute to previous findings suggest- ing that company performance is positively related to the percentage of equity held by managers (Bouras & Gallali, 2017), by determining for which growth determinants, eq- uity-based manager compensation or ownership, can have a positive influence on HGC’s financial performance. Pre- vious studies on this topic are rare and subjected to hetero- geneity, and our paper tries to fill this gap. Results show that when analysing owners-managers group of HGCs, risk-taking as one of the critical entrepre- neurial orientation determinants (Wach et al., 2023; Correa et. al., 2022; Putninš & Sauka, 2020) and organisational networking capability defended by Mu & Di Benedetto (2012), have a positive and statistically significant impact on HGCs financial performance. Compared to the own- er-manager’s group of HGCs, only risk-taking was found to have a statistically significant effect on financial perfor - mance in the manager’s group of HGCs. Results also indi- cate that when considering the importance of organisation- al networking capability for HGC’s financial performance, there are statistically significant differences between own- er-managers and managers. Our paper complements rare previous research, supporting Mosleh Shirazi et al. (2013) findings. The topic of differences between owner-managers and managers in relation to growth determinants and financial performance is in the high interests of policymakers and HGCs decision makers; as shown by Haubrich (1994), correct incentives for managers can significantly enhance a company’s performance. The paper aims to verify previ- ous theories and extend previous findings by focusing on selected growth determinants. With this, it contributes to and fills the research gap by determining for which growth determinants, equity-based manager compensation, can positively influence HGC’s financial performance. In the best case, research on this topic is rare or non-existent at the moment. Our paper highlights the importance of or- ganisational networking capability as a growth determi- nant through which equity-based manager compensations can positively influence HGCs’ financial performance. The paper also has practical importance to HGC decision-mak- ers seeking to achieve and sustain financial performance and their competitive advantage that enables growth in challenging high-growth environments, focusing on the growth determinants highlighted in the research. 2 Theoretical background 2.1 High-growth companies and growth determinants The beginnings of studying company growth in entre- preneurial theory date back to the 1950s when Edith Pen- rose (1959) published the theory of the firm’s growth, con- tributing to Birch’s findings on the economic significance of small HGCs (Landström, 2010). HGC research is now a vastly diverse research field covering entrepreneurial be- haviour, companies’ main characteristics and impacts on economic development, growth and employment. HGCs are defined as a tiny proportion of all companies achiev- ing high growth in the selected period. Despite numerous findings regarding the importance of HGCs for economic development and employment (Bisztray et al., 2023; Coad et al., 2022; Laur & Mignon, 2021; Santoleri, 2021), a gen- erally accepted definition of them does not exist, as was shown thru Rocha & Ferreira (2022) bibliometric analy- sis. Differences arise as growth is a complex phenomenon, which is not inherently present as it’s subject to different constraints (Chen et al., 2019). HGCs seeking to sustain growth and contribute to economic development must thus manage numerous factors that influence their growth and financial performance. One of these factors is the entre- preneurial orientation – involving at least innovativeness, risk-taking and proactivity (Miller, 1983), later completed with competitive aggressiveness and autonomy (Lumpkin & Dess, 1996) – which becomes the driving force of or- 50 Organizacija, V olume 58 Issue 1, February 2025 Research Papers ganisational tendencies to fulfil entrepreneurial activities, and thus one of the fundamental aspects of the study of entrepreneurship (Covin & Wales, 2012). Likewise, entre- preneurial orientation is also one of the critical determi- nants for the emergence and existence of HGCs (Sheppard, 2023; Sorama & Joensuu-Salo, 2023; Chaston & Sadler- Smith, 2012), as it originates from the assumption that en- trepreneurial orientation is formed as a factor (variable or group of variables) based on which companies can be dis- tinguished, based on their level of entrepreneurial orienta- tion capacity, on more or less successful (Coivn & Wales, 2012: 677). Entrepreneurial orientation is one of the lead- ing indicators of the company’s ability to operate in an en- trepreneurial way, as it is one of the critical dimensions of a company’s entrepreneurial capacity (Alvarez-Torres et al., 2019). Thus, it can be one of the main determinants enabling high growth and fostering their financial perfor- mance. The next one is organisational networking capability, which is the ability of a company to leverage its existing linkages (both strong and weak) and establish new con- nections (both strong and weak) with external entities to achieve resource (re)configuration and strategic compet- itive advantage (Mu & Di Benedetto, 2012), supporting their high-growth aspirations. If HGCs want to achieve and sustain high growth, financial resources and their ad- equacy will also be necessary. Insufficient or inadequate financial resources may lead to the inability to operate cor- rectly or to reduce the realisation of business opportuni- ties, leading to reduced growth and company development (Kim-Soon et al., 2017; Fraser et al., 2015). 