Showing papers in "Journal of Small Business Management in 1999"

The Proactive Personality Disposition and Entrepreneurial Behavior among Small Company Presidents

Abstract: Much of the effort to understand entrepreneurship and new venture creation has focused on the characteristics of individual entrepreneurs. From the early work of McClelland (1961) which focused on the need for achievement as a personality characteristic of entrepreneurs, the field has examined a number of different traits like locus of control, propensity to take risks, personal values, and tolerance for ambiguity in a variety of different studies (see for example, Hornaday and Aboud 1971; Timmons 1978; Brockhaus 1980; Brockhaus and Horwitz 1986; Carland, Hoy, and Carland 1988; Hebert and Bass 1995). This trait-oriented line of research has come under fire as "inadequate to explain the phenomenon of entrepreneurship" (Gartner 1988, p. 12). As the preoccupation with individual traits has been de-emphasized, several other elements of entrepreneurship have been proposed to define the entrepreneur. "Behavior" has been argued as the best method to identify an entrepreneur (Gartner 1994), and it is suggested that founding a business is one behavior which certainly defines entrepreneurship (Stewart, Carland, and Carland 1996). Another type of behavior which has been linked to entrepreneurial activity is strategic planning (Olsen 1985), as entrepreneurs plan in more depth than small business owners (Carland et al. 1984). Other studies have identified a number of elements that define entrepreneurship and entrepreneurial behavior including: leadership and dimensions of teamwork, organizational creation, opportunity recognition, innovation, risk assumption, marshaling of resources, and the creation of value (Stearns and Hills 1996). While many studies have enumerated the wide variety of elements that may define an entrepreneur, it has recently been posited that perhaps we can identify several types of entrepreneurs (Stewart, Carland, and Carland 1996). This variety of perspectives is best understood through the integrative approaches that have recently evolved to explain entrepreneurial behavior. They suggest that entrepreneurship is an activity that can only be understood by simultaneously combining several of the individual elements of the phenomenon. A model developed by Gartner (1985) integrated four major dimensions of entrepreneurship: characteristics of the individual who starts the venture, the organization which is created, the environment surrounding the new venture, and the process by which the new venture is started. He emphasizes that it is the interaction of these variables that result in varying patterns of new business creation. Shaver and Scott's (1991) psychological model based on the person, the process, and the choices also attempts to explain entrepreneurial activity in terms of variable interaction. In their theoretical framework, these researchers strongly reject the solo role of "personological" approaches to understanding entrepreneurship and propose that we must also understand both how the external environment is perceived in the mind of the potential entrepreneur (the process of social cognition) and whether the person chooses to act. They emphasize that it is critical to understand how cognitive representations in the mind of the potential entrepreneur get translated into action. More recently, other models have been developed which recognize the importance of the interaction among several variables. Herron and Sapienza (1992) propose a model of new venture creation which links individual traits with the situational context experienced by the potential entrepreneur. Similarly, the role of personal characteristics interacting with perceptions of situational factors serve as the basis for a model of entrepreneurial motivation developed by Naffziger, Hornsby, and Kuratko (1994). All of these recent multi-dimensional models reflect the importance of the interface between the environment or situation and the personal characteristics of the potential entrepreneur in understanding the process of venture creation. …

Differing Perceptions of New Venture Failure: A Matched Exploratory Study of Venture Capitalists and Entrepreneurs

Abstract: * "The key factor [that caused our failure] was that our external market had changed after we introduced the product." * "Failure to provide the customer what he [or she] wanted cost us some jobs." * "The bad news is that we missed a lot of [problems] that had we been in the business before, we would have caught." * "We had problems moving fast enough in an extraordinarily fast moving industry, so that we couldn't capitalize on the opportunity that we had created." The above quotes from entrepreneurs highlight some of the problems that haunt new ventures in their struggle to survive. In fact, Timmons (1994) notes that over 20 percent of new ventures fail within one year, and 66 percent fail within six years. The large percentage of failures and the perceived drain on national resources has been a point of contention. Robert Reich asserts that "chronic entrepreneurialism" is undermining America's competitive strength because entrepreneurial ventures splinter "American manufacturing power into too many small pieces" (Castro 1988, p. 48). The fact that a large percentage of new ventures fail is indisputable; however, others argue that the learning accrued by the failed entrepreneur may outweigh the costs to society (Shapero 1981; Vesper 1980). Nevertheless, given the societal costs involved, research is needed to examine the characteristics of new venture failure. Introducing the effects of venture capitalists (VC) on new venture survival is important because of the differences in failure rates of VC and non-VC backed firms. Although the overall rate of new venture failure is extremely high, Dorsey (1979) found that the failure rate of VC-funded enterprises is substantially lower. Only 18 percent of VC-funded companies failed within seven years compared to 75 percent of non-VC funded firms. Even though the failure rate is much lower for VC-funded entrepreneurs, VCs felt that 20 percent of those surviving ventures would fail to provide an adequate return (Ruhnka, Feldman, and Dean 1992). Ruhnka, Feldman, and Dean termed these ventures the "living dead." Prior research points to a relationship between the presence of VC backing and new venture survival rates. Given that such a large percentage of new ventures fail, it is meaningful to investigate the perceived causes of their poor performance from the context of both the entrepreneur and the VC. The purpose of this exploratory study is to examine new venture failure from the viewpoint of both the entrepreneur and the VC using an attribution theory perspective (Weiner 1979). A fundamental question is posed: Do entrepreneurs and VCs perceive new venture failure differently? If so, why? Attribution theory provides a useful framework to examine the differences in perceptions regarding the causes of failure. Attributions have important implications for how the entrepreneur and the VC approach the problem of a failing venture (Ford 1985). Incorrect attributions may result in misapplication of resources that could ultimately cause future new venture failures. Venture Failure Factors Most organizational studies of new ventures have focused on "successful" endeavors; research on venture failures has been limited for a variety of reasons. First, it is difficult, if not impossible, to do financial analysis on failed new ventures because their financial data are typically not public. Thus, researchers must locate the failed entrepreneurs. As Bruno, Leidecker, and Harder (1986) note, even if an entrepreneur is identified, he or she may be hesitant to discuss the failure. Moreover, those entrepreneurs who do agree to an interview may not understand or be able to articulate the factors that contributed to their demise, especially if a lengthy period of time has passed since the failure (Bruno, Leidecker, and Harder 1986; Bruno and Leidecker 1987). In this instance, the entrepreneur may resort to sensemaking (post-hoc rationalizations of why the venture failed). …

