Showing papers in "Journal of Small Business Management in 1990"

Human Resource Management in Small Business: Critical Issues for the 1990s

Abstract: HUMAN RESOURCE MANAGEMENT IN SMALL BUSINESS: CRITICAL ISSUES FOR THE 1990'S INTRODUCTION The practice of effective personnel management is one that small businesses need to develop and improve as they expand and grow. The vast majority of businesses in the United States today employ fewer than 100 people and yet current research conducted in the personnel field tends to focus on larger firms (over 100 employees) that employ full-time personnel specialists. One study of personnel functions in smaller firms found that the areas of accounting, finance, production, and marketing all take precedence over personnel management (McEvoy 1984). In many cases, the owner of a small business handles the personnel functions since they are usually limited when the firm employs only a few people. Obviously, an extremely small firm with two or three employees may not develop sophisticated personnel systems; however, there are numerous business that are categorized as "small" that employ a large number of people and need effective personnel policies for their workforce. A survey conducted by Hess (1987) showed that small business owners rank personnel management as the second most important management activity next to general management/organizational work. However, while small business owners/managers consider personnel management to be an important issue, business management textbooks do not devote enough coverage to the relevant personnel management concerns for small businesses. Even though personnel management was the second highest ranked management activity, Hess found that small business management textbooks only devoted a small percentage of space to discussion of personnel management topics as compared to other topics such as finance, marketing, or planning. Thus, as personnel practices begin to emerge in importance for smaller firms, the literature is beginning to show an increase in actual empirical data on this topic. The purpose of this article is to examine the future trends in personnel practices as perceived by the owners of small firms. In order to examine any changes in perceived concern as a small business grows, this study focuses on three sizes of small businesses: 1-50 employees, 51-100, and 101-150. THE RECENT LITERATURE The recent literature is replete with articles on various issues in personnel management that relate specifically to small business. Topics include benefits (Nation's Business, December 1988), training (Curran 1987), employee leasing (Bacas 1988), selection (D & B Reports, May-June 1987), and strategies for human resource management (Finney 1987). As illustrated by these articles, the bulk of the recent literature dealing with personnel issues specific to small businesses appears to be more conceptual in nature than empirical/data-based. However, a few researchers have examined particular aspects of the personnel field through empirical research. Amba-Rao and Pendse (1985) surveyed the compensation and maintenance practices of 78 small firms ranging in size from fewer than 25 employees to 300 employees. Their study found that most small firms lacked any systematic or rational approach in their compensation practices. Little (1986) examined the personnel functions in 275 small firms employing fewer than 100 employees and, more specifically, who in the organization performed those functions. This study found that typically the owner of a small business with up to fifty employees handles all of the personnel duties himself. Sixty-two percent of firms employing 50-100 employees had one or more full-time personnel managers. However, even in these larger firms, the owners retained certain important personnel functions for themselves. This indicates that personnel is one of the functional roles handled by most small business owners. Verser (1987) interviewed small firms in the midwest to examine the perceptions of male small business owners concerning their control over personnel practices. …

Entrepreneur career selection and gender: A socialization approach

Abstract: ENTREPRENEUR CAREER SELECTION AND GENDER: A SOCIALIZATION APPROACH Employment of women has increased substantially over the last fifty years. Currently, over 50 percent of the labor force in the United States is composed of female workers (Bowen and Hisrich 1986). This trend of increasing female labor force participation is expected to continue for the rest of the twentieth century. In addition, the last decade has seen the number of self-employed women increase by 69 percent compared to a 13 percent increase in the number of self-employed men (Mitchell 1983, Phillips and Crockett 1987, and Nelton 1989). It has been suggested that this growth is in part due to women in the corporate environment hitting the "glass ceiling, the level beyond which promotions are no longer expected (Nelton 1989). However, while women have made inroads into career fields dominated by males, (referred to as non-traditional female careers), their numbers are still quite low. This difference becomes acute when considering the fact that as of 1986 only 29.6 percent of the total sole proprietorships in the United States were owned by women (The State of Small Business 1989). Given that entrepreneurial activity is a major factor in furthering the growth of our national economy, encouraging women to explore the possibilities of pursuring an entrepreneurial career, coupled with the influx of women into the workforce, may have important implications for public, social, and educational policies. A number of investigations have explored the hypothesis that males and females differ on dimensions related to entrepreneurial activity. Traditionally, research has focused on revealing differences in personality traits presumed to differentiate entrepreneurs from non-entrepreneurs (Welsch and Young 1984, DeCarlo and Lyons 1979, Waddel 1983, Sexton and Bowman 1983, Brockhaus and Horwitz 1986). Even though the data concerning personality differences between male and female entrepreneurs is limited, researchers have concluded that gender differences with respect to traits are not a significant factor in explaining the career decisions of entrepreneurs and are not helpful in distinguishing between males and females (Chaganti 1986, Birley 1989). Consequently, the thrust in entrepreneurship research has moved away from investigating psychological traits, instead focusing on such factors as social learning and behavioral experiences (Carsrud and Johnson 1989; Scherer, Adams, and Wiebe 1990). BACKGROUND LITERATURE In the career selection literature differences in male and female career choices have centered on the early social learning experiences of the career decision maker. Such variables as sex-role stereotyping, lack of appropriate role models, and other environmental constraints have been investigated. The conclusion is that women enter traditionally male-dominated occupations less frequently than males as a result of these early experiences which serve to negatively shape preferences for the non-traditional career (Betz and Hackett 1981, Marini 1978, Brooks 1988). When looking at the preference for starting one's own business, similar conclusions have emerged. For example, Scott and Twomey (1988) found that individuals expressing a preference for an entrepreneurial career had been influenced positively by their environment in terms of perceiving that they had the ability to work long hours, possessed a special skill, and were innovative. Ronstadt (1983) looked at individuals who decided against starting their own businesses and found family considerations, time commitments, and lack of role models as important factors. These descriptive studies have been useful in building a demographic profile of the would-be entrepreneur, but have not focused specifically on socialization differences, by gender, in relation to entrepreneurial career selection. Scherer, Adams, and Wiebe (1990) have proposed three social learning indicators of entrepreneurial career selection which can be useful in distinguishing between males and females with respect to entrepreneurial career preference: education and training aspirations, career entry expectations, and career self-efficacy. …

Perceived Advantages of the Franchise Option from the Franchisee Perspective Empirical Insights from a Service Franchise

Abstract: PERCEIVED ADVANTAGES OF THE FRANCHISE OPTION FROM THE FRANCHISEE PERSPECTIVE: EMPIRICAL INSIGHTS FROM A SERVICE FRANCHISE In a relatively few years, franchising has become a major component of the distribution system in the United States. Presently accounting for over one-third of all U.S. retail sales, it is predicted that by the year 2000, the franchising format will distribute half of the nation's retail goods (Padmanabhan 1989). Many business analysts already see franchising as the "wave of the future" and the number of "how to" publications directed at would-be-franchisees grows ever larger. Although many writings aimed at industry and academia list and discuss the advantages of becoming a franchisee, most of this literature is based on the benefits considered significant by the franchisors in marketing their business formats. It appears to have been assumed that franchisees perceive the same advantages to be salient; and few studies have aimed at directly comparing the importance of the advantages as seen from the perspective of franchisees. The purpose of this article, then, is to present some initial empirical insights on the question of why the franchisees choose the franchise route, and to assess the influence of selected correlates on this decision. Unlike previous studies, level of agreement measures as well as rankings were obtained for different advantages to ascertain their relative attractiveness to the franchisees. The impact of three correlates, namely, (1) the number of years in the franchise, (2) annual sales, and (3) prior business experience on the perceptions of the franchisees is also analyzed and discussed. The data were obtained from the franchisees of a major national service franchise system. LITERATURE REVIEW Advantages of Franchise Format to Franchisees Despite an abundance of writings delineating the advantages of the franchising format to franchisors and franchisees (Izreali 1972, Diaz and Burnick 1969, Hunt 1977, Vaughn 1979, Mendelsohn 1985, Stern and El-Ansary 1988, Justis and Judd 1989), no theoretical framework has been proposed for organizing these advantages into a taxonomy or a hierarchical typology. Rather, the advantages suggested (and actually promoted within the industry) stem directly from the very logic and nature of the franchise format. Broadly, one can dichotomize these reasons into (1) the advantages of the franchise route over starting one's own business, and (2) the advantages of franchising as a business option over being an employee. Although both categories of reasons are likely to be potential motivators to would-be franchisees, past literature has largely dwelled on franchising's advantages vis-a-vis independent business, with the notable exception of the "relative independence compared to being an employee" reason. Presumably, this is so because the independence reason is the only major and unique advantage franchising offers over being a salaried employee. For instance, although "higher earning potential" would be another advantage over working as an employee, this reason is also a purported advantage of franchising over independent business. Similarly, other advantages over salaried work such as "excitement of running one's own business," "desire to succeed," and "autonomy" are related to independence and higher earning potential. Hunt (1977) summarized what he considered to be the greatest advantage of franchising as follows: "To franchisees, franchising offers one of the most potent advantages of belonging to a large chain while, at the same time, being an independent businessperson. To compete effectively with corporate chains and others, franchising offers trade-names and trade-marks, and pre-opening and post-opening assistance.. .. Unquestionably, one of the major advantages of a franchise is the trade-name of a franchise." Diaz and Burnick (1969) have suggested similar benefits and stated: "It is apparent that they [franchisees] were attracted to franchised businesses because the `franchise package' was recognized as superior to the `package' that the franchisee as an individual could create through his singular efforts. …

Work-Home Role Conflict in Female Owners of Small Businesses: An Exploratory Study

Abstract: WORK-HOME ROLE CONFLICT IN FEMALE OWNERS OF SMALL BUSINESSES: AN EXPLORATORY STUDY* A critical problem faced by female entrepreneurs is the tension that exists between their personal lives and career pursuits.(1) This tension may be viewed as a form of interrole conflict in which the role pressures from the work and home domain are incompatible.(2) In short, involvement in one role becomes more difficult because of involvement in the other role.(3) The social and psychological significance of this topic is enhanced by the continued growth of female-owned firms relative to the growth rate of male-owned firms.(4) In fact, the number of women-owned non-farm sole proprietorships increased by 62 percent between 1980 and 1986, far outstripping the 41 percent increase among all non-farm sole proprietorships over the same period. Work-home conflict literature suggests points of concern.(5) The extent of work-home role conflict for contemporary female business owners has received little attention. To date, most entrepreneurial and small business studies have not fully explored the variables influencing work-home role conflict. The existing work-family role conflict literature has a distinctive non-entrepreneurial slant, in that it deals with women who are employees rather than owner/managers, and often employs samples that are predominently male. Accordingly, the general purpose of this study is to probe, in greater depth, the content and nature of work-home role conflict for female small business owners. Specifically, this study will: 1. Identify the extent of work-home role conflict experienced by female small business owners. 2. Determine the impact of relevant variables expected to affect this conflict. These include: business-related factors (number of hours worked, business satisfaction, perceived financial health of the business, and number of employees); family-related factors (happiness in marriage, marital status, and size of the family); and personal factors (perception of self-worth, life satisfaction, education, and age). REVIEW OF LITERATURE General issues of work-home conflict have been addressed in previous research, and a number of critical relationships have been noted. The findings indicate that time pressures, family size and support, job satisfaction, marital and life satisfaction, and size of the firm are important variables affecting work-home role conflict. Time Pressures Time pressures bear prominently on the level and extent of work-home role conflict. Quite naturally, as more time is spent on work roles, less time is available to be devoted to home and family roles. It is expected, and previous studies have reported, that work-home role conflict is positively related to the number of hours worked per week.(6) Yet these studies have not dealt specifically and exclusively with female small business owners. Family Size and Support In addition to time pressures, family size also affects work-home role conflict. Keith and Schafer reported higher levels of work-family role conflict for larger families.(7) Not surprisingly, parents of younger children (presumably more demanding of parental time) experienced more work-home role conflict than did parents of older children.(8) However, Beutell and Greenhaus noted that large families produce conflict primarily for women whose husbands are highly involved in their own careers, and thereby devote little time to the family.(9) In addition to family size, the degree of family support appears to be an important factor affecting work-home role conflict. Holahan and Gilbert reported that support from family members can help reduce or relieve perceived work-home role conflict.(10) Yet, family support for female entrepreneurs may be limited. …