2.2 Principal-agent theory and company performance Agency theory is one of the most commonly analysed theories in entrepreneurship, which can be traced back to Smith’s (1776) findings of dangerous differences between owners and managers. Agency theory covers a wide range of topics, from markets and companies to different research fields – for example, organisational behaviour (Effelsberg et al., 2014), knowledge hiding (Khoreva & Wechtler, 2020) and family business (Kowala & Šebestova, 2021) – where organisational governance has historically focused mainly on the perspective of principals and agents with the persuasion of the goal of maximising owner wealth, i.e. principal-agent research (Caldwell et al., 2006). Agency theory teaches us that whenever the principal (i.e. compa- ny owner in the case of the paper) engages with another agent (i.e. manager in the case of the paper) to whom some decision-making is granted, a potential agency problem could exist, shown as agency costs that can shape compa- ny performance (Ahmed et al., 2023), as one of the parties can have a different approach to solve a particular prob- lem (Jensen & Meckling, 1976). The expected outcome of this behaviour should lead to outcomes specified by principals; however, self-interest behaviour could lie at the core of the agency problem. The problems arising from principal-agent cooperation cause divergence in the area of risk-sharing and create possibilities for information asym- metries, which in turn reduces the principal’s ability to monitor and control agent behaviour, leading to situations where it is inherently difficult to create and sustain an ideal contract between the principal (i.e. owner) and the agent (i.e. manager) (Bendickson et al., 2016). Considering HGCs, this could lead to differences in the company’s per- formance and growth possibilities between owner-manag- ers and managers HGCs. It is shown that when agents have equity (or (co)ownership) in the company, they are more likely to embrace and fulfil the actions desired by princi- pals and behave in principal interests (Eisenhardt, 1989), leading to higher HGC performance, compared to a situ- ation where perceived inequity exists, as their, agents are more likely to engage in self-interested behaviour and may not loyally serve their principals (Wagner, 2019). There is no surprise that the correct incentives for managers can significantly enhance a company’s performance (Wijew- eera et al., 2022), as company performance is positively related to the percentage of equity held by managers and to the percentage of their compensation that is equity-based (Bouras & Gallali, 2017; Haubrich, 1994). 2.3 Hypotheses development Previous studies have shown that company perfor- mance can be positively related to the percentage of equity managers (agents) held. In our paper, we want to examine if managers who are also (co)owners (owner-managers) can contribute to HGC’s financial performance through se- lected growth determinants better than managers who are not (co)owners of HGCs (managers). Even though there are some concerns regarding moderating effects analysis in past theories, as moderator relationships regularly con- front challenges, moderated regression analysis still repre- sents the most popular procedure in the context (Helm & Mark, 2012). 2.3.1 Risk-taking, financial performance and ownership Risk-taking as a dimension of entrepreneurial orienta- tion is defined by Rauch et al. (2009: 763) as “making bold moves, diving into the unknown, when acquiring (borrow- ing) large amounts of financial assets and providing signif- icant amounts of resources for the realisation of undertak- ings in uncertain environments”. Within entrepreneurial orientation, risk-taking is implemented at the level of the 51 Organizacija, V olume 58 Issue 1, February 2025 Research Papers company or the decisions taken by the company (i.e. upper management) for various uncertain undertakings (Schillo, 2011). Risk-taking is one of the critical determinants of successful entrepreneurs and companies (Putninš & Sau- ka, 2020) as risk-prone companies combine the search for opportunities with taking risks by creating strategic con- ditions for their exploitation, leading to higher success ei- ther in terms of financial performance or company growth (Frešer, 2022). Risk-taking can thus positively enhance future company goal-setting and financial performance expectations (Mahto & Khanin, 2020). However, compa- nies must be careful that risk-taking is driven by the right strategic management decisions and careful consideration of cost–benefit balance (Kreiser et al., 2013), as otherwise, risk-taking can have unwanted results. There could also be different risk-taking propensity levels between owner-managers and managers. Some ar- guments suggest that as managerial ownership increases, the level of risk-taking decreases (Chen et al., 2014), sup- porting the risk aversion hypothesis, where in the presence of owner/manager agency problems, managers could be more risk averse in some cases. In usual circumstances, managers will not maximise shareholder wealth. Thus, their compensation must be designed so that when man- agers increase the company’s value (take risks), they also increase their expected utility – i.e. their own goals (Smith & Stulz, 1985). These differences could create an une- ven impact on financial performance. On the other hand, Brockhaus (1980) found no differences regarding risk-tak- ing propensities when comparing managers who quit their managerial jobs and became owners and regular managers. H1a: Risk-taking positively and statistically signifi- cantly affects the financial performance of owner-manager and manager HGCs. H1b: There is a moderated effect of (co)ownership on the relationship between risk-taking and HGC’ s financial performance. 2.3.2 Innovativeness and Proactiveness, financial performance and ownership Innovativeness as a determinant of entrepreneurial ori- entation can be most commonly defined as a benchmark of novelty (McGrath et al., 1996), which can cause radical changes, altering the status quo on the market, or change companies’ levels of proactiveness, risk-taking propensity and competitiveness. As such, innovativeness is often seen as one of the critical determinants of a company’s entre- preneurial behaviour and performance (Hurtado-Palomino et al., 2024; Suifan, 2021). The sample of large companies (Scherer, 1965) found that innovativeness can positively impact achieved sales and, thus, the company’s profitabil- ity. Some other authors (e.g. Ng et al., 2020; Shashi et al. 2019) also reported positive relations between innovation and a company’s financial performance in their studies, while others found a negative direct impact of innova- tion on financial performance (e.g. Gök & Peker, 2017). Different levels of innovativeness propensity between owner-managers and managers could exist. As shown by Aghion et al. (2013), ownership is associated with more innovation, which aligns with the “lazy” manager hypoth- esis. Innovation can require many efforts, and “lazy” man- agers might not exert enough of it (ibid.: 227). Innovation is also extremely risky, as large projects require extensive resources. On the other hand, the effects of innovativeness are uncertain and can most likely be seen more in the long term (Ghanbarpour & Gustafsson, 2022). This could lead more risk-averse managers to be intimidated by innova- tion (Kuczmarski, 1996) and unwilling to admit to large innovative projects. Conversely, this could represent the opportunity and challenge that will motivate them. Differ- ences in levels of innovativeness between owner-manager and manager could lead to different impacts on a compa- ny’s financial performance. The same can also be said for proactiveness, which refers to the company’s view of the future, in which the company wants to proactively search for business opportunities that will enable the benefits of making the first move and changing the competitive en- vironment (Hughes & Morgan, 2007). Proactiveness can thus be often analysed as interconnected with innovative- ness (Covin & Wales, 2012). H2a: Innovativeness and proactiveness positively and statistically significantly affect the financial performance of owner-manager and manager HGCs. H2b: There is a moderated effect of (co)ownership on the relationship between innovativeness and proactive- ness and HGC’ s financial performance. 2.3.3 Organisational networking capability, financial performance and ownership Social capital is essential for entrepreneurship research as a driving force to perceive and exploit business oppor- tunities (Shane, 2003). Nahapiet & Ghoshal (1998) define social capital as a construct of three dimensions – structur- al, cognitive and rational. Organisational networking ca- pability is defined by Mu & Di Benedetto (2012: 5) as the capability of the company/organisation to exploit its ex- isting network connections (weak and strong) and explore new network connections in order to achieve a (re)config- uration of resources and competitive strategic advantages, lies in the core of structural social capital. Organisational networking capability has a decisive impact on the compa- ny’s performance (Sasmito et al., 2023; Kurniawan et al., 2021). There is no doubt that this determinant is positive- ly linked with better financial performance (Wang et al., 2021). Theoretically, this could be explained by the fact that social capital and networking capability have often 52 Organizacija, V olume 58 Issue 1, February 2025 Research Papers been shown as factors influencing financial resource avail- ability (Lukkarinen et al., 2016), as they can also build trust which can reduce the cost of financing (Meng & Yin, 2019). Previous literature research regarding social capital differences among owner-managers and managers is not standard. In one of the rare studies, Mosleh Shirazi et al. (2013) found out that managers who are not owners are weaker in social capital than owner-managers. This could lead to different effects of organisational network capabil- ity on financial performance. H3a: Organizational networking capability positively and statistically significantly affects the financial perfor - mance of owner-manager and manager HGCs. H3b: There is a moderated effect of (co)ownership on the relationship between organisational networking capa- bility and HGCs’ financial performance. 2.3.4 External financial resources diversity, financial performance and ownership The importance of financial resources as one of the es- sential resources for the exploitation of opportunities has already been stressed by past theories (Shane, 2003), as insufficient and inadequate financial resources will lead to all sorts of problems related to companies’ development, growth and existence. In line with resource-based the- ory, adequate financial resources will create competitive advantages and the long-term preservation of companies (Eisenhardt & Martin, 2000) and will shape their business strategies (Belenzon et al., 2020). The importance of fi- nancial resources is even more highlighted with HGCs. HGC will require extensive financial resources to man- age opportunities that will enable growth. In that aspect, Brüderl & Preisendörfer (2000) found that the amount of financial capital invested will significantly impact the likelihood of the company achieving high growth. This will lead HGC to implement different financing strategies as a non-growth company. The critical feature concerns external financial resources (Frešer, 2022), as HGCs are in some cases not able to cover all of their financial re- quirements using only their sources of financing – retained profits (Vanacker & Manigart, 2010); instead, HGCs are more likely to use a cocktail of financial resources from various providers (Brown & Lee, 2014). There is no doubt that sufficient financial resources can positively contrib - ute to financial performance as an essential link between access to external financial resources and financial perfor - mance was shown in past (Memon et al., 2020). Diversi- ty and accessibility of financial resources can also more efficiently distribute risks, leading to better performance. There could also be different levels of propensity between owner-managers and managers to use different external fi- nancial resources. Thus, owners could be more prone to finance through their sources (retained profits) and with negligible debt levels to control the company (Hamilton & Fox, 1998). On the other hand, it was found that managers’ ownership status has a statistically significant and positive association with their level of preference towards different sources of financing (Zabri et al., 2015). The possible ex- istence of differences between owner-manager and manag- er could lead to different impacts on financial performance between the two groups. H4a: External financial resources diversity positively and statistically significantly affects the financial perfor - mance of owner-manager and manager HGCs. H4b: There is a moderated effect of (co)ownership on the relationship between external financial resources di- versity and HGCs’ financial performance. 