We investigated the development of business ownership (self-employment) rates over time at the sectoral level and the effect of these rates on sectoral output growth. In an earlier exercise, Carree et al. (2002) presented an analysis of the interrelationship between economy-wide business-ownership rates and economic development. Their analysis raised an important research question: To what extent do differences in business ownership rates at the economy-wide level reflect differences in the sectoral structures of economies or differences in business-ownership rates at the sectoral level? The current paper investigates this question making use of a sectoral database of 21 OECD countries for the 1970-98 period. Estimation results suggest that there is, on average, a too low business-ownership rate in manufacturing and a too high business ownership rate in services. This paper was previously published as Research Report H200206. Compared to the earlier version, it specifically elaborates the theoretical foundation of the estimated model in more detail.
A plethora of studies has investigated the determinants of product innovation in small firms, suggesting product, firm, market and innovation process factors as its key drivers of success. Variations across industries relating to the determinants of product innovation are often suspected, but due to a lack of data this area is underresearched. In case of major differences much previous work will be flawed. Drawing upon of database of 1250 small firms across seven industries, this paper explores if any differences are found in the presence and impact of various firm-level determinants. Controlling for size and age differences, the analysis reveals some major differences to the extent small firms use innovative practices, and their connection with new product introductions.
(CHRISTINE ENNEW AND SALLY MCKECHNIE are with the School of Management and Finance at the University of Nottingham, England, and at the time the paper was written Lauren Read was with the I)epartment of Geography, University of Southampton, England. The purpose of this paper is to shed new light on the issuie of whether banks treat female and mnale small buisiness owners differently, by explorinig the nature of the banking i-elationship from the perspective of two grotips of owner-managers differentiated only bv gender. Being able to identify similarities and differences in the needs anid inotivations of each gender, as well as develop a better understanding of how baniks are perceived, should then enable banks to identify ways in which they may serve their small business owners better. Following a review of the literature, which is predominantly North American- based, this paper goes on to report the findiings of two empirical studies conducted in the UK, which focus on financing conditions and aspects of the overall relationship between the small business an-d the bank manager. The findings suggest that gender based differences in both the provision of finance and the nature of the banking relationship are less substantial than mnight have been expected. There continues to be evidence that some business owners perceive greatei- difficulties in their dealings with theii- bank and perceive themselves as being- subject to discriminatorv behaviour but there is less evidence to suggest that this affects the terms and coniditionIs o)n xNsui h their businesses are finaniced.
Export is vital for almost any sector in the economy. Most research on SME export behavior is carried out in the manufacturing sector. In this article, however, the scope is broadened from the manufacturing sector to the service sector: which problems do SMEs in the service sector face when doing business abroad? In addition, the study involved a comparison with domestic activities. Normally, research on SME export behavior is directed at profit and risk only. In this paper, however, profit and risk perception in the context of international activities is also compared explicitly with domestic activities. The exporting SMEs dealt with in this paper experienced higher profits and lower risks than their non-exporting counterparts thanks to exporting. These conclusions about the service sector confirm research in the manufacturing sector and suggest that exporting SMEs are a homogeneous group that do not reflect the classical dichotomy between products and services. Furthermore, export profit and risk perception in an absolute sense are similar to export profit and risk perception in relation to domestic perception.
Knowledge intensive business service firms (KIBS) are an important element of modern economies and thus attracting increasing interest in scientific research. In the existing literature it is argued that due to the important role of knowledge, innovation and userproducer interaction in the KIBS sector, functional integration and spatial proximity are particularly decisive for a firm’s development. Nevertheless, due to the absence of suitable micro data there is a lack of studies empirically analysing the impact of functional integration and regional proximity using micro firm data. Based upon newlyconducted firm micro data in three German metropolitan regions, this paper supplements the literature by giving a multivariate empirical analysis of the determinants of post-entry performance of KIBS. The results of the estimation of firm growth equations show that functional linkages to knowledge providers, customers and co-operation partners indeed matter for the performance of young KIBS. Regarding spatial proximity, however, especially a high diversification of geographical reach is proved to be crucial.