Strategic Alliances and the Small Technology-Based Firm

Abstract: STRATEGIC ALLIANCES AND THE SMALL TECHNOLOGY-BASED FIRM The changing nature of business as reflected in such factors as increased competition, both national and international, the increasing internationalization of markets, and new global competitors has meant that firms both large and small have had to develop new strategies to react to these changes. For small technology-based firms (STBFs) changes in the environment in the form of shortened product life cycles, the more rapid diffusion of new technology, and the increasingly multidisciplinary nature of new technology have added to these challenges. These latter factors are of paramount importance to STBFs as more often than not their technology is their principal competitive weapon. It is now well recognized by managers that technology should be used as a competitive weapon and as such be an explicit part of the firm's overall strategy (Porter 1985, Frohman 1982). It has been posited that technological change is one of the principal drivers of competition and that it can play a role in changing industry structure, creating new industries, and eliminating others. Indeed for some firms technology may be their dominant competitive variable (Alster 1986), though its role can vary over each product's technological life cycle (TLC). Firms in emerging high technology industries are usually faced with unfamiliar products and/or processes and a new set of vendors. Neither the organization nor the environment is yet structured and a certain amount of instability and chaos exists in both, thus making the strategic management of a firm in such an industry a difficult task (MacDonald 1985). The STBF is often characterized as having a disproportionate number of scientists and/or engineers with bright ideas and strong innovative ability to produce new products, but possibly lacking the necessary business acumen or resources to commercialize them. The skills needed to bring a product to market always include marketing, distribution, and selling skills, but for some products/processes other skills are also required. For instance, in the new biotechnology industry it is essential for many firms to acquire scaleup, manufacturing, clinical testing, and regulatory approval skills in order to commercialize their products. The STBF cannot compete by using economies of scale, for both its size and rapid technological change can invalidate this option. Thus the development of innovative new products or processes is the firm's key competitive weapon. The development of product/process expertise can increase the innovative capacity of the firm and pose a barrier to new entrants, but in the increasingly competitive high technology world, where new technology is rapidly diffused, the company must develop other strategies whereby it can exploit and sustain its technological leadership. More and more, small high technology firms are using innovative developmental strategies to do this. STRATEGIC ALLIANCES One such strategy is the use of strategic alliances (SAs) or collaborative arrangements as an explicit part of the firm's development plan. A recent study of small biotechnology firms that use SAs found that for most such firms, SAs were a part of their long-term strategy (Forrest, unpublished study). A variety of terms have been used to describe the relationships which exist between two organizations when they collaborate for strategic reasons. The terms "strategic alliances," "strategic partnerships," "collaborative arrangements," "co-operative agreements," or "coalitions" can be found throughout the literature (Porter and Fuller 1986, Mariti and Smiley 1983, Harrigan 1985, Adler 1966, Varadarajan and Rajaratnam 1986) and have often been used interchangeably. One analysis (Forrest and Martin 1988) of the various ways that firms can link up with other organizations for strategic reasons has identified a range of different types of SAs which are summarized and defined in table 1. …

Dropping the E-Words from Small Business Research: An Alternative Typology

Abstract: DROPPING THE E-WORDS FROM SMALL BUSINESS RESEARCH; AN ALTERNATIVE TYPOLOGY(*) The words "entrepreneur" and "entrepreneurship" (the E-Words) continue to bedevil small business scholars. The reason is in the past. Economists originally identified entrepreneurs as those who were the instruments of major macroeconomic change. Max Weber and Joseph Schumpeter used the terms to critique the ideas of Karl Marx. The entrepreneur was an "ideal type," representing a class of individuals, to be used along with terms like "capitalist," "bourgeoisie," or "proletariat" (Collins 1986, Giddens 1971). Moreover, the entrepreneur was an agent of change, breaking the "circular flow" or macroeconomic equilibrium. Entrepreneurial change was discontinuous change, as entrepreneurs devised "new combinations" of economic forces. As a historical explanation of macroeconomic change, the concept of entrepreneurship worked quite well, reaching its most systematic development in the work of Schumpeter (1961). But for the concept of entrepreneurship to enter the mainstream of economic thought, it had to be quantifiable for use in elaborate economic models. Although many have tried to quantify the effects of entrepreneurship, the task seems impossible. Demsetz (1983) explained that an entrepreneurship variable cannot be used in predictive models. Successful entrepreneurship (the only kind that has an economic effect) is purely a matter of luck. Entrepreneurs are attempting to initiate major economic changes all the time, but conditions have to be right before any of them can make an innovative breakthrough. Which will be successful cannot be known until after the success occurs. No one can quantify the "unforeseeable" effects of entrepreneurial activity because, by definition, the entrepreneur is doing something new. Economic models describe entrepreneurial effects after the event, not before (Demsetz 1983). Unfortunately with all their problems, the terms "entrepreneur" and "entrepreneurship" have saturated the field of small business research, to the detriment of all because there are no commonly accepted definitions of the terms (Low and MacMillan 1988; Kent 1984; Kilby 1971; Wortman 1986). This is not a new problem (Livesay 1982), but with the current popularity of "entrepreneurship," definitional problems seem to be worsening (Gartner 1988; Carland et al. 1988). What can be done? Some feel the solution is to continually redefine the terms "entrepreneur" and "entrepreneurship" (Gartner 1988; Carland et al. 1988; Low and MacMillan 1988; Ronan 1988). Others have constructed elaborate models in an attempt to deal with "corporate entrepreneurship" (Spann, Adams, and Wortman 1988). But the terms are 300 years old and carry too much historical baggage. Researchers are trying to employ the concept of entrepreneurship in ways never intended by those who coined and developed it. However useful in historical studies of macroeconomic change, the concept of entrepreneurship is not helpful in small business research. THE WARRIOR EXAMPLE To begin the discussion, consider the term "warrior," another concept useful in historical narrative but of only limited application in particular cases. The actions of warriors have been a crucial element in the development of all societies, arguably more important than the actions of entrepreneurs. History, anthropology, and sociology are replete with accounts of the actions of warriors. For the sake of this argument, assume that the accepted definition of the term warrior is "one who engages an armed enemy in personal combat." Now imagine that a researcher is attempting to improve the performance of U.S. soldiers in combat. The researcher travels to a combat action to do field research, say, the 1965 Battle of the Ia Drang Valley in Vietnam between the U.S. 1st Air Cavalry Division and elements of two North Vietnamese regiments. Assume that our researcher has only the concept of "warrior" to help him understand the soldiers he is interviewing. …

A Controlled Experiment Related Entrepreneurial Education to Students' Start-Up Decisions

Abstract: A CONTROLLED EXPERIMENT RELATING ENTREPRENEURIAL EDUCATION TO STUDENT'S START-UP DECISIONS INTRODUCTION Over the last two decades, institutions of higher learning have experienced an increased demand for courses dealing with entrepreneurship and new venture creation. Vesper and McMullan (1988) report that while only around a half dozen U. S. universities offered entrepreneurship courses in 1967, the number had increased to around 300 by 1988. These figures are not surprising when both the substantial effect entrepreneurship education has on entrepreneurial success (Chusimir 1988, Ronstadt 1985, Clark et al. 1984) and the positive relationship between entrepreneurship education and economic development (McMullan and Long 1990, McMullan and Long 1987, McMullan et al. 1986, McMullan et al. 1985) are considered. In their efforts to respond to the growing demand for entrepreneurship education, universities have created a variety of course offerings. These range from traditionally structured courses consisting of lectures, venture design projects, case studies, and readings (Vesper 1986) to innovative courses developed to address the unique personality characteristics of the entrepreneurship student (Sexton and Bowman-Upton 1987). However, "studies related to teaching effectiveness of entrepreneurship courses have been limited" (Sexton and Bowman-Upton 1988). There has been a lack of formal educational research in the field of entrepreneurship, with almost no research treating the subject of performance outcomes in entrepreneurship education (Vesper 1985). The purpose of this article is to contribute to the literature on the effectiveness of entrepreneurship education by reporting the results of a study that empirically assessed the impact of an introductory entrepreneurship course on students' views of a new venture's viability. BACKGROUND The decision of whether or not to initiate a venture is central to the understanding of entrepreneurial activity. Though different authors discuss new venture initiation from various perspectives, decision making is an important part of each author's conceptualization. For example, Greenberger and Sexton (1988) present a model that, "depicts the decision to initiate a new venture as arising from the interactions of a number of factors, including personality, situational variables, self-perceptions, and social support." Olson (1986) characterizes entrepreneurs as opportunistic decision makers, and Cole (1959) identifies decision making as the critical or key component in entrepreneurship. Timmons et al. (1985) suggest that, when faced with a constant flow of opportunities, knowing which opportunity to focus on and which to say no to is critical for entrepreneurs. Despite this importance of entrepreneurial decision making, few authors have empirically investigated the entrepreneurial decision process itself, and Vesper (1980) suggests that tracking back the mental process through which venture ideas are generated and screened is a type of research that remains to be done. This research was undertaken in order to give introductory entrepreneurship students the opportunity to make multiple simulated new venture decisions at both the beginning and the end of an entrepreneurship course. The resulting data provided individual students with a basis for better understanding their own new venture decision process. Additionally, the course's ability to change student decision behavior from a primary emphasis on long-term profitability to a more balanced consideration of the means to achieve that profitability was assessed. Entrepreneurship Course Pedagogy A review of the syllabi from entrepreneurship courses (Vesper 1985) reveals numerous teaching approaches. Though diversified, each approach provides students with exposure to entrepreneurial activities while laying the groundwork for the critical skills needed to pursue entrepreneurship as a career option. …

Saint Martin/Sint Maarten: A Case Study of the Effects of Culture on Economic Development