3 Methodology and data 3.1 Sample and data collection The research model is based on the population of com- panies that were recorded as HGCs (and thus fulfilling mul- tiple criteria on which HGCs are determined) at least once between 2011 and 2016, based on the methodology of the Agency of the Republic of Slovenia for Public Court Re- cords and Related Services (SI: AJPES; Slovenia). Based on this population, 8,194 HGCs were identified. Data was collected in May and June 2022 using the online survey, where 4,049 HGC e-mail addresses were publicly availa- ble. The final sample size was n = 119 HGCs after consid- ering all assumptions: (i) the questionnaire was completed by competent individuals, i.e., individuals with experience at the top management level of HGCs (one of the questions in the questionnaire was the position of respondent in the Table 1: Sample distribution - external financial resources diversity (FRD) Source: Own Number of different external financial resources used by HGCs 0 1 2 3 4 5 6 7 Together fk 5 19 23 30 30 8 4 0 119 fk % 4.2 16.0 19.3 25.2 25.2 6.7 3.4 0 100 % 53 Organizacija, V olume 58 Issue 1, February 2025 Research Papers company, based on which we were able to filter and select just the respondents with top management experiences). We assume that these individuals are responsible individu- als in HGCs (managers), as they have the most knowledge about what is happening in the HGCs where they are em- ployed, and (ii) we asked respondents to answer the ques- tions from the perspective of the whole company as one organisation (in the questionnaire preface). The characteristics of the sample show that out of 119 respondents, 75 (63 %) were male, while 44 (37 %) were female. Ninety-two respondents were also (co)owners of HGC, i.e. owner-managers (representing 77.3 %), while 27 (22.7 %) respondents were managers in HGCs and had no ownership claims. As shown in Table 1, 5 HGCs (4.2 %) included in the survey did not use any external financial resource, while 12 HGCs (10.1 %) did use five or more an- alysed external financial resources in their operations. On average, HGCs included in the survey used 2.8 different external financial resources out of the seven analysed: (i.) suppliers and other business partners, (ii.) business angels, (iii.) venture capital investors, (iv.) banks, (v.) national programmes and subsidies, (vi.) European Union funds and (vii.) non-formal sources of financing (financial re- sources from friends and family). 3.2 Measurement scales The measurement instrument for the survey was de- signed on existing and validated measurement scales. The basis for measuring entrepreneurial orientation is Hughes and Morgan’s scale (2007), which is also recommended by Covin & Wales (2012) as one of the better scales. Organi- sational networking capability was developed by Mu & Di Benedetto (2012). The measurement of HGC’s financial performance was developed based on recommendations in the literature (e.g. Chen et al., 2005). The survey also analyses seven external financial resources based on expe- riences most common in the Republic of Slovenia. A com- plete list of measurement items is provided in Appendix A. Based on measurement scales, exploratory factor anal- ysis (EFA) was conducted (m = number of items included in factor, α = Cronbach’s alpha, KMO – Kaiser-Meyer-Ok- lin Measure of Sampling Adequacy, BT – Bartlett’s Test of Sphericity-Chi Square). 1. Entrepreneurial orientation was defined with two factors in line with previous literature (e.g. Hughes & Morgan, 2007). First factor is EO_1 (risk-taking), m = 3, α = 0.707. The second factor is EO_2 (innovativeness and proactiveness), m = 9, α = 0.905. EFA for EO shows that KMO is 0,876 and BT (Chi-Square = 750.744; p = 0.000), total variance explained = 60.44 %. 2. Organisational networking capability was defined as one factor. NC_1 (organisational networking capability), m = 9 (two items were excluded to match the corresponding EFA criteria), α = 0.945, KMO = 0.888, BT (Chi-Square = 1,005.605; p = 0.000), total variance explained = 70.02 %. 3. Financial performance was defined as one factor. FP_1 (financial performance), m = 5, α = 0.951, KMO = 0.820, Bartlett’s test (BT) (Chi-Square = 699.029; p = 0.000), total variance explained = 83.92 %. 3.3 Data analysis The empirical analysis was performed using regression analysis based on EFA results. Analysis was performed us- ing IBM SPSS Statistics 27 software. EFA was designed with key recommendations in past literature: KMO > 0.5; BT significant with Chi-square statistically significant; communalities > 0.4 total variance explained > 60 %; factor loading > 0.50 for samples with a size larger than n = 100 (Yong & Pearce, 2013: 88; Costello & Osborne, 2005). A comparison of two regression models based on ownership of HGC (group one – respondents are also (co) owners, and group two – respondents are not (co)owner of HGC) was made according to guidelines from UCLA (2021) for the analysis of moderated effects of (co)owner- ship on selected determinants. 4 Results The results of the regression analysis are presented. Regression analysis was performed in two steps. The first regression analysis was prepared separately for HGCs where respondents were owner-managers (model 1) and the second for HGCs where respondents were managers (model 2). The next step was to check if statistically signif- icant differences between model 1 and model 2 exist (mod- el 3). The results presented below show some important findings. 4.1 Regression models based on (co) ownership Using a split file, two regression models were created. For both correlation coefficient (R), the adjusted coeffi - cient of determination (adj. R Sq.) and standard error of the estimate (std. err.) were checked. 1. Model 1: R = 0.662; adj. R Sq = 0.413; std. Err. = 0.798. The overall regression was statistically significant, F(4, 87) = 17.003; p = 0.000. R of 0.662 indicates that there is a moderate correlation (Schober, 2018) between independent (EO_1, EO_2, NC_1, financial resources diversity) and dependent variable (FP_1). Adj. R Sq in- dicates that independent variables explain 41.3 % of the variation in the FP_1. 