Succession in family businesses: Exploring the effects of demographic factors on offspring intentions to join and take over the business

Abstract: One does not have to limit oneself to cultural interfaces to encounter the bizarre, the parataxic, or the insane. Much is inherent in any given culture...Understanding man, understanding culture, and understanding the world and unraveling the irrational are inseparable aspects of the same process (Hall 1989, p. 216, 220). One could consider irrational and paradoxical the common belief that while family businesses are considered important economic and social pillars throughout the world, not many survive beyond the first generation (Birley 1991; de Jordy 1991; Dunlop 1993; Gallo 1995; Lank et al. 1994; Madore 1993; Rosenblatt et al. 1985; Thomassen 1992). Also irrational, yet understandable, seems the notion that offspring are quite often welcome in the family business regardless of their ability to contribute to its success (Kets de Vries 1993). Many researchers have attempted to explore the reasons behind such irrationalities, but most of these attempts have focused on the owners and their inability to plan their succession (Aronoff and Ward 1992; Kerr 1993; Marshack 1993; Seymour 1993; Welsch 1993; Whiteseide 1993). Few have focused on the heirs and the factors related to their involvement in the family business (Davis 1968; Handler 1989; Rosenblatt et al. 1985). Even fewer have investigated heir intentions to join and take over the family business (Birley 1991; Stavrou 1996). Succession is not a static event, or a process that begins once heirs are involved in the business; it is a long-term endeavor initiated early in the heirs' lives (Christensen 1953; Davis 1968; Longenecker and Schoen 1991; Stavrou and Winslow 1995; Trow 1961; Ward 1987). Succession models that investigate the role of heirs in their families' firms divide that role into three levels of involvement (Churchill and Hatten 1987; Handler 1989; Longenecker and Schoen 1991; Ward 1987). The first level entails the association of offspring with the firm through family discussions or part-time employment. The second level entails the full-time employment of offspring in the family business. The third level entails the appointment of offspring to the leadership roles and responsibilities of their parents in the business. Some offspring may decline any participation in the family firm; others may become involved at only the first or second levels described above. The extent of their participation may be up to them or may depend on decisions made by the firm's managers (their family elders). However this is decided, in order for the firm to make the best possible decisions regarding future management and succession planning, it is imperative to understand the intentions of rising family members before plans are made for them to join the business. The present study focuses on an exploration of offspring intentions to join and take over their parents' business. Offspring intentions were viewed in light of a set of demographic characteristics of the offspring, the parent-owners, and the firms. Figure 1 illustrates the theorized relationships between these demographic variables and offspring intentions. Offspring intentions were explored when the offspring were in college or university at the ages of 18 through 28. This time-frame was selected because many if not most offspring tend to seek full-time employment or a career in their families' firms sometime between their eighteenth and twenty-eighth birthdays (Birley 1991; Handler 1989; Longenecker and Schoen 1991; Ward 1987). Further, most young adults make important choices between their eighteenth and twenty-eighth birthdays that can affect the rest of their lives and careers (Banks et al. 1992). In addition, a study revealed that even though most offspring first become involved in their parents' firms around age thirteen, many do not join the firm on a full-time basis until age twenty-one (Mass Mutual 1993). College students were chosen because whereas previous generations employed in businesses have been prepared for their roles primarily through on-the job training, the current generation is strongly encouraged to get a college education (Mass Mutual 1993; Thomassen 1992; Ward 1987; Welsch 1993). …