Abstract: SAINT MARTIN/SINT MAARTEN: A CASE STUDY OF THE EFFECTS OF CULTURE ON ECONOMIC DEVELOPMENT Government policy plays a strategic role in directing the economic development of a country. This international note compares the development efforts of two nations that coexist on the island of St. Martin--at 37 square miles, the smallest land mass in the world which is divided into two countries; nowhere else do two distinctly separate governments rule a smaller island. Consequently, this study reflects what is almost a controlled experiment in economic development. A remote island, with limited natural resources, has been divided into two sectors, each influenced by its respective culture, for a substantial number of years. The difference in development can thus be partially attributed to the differences in culture, as well as differences in government and policy. Each nation has its own official language, currency, predominant religion, and distinct culture, but most striking is the fact that differences in culture have resulted in contrasting policies on small business and consequently significantly different environments for entrepreneurship. Although both governments attempt to encourage economic development, the role of the state in small business formation in these two island economies differs greatly. "American business sometimes thinks that government can best help business by not interfering with it; many believe laissez-faire is the best policy because they feel that it is dangerous to have the government in business. In France, the attitude is the opposite. There, business wants government intervention in the business sector, for the purpose of keeping potential danger out" (Dana 1988). In French Saint Martin, the state has succeeded in regulating to the extent of keeping danger out, but entrepreneurship as well; in Dutch Sint Maarten, by contrast, policymakers have created an environment supportive of entrepreneurship under the assumption that entrepreneurs emerge in favorable environmental circumstances. Indeed, they have. Peterson (1988) has developed a typology to classify government policy into three categories: (1) laissez-faire-ist; (2) limited environmental approach; and (3) strategic interventionist approach. The "laissez-faire-ists" are content with natural processes within a market economy, with no assistance or interference from the government. Such an approach is pursued by those who view state intervention as an impediment to spontaneous private, entrepreneurial development. The limited environmental approach holds that government aid is legitimate so long as it is limited to ensuring a proper tax climate and positive stimulation of economic conditions. The strategic interventionist approach favors even greater government support such as deregulation, educational enhancement, and direct financial aid. Dutch Sint Maarten has taken what Peterson describes as the limited-environmental policy approach, thereby creating a supportive environment(*) in which entrepreneurship can flourish. The result is a thriving business community characterized by sophisticated entrepreneurial activity. In contrast, French Saint Martin, a subprefecture of Guadeloupe, which in turn is an overseas department of France, has an abundance of restrictions, regulations, and paperwork requirements (Peterson and Peterson 1981) as well as some regulated prices (Levi and Dexter 1983). While many of its citizens commute illegally to Dutch Sint Maarten for work, much of French Saint Martin has remained largely rural and agricultural. Sint Maarten has a larger population than Saint Martin. In some instances a difference in population can be an explanatory variable for the propensity to entrepreneurship; in the case of Sint Maarten, however, it can be argued that an environment conducive to entrepreneurship appears to be attracting more people. The birth rate is higher in Saint Martin where the official religion does not condone contraception; yet demand for housing is growing faster in Sint Maarten, suggesting a higher rate of population growth. …

Management Education and Small Business Development: An Exploratory Study of Small Firms in the U.K

Abstract: MANAGEMENT EDUCATION AND SMALL BUSINESS DEVELOPMENT: AN EXPLORATORY STUDY OF SMALL FIRMS IN THE UK(*) There has been considerable international interest in recent years in "the role of management training and development in the small firm and on the wider, but related, issue of education and training for entrepreneurship" (Gibb 1983) In Britain, this interest has stemmed, not solely from recognition of the importance of small firms to economic regeneration, as Gibb argues, but from a recognition of "the contribution that training and education might make to productivity and efficiency" (Gibb 1983) More recently, it has stemmed from a wider concern that, when compared with other leading industrial nations, management training in Britain is poorly developed (Institute of Manpower Studies 1984, Handy 1987) In the context of small business, this lack of emphasis on management training in the UK is manifest most clearly, perhaps, in a 1983 survey (Watkins 1983) of 231 owner-managers which reveals that: the firms surveyed were generally inward looking and had a rather limited time horizon The owner-managers (and many other managers) were too close to the day-to-day problems of running an independent business to look positively outward into the environment to secure a more prosperous future Given this, coupled with the narrow educational and experiential base on which most of the firms had been built, and the short-term, inward looking, information-oriented training subsequently undertaken [italics by Dr Kirby], the most pressing development needs are arguably the cultivation of a better general environmental sensitivity, the skills to then construct a sound and coherent policy for the firm and the ability to communicate this fully within the organisation Since then, much has been done to rectify the situation but, as Curran and Stanworth (1989) have recognized, the development has been largely "ad hoc" and under-resourced Even so, a wide range of training support measures has been introduced in recent years to aid small firm growth and development, and to equip small firm owner-managers with the knowledge and skills necessary to manage their businesses more strategically While training provision has not been confined to the public sector, the British Government has been the main instrument for change in this context, primarily through the Department of Education and Science's PICKUP Initiative (Professional, Industrial and Commercial Knowledge Updating Program) and the Employment Department's Training Agency (formerly the Manpower Services Commission) Intended to promote the concept of "Continuing Education," PICKUP serves to foster links between higher education and the world of work Although there is no specific policy within PICKUP relating to small firms, several of the institutional initiatives have focused on identifying and matching the local training needs of small and medium enterprises, and the Department of Education and Science is currently sponsoring a national research investigation into the role of training in small firm growth and development In contrast, the Training Agency has developed, in recent years, a broad (and, often, short-lived) portfolio of programs both to stimulate small firm formation (eg, Business Enterprise Program) and small firm development (Private Enterprise Program, Firmstart, Growth Program, etc) in addition to its more generic product, Business Growth Training Both the provision and adoption of small business training within the UK is variable but, overall, it would seem that the adoption of training by small firms has been slower than might have been anticipated and that the effectiveness of training as a means of arresting decline and stimulating growth and development is, as a consequence, open to question …

Managerial Issues and Problem-Solving in the Formative Years

Abstract: MANAGERIAL ISSUES AND PROBLEM-SOLVING IN THE FORMATIVE YEARS INTRODUCTION This is a study of the type of problems newly established firms encounter in their first three years and how the chief executives of these organizations solved these strategic problems. The success or failure of a business during its first year is generally attributed to pre-start-up planning and readiness along with entrepreneurial skills (Van Auken and Sexton 1985). Approximately 55 percent of all new ventures fail during the first three years, primarily due to managerial shortcomings (Siropolis 1986). Dun & Bradstrete (1981), which does an annual review of small business failures, defines the primary cause broadly as incompetence (O'Neill and Duker 1986). This view is supported by Ibrahim and Ellis (1987) and Landesberg and Edmunds (1983) who attribute the vast majority of business failures in the formative years to managerial shortcomings. What motivates a person to create a business and how one goes about starting a new business are well-researched topics (Brockhaus and Horwitz 1986, Welsh and White 1981). There is also substantial data on leadership and managerial behavior once the firm is well entrenched in its domain and is one its way toward rapid growth (Miller and Toulouse 1986, Saunders and Staunton 1976). These studies seem to focus upon the owner-manager's planning role during the formative years of the organization and explore the behavior of decision makers after their firms have become well established (Robinson et al. 1986, Mescon et al. 1984). On the other hand, our research focuses on the problems firms encounter in the first three years following their establishment and the actions of owner-managers in solving these problems. METHODOLOGY A nationally representative sample list of 526 businesses in food processing, electronics, and services, established between 1980 and 1985 which were still in operation in 1988, wa obtained from Dun's Marketing Service. The Dun's list was developed from a variety of sources: self referral, telephone directories, and other mailing lists. The representative sample in this study was randomly chosen from a list of 150,000 firms that met the following sample criteria we forwarded to Dun's Marketing Service. The primary criteria for selection of the list was the year of establishment, the form of ownership, and employment of fewer than 100 individuals in 1987. Only those firms established between 1980 and 1985 as single proprietorships or partnerships were included in this list. Although the SBA suggests fewer than 500 full-time employees is an average selection standard denoting a small business, our sample was limited to firms employing no more than 100 people in 1987. The rationale for studying firms with fewer than 100 employees was to focus on firms where size of the firm's start-up human resource pool is not a significant barrier to entry. Furthermore, we wanted our survey sample to reflect the fact that 65 percent of all U. S. small businesses employ fewer than 20 people. Subsidiaries of larger corporations were excluded. The firms selected for this study were able to break the start-up barrier and managed to register some growth during the first four to seven years of existence. This is no small feat. For instance, according to a Canadian study only 20 percent of small business start-ups survive the first few years in business (Department of Industry, Trade and Commerce, Government of Canada 1982). A four-part questionnaire was sent to 526 businesses representing each of the three SIC categories. In order to make the conclusions drawn from this survey representative of the general population, we needed 352 responses. Since only 122 were obtained, caution must be employed in extending these findings to the general population. However, from an exploratory perspective, the findings will be useful in developing future research projects. …

Diversification Patterns among Small Businesses

Abstract: DIVERSIFICATION PATTERNS AMONG SMALL BUSINESSES Business diversification has received a great deal of research attention in the past decade, but somehow, small businesses have been overlooked (d'Amboise and Muldowney 1988, Pettit and Singer 1985). This omission has occurred in spite of the fact that many owner-managers and entrepreneurs operate diversified businesses or plan to in the future (Orpen 1985). A few studies include a measure of organizational size, e.g., the firms defined as "small" are publicly held companies with stock portfolios worth over $1 million (Jahera et al. 1987, Pettit and Singer 1985, Smith and Cooper 1988); and a few extant discussions of small business diversification appear to be based on findings from large-firm research or are without empirical basis (Greenfield 1989, Poza 1988, Stoner and Fry 1987). Since small businesses differ in many ways from large ones, extending large-diversified-firm research to small businesses is questionable (Hollander and Elman 1989, Jahera et al. 1987, Welsh and White 1980, Welsh and White 1981). The present study is an initial attempt to address this gap in the literature by identifying diversification patterns among owner-managed businesses. THEORETICAL BACKGROUND AND RESEARCH QUESTIONS Existing diversification research suggests that at least four aspects of diversified small firms might be investigated: (1) the purpose or reason for diversifying; (2) the mode of entry into new business lines; (3) the degree to which diversifications are related; and (4) the financial, organizational, and strategic effects of diversifying. Purpose of Diversification The first research question to ask is, "Why do owner-managers diversify their businesses?" The purpose or reasons for diversification among large firms vary widely. Risk reduction, directional change, stabilized earnings, use of spare resources, adaptation to customer needs, synergy gains, and increased growth are mentioned as potential benefits from diversifying (Chen and Kensinger 1989, Reed and Luffman 1986). Since owner-managers and entrepreneurs may differ significantly in fiscal and operational conservatism, motivations for operating a small business, desire for organizational growth, and other qualities, reasons for diversification probably also vary widely and are related to factors both internal and external to the firm (Birley 1989, Carland et al. 1984, Smith and Miner 1983, d'Amboise and Muldowney 1988, Dollinger 1983). Mode of Entry A second research question is, "By what means do owner-managers diversify?" Several modes of entry into new product markets exist (Roberts and Berry 1985). Although acquisition is the most common diversification method for U.S. public companies, capital limitations of owner-managed firms suggest that internal development may be a more common diversification strategy (Greenfield 1989, Reed and Reed 1989, Scherer and Ravenscraft 1986, Van Auken and Carter 1989, Welsh and White 1981). Acquisition may provide a much smaller but still accessible window of diversification entree for some owner-managers. Relatedness Among Lines of Business The third research question is, "How related are the business lines within owner-managed diversified firms?" Numerous tests of effectiveness for related and unrelated diversification have been made using data from large corporations. Benefits of unrelated diversification include an increase in firm size and status plus a decrease in operating risk as well as increased profitability (Michel and Shaked 1984, Marris 1964). Benefits of related diversification include higher economic return, increased productivity, and a decrease in total risk (Christensen and Montgomery 1981, Grant et al. 1988, Hill and Snell 1989, Lubatkin 1983, Lubatkin and O'Neill 1987, Rumelt 1974, Rumelt 1982). Without empirical research it is unknown whether unrelated diversification occurs infrequently in small, owner-managed businesses (due to the potentially diverse business knowledge required of one individual) or frequently (due to the relative ease of starting an additional small, simple business line) (Greenfield 1989, Stoner and Fry 1987). …