NOLA HEWITT-DUNDAS, BRENDAN McFerran and Stephen Roper are with the Northern Ireland Economic Research Centre, Belfast, Northern Ireland. It has been demonstrated that those companies which take into account the performance of competitors in the development of their business strategy are considerably more likely to succeed than those which do not account for their competitors' performance. However, if a company is developing a strategic plan and therein accounting for the performance of competitors it is essential that the extent of competitor knowledge is accurate otherwise the company will have a distorted perception of its own relative position within the market and thus formulate a strategy with misguided and often unobtainable objectives. This paper presents the key findings of a project to evaluate the accuracy of information which firms held regarding their competitors and the likely contribution of this information to strategic development. The results of the project demonstrated that only between 50 and 60 per cent of the firms were capable of providing measures of size and efficiency. Of the estimates that were made only 45 per cenit were of reasonable accuracy, suggesting that the sample firms were able to make reasonably accurate assessments of around one-fifth of all competitors' data items. As these firms had performed better than most United Kingdom small firms over the 1991-93 period this would suggest that the comparisons reported within the project were likely to have over-estimated the competitor knowledge of the general population of small firms. If this finding was confirmed by a larger study it would imply that a significant information gap exists in the market knowledge of small firms and therefore is an issue which should be addressed by development agencies.
This article investigates the determinants of new venture creation across industries and locations for 103 Italian provinces between 1997 and 2003. Allowing for differences in regional opportunities across industries, we investigate the impact of a range of factors, including policy initiatives, on new firm formation in manufacturing, retailing and wholesaling, hotels and restaurants. Our results show that regions with industrial districts are characterized by higher start-up rates in manufacturing and that wage costs deter entry in this industry. Firm entry in commercial sectors appears to be higher in large cities and areas with strong economic progress. For hotels and restaurants we find that tourism positively influences new firm formation. We do not find a significant effect of recently introduced regional laws promoting new firm formation in Italy.
This article adds new insights into the relationship between founders' human capital and the survival prospects of startup businesses. The impact of founders' human capital on firm survival is controversial. On one hand, more experienced and skilled individuals are likely to create start-up businesses with a high chance of survival; on the other hand, their opportunity costs to run the firm may be high given the potential returns for investing their efforts in alternative employment opportunities. Analysing a sample of 179 Italian start-up companies created during 1995-early 2000 and operating in ICT services markets, this study provides evidence that, in intense industry crises (early 2000-2003), highly work experienced entrepreneurs may pursue an exit strategy and highlights the importance of distinguishing between different types of work experience and different exit routes. In particular, founding teams with highly specific work experience show higher probability of following the M&A route, while a higher level of generic work experience is more conducive to closure.
STEPHEN ROPER, NoIA HEWIET-DUNDAS and Brendan McFerran are with the Northern Ireland Economic Research Centre, Belfast, Northern Ireland. Discussion of product quality in the context of small United Kingdom companies has largely related to the impact of quality certification. Product quality improvement will, however, only yield a competitive advantage if improvements are recognised and wanted by customers. This raises two key questions: first, how aware are small firms of their customers' priorities in improving quality? Second, how does small firms, assessment of their own product quality compare with that of their customers? To answer these questions, perceived relative quality indices were constructed for a group of small firms and their customers. Comparison of customer and supplier responses highlighted significant disparities. First, the small firms in the sample tended to over-emphasise the importance of intrinsic quality attributes while under-estimating the importance to their customers of extrinsic and service quality attributes. Second, there was a major disparity between the relative quality perceptions of the sample of suppliers and their customers. With one exception, small firms in the sample gave themselves a higher relative quality rating than that given by their customers. The results suggest that the sample firms, twothirds of whom were IS09000 registered, needed to re-evaluate their quality priorities. The results also suggest a potential role for development agencies as gatherers/providers of market information.
The relationship between Internationalization and performance is a challenging topic for the agenda of researchers across the world, due to the complexity of the variables involved, to the difficulties in construct building and, last but not least, to the controversial results arising from the different studies that have been conducted on the matter in recent decades. This is particularly true in the case of SMEs, which represent a field still to be explored from this point view. The fundamental hypothesis that has driven the present work is that the growing level of market integration has generated a framework of international competition for economic actors which has to be considered as the actual natural environment both for international and for domestic firms. As a consequence, being international is no more than a natural status for the enterprise, in the sense that firms which have not engaged yet in international markets are also part of a competitive international environment that influences strategic decisions and contributes to shaping business models and performances accordingly. This concept applies immediately to those regions where the integration process has gone further and deeper, for example the European Union area, where the domestic market for economic actors has gradually evolved from the former national base to a European one. The empirical study, based on 220 Italian firms, performance - measured by profitability ratios - is not determined by the degree of internationalization in terms of classical export intensity and number of international agreements, but depends mainly on the ability of firms to gain access to specific markets such as the American one. Moreover, SMEs which have grown in foreign markets through FDI show a lower profitability, showing the existence of a "liability of foreignness" effect at the beginning of their international growth. Howeverthis negative effect can be reduced when SMEs have already developed inter
The objective of this paper is to explore the reasons underlying the frequent decoupling between the rhetoric and practice of ISO 9000, an internationally disseminated standard in small and medium enterprises (SMEs) that entails formalization. For that purpose, extensive fieldwork based on 65 in-depth interviews of general managers, middle managers and employees was carried out in eight Spanish SMEs that have adopted the standard for a long period of time. Contrary to common beliefs and the dominant neo-institutional approach to ISO certification, the results showed that companies tend to adopt ISO 9000 ceremonially, in response to various internal organizational contingencies, rather than as part of their adaptation to external pressures. ISO 9000 certification in SMEs can be compared to the acquisition of an organizational degree whose optimistic rhetoric and similar institutional pressures mask the considerable heterogeneity of certified organizations and elasticity of the standard when it is integrated in daily activities.