Understanding the Consequences of Founders' Experience

Abstract: The kinds of experience that founders bring into a business has received attention from researchers who are attempting to explain why certain business founders are more successful than others. If certain kinds of experience are found to be predictive of firm performance, they could be used as criteria in evaluating business plans or loan applications and as the basis for tailoring development, incubation, and educational programs. In addition, prospective business owners would have some criteria against which to assess their own readiness for start-up, to identify areas in which they might want to gain further experience, or to gain insights into ways to capitalize on the experience they do have, such as entering particular industries. Reviews of the literature on founders' experience (for example, Reuber, Dyke, and Fischer 1990; Reuber and Fischer 1994) indicate that no consistent, direct relationship between the experience of the founder, owner, or management team of a venture on the one hand, and the venture's success on the other, have been found. As a group, the studies are fragmented and inconclusive. Across different studies, there is a wide variety in the measures of experience and outcomes, in the moderating, mediating and control variables used, and in the range of values placed on particular kinds of experience (Reuber and Fischer 1994). However, knowledgeable practitioners, such as venture capitalists, seem to believe that founders' experience is important to the success of a new venture (Goslin and Barge 1986; MacMillan, Siegel, and SubbaNarasimha 1985; Riquelme and Rickards 1992). Furthermore, even researchers who do not find a relationship between founders' experience and venture performance are hesitant to conclude that experience, or lack of experience, is inconsequential (see, for example, Roure and Keeley 1990; Sandberg and Hofer 1987). Thus, while we recognize that many factors will impact venture performance (Baum 1995; Herron and Robinson 1993; Keeley and Roure 1990; Roure and Keeley 1990; Sandberg and Hofer 1987), and that experience is not necessarily the strongest of these, we believe that examining the role it plays in business performance is a valuable endeavor. A reason why the empirical body of literature is, on the whole, fragmented and inconclusive is that there is often little conceptual basis for the way in which experience is studied. This article addresses this gap by examining the nature and role of experience in more detail. Specifically, we recognize that experience is the antecedent of present or future states, and it is this temporal property which makes it relevant and interesting. Thus we argue that it is necessary to take temporal considerations explicitly into account when studying the influence of experience. Much of the research on experience, and more particularly, on founders' experience, views experience as a quality of an individual (or of a team or of a firm) at a particular point in time. This view is analogous to a balance sheet: experience consists of the background or history of the individual, team, or firm that has accrued up to that point. In the same way that there are different elements on a balance sheet, an entity will have had different types of experience. Furthermore, a particular experience may be an asset or a liability, or both at the same time (Starr and Bygrave 1992). For example, a long tenure in a particular industry may enable an individual to perform more efficiently or effectively when starting a new venture in that industry, but also may inhibit that individual from seeing new opportunities or alternatives. A complementary view of experience is analogous to an income statement: experience, or experiences, are things that happen, or events that occur, during a specific time period. It is these occurrences and their impact on the venture that are relevant, and collectively they affect the stock of experience, just as income ultimately affects a balance sheet. …

Applicant Attraction Practices and Outcomes among Small Businesses

Abstract: Small firms dominate the business landscape of the U.S. Only two percent of organizations nationally have more than 100 employees (Wiatrowski 1994). Further, small businesses are the fastest growing segment of the U.S. economy, and accounted for 75 percent of all new jobs created in 1995 (Small Business Administration 1996). Despite the prevalence of small businesses, the human resource management (HRM) systems embedded within them are understudied and poorly understood. There is a decided large-organization "bias" in the description and evaluation of HRM systems that has characterized research for decades (Granovetter 1984; Rynes and Boudreau 1986). Consequently, little is known about how small businesses actually practice HRM or how effective their HRM practices are in attracting, motivating, and retaining employees. Small businesses face different concerns than those of larger organizations. The concept of "liability of smallness" suggests that small organizations, relative to larger ones, face problems of access to financial and material resources that make it difficult to compete and survive (Hannan and Freeman 1984). Further, because of the small size of the organizations, there are a high number of single incumbent jobs, and employees typically perform multiple roles with unclear boundaries regarding the respective job role responsibilities (May 1997). At a time when small businesses need strong human resource management practices to manage their growth, the HR function is typically an underdeveloped functional area in the organization. Though a small business may need to acquire additional employees to fuel its growth, employee attraction strategies may be used on a sporadic, ad-hoc basis. Such usage may be necessary because of a major knowledge gap regarding the attraction practices actually used by other small businesses and the effectiveness of those practices. This important void needs to be filled if small businesses are to learn how to attract more effectively a qualified workforce, which is a key component of overall effective management of the firm's human resources. The present study addresses this void by investigating the nature and effectiveness of employee attraction practices of small businesses. Such practices encompass the myriad of staffing and compensation activities used by small businesses to attract its work force. To lay the ground work for the study, the results of the three studies that have investigated attraction practices in small businesses are first presented, followed by discussion of the rationale for the present study and how it extends the previous research. Literature Review and Research Rationale McEvoy (1984) studied the HRM practices of 84 small businesses (between 25 and 250 employees) near a major metropolitan area. A 36-item questionnaire was administered via personal interview to the person responsible for HRM in the firm. The questions sought information about usage of HRM practices in HR policy and strategy, staffing, performance evaluation, motivation, compensation and benefits, job satisfaction, and turnover. Findings of direct relevance to the present study were that advertisements and walk-ins were the most widely used (67 percent) recruitment methods, and that interviews and application blanks were the most widely used (90 percent) selection techniques. In addition, while most firms (90 percent) conducted performance appraisal, relatively few attempted to relate pay raises to appraisal results. Only 29 percent of the firms used salary survey results to determine starting pay for new employees, though most offered vacations, paid holidays, rest breaks, and life and health insurance. To evaluate the effectiveness of these practices, a few questions were asked to assess respondents' "feelings and attitudes toward various personnel practices of their firms" (McEvoy 1984, p. 7). Respondents generally indicated a "very positive outlook with regard to these practices" (p. …