Purchasing Motor Carrier Service: An Investigation of the Criteria Used by Small Manufacturing Firms

Abstract: PURCHASING MOTOR CARRIER SERVICE: AN INVESTIGATION OF THE CRITERIA USED BY SMALL MANUFACTURING FIRMS(*) Managers of businesses, large and small, are frequently asked to respond to customer demands for special orders, unscheduled orders, small shipments, and so forth. In fulfilling these requests, large firms typically rely upon their internal professionals to determine the most economic and expeditious means of transporting such orders. The decision will be based upon such considerations as the amount of stock in inventory, use of the company's annual freight volume as leverage with carriers to obtain lower freight rates, and ability to consolidate its special orders with other shipments. Managers of small businesses, however, are typically at a comparative disadvantage in purchasing motor carrier service. Because such firms usually do not employ traffic professionals, they may lack the necessary expertise and inventory space to consolidate orders. Consequently, they often incur increased expense for less-than-optimal truckload/carload shipments. In addition, these firms must rely upon the information supplied by carrier sales representatives to make efficient and effective decisions. Yet, the carrier representatives, if they are interested in obtaining the business at all, often are not familiar with the actual transportation needs of the small firm. The small firm manager - or the employee to whom the carrier-selection task is delegated - normally lacks distribution or transportation expertise. Yet he or she must somehow select an appropriate carrier from the forty thousand potentially available trucklines in existence. The complexity of this selection problem is increased because of the firm's need both to control costs and respond to customer demand. In order to survive, small businesses require the prompt and efficient support services of a good transportation carrier. This article explores the decision making process preceding a small manufacturing firm's purchase of motor carrier service. Furthermore, this study seeks to prove the contention that previous studies, which have focused on large businesses's selection of motor carrier service, cannot be used to characterize the small manufacturing firm's purchases. Hopefully, the results of this study can be used by practitioners and academicians alike to advance their understanding of the key factors affecting the small manufacturer's selection of motor carriage. By doing so, improvement can be made in both the offering of motor carrier service to small firms and their use of such service, thereby contributing to the understanding of the behavioral differences between small and large firms. Physical Distribution Physical distribution activities have begun to receive increased attention from businesspeople and academicians alike. The importance attributed to these activities has been growing, primarily due to increased operating costs associated with transportation. As transportation becomes increasingly important to firms, perhaps even acting as a significant competitive advantage, the attention paid to it should grow commensurately. To the extent that physical distribution activities have been studied, researchers have generally examined two questions: (1) what are the key components of physical distribution systems; and (2) how do physical distribution activities satisfy customer needs? Research has also been conducted to determine both the responses of buyers to physical distribution service(1) and the managerial implications of these responses.(2) Several earlier studies have identified the relative importance attributed to various criteria by traffic managers when selecting a carrier. For instance, Flood identified seventeen criteria in order of importance.(3) Jerman, Anderson, and Constantin(4) asked 270 traffic managers about the motor carrier selection criteria used by their firms. …

Factors Related to Venture Feasibility Analysis and Business Plan Preparation

Abstract: FACTORS RELATED TO VENTURE FEASIBILITY ANALYSIS AND BUSINESS PLAN PREPARATION In recent years, governments, educational institutions and private corporations have become increasingly involved in the process of educating entrepreneurs (McMullan 1988). There is some evidence in the literature to indicate that entrepreneurial education programs have a positive influence on aspiring entrepreneurs (Hornaday and Vesper 1982, Clark et al. 1984, Watkins and Morris 1981, McMullan 1988, Wyckham and Wedley 1989). Important components, common to many of these programs, and as yet not examined in the literature, are feasibility studies and business plan preparation. This study analyzes demographics, ownership/employment, and venture factors as they relate to feasibility analyses and the preparation of business plans. Educators designing recruitment, selection, and curriculum components of entrepreneurship courses may benefit from a better understanding of the factors related to successful venture feasibility analysis and business plan preparation. New Enterprise Program (NEP) graduates and their ventures are the focus of this research. The NEP, offered by Continuing Studies, the Faculty of Business Administration, and the School of Engineering Science at Simon Fraser University, is a merket-responsive program aimed at current and aspiring entrepreneurs, research and development professionals, and corporate managers of new product development. Between the spring of 1985 and the spring of 1988, a total of 97 participants completed the NEP. Given that it is the objective of the New Enterprise Program to assist aspiring entrepreneurs to determine the feasibility of their proposed ventures and to help them prepare plans to launch and manage their businesses, three research questions were addressed: 1. Are participants able to evaluate the feasibility of their ventures? 2. Do they prepare business plans? 3. Are there demographic, ownership/employment, and venture factors which distinguish those who determine venture feasibility and those who do not, and those who do and do not prepare a business plan? EVALUATING ENTREPRENEURSHIP EDUCATION There are many ways to evaluate entrepreneurship education programs. Table 1 outlines some objectives of these programs which may be used to examine their output. In addition to these objectives, demand for spaces in entrepreneurship courses, the value of entrepreneurial consulting by students, and after-graduation course assessment may be used as foci for evaluating the perceived impact of education for entrepreneurs. Although only a limited number of measures are addressed, research results demonstrate that entrepreneurship programs can yield positive returns. For example, data suggest that entrepreneurship courses may influence career choice toward self-employment (Clark et al. 1984, Hornaday and Vesper 1982). In a study of graduates from one business school, Knight (1987) found that a significant proportion of the people who became entrepreneurs felt that their studies had prepared them for a career in entrepreneurship. And, graduates of entrepreneurship programs seem to be more likely to start their own businesses (Clark et al. 1984, Conner 1985, Hornaday and Vesper 1982, Watkins and Morris 1981), although Dimick (1986) did not find this relationship. Furthermore, courses in entrepreneurship are one of the factors related to increased venture spin-offs from universities (McMullan and Vesper 1987). Moreover, entrepreneurship education may be cost effective. A learning program for aspiring entrepreneurs working with established entrepreneurs resulted in positive returns (Long and Ohtani 1988). Similarly, increased taxes more than covered the cost of long-term counselling at Small Business Development Centres (Gatewood et al. 1987). The New Enterprise Program is analyzed in light of such evidence. …

The Innovative Attitude of Small and Medium-Sized Enterprises

Abstract: THE INNOVATIVE ATTITUDE OF SMALL AND MEDIUM-SIZED ENTERPRISES In some new empirical studies of the innovative attitude found in small and medium-sized enterprises (S.M.E.s) an attempt is made to calculate the innovation-increasing and innovation-decreasing factors. The authors start from the hypothesis that a high level of the innovative attitude will enforce, simultaneously, the competitiveness of enterprises and the intensity of competition in the economy as a whole. The S.M.E.s are assumed to be interested in stabilizing the behavioral environment and increasing in-house flexibility in various ways. Concerning "new technologies," S.M.E.s show different patterns of behavior and different organizational structures under varying environmental conditions. The new technologies being applied in S.M.E.s include computerized machinery, flexible manufacturing systems, data processing equipment, and related process innovations. To a large extent process innovations are connected to product innovations, the latter even being preponderate in many S.M.E.s. As to the size of enterprises being considered, the upper margin is understood to be 500 employees per enterprise. Special emphasis is given by means of horizontal or vertical integration to the input relations as well as to the output relations of S.M.E.s. Of course, environmental conditions influence the organizational structure and the market performance of S.M.E.s. Modelling the Role of S.M.E.s in the Diffusion Process For firms under conditions of environmental uncertainty, the degree of uncertainty will increase with the rate of technological change and the speed of diffusion of the new technologies. The more information concerning the new production methods that is diffused, the more that a circle of technological information is enlarged and intensified. Several different phases are discernible, such as the invention (research and development and the evaluation of research results), verification, innovation, adoption (including imitation), and modification phases. During the diffusion process different patterns of entrepreneurial and management behavior may be recognized: aggressive, innovative, imitative, hesitant, and traditional. The more that aggressive and innovative entrepreneurs are available, the higher is the speed of diffusion. The more that S.M.E.s are managed by "pioneering entrepreneurs" in specific sectors of the economy, the more intensively the technological change will occur in these sectors. Yet, S.M.E.s often lack risk-bearing capital, qualified personnel, or adequately educated and well informed management. Moreover, the relation of costs and risks of innovations may be different for the various sizes of firms. Also, the specific effects of new technologies on the investment, production, and employment of small firms should be taken into consideration. Following from this, different kinds of models may be developed, such as the substitution model (large enterprises compete with small enterprises by means of diversification of the supply), the compensation model, the steady-growth model, and the model of disproportionate growth of the economy. …

A Technique for Applying EOQ Models to Retail Cycle Stock Inventories

Abstract: A TECHNIQUE FOR APPLYING EOQ MODELS TO RETAIL CYCLE STOCK INVENTORIES(*) This article illustrates a practical technique for managing retail cycle stock inventories. Cycle stocks are those maintained to satisfy normal demand. Anticipation stocks, on the other hand, maintained to deal with significant seasonal variations in demand, and safety stocks (the amount of inventory needed to protect against completely running out), are assumed to be relatively small. Effective inventory management is essential in the operation of any business. As shown in the case example below, improvements in inventory management can achieve worthwhile cost savings. At the same time, small businesses require inventory management systems that are simple, easy to use, inexpensive, and keyed to current data sources and modes of operation. A basic inventory management device is the economic order quantity (EOQ). An EOQ strategy minimizes the total cost of ordering and carrying cycle stocks. While EOQ strategies are theoretically optimal, they present many practical problems of implementation, especially for small businesses. First, as Blackstone and Cox(1) suggest, EOQ strategies require continuous monitoring of inventory balances. Second, as noted by Lin,(2) keeping EOQ values current necessitates frequent updating of ordering and carrying cost information. These problems can be quite serious if EOQ values are being calculated separately for each item in the product line. Third, the computation of EOQs requires accurate knowledge of ordering costs per order and carrying costs per dollar of inventory. Some rough estimates of carrying costs exist.(3) However, ordering cost estimates are harder to come by. Silver and Peterson(4) essentially argue that this is largely because ordering is a staff activity, and it is difficult to allocate the time spent by various staff members to a given order. The technique illustrated in this article attempts to meet the needs of small businesses in the following ways: 1. Order "quantities" are calculated, not in units for each single stock item, but in dollars for each vendor. This approach simplifies the tasks of monitoring and analysis by taking advantage of existing methods of record keeping and of doing business. Also, Silver and Peterson(5) show that the approach is optimal if the incremental costs of including an extra item in an order from a vendor are small. 2. It is not necessary to make explicit determinations of or assumptions about ordering and carrying costs. Other authors, including Silver and Peterson,(6) Banks and Heikes,(7) and Eaton,(8) have advocated similar strategies, but this technique is a new adaptation, focused on the small business environment. 3. The only data required are those already available. 4. The technique is designed for easy implementation on spreadsheet software. This makes it easy to use and also takes advantage of the microcomputers now widely available. DEVELOPMENT OF THE TECHNIQUE The operation of this inventory management technique can be broken down into two steps: (1) determine if the current inventory management strategy is consistent among all vendors, and (2) if not, modify the strategy to achieve consistency. In this technique, the decision variable is [Q$.sub.i], the order quantity for vendor i expressed in dollars. It can be shown that the economic (cost minimizing) order quantity for a given vendor is [Mathematical Expression Omitted] where [D$.sub.i] = The weekly demand for goods bought from vendor i, expressed at cost, i.e., the cost-of-goods-sold accounted for by vendor i. (i=1,I) [Q$.sub.i] = The amount (in dollars) ordered from vendor i in each order. A = The administrative cost of placing and receiving an order, assumed to be the same for all vendors. r = The cost of carrying one dollar's worth of inventory for a week, assumed to be the same for all vendors. …