This article presents findings from a large-scale study of access to finance and business support by ethnic minority businesses (EMBs) in the UK. The results show more variation between ethnic minority groups than between EMBs (as a group) and white-owned firms; with African/Caribbean owned businesses (ACBs) appearing the most disadvantaged. Analysis shows them to have been less successful in accessing bank loans than either white or other ethnic minority groups and to have a higher propensity to turn to non-bank formal sources of start-up finance (including various sources of `last resort' lending). Although some of these difficulties are associated with certain types of business activity in which ACBs are concentrated, sector is not a determining influence. The results suggest that ACBs, and/or sectors in which ACBs are concentrated, would appear to justify a targeting priority in any new finance initiatives that are taken.
Small and medium-sized practices (SMPs) are often identified as a main provider of human resources and employment advice to small and medium-sized enterprises (SMEs), but little is known about the nature of this involvement. This article explores this gap in knowledge. It examines the type of support provided and resources used by SMPs and how this support role sits alongside core SMP competencies. Nineteen interviews were carried out. The study found an emphasis upon employment procedures and contracts in the support given. The support offered and the resources used were related to the size of SMP. The trust established during the provision of traditional accountancy services was the main reason that SMEs approached their accountant in search of human resources and employment support. The article provides an important insight into understanding how SMEs are supported in this area and indicates several areas where further research is required.
TONY BLAcKwoOD AND GRAHAM MowL ARE both lecturers at the University of Northumbria, England. this paper aims to identify and account for patterns of success and failure among small, expatriate-owned businesses operating in the tourism service sector of the major resorts of the Costa del Sol in Southern Spain. This group of businesses is particularly interesting because they have acquired a reputation for economic instability and relatively high rates of business failure. Furthermore, the need has been argued for both area and industry specific research on small business failure in order to gain a more contextual understanding of their problems. To understand any patterns of business success and failure it is necessary to investigate not only the behaviour of business owners but also the more general economic and social processes affecting the industrial sector and the locality in which the firm operates. The paper assess the tourism industry and in particular the role of small businesses within the tourism-related sector. It also investigates the background, aims and business management practices of individual entrepreneurs and attempts to use these findings to generate possible explanations of the patterns of business success detected.
The authors of this paper are employed at Ealing College of Higher Education, London, England, in the School of Business and Management. Pat Armstrong is the Head of Division of Applied Behavioural Science, Alison Baker is a Senior Lecturer in Sociology, currently on secondment to the CNAA, and James Johnson is a Research Assistant. The paper is based on empirical research, undertaken in the London Borough of Ealing, and was designed to investigate perceptions held by small retail proprietors of business success. The results to date indicate that these perceptions more often revolve around personal satisfaction and security that business growth and development.
There is little doubt that e-learning has had a major impact in large companies, both in allowing the extension of training provision and in facilitating professional development activities. However, the picture is far less clear when it comes to Small and Medium Enterprises (SMEs). Technology and attitudes of managers and employees seem to form potential drawbacks to e-learning initiatives in SMEs. Questionnaire data have been gathered from more than 400 owner-managers of SMEs in 7 European countries. Furthermore, 105 owner-managers and 5 employees from 105 of these firms have been interviewed on aspects of e-learning in their company. The overall picture of e-learning in small firms across seven European countries was fairly negative: owner-managers generally did not show positive attitudes towards technology, learning and training in companies. These attitudes are strongly related to technology infrastructure in the company and vary among companies of different size and from different economic sectors.