Community Involvement and the Perception of Success among Small Business Operators in Small Towns

Abstract: The purpose of this analysis is to elaborate the relationship between the success of small businesses and their level of social responsibility. It focuses specifically on one dimension of social responsibility - commitment to and support for the community. Scholarship about corporate social responsibility recognizes several different variants of what is generally thought of as good corporate citizenship (Post 1996; Carroll 1979; Frederick 1986). In this article, "corporate social responsibility" means the contribution that businesses make to the public good above and beyond the provision of goods and services that they exchange in the market. Public goods are specifically defined as goods that are not diminished by others' enjoyment of them, and once provided, the public good is available to all (Olson 1965; Boulding 1973). Examples include clean air, public radio, and community betterment. Because the term "corporate social responsibility" reflects the bias toward big business that permeates the scholarship on this subject, in this article the term "business social responsibility" will be used instead in an attempt to broaden consideration to all for-profit organizations. The enlightened self-interest model of business social responsibility posits that businesses can realize significant benefits through socially responsible behavior; some of these benefits include a well-educated, stable, satisfied work force; a healthy environment; and a thriving community in which to live and do business (Sethi 1979; Keim 1978; Fry, Keim, and Meiners 1982). Equally important, according to enlightened self-interest logic, is the possibility that socially responsible behavior will directly enhance a firm's public image and prestige, thereby increasing the probability of customers buying its products, of bank officers giving it attractive rates on loans, of suppliers treating it fairly, and of collaborators seeking it out as partners on lucrative ventures. These consequences can positively impact the success of socially responsible companies (Keim 1978; Fry, Keim, and Meiners 1982). The classic dilemma posed by the provision of public goods, however, is known as the free rider problem. Free riders are the businesses that benefit from the provision of community improvement by others without bearing the cost of providing it. When other businesses bear the costs of providing public goods, non-contributing businesses will have lower costs and are in a better competitive position relative to socially responsible businesses. Capturing the benefits of socially responsible behavior and overcoming the free rider problem require effective mechanisms of monitoring and sanctioning (Olson 1965; Ostrum 1990; Portes and Sensenbrenner 1993). This function could be carried out by a group of prominent civic-minded business leaders (Galaskiewicz 1985); or by a network of local suppliers, collaborators, and contractors (Uzzi 1996; Piore and Sabel 1984; Young and Francis 1991); or by the community as a whole. Brown and King (1982) found that a sample of small business respondents identified norms and pressures from the community and peers as having more influence on business ethics than did moral or religious principles, anticipation of rewards, upholding the law, or fear of punishment. Monitoring and sanctioning should be more effective in small towns where free rider behavior is more difficult to hide. In the Brown and King (1982) study, 39 percent of the respondents indicated that doing business in a small town had a large positive effect on small business ethics, second only to the respondents who said competition had a large positive effect. Smith and Oakley (1994), in a comparison of business owners in metropolitan and non-metropolitan towns, discovered that non-metropolitan business owners were less accepting of questionable ethical behavior and had higher expectations for ethical behavior than their metropolitan counterparts. …

Mission Statements in Small and Medium-Sized Businesses

Abstract: All growth businesses experience difficulties during organizational transitions (Kazanjian 1988; Churchill and Lewis 1983; Scott 1970). The transition from a small entrepreneurial organization to a "mature" business organization is characterized by a number of important internal and external changes (Hambrick and Crozier 1985; Churchill and Lewis 1983). The small business often finds that success attracts the attention of others; new small start-ups and/or large competitors may enter the market (Porter 1980). Increases in growth may necessitate expansion into overseas markets. Internal changes include the introduction of professional management to manage the increasingly complex organization; the introduction of outside equity to finance growth (Welsh and White 1981); and the introduction of organizational systems and procedures. Internal changes such as increases in sales volume, in employees, and in organizational formality and complexity require small business operators to change their role within a changing organization (Hambrick and Crozier 1985). The pursuit of growth often requires the owner/manager to learn new skills and change from a "doer" to a "manager" (Churchill and Lewis 1983). Many small businesses fail to grow because the manager fails to make this transition (Willard, Krueger, and Feeser 1992). During the growth process, the small business manager becomes increasingly removed and distant from employees (Hambrick and Crozier 1985; Churchill and Lewis 1983), and discovers that his or her strong entrepreneurial vision is no longer shared by new staff, new professional managers, and new investors. One coping strategy is to introduce financial and strategic planning and control systems into the organization (Gable and Topol 1987; Bracket and Pearson 1985). Essential to these planning and strategic management systems in large organizations is the introduction of a mission statement. In their much referenced work, Pearce and David (1987) argue that the mission statements of higher performing large companies are more comprehensive than those of less successful firms. The purpose of this article is to explore whether high growth small and medium-sized enterprises (SMEs) in Ireland are characterized by more comprehensive mission statements. Review of the Literature The literature on mission statements is both descriptive (Pearce and Robinson 1994; Ackoff 1987; Peters 1988; Campbell, Devine, and Young 1990; Falsey 1989) and prescriptive (Pearce 1982, Pearce and David 1987; Want 1986). There is an overwhelming consensus in the literature that the development and management of business missions is fundamental for the survival and growth of any business (Levitt 1960; Drucker 1973; Peters and Waterman 1982). Mission statements have been described as the cultural "glue" which enables an organization to function as a collective unity (Fahrnam 1993). The Benefits of Mission Statements The prevalence of missions statements in large organizations suggests that there are benefits to developing public mission statements. Benefits cited in the literature include the following: * developing of a unity of purpose within the organization (Campbell, Devine, and Young 1990); * providing a guide to behaviors and decisions (Ledford, Wendenhof, and Strahley 1995; Falsey 1989); * motivating staff (Collins and Porras 1991); * communicating the corporate image (Gray and Smelzer 1985); * reducing culpability when charged with "unethical" behavior (Fahrnam 1993); * enhancing performance (for example, Pearce and David 1987). However, there is a remarkable lack of empirical evidence for the acclaimed and assumed positive effects of mission statements (Piercy and Morgan 1994). A few studies have lent limited empirical support to the idea that mission statements are valuable and contribute to higher profits (Rarick and Vitton 1995; Klemm, Sanderson, and Luffman 1991; Germain and Cooper 1990; Falsey 1989; Pearce and David 1987). …