Reasons Why Japanese Small Businesses Form Cooperatives: An Exploratory Study of Three Successful Cases

Abstract: REASONS WHY JAPANESE SMALL BUSINESSES FORM COOPERATIVES: AN EXPLORATORY STUDY OF THREE SUCCESSFUL CASES According to the Japanese Agency for Small- and Medium-Size Enterprises (Chushokigyo-cho 1982) more than 46,000 enterprise cooperatives exist in Japan. Their formation is exempted from the anti-trust law. These cooperatives of small businesses are important in the Japanese business world and even outside of Japan, since over 99 percent of Japan's businesses are small. Small businesses contribute more than 80 percent of total employment (Chushokigyo 1982) and most small businesses are members of cooperatives. Also, many Japanese small businesses are subcontractors to large businesses. The objective of this exploratory study was to determine the sociocultural reasons as to why Japanese small businesses form cooperatives and abandon some of their autonomy. LITERATURE REVIEW Studies on U. S. cooperatives have been limited to agricultural/producer cooperatives, housing cooperatives, fisheries cooperatives, credit unions, and employee or worker-owned organizations, many of which are cooperatives of individual producers, workers, or consumers rather than cooperatives of firms. (2) Thus, very little is known about enterprise cooperatives of manufacturing firms, non-agricultural wholesale/retail firms, or service firms. The members of enterprise cooperatives in Japan are small firms engaged in manufacturing, wholesale, retail, or service businesses. It is important to note that members of these cooperatives are not individuals. Instead, the cooperative members are small business firms which continue to maintain their own management and ownerships, and furthermore these firms are not employee-owned. It should also be noted that the member firms existed before the formation of a cooperative. Each member firm is free to withdraw from the cooperative whenever it so desires. Furthermore, these cooperatives are not joint ventures or the product of mergers. Studies of business firms have been largely limited to those with vertical linkages between businesses and horizontal ties established through interlocking boards of directors, mergers, and joint ventures (Whetten 1987). After an extensive review of past studies on interorganizational relationships, Galaskiewicz (1985) concluded that the overriding reason for a firm to form interorganizational linkages is resource procurement in order to ensure its own survival. In addition to resource dependency, Aldrich (1978) suggested that socioeconomic environmental uncertainty motivates interorganizational linkages. While both resource procurement and environmental uncertainty concerns are directly tied to organizational needs, external forces such as pressure from other organizations have been recognized in the literature as another factor that fosters linkages (Aldrich 1979, Hall et al. 1977, Schmidt and Kochan 1977). However, Galaskiewicz (1985) observed that only scant attention has been paid by researchers to groupings of horizontally independent organizations. Enterprise cooperative formation is an example of such grouping. This literature review provides some insight as to why interorganizational linkages are formed, even though no previous studies exist which pertain to the type of enterprise cooperatives found in Japan, so that we might be able to use such knowledge as a conceptual guideline in the examination of our data. We will see if any of the reasons stated in the literature (resource dependency, socioeconomic environmental uncertainty, and external forces) might also apply to Japanese small firms' decision to join a cooperative. JAPANESE SMALL BUSINESS COOPERATIVES The type of cooperatives studied here is called kyodokumiai. The Japanese government promotes this systesm for small businesses in order to strengthen them by providing loans, legal guidance, and exemption from the application of anti-trust laws. …

Micro-Enterprise Growth: Operational Models and Implementation Assistance in Third and Fourth World Countries

Abstract: MICRO-ENTERPRISE GROWTH: OPERATIONAL MODELS AND IMPLEMENTATION ASSISTANCE IN THIRD AND FOURTH WORLD COUNTRIES Micro-enterprise, or the development of small scale income-generating activities, was one focus of major international development for the 1980s (Anderson 1982). Continuing into the 1990s, and given interest and support by international voluntary organizations, foundations, and government agencies, third and fourth world countries are addressing their needs for stimulating and fostering economic growth through such a focus on micro-enterprise (Tendler 1987). The change in focus--from large scale industrialization and import protection programs initiated in the 1960s and 1970s to smaller scale economic initiatives that are more directly related to the poor and their economic capabilities and needs--is a major theme of international assistance for developing countries (Kristof 1985). Danziger and Weinberg (1986) stated that, in spite of twenty years of increased spending, the level of poverty in underdeveloped countries has not declined. Education, employment, and training initiatives have provided only small gains. They concluded that not enough is known about how to improve the education and employment prospects for the poor, and that international assistance to developing countries needs to address more directly the economic needs and potential for self-improvement programs for the poor. Alternative strategies are needed to reduce unemployment and redistribute economic opportunities and benefits among regions and social groups within developing countries (Miller and Kirschstein 1988). A micro-enterprise has been defined in a variety of ways using such factors as the number of employees, the volume of sales, the capital value of an endeavor, and the level of capital costs per workplace (Harper 1984). Recognizing that an exact definition may vary depending upon the culture and country involved, a working definition for purposes of this article is that a micro-enterprise is an economic endeavor which is: (1) operated and managed by one or two people, (2) usually based within a family, and (3) usually functions within the informal sector of the society outside of bureaucratic regulations and government controls. Typical micro-enterprises include such income-generating endeavors as fruit/vegetable vending, dressmaking, wood and metalworking, mechanical and electrical repair, cloth making, and small food services (Miller and Kirschstein 1988). These income-generating activities, which include both service and manufacturing, typically address the consumer needs of the poor. The interest in and importance of micro-enterprise development among economic planners and international assistance agencies stem from the need for more direct assistance to the alleviation of poverty (Neck 1977). In contrast to "top down" economic planning and implementation, micro-enterprise programs are based on several "bottom up" development premises which include the need for: (1) self-employment opportunities among the poor; (2) employment which is labor intensive rather than capital and education intensive; (3) economic growth based on small scale business initiatives; (4) an economic base from which to foster business expansion; (5) the use of natural resources in the economic development process; (6) development strategies that assist in the transmission of economic initiatives and opportunities from the informal to the formal sector; (7) economic development opportunities for indigenous populations as opposed to "alien minorities" within a developing country's social and economic structure; (8) poverty alleviation through new sources of income; (9) "an incubator environment" from which indigenous services and technology can be nurtured for expanding a country's economic base; (10) technology adaption to indigenous resources; and (11) development of entrepreneurial skills and talents (Harper 1984, James and Rose-Ackerman 1986). …

An Examination of Differences between Supervisors in Large and Small Companies

Abstract: AN EXAMINATION OF DIFFERENCES BETWEEN SUPERVISORS IN LARGE AND SMALL COMPANIES A review of the literature reveals relatively little research which compares managements of small businesses to managements of large businesses. Welsh and White (1981) claim that little is known about how managing small businesses differs from managing large businesses. They argue that in the financial management area small business managers must adopt a different outlook and apply different principles than their large business counterparts. Harrell and Alpert (1979) present findings that Stanford MBAs who seek "autonomy," defined as "the quality or state of being independent, free, and self directing," show more interest in working for small companies (those employing fewer than 1,000 persons). Paolillo (1984) assessed ten roles deemed essential to managers in both small and large companies and concluded that seven of these roles were influenced by company size. Anderson and Anderson (1988) found female managers in small (having fewer than 100 employees) and large firms to be very similar, but women in small firms were less inclined to change jobs, were more decisive, and had a lower need for power. Certainly, organizational structure and size are related. In a study of organizations employing 35 to 17,000 persons, Yasai-Ardekani (1989) found that structural complexity is positively related to size. In the manufacturing area, there is a growing belief that small size is related to organizational effectiveness. For example, Schmenner (1976) presents arguments in favor of smaller organizations. RESEARCH FOCUS This article presents research evidence regarding differences between supervisors in small and large organizations. Supervisors are defined as persons holding at least a first-level supervisory position in their organization. The major research questions examined include the following: 1. How do the supervisors differ in their perceptions and opinions of various job conditions affecting operations? 2. How do the supervisors differ in their opinions about their employees and in their managerial style? 3. How do the supervisors differ in their feelings about their relationships with their peers and superiors? 4. How do the supervisors differ in their perceptions of their own skills? RESEARCH METHODOLOGY The research methodology consisted of a field survey conducted by the College of Business at James Madison University. The National Survey of Supervisory Management Practices (1983) produced data on 7,725 supervisors from 564 different organizational units located in 37 states. The study questionnaire included 150 items for which the respondents checked appropriate responses. Most of the supervisors completed the instrument in group sessions at professional meetings or within their company setting. This article examines data collected on 1,206 supervisors who worked for companies employing 50 or fewer persons (small organizations) and 6,519 supervisors who worked for companies employing more than 50 persons (large organizations). Industry sectors most heavily represented include manufacturing companies, hospitals and educational institutions, retailing and wholesaling establishments, and general services, including data processing and distribution. The dominant functional work areas included were production and operations; sales, marketing, and customer relations; clerical, record keeping, and data processing; and accounting and finance. In order to evaluate the statistical significance of the percentage differences observed throughout the paper, Z-values calculated for a two-tailed test of the difference of two proportions are shown in the tables. The difference is always computed as the proportion of large company supervisors subtracted from the proportion of small company supervisors. …

Location Criteria and Perceptions of Regional Business Climate: A Study of Mexican and U.S. Small Electronics Firms