2. Model 2: R = 0.678; adj. R Sq = 0.362; std. Err. = 0.678. The overall regression was statistically significant, 54 Organizacija, V olume 58 Issue 1, February 2025 Research Papers F(4, 22) = 4.678; p = 0.007. R of 0.678 indicates the ex- istence of a moderate correlation. Adj. R Sq indicates that independent variables explain 36.2 % of the variation in the FP_1. In both regression models’ null hypotheses, H0: R2 = 0 is rejected at a statistically significant level p < 0.05. Results of statistically significant independent varia- bles from model 1 and model 2 are presented in Table 2. Both models show that EO_1 has a statistically significant and positive impact on FP_1. In model 1, where respond- ents are also (co)owners, one additional statistically signif- icant impact is recorded, i.e. between NC_1 → FP_1 (β = 0.317, p = 0.002), while in model 2, the impact between two variables is not statistically significant (β = -0.193, p = 0.290). Table 2: Regression models based on (co)ownership Dependent variable: FP_1 Note: * FRD – financial resources diversity (see Table 1), **VIF statistic > 5 would indicate a high existence of multicollinearity (Shrestha, 2020: 40) Source: Own β Std. error t stat P-value VIF statistics** Model 1 Constant 0.251 0.185 1.355 0.179 EO_1 0.418 0.096 4.341 0.000 1.407 EO_2 -0.004 0.094 -0.038 0.970 1.075 NC_1 0.318 0.097 3.277 0.002 1.432 FRD* -0.093 0.060 -1.552 0.124 1.021 Model 2 Constant 0.409 0.385 1.061 0.300 EO_1 0.632 0.159 3.984 0.001 1.099 EO_2 0.163 0.155 1.053 0.304 2.097 NC_1 -0.193 0.178 -1.084 0.290 1.441 FRD* -0.123 0.113 -1.090 0.288 1.535 Table 3: Comparison of regression coefficients Dependent variable: FP_1 Source: Own β Std. error t stat P-value Model 3 Constant 0.273 0.166 1.649 0.102 EO_1 0.632 0.181 3.500 0.001 EO_2 0.133 0.152 0.877 0.382 NC_1 -0.183 0.200 -0.914 0.363 FRD -0.086 0.064 -1.339 0.183 EO_1*OWN -0.215 0.203 -1.058 0.292 EO_2*OWN -0.136 0.176 -0.772 0.442 NC_1*OWN 0.500 0.221 2.265 0.025 FRD_OWN -0.014 0.052 -0.265 0.791 55 Organizacija, V olume 58 Issue 1, February 2025 Research Papers 4.2 Comparison of regression coefficients between model 1 and 2 A comparison of regression coefficients was done based on UCLA (2021) guidelines. First, a dummy variable was created called OWN (value one was set to respondents who are also (co)owners, and value zero was set to respondents who are not (co)owners of HGC). Second, variables repre- senting the product between the independent variable and variable OWN were created: EO_1*OWN, EO_2*OWN, NC_1*OWN, and FRD*OWN. A new regression model with starting and newly calculated variables was formed to analyse moderated effects (model 3: R = 0.666; adj. R Sq = 0.403; std. err. = 0.772. The overall regression was statistically significant, F(8, 110) = 10.972; p = 0.000). The results of the regression coefficient comparison are shown in Table 3. With model 3, the null hypothesis H0: β1 = β2 for each original independent variable was tested, where β1 is the regression coefficient for respondents who are also (co) owners of HGC (model 1) and β2 is the regression coef- ficient for respondents who are not (co)owners of HGC (model 2). As the results show, the regression coefficient for variable NC_1*OWN is statistically significant (p = 0.025), meaning that NC_1 will have statistically signif- icant different impacts on FP_1 in relation to (co)owner- ship. The result implies that when managers are also (co) owners of HGC, NC_1 will have a statistically significant- ly more pronounced impact on FP_1 and that, thus, a mod- erated effect of (co)ownership on the relationship between risk-taking and HGC financial performance exists. 5 Discussion and conclusion 5.1 Key findings and theoretical implications The paper analyses the relationship between selected growth determinants highlighted in previous literature as one of the most critical determinants enabling HGC growth and development, with a meaningful connection to financial performance and HGC ownership. Our paper is based on findings from previous literature (e.g. Bouras & Gallali, 2017) that show that company performance is pos- itively related to the percentage of equity held by manag- ers and the percentage of their equity-based compensation. We want to contribute to these findings by determining for which growth determinants, equity-related manager com- pensation, can positively influence HGC’s financial per - formance. Not surprisingly, results showed that risk-taking (EO_1) has a statistically significant and positive impact on the financial performance of both owner-manager and manager HGCs, supporting findings from previous litera- ture (Mahto & Khanin, 2020). As suggested in previous lit- erature and in line with agent-principal theory, there could be different risk-taking propensity levels between own- er-managers and managers, as when managerial ownership increases, the level of risk-taking could decrease (Chen et al., 2014), leading to different impacts of risk-taking on financial performance for owner-manager and manager HGC. Even though it can be seen from Table 2 that there are some differences between owner-managers and man- agers’ HGC regression coefficients analysing influence of risk-taking on financial performance, the results, in this case, show that (co)ownership does not have an essential impact on forming the influence of risk-taking on HGC’s financial performance, suggesting that regarding risk-tak- ing as a growth determinant additional equity compensa- tion or ownership, will not have a significant impact on HGC’s financial performance. Results show that for both cases – owner-manager and manager HGC – innovativeness and proactiveness (EO_2) do not significantly impact HGC’s financial performance, supporting previous findings that innovativeness studies are vastly diverse, with different impacts recorded. Some authors (e.g. Ng et al., 2020; Shashi et al. 2019) reported positive relations between innovation and a company’s fi- nancial performance, while others found a negative direct impact of innovation on financial performance (e.g. Gök & Peker, 2017). Past literature also suggests that different levels of innovativeness and proactiveness between owners