Managing Innovation in French Small and Medium-Sized Enterprises

Abstract: Intense competition in the marketplace is forcing organizations to examine the different ways by which they could enhance or retain their competitive advantage. Several organizations have generated sustained competitive advantage through a continuous stream of incremental, overarching, and discontinuous innovation. There is a burgeoning literature on the competitive importance of innovation and the linkage between innovation and organization renewal across industries and countries (Schoonhoven, Eisenhardt, and Lyman 1990; Morone 1993; Hamel and Prahalad 1994; Utterback 1994). Central to the notion of technology as a competitive advantage for nations, firms, and industries is the significant role of small to medium-sized companies as a source of innovation during the early stages of new and emerging technologies (Abernathy and Utterback 1978). Several research studies (Rothwell 1983; Chanaron 1991; Khalil and Bayraktar 1994) have also attested that the rate of innovation by small and medium-sized enterprises (SMEs) has grown regularly and seems to be higher than that of very large corporations. For example, studies conducted by the U.S. Department of Commerce revealed that 50 percent of all innovations and 95 percent of all radical innovations since World War II have come from new or smaller firms (Timmons 1994). Despite the perceived importance of SMEs to technological innovation and international competitiveness, there is a paucity of research in the "management of technology" literature that emphasizes innovation within SMEs. It is only in recent years that this topic has become a subject of interest to academicians and practitioners alike (Birchall, Chanaron, and Soderquist 1996). Prior research evidence suggests that significant benefits can be reaped by firms (including SMEs) that integrate technological and innovation considerations with corporate-wide strategic development (Fusfeld 1989; Erickson et al. 1990; Pavitt 1990; Adler, McDonald, and McDonald 1992; Carrier 1996). Specifically, process improvements can help firms benefit from increased productivity and adaptability (Burgelman and Maidique 1988), and product innovation can increase a firm's sales by providing unique or higher-performance products (Burgelman and Maidique 1988; Harms 1990; Guimaraes and Liska 1993). The purpose of this article is to report on these and other issues pertaining to managing innovation in French SMEs. The authors will examine the impact of such variables as actions for continuous improvement, pressures for cost cutting, aspects of the internal management system, innovativeness within each sector of the economy, and structures for managing product and process innovation in French SMEs. Review of Literature The limited research done in the area of technology and innovation in SMEs can be conveniently grouped into three research streams. The first concerns the definition and overview of technology and innovation in SMEs. Most existing literature limits the definition of the management of technology to the management of both internal and external RD Dodgson and Rothwell 1991; Bowen and Ricketts 1992), [TABULAR DATA FOR TABLE 1 OMITTED] and the importance of a marketing orientation and effective strategic formulation in successful small high-tech firms (Shanklin and Ryans 1984; Dodgson and Rothwell 1991; Roberts 1991; Oakey and Cooper 1991). …