Abstract: LOCATION CRITERIA AND PERCEPTIONS OF REGIONAL BUSINESS CLIMATE: A STUDY OF MEXICAN AND U.S. SMALL ELECTRONICS FIRMS(*) Plant and facility location has been an important research topic in economics, regional development, and industrial management for several decades. More recently, the global proliferation of regional high-technology centers has influenced various public and private sector interest groups to intensify efforts to understand the forces driving such development. From a public perspective, many local governments view a high-technology-based economy, comprised primarily of smaller entrepreneurial efforts, R&D laboratories, and "clean" assembly work, as the critical link in their long-range efforts to establish a vibrant community. As a result, competition among local, state, and even national governments to lure these types of firms has taken on increased intensity. Likewise, private sector interest in high technology development is equally acute. Venture capitalists, financial institutions, industrial site developers, hotel and convention center operators, existing high-technology firms seeking larger supplier and customer bases, and other ancillary services to a technology-based community all have a vested interest in profitable high-technology development. Just as the efforts to attract high-technology firms have become more competitive over the last decade, the "targets" of such efforts--firms seeking new industrial space and R&D sites--have become more sophisticated in their search behavior. Some smaller firms, for example, now employ location consultants, or subscribe to one of the many "business environment reports" which purport to analyze the commercial desirability of various regions and cites. (1) Others, however, are joining powerful "consortiums," such as the Super Conducting Super-collider project and the Sematech consortium, which are organized to jointly seek-out and negotiate attractive offers from local governments. Of current interest to many is the ongoing effort by the firms in the struggling U.S. Memories, Inc. consortium to sift through 57 potential sites in over 30 different cities to build a $500 million state-of-the-art chip manufacturing complex. Clearly, the need to understand the nature of high-technology location decisions has become paramount across a wide range of stakeholders. Additionally, as high-technology development spans international borders, the issues become even more complex. In an international environment, theoretical questions of bounded rationality and cultural perceptions need to be integrated with traditional location issues to gain a fuller understanding of the dynamics which occur. Accordingly, the purpose of this study is to investigate the impact of cultural differences on the location concerns of smaller high-technology operations in both Mexico and the United States. Within this framework, a set of issues relating to these cultural differences are identified and examined. Specifically, we explore the differences and similarities in region and site-specific location criteria and preferences between Mexican and U.S. small high-technology electronic manufacturing firms. We also examine the way these firms view the importance of various strategic factors, such as pricing, marketing, and R&D, in contributing to overall competitive success. Additionally, cross-cultural business environment perceptions and their influences on manufacturing intentions are considered. LITERATURE REVIEW Early approaches to understanding industrial development and location decision making are rooted in A. Weber's neoclassical assumption that the maximization of owner wealth is critical to the site location decision (Weber 1928). Subsequent theorists, however, have found it useful to speak of two basic types of location behavior: (1) "agglomerative"--firms that are attracted to sites because of demand and supply considerations, or (2) "footloose"--firms whose financial performance is relatively independent of location considerations. …

Nontraditional Business Education for Black Entrepreneurs: Observations from a Successful Program

Abstract: NONTRADITIONAL BUSINESS EDUCATION FOR BLACK ENTREPRENEURS: OBSERVATIONS FROM A SUCCESSFUL PROGRAM BACKGROUND Our nation's economic well-being is in part dependent on the continuous infusion of new entrepreneurial and small business ventures. Minorities, blacks in particular, will play a part in this economic future. Some important questions need to be addressed: 1. What will be the extent and nature of their involvement? 2. What will facilitate more effective involvement? 3. What can communities do to ensure more participation by minorities in business development? Fratoe (1986) contends that black business is foremost a group-level phenomenon that is highly dependent upon social group resources for its development. The individual black entrepreneur in the community is seen as the most visible member of a self-help network of supportive kinship and peer and community subgroups (Fratoe 1984). This network includes family, friends, dependable resources of ethnic labor, other primary institutions such as churches, fraternal orders, etc., and special programs that are established for the purpose of providing a support network and a continuum of services. Many black entrepreneurs feel that one must look to the group as the basis of entrepreneurial effort and that it is not the work of isolated persons, but a coordination of many individual efforts that is needed to supply the functions essential to business ownership. The strength, consistency, and quality of the wide range of services offered by the self-help support network play a critical role when a black entrepreneur starts or tries to successfully maintain a business. Research shows that family history or a tradition of family-owned business is important for developing entrepreneurs (Goldscheider and Kobrin 1980, Hisrich and Brush 1984). Family role models including parents, uncles and aunts, and cousins provide an environment that encourages young entrepreneurs to learn about business as well as inculcating a positive attitude toward business ownership. Foremost are the motivational effects that accrue over a long period of time that drive young family members to compete with each other in a business sense. This psychological early advantage has not been part of the history of black Americans, because of the paucity of black business role models as well as a lack of entrepreneurial tradition. Many blacks operate only marginal business ventures with little profit and limited potential. The need for an entire range of assistance and a support system is especially important due to the diminished status of black entrepreneurs when compared to Hispanic, Asian, or Anglo businesspersons (Fratoe 1988). Negative perceptions about self-employment have prompted many young adults to choose professional careers or management positions instead of entrepreneurship. Other youn g adults are negatively influenced by the unrealistic profits of those persons involved in drug traffic when compared to those of the legitimate business owner. The self-help network is often an important source of financial support for a black entrepreneur to initiate or expand a business. Family and friends often provide the investment capital. When the black business community is not perceived as having viable businesses or the funds from personal sources become unreliable, the black businessperson has to turn to other areas of support. Black entrepreneurs need to understand how to take advantage of the community's resources that provide a wide range of entrepreneurial assistance. This includes training, business advice, contacts, special programs, and access to financing. As important is the need to discover and nurture future business owners by identifying young future entrepreneurs at the high school level and supporting those students who are inclined toward pursuring a business education or career. NONTRADITIONAL BUSINESS EDUCATION PROGRAMS One form of nontraditional education is based on community or local government support. …

Further Training in Small and Medium-Sized Enterprises (Austria)

Abstract: FURTHER TRAINING(*) IN SMALL AND MEDIUM-SIZED ENTERPRISES [AUSTRIA] The Institute of Educational Research for the Economy, in Vienna, carried out sixty interviews with managers of small companies with between five and one hundred employees. The researchers gathered data concerning the development of the companies (that is, changes having occured in the past, their strong and weak points, the companies' aims and expectations for the future), the importance of learning, the organization of internal further training, and its connection with the companies' development. This information was used to divide the companies into five groups, depending on their frequency of utilizing further training measures. As a result, practical assistance can be offered to institutes providing external further vocational training, since each of the five groups needs a different kind of marketing and publicity. The most outstanding changes mentioned by the companies were: * introduction of electronic data processing (EDP), * enlargement and/or reconstruction of the storehouse, or the office(s), and the opening of new branch offices, * introduction of new technologies and new equipment in the production process, product innovations, or an increase in the number of employees and expanded production, * introduction of new "intermediate" ranks into the company's hierarchy (master craftsman, foreman, etc.), and * changes in the management (e.g., successor takes up the former manager's office). The most important current problems of the small companies are: * underutilization and financial problems, * problems with staff members, such as lack of motivation for further training and lack of identification of the staff with the company, * management problems, * organizational problems, and * lack of technical and especially commercial knowledge on the part of the owners and lack of qualifications in the employees. Usually an attempt is made to solve these problems by having recourse to old solutions, through supreme effort, and so forth. As a result, there is hardly any time for formulating goals, engaging in long-term planning, and cultivating new visions for a company future. The interviews often gave a very restricted meaning to the concepts "learning" and "education" ("training") and associated them with words like "school," "basic knowledge," "theory that cannot be put into practice," attitude posed an obstacle for consulting in regard to management and training measures. The survey, which covered all of Austria, shows that further education in small enterprises mainly consists of attending external special courses for the branch in question, of attending courses offered by producers , of reading job-oriented literature, and of going to trade fairs. On an internal level, on-the-job training programs and introductory courses on new machines are most frequently used. Only a few companies offer internal courses. Usually, these are job-oriented programs with instructors sent by the producers and traders, or sales training activities. The groups which most often attend further training courses are managers and sales and EDP personnel. With regard to factors influencing the attitude towards further education, on the whole it can be said that the likelihood of using further education in small enterprises mainly depends on: * the innovativeness of the branch the company belongs to, * the specificity of the visions for the future and the lenght of the planning horizon. * the profile of the employee and his or her qualifications and willingness to work as perceived by the employer, * the degree to which the staff can cope with stress at work ("daily business has priority"), and * the age of the employer and his own past experience with education and training (including formal schooling). …

Team Building in the Small Business Firm

Abstract: Team Building in the Small Business Firm Eight months into her new position as director of new product development for a small business firm, Carol Anderson (a pseudonym) realized that something was wrong. Not the position itself--Anderson enjoyed nurturing new product ideas and her many other responsibilities--it was her manager with whom she could not seem to communicate and work effectively. Soon after she had assumed her position, Anderson met with the manager to discuss a new product introduction plan. Her plan was carefully detailed, and she was anxious to implement it as soon as possible. About half way through the presentation, her manager interrupted, indicating that he would read through the plan carefully and get back in contact with her soon. That was over a month ago. When Anderson inquired about the plan in a recent conversation, the manager curtly replied that he would respond as soon as he had time to read and approve the prepared plan. Some behavioral scientists might interpret such an incident as a personality conflict. Others might view it as a lack of sensitivity or interpersonal understanding on the part of one or both individuals. However, perhaps it is best referred to as a difference in social style. When such a difference occurs, it can cause frustration and resentment in a small business firm--even leading to the resignation and departure of a key individual. In a study of characteristics that make executives successful, McCall and Lombardo (1983) identify the inability to adapt to an individual with a different style as a major contributor to failure in management. Concept of Social Style The concept of social style provides a very useful model for helping individuals in a small business firm understand themselves and others. At the same time, it aids in analyzing the process of team-building in the firm. Social style does not focus on the innermost workings of one's personality, nor on one's values or beliefs. It is quite simply a question how one acts--what is said and done. There are four social styles--amiable, analytical, driver, expressive--none of which is better or worse than any of the others, but each of which has a key role to play in organizational team-building. Each person has a dominant social style that influences the way that individual works and interacts with others. Psychologists and management researchers largely agree that two crucial dimensions of interpersonal behavior determine social style--"assertiveness" and "responsiveness." Assertiveness is the degree to which a person's behaviors are seen by others as being forceful or directive. Responsiveness is defined as the degree to which a person's behaviors are seen by others as being emotionally driven.(See figure 1.) Four Basic Social Styles The two crucial behavioral dimensions of assertiveness and responsiveness form the axes of the social style grid, the four quadrants of which represent the four social styles. While no one style is basically better than any other, versatility--the ability to get along with people whose styles differ from one's own--has often been shown to distinguish the successful from the unsuccessful within a small business firm. The effective managerial team is typically made up of and values all four types of individuals. In fact, it can be hypothesized that the most productive team in a given organization will have a balance of individuals who reflect each of the four social styles. A willingness to recognize and develop individuals with each style enables the total team to reflect the strengths of all four styles. According to management consultant Peter Drucker (1973), management tasks typically require at least four different kinds of human beings: the people person (amiable), the thought person (analytical), the action person (driver), and the front person (expressive). Drucker states that one is unlikely to find all four strengths in any one individual. …