There is a continuous commitment of policymakers in the UK to support innovation in small and medium-sized firms. For these policy initiatives to be successful, an understanding of the factors driving innovation activities is required. In this study, the focus is upon the role that information and communication technologies (ICT) play in the innovation performance of UK small and medium-sized enterprises (SMEs). Using data drawn from the 2004 Annual Small Business Survey (ASBS) database, it is shown that ICT operate primarily as efficiency-enhancing technologies, although specific market-oriented applications (that is, website development) exhibit the potential to create competitive advantage through product innovation.
In this paper, we investigate the issue of financial constraints to innovation in SMEs in Italy with respect to the future changes in the banking system, which will be driven by the adoption of the new version of the Basel Capital Accord, scheduled to be implemented after 2006. The study is based on firm-level data from the Mediocredito survey (2004). The availability of a qualitative indicator of financial constraints allows us to estimate possible determinants of credit rationing. Our empirical analysis is twofold: first, we implement a probit model in order to observe if the indicators of R&D intensity exert a significant impact on the probability of being denied credit. After deriving these results, which in general suggest a weak effect of the variables accounting for R&D intensity on the probability of a firm declaring the need of additional financial resources, we perform a simulation on the potential impacts of the adoption of the Basel II capital requirements by Italian banks on lending conditions to small and medium enterprises involved in product innovation.
Professor Vesper is with the University of Washington, USA and W Ed McMullan and Dennis M. Ray are with the University of Calgary, Canada. At least half of the business schools in the United States and Canada now offer courses in entrepreneurship. In those schools the typical pattern is to offer one three- credit cours in the subject. Such a course ordinarily centres around preparation by students of a detailed plan of steps to be followed for creating a new business enterprise. Class activities usually include some lectures by entrepreneurs as well as the instructor; plus review of prior business plans by other entrepreneurs, often combined with case studies. A few schools have gone on to offer more than one course, possibly a second course in which those students who wish to do so can carry further forward their business plan. A still smaller number of schools, around a dozen, have enough different entrepreneurship courses to permit students to major in the subject. A next step, already being explored by two or three schools, would seem to be development of an entrepreneurship degree programme.
This paper uses a unique, longitudinal data set of UK and German new technology-based firms (NTBFs) to investigate the determinants of internationalization and firm survival. Specifically, it tests the influence of absorptive capacity, inter-firm specific relationships and international exposure on survival. Its key findings are that high absorptive capacity increases survival probabilities; specific customer–supplier relationships enhance survival; and the greater the firm’s exposure to internationalization activity, the higher its subsequent chance of survival. Thus, the paper provides evidence that young firms are more likely to survive when they pursue an internationalization strategy based on resource consolidation.
In this paper we study how small and medium sized firms successfully decouple themselves from declining markets. Based on detailed interviews with 20 small business top managers, we observe that most firms employ a multiple-strategy approach, simultaneously pursuing a differentiation and a product-service customization strategy. Most aimed to serve the entire market spectrum but aimed to differentiate themselves through aggressive innovative and product customization. Following this strategy, firms actively search for the high-margin products, avoid aggressive price competition, while at the same time keeping a very tight tab on costs. Most surprisingly, there is agreement that operating in such a market environment is rather ‘exciting’, pointing to the special role the manager plays in identifying the strategies that can alleviate the negative effects of the environment and grow irrespectively.
This article explores how people in the European schools' environment understand entrepreneurship, by tapping into the metaphors that they employ to describe entrepreneurs. Metaphors, where the characteristics of one thing are attributed creatively to another, have previously been shown to be a rich repository of socially constructed meanings.We find that across the European Schools' environment, the entrepreneur is a conflicted social archetype, simultaneously perceived as an aggressor and a winner, a victim and an outsider. Most transnational homogeneity existed in relation to the perception of the entrepreneur as a predatory aggressor, while positive constructions of the entrepreneur were more likely to be diverse between the six countries studied.These social constructions within European schools must be taken seriously if enterprise education is to be effective.We must take account of national divergence in understandings of the entrepreneur, as well as recognizing the pan-European suspicion of their predatory potential.
This research note investigates the failure probability of British Initial Public Offerings (IPOs) on the Alternative Investment Market (AIM) in terms of spatial proximity to London and operating within the financial services sector. The results suggest that financial services firms in proximity to London experience a higher failure rate on AIM. It is suggested that part of the higher failure rate observed on AIM, compared to the failure rate of small IPOs elsewhere, can be explained by the London dominance of AIM, which favours those financial sector businesses that manage to achieve an IPO.