The Influence of Outsider-Generated Knowledge Resources on Venture Creation

Abstract: Entrepreneurship is the creation of new combinations (Schumpeter 1934) Studies of surviving and successful ventures have made a significant contribution to our understanding of entrepreneurship (for example, Sandberg 1986) Nevertheless, serious gaps in our knowledge remain about the events that occur before an independent organization is started The theoretical work of Bird (1988) suggests that an entrepreneur's intentions to start a business and the decisions that occur before start-up shape the subsequent goals, strategies, and structures of the new venture These difficult-to-reverse initial decisions and alignments will in turn have an influence on the survival, growth, and profitability of a new firm (Hannan and Freeman 1989; Hansen and Wortman 1989) Furthermore, not all aspiring entrepreneurs are successful in starting a business (Learned 1992); the market may not be as attractive as initially perceived, adequate financing may not be available, or the desire to start a business may dissipate Thus, to understand why some ventures are started and others are not, and why some start-ups are successful and others end in failure, it is important to study venture creation from the earliest possible point in the process (Aldrich et al 1989; Reynolds and Miller 1992) Research by Reynolds and Miller (1992) has indicated that by far the most frequent first event in the life history of a nascent venture is the personal commitment of the lead entrepreneur to found a business Although Katz (1990) has shown that many start-ups are enacted or unintended rather than intended, Krueger and Carsrud (1993, p 315) suggest that intention is the "single best predictor" of entrepreneurial behavior Furthermore, people with intentions to start a business can be identified and studied as they progress through the entrepreneurial process much more readily than people without an initial intention Therefore, using intention as a basis for studying nascent entrepreneurs seems to be a logical and practical approach1 Many theories of the start-up process have been put forward in recent years (Bhave 1994; Hansen and Wortman 1989; Krueger and Carsrud 1993; Learned 1992) Of those theories dealing with intentional entrepreneurial behavior, Krueger and Carsrud's (1993) model is perhaps the most fully developed Their theoretical model, based on the work of Shapero (1982) and Ajzen (1991), has been partially tested using path analysis (Krueger 1993) Krueger's study showed that exogenous factors significantly influenced attitudes toward entrepreneurship which, in turn, significantly influenced entrepreneurial intentions His results suggest further investigation is in order to understand how entrepreneurial intentions are translated into entrepreneurial behavior, or in other words, venture creation Following from Krueger and Carsrud's (1993) model and Krueger's (1993) research, the purpose of this article is to investigate the influence of exogenous factors on the relationship between entrepreneurial intentions and venture creation Although the intentions to start a business may be a strong predictor of venture creation, we know that not all intentions become reality (Carter, Gartner, and Reynolds 1996) Factors that affect the individual or the situation may intervene to change the likelihood of the start-up event Krueger and Carsrud (1993) note the particular importance of personal or situational variables that affect perceptions of self-efficacy or feasibility In this article we extend this viewpoint by arguing that among the most important exogenous variables are those which represent the development or availability of the resources required for a competitive advantage More specifically, we treat the emergence of organizations as a special application of the resource-based theory of the firm and use this theory to operationalize exogenous factors that influence the entrepreneurial decision Outsider assistance has been shown to be an important source of the information needed to develop an entrepreneur's knowledge resources (Robinson 1982) …

Dangers of Dependence: The Impact of Strategic Alliance Use by Small Technology-Based Firms

Abstract: As managers confront a competitive environment that is increasingly complex, globally centered, and technologically uncertain, there is a critical need for dynamic, flexible, and proactive responses. As a result, many companies are turning to strategic alliances. Evidence suggests that this is a reasonable choice. Properly utilized, alliances can provide a number of advantages over traditional organizational arrangements including faster market penetration (Gomes-Casseres 1989), the sharing of financial risk (Jorde and Teece 1989), possibilities for technology transfer (Lei and Slocum 1992), and increased production efficiencies (Datta 1988). Such arrangements may be particularly suited to early stage, technology-based firms (ESTBFs). These firms generally have innovative ideas and products but often lack the resources and experience to fully capitalize on them in a timely fashion. Alliances can work to benefit ESTBFs by allowing them to build on their strengths and overcome their weaknesses. Despite these proposed advantages and the increased use of alliances, however, little insight has been gained regarding the overall impact of alliance use on firm success. To date, most research on alliances has focused on issues related to the success or failure of the alliance itself (see, for example, Tyler and Steensma 1995; Zaheer and Venkatraman 1995; Lyons 1991). While this work has been beneficial in helping our understanding of alliances, it still leaves unanswered questions regarding how firms can gain the greatest benefits from alliance relationships. Accordingly, this study examines the use of strategic alliances by ESTBFs and explores several factors that might indicate how and when alliances might benefit such firms. The study begins by reviewing the relevant literature to develop hypotheses regarding the use and benefit of alliance arrangements. Of particular importance in this regard is work from the resource dependence perspective (Pfeffer and Salancik 1978). Attention then turns to the details of a study that tests these hypotheses. Results are reported and implications of these results explored. Literature Review and Hypotheses Alliance Use by ESTBFs ESTBFs bring a unique set of competencies to the competitive arena. Unencumbered by established processes and routines, such firms typically have great success in the innovative application of new technology (Knight 1989). As a result, these firms often provide the starting point for radical change within industries and serve as a source of inspiration and revitalization (Moore and Garnsey 1993). As a byproduct, ESTBFs also benefit society through higher paying jobs, increased national competitiveness, and increasing community tax bases. At the same time, however, ESTBFs face a unique set of challenges. Financially, they often fall between the cracks of traditional funding sources (Miles and Preece 1995). As well, they are often limited in their managerial expertise, which tends to focus on technological rather than general business concerns. While their technologies are often innovative, the firms do not always have the necessary production capabilities to leverage them to the fullest potential. Furthermore, the innovative nature of their products often means that large, readily accessible markets have not yet been established, and the firm may need to seek out a number of smaller market niches if it wants to be successful and recoup its investment. Taken together, this combination of strengths and weaknesses should make ESTBFs prime candidates for strategic alliances (Kirni 1995). While it is clear that ESTBFs have something to bring to a relationship, it is also clear that they have deficiencies that might be addressed by an alliance partner (Brown and Butler 1995). The independence-oriented owner/managers of ESTBFs may appreciate having the ability to build on their core competencies and capabilities while retaining their existence as an autonomous entity. …

Who becomes a small scale entrepreneur in a post-socialist environment: on the differences between entrepreneurs and managers in East Germany