and managers may exist (Aghion et al., 2013; Kuczmarski, 1996), which could lead to different impacts of innova- tiveness and proactiveness on the financial performance of owner-manager and manager HGCs. It’s also critical to emphasise that innovativeness was analysed in our pa- per as one construct. On the other hand, innovativeness can be divided into many conceptual approaches covering technology-, behaviour-, and product-related innovative- ness (Salavou, 2004). Owners and managers could have different desires for innovativeness (Aghion et al., 2013) and thus also have a different propensity to technology, be- haviour or product-related changes. Thus, analysing and measuring innovativeness as separate factors could also be beneficial. In addition, our results show that (co)ownership does not have an essential impact on forming the influence of innovativeness and proactiveness on HGC’s financial performance, suggesting that regarding this growth deter- minant, additional equity compensation or ownership in HGC will not significantly impact financial performance. Regarding organisational network capability (NC_1) for owner-manager HGCs, results support the previous findings that this growth determinant can positively affect financial performance (Wang et al., 2021; Kurniawan et al., 2021). Organisational networking capability as the capability of the company/organisation to exploit its ex- isting network connections to achieve a (re)configuration 56 Organizacija, V olume 58 Issue 1, February 2025 Research Papers of resources and competitive strategic advantages (Mu & Di Benedetto, 2012) is, in that way, directly connected to RBT, as it can provide the company with the set of hetero- geneous, valuable, rare and immobile production resourc- es that the competition cannot completely emulate (Bar- ney, 1991), thus forming a competitive advantage leading to economic value creation and leading to higher financial performance. Results also show that organisational net- working capability has statistically significant different impacts on financial performance when analysing groups of owner-manager and manager HGCs, suggesting that in owner-manager HGCs, organisational networking capabil- ity will have a more pronounced impact on company finan- cial performance. As it was already pointed out by Mosleh Shirazi et al. (2013), managers who are not owners are weaker in social capital. This finding is not only validated in our study, but it is also extended to the company’s fi- nancial performance. The results show that (co)ownership has an essential impact on forming the influence of organ- isational networking capability on HGC’s financial perfor- mance, suggesting that regarding this growth determinant, additional equity compensation or ownership in HGC will significantly impact the company’s financial performance. This is an essential theoretical contribution to the research field. Regarding organizational networking capability, our paper builds upon previous literature and RBT, supporting previous findings regarding the significant importance of networking capability to enable companies’ resources that will enable competitive advantage and, thus, better perfor- mance. In addition, our paper builds on Mosleh Shirazi’s (2013) findings, suggesting that different levels of network capacity exist between managers and owner-managers. The difference was shown in our paper as having a deci- sive role in shaping the financial performance of HGCs. The difference between managers and owners-managers regarding network capability and its relationship to finan- cial performance can also be viewed by the principal-agent theory perspective, where when agents (managers) have equity (or (co)ownership) in the company, they are more likely to embrace and fulfil the actions desired by princi- pals and behave in principal interests (Eisenhardt, 1989), meaning they would be more willing to use their network capability and social capital knowledge and skills to gain profit for the company. External financial resources diversity (FRD) was found not to have a statistically significant effect on HGCs’ financial performance in both groups – i.e. owner-manager and manager HGCs, and there is no relation of (co)own- ership on forming the influence of external financial re- sources diversity on HGC’s financial performance. Even though there are findings that sufficient external financial resources can positively contribute to financial perfor- mance (Memon et al., 2020), their diversity in our study was shown as a statistically uninfluential factor. As is shown with principal-agent theory, differences be- tween principals (owners) and agents (managers) can lead to different goals, as in usual circumstances, managers will not maximise shareholder wealth (Smith & Stulz, 1985). Here, ownership or equity-based compensation can have an important role. When agents have equity (or (co)owner- ship) in the company, they are more likely to embrace and fulfil the actions desired by principals and behave in prin- cipal interests (Bendickson et al., 2016; Eisenhardt, 1989), leading to higher HGC financial performance. Our study made a significant contribution, showing that (co)owner- ship and, with this equity-based compensation, can sig- nificantly contribute to better HGC financial performance through organisational networking capability. 