This paper analyses the determinants of the export propensity of UK small and medium-sized enterprises (SMEs) based on the 2004 Annual Small Business Survey. Particular emphasis is placed upon the relationship between innovation activities (distinguishing product from process innovation) and export performance. In general the data suggest that some 17 per cent of firms within this group sell outside the UK. Businesses that export are also characterized by high levels of innovation activity (43 per cent of exporters innovate in products, 27 per cent innovate in process and 21 per cent innovate in both). When considering product and process innovation independently we find that both impact positively on the decision to export. However, once we consider the interdependence between both innovation activities, we find no robust evidence that process innovation increases the probability to export beyond product innovation.
The aim of this article is to conduct an exploratory study into how SMEs apply Reengineering. In particular, the approach of SMEs to Reengineering definition and methodology are examined. Reengineering has developed from a background in large enterprises. Existing methodologies mainly assume a large organization setting with large-scale resources dedicated to bringing about the large-scale reengineering changes. The paucity of studies in SMEs is surprising given the current and anticipated future market challenges in the SME environment that increase pressure for organizational realignment and responsiveness and market agility. The research involved a literature review and an exploratory multiple case study analysis. In total eight case studies on SMEs, where reengineering had been applied, were analysed using an inductive research methodology, which analysed positivistic reengineering approaches and less structured, more phenomenologically based approaches, which emerged within the case analysis. The analysis indicates that the taxonomy and nomenclature of reengineering, as defined by large organization-based studies, has not translated into SMEs, who use much more general terminology.
PROFESSORJAMES CURRAN IS EMERITUS professor at Kingston University, England, and was formerly director of its Small Business Research Centre. Since 1980 the United Kingdom small business population has increased greatly. Small businesses have also acquired a key role in UK economic policies paralleled by a huge development in support structures to promote them. Despite broad rhetorical claims that policies and support help develop a strong enterprise culture and promote UK economic prosperity, the precise outcomes of these policies have been difficult to pin down. As policies developed over the twenty years, the evaluation of their achievements has also proved difficult because of methodological problems. This paper examines the problems of evaluating small business policies and support and draws out some key implications for their future in the UK It concludes that even allowing for the problems of evaluation, one of the best and clearest supported findings is of poor take-up of the support offered. In other words, although small businesses have become much more important in the UK economy, it is unlikely that this has been due to state intervention. Because of the well-entrenched unanimity on the value of small business support in the UK, little attention has been given to whether the support represents good value for public money. Small and medium-sized businesses now account for well over half of business turnover and jobs in the UK. Not only can there be doubts about whether the policies and support are cost effective but more importantly, the question can be asked whether such policies are needed at all any more.
In England, publicly supported advisory services for small firms are organised primarily through the Business Link (BL) network. Based on the programme theory underlying this business support services we develop four propositions and test these empirically using data from a new survey of over 3,000 English small firms. Our empirical results provide a broad validation of the programme theory underlying BL assistance for small firms in England during 2003, and more limited support for its effectiveness. More specifically, we find strong support for the value of BL operators maintaining a high profile as a way of boosting take-up. We also find some support for the approach to market segmentation adopted by BL allowing more intensive assistance to be targeted on younger firms and those with limited liability status. In terms of the outcomes of BL support, and allowing for issues of sample selection, we find no significant effects on growth from ‘other’ assistance but do find positive and significant employment growth effects from intensive assistance. This provides partial support for the programme theory assertion that BL support will lead to improvements in business growth performance and stronger support for the proposition that there would be differential outcomes from intensive and other assistance. The positive employment growth outcomes identified here from intensive assistance, even allowing for sample selection, suggest something of an improvement in the effectiveness of the BL network since the late 1990s.
This study had two primary objectives. First, to determine whether there are any systematic networking diffesrences between male and female SME owners. Second, to determine if there is an association between networking and firm performance, for both male- and female-controlled SMEs. The results of examining 2,919 male- and 181 female-controlled SMEs (with at least one employee) over a three-year period suggest little difference in the networks accessed by male and female SME owners after controlling for education, experience, industry, age and size. The results also indicate that several formal and informal networks are positively associated with firm survival but only formal networks appear to be associated with growth. In particular, accessing an external accountant is associated with survival and growth for both male- and female-controlled SMEs.