Abstract: Small and medium-sized enterprises hold an important place in the modern economy. They constitute about 95 percent of all European enterprises and provide 60 percent of all jobs (Gleichmann 1990). They are also assumed to be more adaptive and innovative than larger companies. They are of particular importance in East Germany and in general in East Europe. First, it was difficult to develop entrepreneurship in East Europe (Frese 1995) and second, hope to reduce unemployment is mainly centered on the development of a small-scale enterprise sector. Moreover, small-scale enterprises have been shown to be the most promising and successful of all enterprises in East Germany (Deutsche Bundesbank 1993). In this study we investigated the differences between entrepreneurs and managers in East Germany in order to know more about who becomes a small-scale entrepreneur in a post-socialist environment. We did this by using personality orientations that made up an entrepreneurial personality. We conceptualize personality orientations to mean propensities to use certain behaviors for the work task, given that the environment allows the expression of these orientations. Personality has frequently been studied in entrepreneurship research (see overviews by Brockhaus and Horwitz 1986; Gartner 1989; Shaver and Scott 1991). However, there has also been a number of criticisms of the idea that personality is important for entrepreneurship research. Gartner (1988, 1989) argued that studying behavior is more fruitful than studying personality traits. Personality researchers have of course countered that behavior is inextricably related to personality traits (Epstein and O'Brien 1985). This study is based on the premise that there may be some value in differentiating between the decision to become an entrepreneur and the success of an entrepreneur. This distinction has proven to be useful in the debate on personality in leadership research. Early research relied on a pure personality-based approach to explain leadership success (see reviews by Bass 1990; Kirkpatrick and Locke 1991). Later this was criticized by Stogdill (1948) who argued that traits are not important for leadership. The differentiation between leader emergence and leader effectiveness has further clarified the role of personality traits. Leader emergence is more heavily related to personality issues than leadership effectiveness (Kenny and Zaccaro 1983; Lord, DeVader, and Alliger 1986). While there are clear differences between leaders and entrepreneurs, it is reasonable to compare leadership research and entrepreneurship research. Both involve the study of leadership, of management, of working in a risky and competitive situation, of a high degree of responsibility, and of a far-reaching career decision. We think that similar to leadership, entrepreneur emergence is more strongly related to personality factors (Herron and Robinson 1993; Begley and Boyd 1987) than entrepreneurial success. Thus, we think that personality is one factor in the decision to become an entrepreneur, but is not necessarily a factor in the success of an entrepreneur. Obviously, these are two different criteria that are often not kept clearly apart in entrepreneurship research. In this study we are only interested in personality as one determinate of becoming an entrepreneur. Moreover, the relationship between personality traits and behavior is stronger in situations that do not constrain the person - so-called weak situations (Adler 1996). This is of particular importance for our study because the situation in East Germany was "weak" with regard to the decision to become an entrepreneur. We studied the differences between small-scale entrepreneurs and managers in East Germany (formerly the socialistic German Democratic Republic, which was characterized by a radical and revolutionary transformation from bureaucratic socialism to capitalism). We define a small-scale entrepreneur as anyone who has founded a business. …

Venture Capitalists' Introspection: A Comparison of "In Use" and "Espoused" Decision Policies

Abstract: Many studies have investigated venture capitalists and the means by which they assess likely new ventures.(1) The majority of empirical research on venture capitalists' decision- making has produced lists of criteria that venture capitalists report they use when evaluating new venture proposals (see, Tyebjee and Bruno 1981; 1984; Bruno and Tyebjee 1985; Gorman and Sahlman 1986; MacMillan, Siegel, and SubbaNarasimha 1985; MacMillan, Zemann, and SubbaNarasimha 1987). However, social judgment theorists suggest that "espoused" decision-making processes may be a less than accurate reflection of "in use" decision-making processes (Priem 1992; Priem and Harrison 1994). Given this, prior research, which relies predominantly on the accuracy of venture capitalists' introspection, may not be valid. In this article, venture capitalists' actual decision-making is analyzed to determine the accuracy of their introspection. Research on the DecisionMaking of Venture Capitalists There is no well-integrated explanation of the criteria that venture capitalists use to assess new venture performance (Sandberg 1986; Shepherd, Ettenson, and Crouch, in press), and there is still much to be learned about venture capitalists' assessment decisions (Hall and Hofer 1993). The methods used in previous studies typically ask venture capitalists to list and rank decision criteria based on these criteria's presumed affect on: (1) the investment decision (for example, Tyebjee and Bruno 1981; Tyebjee and Bruno 1984; MacMillan and SubbaNarasimha 1986); (2) the likelihood of success (for example, Kahn 1987; MacMillan, Zemann, and SubbaNarasimha 1987); and (3) the likelihood of failure (for example, Gorman and Sahlman 1986; Meyer, Zacharakis, and DeCastro 1993). The limitations of this research include problems of retrospective reporting (for example, Tyebjee and Bruno 1984), use of questionnaire responses rather than actual evaluations (for example, MacMillan, Zemann, and SubbaNarasimha 1987; Robinson 1987), and biases and errors associated with self-reporting (Sandberg and Hofer 1987). Self-reporting tends to overstate the number of criteria actually used and to understate the weighting of the most important criteria compared to more sophisticated decision-making techniques (Stahl and Zimmerer 1984; Riquelme and Rickards 1992). Zacharakis and Meyer (1998) found that venture capitalists' "actual" decision policies explain more variance in new venture performance than do "espoused" policies. As the information a venture capitalist receives increases, the gap between "espoused" decision-making policies and "in use" decision-making policies also increases. From their nonparametric analysis, Zacharakis and Meyer (1998) conclude that venture capitalists' understanding of their actual decision-making policies may be low. Tyebjee and Bruno (1984) found that venture capitalists' investment decisions can be predicted from the capitalists' perceptions of risk and return. Return is most often evaluated by venture capitalists in terms of profitability (Robinson 1987; Robinson and Pearce 1984; Roure and Keeley 1990); risk is usually assessed in terms of venture failure (Gorman and Sahlman 1986; Sandberg 1986). This study extends the work of Zacharakis and Meyer (1998) by investigating venture capitalists' introspection into their profitability assessments (one of venture capitalists' key perceptions from which investment decisions can be predicted [Tyebjee and Bruno 1984]) and through the use of parametric statistics to determine the significance and strength of that introspection. Shepherd, Ettenson, and Crouch (in press) empirically tested a model of venture capitalists' decision-making which included the following "strategy-related" variables: industry-related competence, competitive rivalry, lead time, key success factor stability, educational capability, mimicry, scope, and timing. This model demonstrates both explanatory and predictive ability for venture capitalists' assessments of likely profitability, and is used here to investigate the following hypothesis regarding venture capitalists' introspection: Hypothesis: Venture capitalists' "espoused" decision-making policy is different from their "in use" decisionmaking policy in their assessment of a new venture's likely profitability. …