5.2 Practical implications Our study has practical implications for HGCs and policymakers seeking higher financial performance and development. Penrose (1959) pointed out that financial performance is crucial and can be compromised with ex- tensive growth. The first contribution of our paper is thus to figure out which growth determinants positively influ- ence HGC’s financial performance. Concerning this, de- cision-makers can focus more on the growth determinants highlighted to shape financial performance positively. In the case of our paper, this are risk-taking and organisa- tional network capability. Managers and owner-managers can thus build on their network capability and other deter- minants of entrepreneurial orientation by participating in different supporting programs prepared by and driven by government policies. Examples of successful programmes that promote the motivation to achieve more remarkable growth through a supportive environment come from Ire- land (the Going for Growth in Ireland programme) and Sweden (Mentor Eget Főretag) (OECD/European Union, 2015: 14). These programmes encourage and support entrepreneurs in their entrepreneurial pursuits, through appropriate mentoring and education, supporting the de- velopment of entrepreneurial orientation (including inno- vativeness) and networking capability. The second contribution, in line with the paper’s aim, can be derived from findings that show that growth de- terminants, such as equity-related manager compensation, positively influence HGC’s financial performance. The results confirm previous literature suggesting that cor- rect incentives for managers can significantly enhance a company’s performance (Bouras & Gallali, 2017). De- cision-makers can thus strive to enhance equity-based compensations, as it was shown that (co)ownership has a crucial positive influence on shaping HGCs’ financial per - formance through organisational networking capability. It is also vital that (co)ownership and equity-based compen- sation will not statistically significantly worsen the HGC financial performance through other growth determinants. 57 Organizacija, V olume 58 Issue 1, February 2025 Research Papers This is essential for policymakers aiming to create a busi- ness environment enabling growth, development and fi- nancial prosperity. Policymakers can support equity-based compensations through different tax systems, enabling tax benefits for equity-based compensations, as past theory suggests tax rules can significantly affect equity-based compensation behaviour (Widdicks & Zhao, 2014). Addi- tional equity-based compensations could also support the innovative tendencies of companies, as they will success- fully build company financial performance through dif- ferent determinants – meaning there will be more money available in the future to cover extensive needs to finance large innovative projects. Thus, policymakers could encourage policies pro- moting equity ownership among high-growth companies’ managers and employees (HGCs). This can be in the form of stock options, equity-based compensation, or other ownership structures. Such policies can align the interests of managers and employees with those of the company, potentially leading to better financial performance. To support organisational networking capability, policymak- ers can support initiatives that enhance the organisational networking capability of HGCs. This can include provid- ing resources for training, fostering business networks, and facilitating partnerships to help HGCs build robust and effective social capital. This is especially relevant for owner-manager HGCs, where networking capability can significantly impact financial performance. Additionally, implications that may be important for HGCs may include the following viewpoints. HGCs should consider implementing equity-based compensation for managers and employees. This can serve as a tool to align incentives, motivate, and engage key personnel in the success and growth of the company. HGCs, especially owner-manager HGCs, should invest in building and lev- eraging their networking and social capital (for example, actively participating in industry events, forming strategic alliances, and fostering relationships with key stakehold- ers). HGCs should also focus on risk-taking by carefully balancing their risk-taking strategies, especially in own- er-manager HGCs, where the relationship between man- agerial ownership and risk-taking may be more complex. While the study found that external financial resource di- versity did not significantly impact HGCs’ financial per - formance, policymakers can still encourage HGCs to di- versify their funding sources. This can help HGCs better Table 4: Overview of Hypotheses Acceptance Source: Own H1a H1b H2a H2b H3a H3b H4a H4b Accepted Rejected Rejected Rejected Accepted Accepted Rejected Rejected navigate financial challenges and access various types of financial support. A diverse funding base can provide fi- nancial stability and reduce dependence on a single source. Considering the implications of management structure and (co)ownership on financial performance, HGCs should evaluate whether a combination of equity-based compen- sation, (co)ownership and organisational networking capa- bility can contribute to improved financial outcomes. 5.3 Limitations and directions for future research The research paper examines the specific context of HGCs to contribute to previous theories suggesting that company performance can be positively related to the percentage of equity managers hold and fill the research gap by including growth determinants. We do this with the empirical model combining selected growth determinants with financial performance and including the moderated effect of (co)ownership. This research paper is subjected to a few limitations. The first limitation concerns the analysis of moderated effects, which are the most popular procedure in the context but are often subjected to some concerns and challenges (Helm & Mark, 2012). The second limitation is related to the research model, where only selected growth determinants were analysed. Another limitation arises from the sample – even though the study is based on a representative sample, there are some limitations regard- ing online surveys, i.e., email address availability. It is also important to note that measurement scales, even though they are recognised in past literature to measure analysed determinants, represent subjective measures. More objec- tive measures could be implemented in the future, to meas- ure analysed determinants better – e.g. innovativeness could be additionally measured with objective measures like patent counts, R&D investments, etc., adding validity and reliability to research findings. Several future research directions are also possible. As HGC research is a diverse and heterogeneous research field, an open issue for further research is analysing research models across other data- sets. As the generally accepted definition of HGCs does not exist (Moreno & Casillas, 2007), the research findings are limited to the specific selected context of Slovenia, and comparison