Rik Donckels is the director of the SME Research Institute, UFSAL University College, Brussels, Belgium. Jan Degadt is a senior researcher at the same institute. In the first part of the paper, some theoretical considerations are given. Public authorities are considered as being a multi-dimensional component of the external environment. The distance problem between SMEs on the one hand and public authorities on the other hand is described, and attention is paid to the existing communication lines and information flows. The second part of the paper is based on empirical research for Belgium, the results of which are compared to findings for other countries. The bottom-up communication line from SMEs to public authorities comes first. Afterwards the top-down communication line is studied. In the last section of the paper some conclusions can be found. The most important conclusions are:
-SMEs and PAs should make special efforts to shorten the distance between them and to bridge the communication and information gap.
-There is a need for a standardised "Bank of SME-knowledge" on an international scale.
-The administration burden involved by information gathering by PAa is considered to be annoying and a rather unproductive type of work. SME-people ask for a feedback relevant to them and useful for their particular business.
-The information-awareness of SME-managers should be increased. There is no systematic search for information and the attitude towards information varies as a function of the individual characteristics of the entrepreneur, the content of the information and the dimension of the firm.
-Bridging the communication and information gap is also a matter of how to procure information and how to ask for data. The diffusion of modern communication techniques will go on. One has to take advantage from this evolution in order to increase effectivity and efficiency as well. There is a need for a fundamental change, which is to be based on personal motivation, insight, education and training.
Building on the literature relating to bank market structure and on the research analysing costs and benefits of concentrated credit relationships, this article aims to empirically assess whether, and to what extent, local credit market concentration impacts on SME default riskiness – making this impact conditional on the closeness of lending relationships. Controlling for inertia, unobserved heterogeneity and endogeneity, we find that bank market concentration positively and significantly affects SME default riskiness when these firms borrow heavily from their main bank and have few credit relationships with other intermediaries. Furthermore, according to our evidence, the influence of credit market concentration on firm default probability is greater as the duration of (close) credit relationships lengthens.
This article examines how firm-based and founder-based determinants of international (as opposed to domestic) new venturing are moderated by perceived barriers to internationalization. In order to test the theoretically derived hypotheses, this article applies event history analysis to a sample of technology firms. The results show that the influence of growth orientation, international network contacts and knowledge intensity on international new venturing varies depending on the perceived financial barriers. Thus, this article provides a contingent perspective within the research field and a contrast to the quite categorical discussion regarding determinants of international new venturing and barriers to internationalization.
We offer a critique of conventional approaches to entrepreneurial barriers and point to the neglect of social and emotional processes in their operation. Drawing from qualitative interviews with 25 entrepreneurs in Russia, we suggest that power rituals between entrepreneurs and state officials may impair entrepreneurial motivation. Our main contribution lies in conceptualizing barriers not simply as objective obstacles but as processes of barring, and in exploring how these might emerge. We elaborate a model of the social nature of barriers and the mediating role played by emotions. We discuss the implications of barring for entrepreneurial action more broadly.
DR. ROBERT BLACKBURN IS HSBC Professor of Small Business Studies and director of the Small Business Research Centre, Kingston University, England, and Dr. David Stokes is assistant director of the Small Business Research Centre at Kingston University. This paper examines the use of a focus group method for investigating business owners. The method is almost absent in the study of business owners or their enterprises, or has been used as a precursor to quantitative-based research. It was found that the organisation, running and analysis of focus groups is resource intensive. In return, the method provides a richness of data uncommon even in many face-to-face data collection strategies. The method adopted is shown to unearth the motivations, rationales and experiences of business owners in relation to their succession strategies. The paper concludes with a discussion of the ability of the method to provide stand-alone results and help overcome the culture gap between researchers and business owners.
PIERRE-ANDRE JULIEN, AN INDUSTRIAL economist, is Director of the Bombardier Chair in Management of New Technology for Small Businesses and director of the Revue Internationale PME; Andr6Joyal is a regional economist and co-director of the Research Group in Economy and Management of Small Businesses (GREPME); Laurent Deshaies is a regional geographer and a member of GREPME. All three are professors at the University of Quebec at Trois Rivieres, Canada. Charles Ramangalahy is a research assistant with the Bombardier Chair. This paper presents the result of an in-depth case study of 20 small and medium-sized manufacturing firms, which examined their historical background, the entrepreneurs' objectives, marketing strategies, and the resources used to support export activities. Three different types of firms were identified. The first type, referred to as 'professional exporters', are proactive, have complex marketing strategies and use considerable internal and external resources in export development. A second type, referred to as 'opportunist' exporters, comprises small businesses that export as the opportunity arises; they wait for orders, behave reactively, have no specific strategy and no dedicated export resources. Between the two are 'transitional' exporters, firms trying either to achieve the status of professional exporters by becoming better organised, or to withdraw altogether from exporting in order to devote their resources to domestic market needs.