Computer Security in Small Business: An Empirical Study

Abstract: COMPUTER SECURITY IN SMALL BUSINESS: AN EMPIRICAL STUDY* During the past 30 years improved technology has produced ever smaller computers that substantially surpass the processing and data storage capabilities of older machines. At the same time the purchase price for these machines has decreased so that acquisition is now a viable option for most small businesses. The combined effects of improved capabilities and lower cost have resulted in substantial numbers of small businesses employing computers in their business operations.(1) One significant barrier to effective use of computers in small business is inattention to computer security. Evidence that computer security for small businesses is an important issue comes from several sources. First, the significance of computer security has been explored in the literature.(2) For example, Bryant (1984) contends that the security of small systems is one of the most difficult challenges faced by management.(3) Becker believes small systems require the same kind of security as large computer systems,(4) whereas Baker suggests that small systems require even more security.(5) Some justification for this last suggestion is apparent when one compares the size differences between large and small system hardware and data media. The diminutive sizes in the small system environment make system components much more prone to theft. Also, the number of potential intruders into a small system are many times larger than that of a large system due to the widespread knowledge of popular operating systems (e.g., MS-DOS) and applications software (e.g., Lotus 1-2-3). Second, the significance of security in small systems has also been discussed in the end-user computing literature.(6) RESEARCH QUESTIONS Despite evidence pointing to the importance of computer security for the effective use of computers, there are indications that many users are unaware of the need for security measures.(7) In fact, a lack of awareness of computer security was a primary reason that the U.S. Congress passed the "Small Business Computer Security and Education Act of 1984." Two goals of this act were to: (1) improve the management of information technology in small business and, (2) to encourage and educate small business owners about security threats to this technology. Accordingly, the general purpose of this study was to investigate both the awareness and implementation of security measures used in small business. Two research questions were of interest. First, to what extent are small business firms attempting to exert some form of control over potential security exposures? Control in this context means the ability to exercise restraint or direct influence over a given situation; it is an action taken to make an event conform to plan.(8) Controls function to prevent, detect, and correct the causes of a security exposure. For security measures to be effective, all three types of control are required. A restatement of the question is: To what extent are small businesses aware of or implementing measures that prevent, detect, or correct possible security exposures? The second question concerns awareness and implementation of measures to protect the various components of a computer system. The components of a computer system that are usually protected are hardware, software, and data. Since both data and software are stored on the same media, measures designed to protect one are also effective in protecting the other. In addition to specific security measures designed to protect a particular component, some measures effectively protect the entire system. Thus, the second question is: To what extent are small businesses aware of or implementing measures that protect hardware, software, or the entire system? Before proceeding, it should be noted that the definition of computer security used in this paper is derived from Cronin: Security assumes the safe and continuous operation of your computer system performed by trained, authorized personnel. …

Training Entrepreneurs through Newspapers

Abstract: Training Entrepreneurs Through Newspapers Unemployment in Quebec reached alarming proportions in the years following the 1982 to 1983 economic recession. Consequently, several organizations and concerned groups showed interest in this issue, which most directly affected the younger generation. Laval University's Faculty of Administrative Sciences was one of the organizations that sought to help minimize the effects of economic stagnation on employment. The idea of promoting business start-ups seemed to be an interesting initiative as various research studies had shown that small business was responsible for a large proportion of new job creation, as much as 89.2 percent for Canada as a whole.(1) It seemed only right to encourage and assist potential entrepreneurs in their business development by providing them with a constructive training program. During a meeting of the faculty advisory committee, which was also attended by the dean of the faculty and members of the Laval alumni (mainly, local businesspeople), it was proposed by the president/general manager of a daily newspaper that two pages of the Sunday edition be devoted to a course on entrepreneurship. The dean then offered to form a team which would establish the content and format production. Furthermore, the Federation des Caisses Populaires de Quebec (a Credit Union) added an incentive by agreeing upon an award of $20,000 Canadian (currently about $16,000 U. S.) to the new entrepreneur who devised the best business plan during the course. The grant could only be received once the new business was in operation. Become an Entrepreneur Set up in just a few months (spring and summer 1985), the "Become an Entrepreneur" course was published over a sixteen-week period (from September 15 to December 29, 1985) in Le Soleil, the daily newspaper of Quebec City. The production team, headed by visiting professor Paul-Arthur Fortin, established the following objectives: * promote entrepreneurship in the Quebec area by emphasizing the importance of small business as the creator of jobs, leading to prosperity; * enable potential entrepreneurs to emerge by assisting them in evaluating their entrepreneurial potential; * encourage business start-ups by offering a comprehensive entrepreneurship training program. Promoting a healthier entrepreneurial environment was deemed as important as aiding individuals, in that the local community would be encouraged to support individual efforts, thus increasing their chances for success. Offering the course in a newspaper was therefore an ideal solution, enabling the authors not only to reach a broader public, but also that small percentage of the population believed to possess the personal characteristics required for successful entrepreneurship.(2) The course began with examples of business start-ups. Next, each student was asked to complete a questionnaire that was designed to reveal his or her personal characteristics and entrepreneurial potential.(3) Other topics covered in the course included the design of the small business project, evaluation of the market, preparing a business plan, buying a franchise or existing business, pertinent legal aspects, achieving success in business, and the response of the community to entrepreneurship. Registration Four hundred and ninety-six people signed up for the course through Laval University's Continuing Education Service by paying a modest twenty-dollar registration fee. They could earn two continuing education credits (CEC) by following the steps laid out in the newspaper, one CEC by participating in a one-day workshop, and twelve CECs by drawing up and submitting a business plan, not to mention being given the chance of winning the prestigious award mentioned previously. …

Operations Management Activities of Small, High Growth Electronics Firms

Abstract: OPERATIONS MANAGEMENT ACTIVITIES OF SMALL, HIGH GROWTH ELECTRONICS FIRMS In a relatively short period of time the Japanese have been able to produce higher quality products that are more reliable and cost less than many competing products manufactured throughout the world. Their ability to accomplish this task has been attributed to their precise utilization of various operations management activities, along with human resource development in the manufacturing segment of their organizations. If the intensive level of global competition brought about by the Japanese has highlighted one thing for American manufacturers, it is the importance of operations management activities in the competitive success of the firm. A number of writers have indicated that systematic participation in typical operations management activities may enable a firm to produce a realible, quality product at a competitive price.(1,2) However, most previous research in operations management has concerned itself with small-scale problems within the context of large firms.(3,4) This unduly restrictive focus has not provided the data to develop the strong conceptual framework needed to identify the interrelationships and impact of operations management on the total organization.(5) Thus, there is a general lack of system-wide research in operations management. The purpose of this article are: (1) to determine if systematic participation in commonly recognized operations management activities has an impact on a firm's performance; (2) to explore the extent of this participation in a dynamic small business manufacturing environment; and (3) to correct some of the methodological shortcomings of past system-wide research on operations management and financial performance. Thus, this research attempts simultaneously to address three of the major deficiencies in the operations management body of knowledge. Utilization of a small business environment allows a number of factors causing significant problems in undertaking meaningful empirical research in large organizations to be overcome. These factors include: 1. Frequent lack of uniformity with regard to process technology, organization structure, and strategy in large businesses in similar industries. 2. The inability to obtain meaningful financial and other performance data. 3. The nature and complexity of large organizations that make the conclusions of numerous research efforts difficult to validate and/or replicate. 4. Poor experimental design that has resulted in the use of weak or inappropriate statistical procedures to test hypothetical constructs. 5. Relatively non-robust statistical procedures that are generally required due to limited sample size.(6) It appears that most of these factors exist primarily because of the heterogeneity of large businesses. To obtain a large number of homogeneous firms it seems logical to investigate the small business environment. (Approximately 95 percent of all business can be classified as small businesses.) The process of identifying homogeneous firms may be facilitated by enlisting the aid of a professional business or trade association. RESEARCH IN OPERATIONS MANAGEMENT Research in operations management addressed specifically to small business has been relatively sparse. Reuter investigated the utilization of specific operations management techniques in various size businesses, including small firms.(7) Studies in inventory management and control have been undertaken by Davis and Whybark(8) and Fuerst.(9) The use of forecasting systems and probabilistic forecasting in small businesses has been treated in a paper by Anderson.(10) Forecasting in the development of strategic plans for small business has been addressed by Robinson. …

The Involvement of Private Foundations in Entrepreneurial Research

Abstract: THE INVOLVEMENT OF PRIVATE FOUNDATIONS IN ENTREPRENEURIAL RESEARCH The last decade has seen a growing interest in entrepreneurship research. There has been an increasing number of academic and practitioner journals in the areas of entrepreneurship and small business as well as a significant increase in the number of entrepreneurship research centers (Wortman 1987). At the same time, there has been some concern regarding the applicability of the research to entrepreneurs, small business owners, and government policymakers (Brockhaus 1987, Hornaday et al. 1984). This article raises the issue of the applicability of current research activity to foundations that may be sources of support. The study indicates possible sources of funding, specific research topics of interest to funding organizations, and the restrictions, if any, imposed by the various organizations. DEFINING THE RESEARCH AGENDA Who decides what entrepreneurship researchers study? Consider an analogy in the art world. In 1989, legislation was introduced in the U.S. Congress to establish guidelines for grants from the National Endowment for the Arts (NEA) (The Atlanta Journal and Constitution 1989). NEA had been accused of supporting artists who produced obscene work or work contrary to generally accepted standards of public taste. Some members of Congress argued that NEA should hold grant recipients accountable for responsible use of public funds. Nationally renowned artists countered that it is impossible to set standards for art. Only the passing of time reveals whether something qualifies as true art. Academic researchers face a similar, if less extreme, quandary. Most scholars prefer to choose their own research agendas. They may select topics that they believe warrant investigation from literature reviews or from observation. They may be mining veins of research that they expect to make significant contributions to the understanding of small business and entrepreneurship. As Brockhaus (1987) reported, however, the interests of researchers do not necessarily match the interests of the objects of the research. Brockhaus contrasted the published studies of entrepreneurship researchers with the issues voted by business owners at the 1986 White House Conference on Small Business as being the most important to them. The discrepancies caused him to conclude that academicians are not addressing the needs of the primary stakeholders for their research. This finding leads to the question of whether small business owners and entrepreneurs should participate in setting research agendas. Further complicating the selection process is the source of resources that support entrepreneurship research. Major investigations often require resources that are in excess of those available at academic institutions. As a result, third party funding is sought, frequently from corporations, government, or private foundations. These organizations, in turn, have their own objectives in providing resources. This study was designed to look specifically at private foundations as sources of unds for entrepreneurship research. What topics do they fund already and what are they likely to support as accepted topics for entrepreneurship research? To what extent are the interests of the foundations aligned with the preferred topics of researchers? The purpose of this study is to identify a set of funding sources and the entrepreneurship-related research these sources may be willing to support. In revealing this information, the study raises questions about the roles played by different parties in determining the types of research conducted and the allocation of resources. METHODOLOGY Private foundations that support activities related to business and free enterprise were identified from the Taft Foundation Reporter (17th edition), which lists major private foundations in America. …

An Interview with Dr. Roman Galar: The Impact of Deregulation on Small Business in Poland