with findings of international or other specific country contexts can be limited. As growth is a very het- erogeneous phenomenon, criteria defining HGCs differs 58 Organizacija, V olume 58 Issue 1, February 2025 Research Papers between countries and could also be subjected to cultural, institutional or other economic factors. This leads to dif- ferences in samples and hardens the direct comparison of the research findings. Thus, the suggested research model could also be used on other samples of HGCs from differ- ent countries and contexts to confirm the model’s validity. Next, another possibility lies in including and analysing growth determinants not primarily included in the model. Our research only covers a few of the most important ones in relation to article context. Selected growth determinants could be analysed more in-depth, adding additional con- text. The determinants of entrepreneurial orientation could be additionally divided. For example, innovativeness as one of the critical determinants of a company’s perfor- mance could be analysed more in-depth by examining the importance of different innovation types. Adding addition- al growth determinants and other in-theory emphasised factors or analysing existing determinants in more depth would result in a more sophisticated research model that could contribute to theory and practice even more. Addi- tionally, to the quantitative approach presented in the pa- per, qualitative research methods could also be used. 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DOI: https://doi.org/10.1166/asl.2015.6060 Asst. Prof. Frešer PhD teaches at the master’s and bachelor’s levels at the Faculty of Economics and Business, University of Maribor. He is the author or co-author of different scientific articles published in esteemed foreign and domestic journals and the author or co-author of several chapters of scientific monographs related to quantitative research methods in the field of entrepreneurship, high-growth companies and other business aspects. He has conducted several invited lectures abroad on the topic of quantitative research methods and decision-making. Currently, he is the head of the Institute of Operational Research at the Faculty of Economics and Business. Prof. Tominc PhD focuses her research work on various aspects of the use and development of quantitative research methods in the fields of management and business sciences, especially in the field of entrepreneurship. She leads the Entrepreneurship for Innovative Society research program at the Faculty of Economics, University of Maribor. In the research group of the Institute for Entrepreneurship and Small Business Management, she participates in the Global Entrepreneurship Monitor and is a member of the international research group for women’s entrepreneurship research DIANA. She has participated in more than 40 scientific and professional foreign and domestic conferences and is the author or co-author of chapters in foreign and domestic scientific monographs and scientific and professional articles published in esteemed foreign and domestic journals. She teaches at the doctoral, master’s, and bachelor’s levels at the Faculty of Economics and Business University of Maribor and has conducted several invited lectures in Slovenia and abroad. 62 Organizacija, V olume 58 Issue 1, February 2025 Research Papers 63 Organizacija, V olume 58 Issue 1, February 2025 Research Papers Appendix – measurement items Entrepreneurial orientation was measured on a 7-point Likert scale (1 -I disagree entirely, 7 – I agree completely). The questionnaire consisted of the following statements (EO_q1–12): Q1: The term “risk taker” is considered a positive attrib- ute for people in our business; Q2: People in our business are encouraged to take calculated risks with new ideas; Q3: our business emphasises both exploration and experimentation for opportunities; Q4: we actively introduce improvements and innovations in our business; Q5: our business is creative in its methods of operation; Q6: our business seeks out new ways to do things; Q7: we always try to take the initiative in every situation (e.g., against competitors, in projects when working with others); Q8: we excel at identifying opportunities; Q9: we initiate actions to which other organisations respond; Q10: our business is intensely competitive; Q11: in general, our business takes a bold or aggressive approach when competing; Q12: we try to undo and outmanoeuvre the competition as best as we can. Organisational networking capability was measured on a 7-point Likert scale (1 -I disagree entirely, 7 – I agree com- pletely). The questionnaire consisted of the following statements (NC_q1–11): Q1: we search locally to find proper net- work partners; Q2: we search globally to identify appropriate network partners; Q3: we search widely to look for the right partners; Q4: if something seems to be going wrong in relationships with partners, we try hard to figure out why; Q5: if the relationship with a partner is successful, we try to understand what makes it work well; Q6: we constantly assess and analyze our relationships with partners so that we know what adjustments to make; Q7: dynamically integrating networking activities into the business operational process is part of our firm’s strategy; Q8: we can find partners to count on in time when the need arises; Q9: we can be pretty accessible to our partners in a timely fashion; Q10: we can get the needed assis- tance from our partners in an accurate and timely manner; Q11: our partners can refer us to a third party who could help if the partners cannot provide direct help. Financial performance was measured on a 7-point Likert scale (1 -I disagree entirely, 7 – I agree completely), where the respondents would express their agreement with the statement, “Compared to directly competing companies, we believe that our company shows better”. The questionnaire consisted of the following statements (FP_q1–5): FP_1: net profit; FP_2: ROE—return on equity (income before taxation/average value of capital); FP_3: ROA—return on assets (income before taxation/average assets); FP_4: revenue growth percentage (revenue of the current year/revenue of the previous year); FP_5: value added per employee.