This paper on a family-controlled firm in Singapore suggests how such businesses, in competitive industries, may grow and survive. Located in the literature on small firm growth, we explore a corporate incident that threatened the survival of the firm under study. An analysis of the manner in which the firm’s managers responded to this threat by developing and launching a new core business, without external intervention, forms the basis of the scholarly contribution of the case. It illustrates how a corporate incident can draw the attention of core shareholders to their need to address specific business and management issues and make subtle organizational changes that ensure the firm’s survival under close control.
Since the growth of the ‘born global’ concept, much of the established literature has tended to overlook the development of its characteristics outside high technology sectors. To further enhance our understanding of this phenomenon, this article draws on the ‘born global’ literature to identify common internationalization behaviours with which rapidly internationalizing firms are involved. Six propositions are developed related to the key dimensions of pace, scale and pattern of firm internationalization. The results from a comprehensive case study of four non-high-tech Australian ‘born global’ firms suggest that entrepreneurial interpretation is a factor in determining the pace with which a firm internationalizes. Other key implications include the importance of product imitability in assessing the extent of a firm’s international operations, the significance of psychic distance in the assessment of prospective international markets, and that entry mode choice is influenced by the prevailing trends established in each firm’s industry and the need to maximize its internal resources.
The article tracks potential employees (team members), university scientists (advisors) and venture capitalists (investors) who participated in a two-day workshop at Stanford University. The three groups are identified as either having preexisting professional interactions with the other two groups prior to attending the initial workshop, or having met for the first time at the workshop. The groups are then tracked over time for entrepreneurial activity. Positive relationships are found for groups who had preexisting professional interactions for founding a firm after the workshop. The article argues that innovation accelerators, such as the Stanford University workshop, offer invaluable social capital building opportunities to accelerate needed trust and tacit knowledge requisite for new firm formation.
This article addresses the under-researched issue of risk management (RM) and risk management capability building in small and medium sized enterprise (SMEs). It draws upon theories of social capital to explain enablers and obstacles for RM capability building and practice sharing in a small and medium-sized construction enterprise in China. Two related propositions are made: first, RM capability is built by SMEs without formal structures and knowledge; and second, such firms are more likely to adopt informal processes to develop RM capability. The article concludes that the role of cognitive capital is the most important for the RM capability building of SMEs and that cognitive capital plays a crucial role in accumulating structural and relational capital. It proposes a model of cognitive capital-based RM capability building in which integrates communication, knowledge, relationship and learning.
In addition to external ratings, an increasing number of enterprises are evaluating creditworthiness by themselves, especially when it comes to short-term decisions. This article presents a method for developing internal ratings to best select among the business partners of a firm. As this is a very complex goal, the Analytic Hierarchy Process is applied, in which the problem is approached step by step. Managers’ and experts’ judgements are taken into consideration when structuring the problem. Since qualitative factors come into play, special attention is given to determining not only quantitative but also qualitative criteria. Their importance is also assessed. The applicability of this method (especially in small and medium-sized enterprises) is discussed and introduced via a practical case from a small Slovenian enterprise.
This paper is a critical evaluation of claims that business exits should not be seen as failures, on the grounds that sometimes they correspond to voluntary liquidations, or because they are learning opportunities. This can be seen as further evidence of bias affecting entrepreneurship research – where failures are repackaged as successes. We reiterate that the vast majority of business exits are unsuccessful. Drawing on ideas from the organizational life course, we suggest that business death is a suitable word for describing business closure. Even cases of voluntary ‘harvest liquidation’ such as retirement can meaningfully be described as business deaths.
The article reports on a qualitative study of the motivations for and experiences of business ownership amongst 11 male gay entrepreneurs in the UK. Included in this analysis is a comparison with issues identified throughout the extant literature for other minority groups, particularly women. Corroborating previous studies, the male-gay-owned firms studied here were concentrated in the service sector and catered to diverse markets. While homophobia is reported in both employment and business ownership it is indirect and implicit rather than direct discrimination or harassment and is not cited as an entrepreneurial motivator. The findings are of importance insofar as they provide new knowledge and consequently, further our understanding of the diverse phenomena of entrepreneurship. Further, the article illustrates that heteronormativity and the gendered nature of most employment contexts also extends to the entrepreneurship domain.