Abstract: AN INTERVIEW WITH DR. ROMAN GALAR: THE IMPACT OF DEREGULATION ON SMALL BUSINESS IN POLAND April 27, 1990 Hotel Wera, Warsaw, Poland Paradiso: I am sitting with Dr. Roman Galar, a professor at the Technical University, Wroclaw, Poland.(1) Before leaving the U.S., I called the editor of the Journal of Small Business Management inquiring about research questions I might address during my business mission to Poland, April 21-28. One of the questions concerned the impact of deregulation on small business in Poland. Dr. Galar has generously agreed to help me understand that issue. Dr. Galar, would you describe your educational background and position at the Technical University in Wrochaw? Galar: I am a lecturer in the Institute of Technical Cybernetics. My particular field of interest is computer simulation of evolutionary systems. I believe that I have gotten some results relevant for describing several different aspects of the market economy. My doctorate degree came from the Faculty of Electronical Engineering in Automatics.(2) Paradiso: Is automatics equivalent to computer science in the U.S.? Galar: At the time I received it, it was something of the kind. Paradiso: What affiliations do you have with local economic development organizations? Galar: Presently, a number of small organizations are emerging on the grass roots level. I take part in one of them which is operating in Wroclaw and makes itself busy with advising. I am also at this point working with the Center for Technological and Economical Forecasting, and we do advise enterprises in Lower Silesia(3) as to how they should behave in the flux condition which now exists. Paradiso: In the U.S., the term "small business" has different meanings to different people. There is no universally understood and accepted definition. For example, the U. S. Small Business Administration generally defines "small" as a firm with fewer than 500 employees. The Internal Revenue Service defines "small" in terms of monthly withholding tax. The Federal Trade Commission defines "small" quite differently. What is the Polish understanding of the term "small business"? Galar: I think that there is hardly an established meaning thus far. I believe it's much smaller than a few hundred people. I think, in Poland, it's a business which [has] fewer than 20 employees. Something bigger would be called a medium-sized business in our conditions, especially if we're talking about privately owned businesses.(4) Only lately, administrative barriers to the growth of private enterprise have been removed. And, as there is very little capital available in the market, these firms are rather small, usually very small. Paradiso: In a recent meeting with Mr. Olender, Director of the Foreign Investment Agency's Promotion Bureau, I was told that retail and service businesses are considered small and manufacturing firms are considered large. I take it that the industrial sector is not the factor distinguishing small from large in your view. Galar: The industrial sector in Poland is still mostly state-owned and indeed very large, especially if you compare it with the meager number of medium and small firms which exist. I think the big firm sector is permanent in Poland and employs most of the employees in Poland. But, it also differs in its structure from what constitutes the large enterprise in the West. I can elaborate. These enterprises acted without a normal market environment and, to be able to function, they had to create a sort of substitute market inside their own body. So, every Polish large firm consists of a number of small subdivisions which, in normal situations, would be replaced by a large number of small enterprises cooperating with them on the market.(5) As cooperation was very difficult or practically impossible, all these small entities belonged to the body of big enterprises in Poland. …

Solving the Inventory Problem for the Sale of Seasonal Merchandise

Abstract: SOLVING THE INVENTORY PROBLEM FOR THE SALE OF SEASONAL MERCHANDISE The Problem Tom Morgan, owner and manager of Mountain Sporting Goods, faces his typical early February inventory dilemma. The Blue Ridge cross country ski tour will occur in three days; tourists have flooded into town for the event and business at Mountain Sporting Goods has been brisk for all kinds of Nordic ski equipment. If sales continue at the same pace for the rest of the season, Tom's Nordic department manager believes they will run out of the most popular items by the end of February. The manager wants to order more inventory immediately. Since most ski equipment is manufactured overseas, orders must normally be placed in July for October delivery. To acquire additional inventory for this season, Mountain Sporting Goods will have to buy from a wholesaler at premium prices. The inventory debacle from two years ago still haunts Tom. Anticipating a good ski season, he ordered aggressively in July. Unfortunately, the snow came late that year and Christmas sales were slow. While Tom was still pondering what to do with all his inventory, two competitors started their spring sales several weeks early. By the time Mountain Sporting Goods had its sale, the market had been saturated. In the tiny resort town in which Mountain Sporting Goods operates, you can't even "give away" ski equipment between late March and early November. Tom ended up carrying the excess inventory all summer and then dumping it at a ski swap at a large city several hundred miles away in November. Thus Tom faced the problem which is typical for retailers of very seasonal goods in an isolated market: "What will business be like for the rest of the season?" "Should I try to get more inventory?" "When should I start marking down to make sure I don't get stuck holding excess inventory all summer?" Over the years, many inventory control models have been developed. Most, unfortunately, do not address the types of problems faced by small retailers. In this article, we briefly review traditional inventory models and why they are unsuitable for small retailers. A new model is developed with which we have experienced limited early success. Economic-Order-Quantity-Based Models Even though the Economic Order Quantity (EOQ) model is considered obsolete by many organizations, some version of a simple EOQ model is still the starting point for most inventory control discussions. If a book on small business management discusses an inventory model at all, the EOQ model is the one that will be considered (Broom, Longenecker, and Moore 1983; Hodgetts and Kuratko 1986; Tate et al. 1985). In the simplest version, this model involves determining the correct order quantity by solving an equation of the form: EOQ = [[2DC.sub.o]/[C.sub.h]].sup.1/2], where: EOQ = economic order quantity, D = demand per time period, [C.sub.o] = cost of placing one order, [C.sub.h] = cost of holding one item in [C.sub.h] = inventory. While the EOQ model is easy to understand, it does not address the problem faced by small retailers because EOQ assumes that demand is known and relatively constant and that multiple orders can be placed at a constant cost. Even expanded versions of the basic EOQ model do not address the seasonal nature of much retail business. Profit Matrix Models Profit matrix models determine the optimum order quantity by comparing the profit for all combinations of likely sales (outcomes) and orders (decisions). The order quantity is determined such that some decision criterion--maximum profit, minimum loss, highest expected profit, etc.--is satisfied. To be effective this model requires the decision maker to be able to identify the set of likely sales, and the revenues and costs associated with each possible order size. Let's assume the following situation. …

New Forms of Entrepreneurship in the USSR

Abstract: NEW FORMS OF ENTREPRENEURSHIP IN THE USSR Only two years ago in the Soviet Union the word "entrepreneurship" was associated mainly with criminal activities. Now, it represents the essential underpinning of a new economic order built by Soviet reformers to replace the old, extremely inefficient command economy. Perestroika has allowed enterprising people to start more or less independent businesses and to choose from a relatively large selection of new forms of business organization. This new sector of the Soviet economy is growing fast and is, to some extent, open to Western businesspeople. However, it is difficult for Westerners to understand the conditions in which business activities occur and the legal status of their potential Soviet partners. Some general knowledge about the new forms of entrepreneurship opening up in the Soviet Union should therefore be useful. One must begin by clarifying the meaning of "entrepreneurship" under actual Soviet conditions. In general, entrepreneurship involves starting and managing an independent business. However, the criteria for independence vary from one economic system to another. The following are essential from our point of view: * An independent enterprise must be free to expend its financial resources for legal purposes without any control from external authorities. The distribution of net profits among investments, bonuses, and retained earnings must be the subject of an internal decision. * An independent enterprise must be able to establish its own wage structure for employees. * An independent enterprise must be able to buy raw materials and sell products largely by way of free contracts. Prices may be fixed or limited by the state, but a contract itself must be a free agreement between independent subjects, not an order from a higher level of the industrial hierarchy to a lower level. Based on these criteria, the following general kinds of independent enterprises can actually be found operating in the Soviet economy at present. First, there are independent state enterprises and independent divisions of traditional state enterprises. This group includes so-called enterprises on the second model of accounting (predpriatia na vtoroy modeli hozraschota), which are traditional state enterprises with enhanced rights in finance, wages, and market operations; those enterprises rented by employees' groups (arendnie predpriatia), and finally, financially independent centers (hozraschetnie centry), which could be either independent enterprises or independent divisions of traditional state enterprises or organizations. Second, there are so-called "cooperative enterprises" (cooperativnie predpriatia), which from the Western point of view, are private enterprises owned by three or more persons. Third, there are two kinds of joint ventures (sovmestnie predpriatia) in the Soviet Union: joint ventures with a state enterprise from the Soviet side and joint ventures with a cooperative enterprise from the Soviet side. Both are independent by definition. Fourth, there is the small, but fast-growing group of limited liability (that is, unincorporated) companies (akcionernie predpriatia). Independent State Enterprises and Independent Divisions of State Enterprises Legal aspects. All state enterprises in the Soviet Union operate on the basis of USSR law governing state enterprises (Zakon SSSR o gosudacstvennom predpriatii). This law defines the rights and responsibilities of enterprises in general. However, one paragraph allows Soviet branch ministries to establish a special status for enterprises, thereby enhancing their rights and responsibilities by way of an individual decision. State enterprises have the same opportunity for their divisions. Therefore, each independent enterprise or independent division operates on the basis of a unique individual decision made by a higher-level establisher. Consequently, the rights and responsibilities of independent enterprises are widely different. …

The Development of Small and Medium-Sized Enterprises - Some Empirical Findings (Sweden)

Abstract: THE DEVELOPMENT OF SMALL AND MEDIUM-SIZED ENTERPRISES - SOME EMPIRICAL FINDINGS [SWEDEN] During the past ten years different agencies have become more interested in finding out to stimulate the development of small and medium-sized enterprises. The Board of Technical Development, The National Swedish Industrial Board (SIND), and the Regional Development Funds are examples. While the main type of action taken by the government has been to provide various kinds of financial support, resources have also been made available for education and service activities. However, in spite of this increased attention, we really do not know very much about how and why such firms develop over time. SIND has investigated different types of problems in small and medium-sized enterprises. This note describes some results from two projects which were completed last year. The questions raised by the two studies can be summarized as follows: * How do small firms develop over time in terms of financial structure, managerial behavior, and number of employees? * Which have been the most important events and problems for such firms during recent years? * What do leaders of the firms think of their environment and, above all, of the actions taken by the authorities? Both studies take similar methodological approaches. The difference is that in the first study we followed up on the development of 28 small and medium-sized firms in the Swedish towns of Eskilstuna. We had done the same type of research in these companies five years earlier. In the second study we expanded our findings from the first study to five other regions in Sweden with different industrial structures. In this subsequent study 80 firms were investigated. Developments Over Time 1. In Sweden during the past ten years there has been a tendency for small and medium-sized firms to slowly increase their percentage of "own risk-bearing capital." One explanation for this trend is that the return on total capital has increased very quickly, i.e., firms generate more money and therefore can use some of this capital to increase the equity portion of their total capitalization. Another explanation is that only small net investments are required, i.e., the need for external capital has decreased. Thirdly, firms with a low share of own risk-bearing capital have been forced to improve their financial strength. In one region almost every firm which had 10 percent or less of its assets financed with its own risk-bearing capital has had at least one financial crisis or gone bankrupt during the next five years. 2. Over time, variability in net investments in inventories and machines has been low, even though the variations among the median measures are very high. On the other hand, investments in physical plants have rapidly decreased during the last five years. Therefore, total net investments have decreased. One explanation of this change is that new, more effective machines demand relatively less capacity. Another explanation is the fact that many firms will only grow to a certain size. Finally, in Sweden, if desired, small firms can rent instead of own their plants. 3. Tax payments in percent of income before allocations are relatively small because many forms of allocations, e.g., various investment funds, exist. 4. We have also tried to see how firms develop with regard to the number of employees during the first ten years. The development can be illustrated by the curve shown in exhibit 1. The resultant curve is similar to that from other studies. Generally, the number of employees increases rather rapidly during the first few years, leveling off to about ten as the firm matures. Some explanations from the interviews for this pattern are the following: * The plant and production capacity is designed from the start for a certain size. If a firm wants to grow beyond this point it has to invest in new facilities, which will involved higher risk. …