DAVID SMALIBONE IS A SENIOR LECTURER IN the school of Geography and planning at Middlsex Polytechnic, Engalnad,with urrentresearch interest in enterprise agaencies, new business and adjusttment processes in nature small frims. this paer aims to ccontribute to knowlede of the charctersitics nd problems of new firms through a lngtudiinal study of a group ofo new business helped tostart by a loca lenterpriise eagency, a unique British organisatiion which provides free or low-cost advice andsupport to young firm and which are themselves funded by laarge local business and local authorities. The characteristics of survving andfaled businesses are described, together wiith theproblems faced in the itnitial trading periodl. the role of external agencies n provding continued support aftr start upsi also discussed breifly. Apart from contributing to a more informed assesment of the recent grwth in the number of new business and self-employed, the paer outlines smeimplcation of the findings for improving the qualty of new business starts.
The case-study method has a long and respected history in the mainstream management literature. The philosophy and implications of the case-study method have received considerable attention and there are a number of standard texts on the approach. The method is also gaining acceptance, along with other qualitative methods, within the small business and entrepreneurial research community. Yet there has been little discussion of the distinctive philosophical consequences of applying the case-study approach in this area. This article will address this gap by mapping the paradigms adopted by small business and entrepreneurial case-study researchers. This will provide a platform upon which to explore the consequences of the paradigmatic position that researchers adopt.
SHUI-YING CHAN IS WTITH THE CITY LTniversitx of Hong Kong and M. J. Foster is associate dean of the Faculty of B1usiness at Kingston University, England. This paper describes the results of a stuidv examining the strategy formulation process in small businesses in Hong Kong in th-le i-iid-1990s. It is believed to be the first stuch study. A sample of some 42 businesses were examined to determine how their actual planning behavioutr comipared with that predicted fromii a suin ple, three-stage imodel of the strategy f'or-niitulationi process based on the literature in both strategy and small business. The imnpact of elenrienits of owner-managers' backgrouni-ds o01 tlhc process xras also examninled. The samiiple ol companies coveret a witle rangc of buisillesses with the bulk being in the sel-xite segmeints of variolus sorts, tlhis being i-epresentative of tlhe Hong Konig econoiny. The 'westernised Chinese' niatuire of most of Hong Kong's resideints was seen to be an iinportant contexttal factor to observed behaviour. The paper concludes with some brief suggestions for ftuttire behaviour bv such small firms.
Many SMEs have been slow to exploit the potential of e-business. However, it can be difficult for any firm to gain value from e-business, and particularly so for SMEs that may lack important information technology (IT) competences. The study focused on one SME which had undertaken a series of e-business initiatives over a period of 10 years. The analysis revealed that the firm used e-business in two different ways: e-business for innovation, and e-business for integrating business processes. Four IT competences were found to be particularly important to the firm’s developments: IT leadership, business systems thinking, architecture planning, and making technology work. The study provides a detailed understanding of how the firm used e-business to gain value and how its IT competences influenced its e-business developments. The study also shows that a lack of competence in some areas inhibited the firm’s e-business developments.
DR. DAVID GADENNE IS A SENIOR LECTURER in Accounting and Foundation Studies at Sunshine Coast University, Queensland, Australia. The main purposes of this paper are to determine whether there were any common (or different) management practices across different industries that contribute to the successful financial performance of small businesses; to determine whether any antecedent factors, in the form of owners' personal characteristics and enterprise objectives, significantly influence successful management practices for small business; and to document the practical implications of the current research for small business practice. While much previous research focused on the underlying 'causes' or reasons for the success of small business enterprises, very little research has been undertaken in relation to the different factors that are used to measure success across different industries. Moreover, the lack of a comprehensive theoretical framework between various factors and small business success has limited the usefulness of previous research. Accordingly, this study contributes to the existing literature by using a causal model framework involving the relationship between management practices and small firm performance for three different industry types, while considering the antecedent factors of small business owners' personal characteristics and small business enterprise objectives on management practices. The results show that there are different management practices associated with small firm success between industry groups and significant effects of enterprise objectives on management practices for only one type of industry.
This article uses empirical evidence from the UK to consider how demand for external finance changed as the economy entered recession and whether external finance became more difficult for entrepreneurs to access as the recession progressed. It finds that larger firms and those experiencing declines in sales were more likely to maintain or increase their demand for external finance. The opposite was true for women-led businesses. Generally, finance was more readily available to larger and older firms throughout the recession. At its peak 119,000 (10% of the total stock) smaller firms were denied credit in a three-month period.