Factors Contributing to the Growth of Small Manufacturing Firms: Data from Australia

Abstract: The small business sector is a vital contributor to the overall performance of the Australian economy. Small businesses account for approximately 97 percent of all private sector businesses, and 51 percent of private sector employment (Australian Bureau of Statistics 1996). Nevertheless, the folklore is that most small businesses discontinue within a few years of their start up. Of those businesses that continue, there is considerable variability in the rate of growth. Therefore, it is important to identify the causes of failures and discontinuations as well as the factors contributing to the success or growth of small enterprises. Moreover, these causes of failure and factors of success may vary from country to country, depending on economic, geographical, and cultural differences. As such, empirical investigation into these aspects of small business in different countries is needed because the findings of such research are useful to economic development planners as well as to individual entrepreneurs in the countries concerned. The purpose of this article is to examine a set of firm- and industry-specific variables that may have an impact on the growth of small firms. This study is based on an examination of a sample of small manufacturing firms operating in the Illawarra region of New South Wales in Australia. Because the study is exploratory, it does not attempt to identify any a priori entrepreneurial and managerial abilities or other specific characteristics associated with the successful operation of firms. Review of the Literature The previous research on factors contributing to the success or growth of small firms has focused primarily on the entrepreneurial, managerial, or other personality attributes of owner-managers. Few have examined firm- or industry-specific factors, which Tan and Tay (1994) claim are more significant than personality attributes in explaining the variance of growth in small business. Another limitation of previous studies is that they are based on small business in general; those focusing on manufacturing firms are sparse. Moreover, some of these studies seem to be supported by anecdotal rather than by systematic empirical evidence. The brief review provided in this section is confined to some of the empirical studies reported in the literature. One of the studies that focused on the impact of owner-manager personality attributes on the success of small businesses in general is by Ibrahim and Goodwin (1986). based on a survey of 144 small firms in the retail, wholesale, service, and manufacturing sectors in a few metropolitan areas of the United States and Canada, they asserted that entrepreneurial behavior and managerial skills of owner-managers are key success factors in small business. Similar findings were reported by Huck and McEwen (1991) from a survey of 54 Jamaican entrepreneurs involved in manufacturing and service businesses. More specifically, these researchers identified entrepreneurs' competencies in management, planning and budgeting, and marketing as most crucial for the successful operation of a small business. Personality attributes of owner-managers were further examined by Duchesneau and Gartner (1990) in an extensive field study of 26 small merchandising firms in eight metropolitan centers in the southeast, central, and southwest Pacific regions of the United States. According to their findings, successful entrepreneurs were more likely to have been raised by entrepreneurial parents, and had broader business and prior startup experience. Such entrepreneurs also worked long hours, had a personal investment in the firm, and were good communicators. Another study that examined personality attributes of owner-managers is by Ghosh, Teo, and Low (1993). On the basis of a questionnaire survey of 101 small and medium-sized enterprises in the manufacturing, financial, and merchandising sectors of Singapore, they reported that ability to satisfy customers, finding a market niche, good service, a good management team, and good networking were the chief success factors. …

Environment-strategy-performance relations in small businesses in China: A case of township and village enterprises in Southern China

Abstract: In contrast to market economies, which are predominantly shaped by privately-owned businesses, transitional economies (that is, former centrally-planned economies) are characterized by a diversity of organizational forms generally including state-owned, collectively-owned, privately-owned, and foreign joint ventures. Of these, collectively- and privately-owned firms are mostly small businesses (Chow and Fung 1996; Nee 1992). Although the formation and expansion of small businesses have been features of all transitional economies (Naughton 1994), the Chinese economy (one of the most notable centrally-planned economies in the past) has relied on collectively-owned businesses whereas other transitional economies have built mainly upon growth in the new private sector (Perkins 1994). The Chinese case demonstrates that the key feature of structural transformation is the development of new' firms, especially small businesses, rather than privatization per se. This development creates competition and drives market expansion, leading to a decline in state control and monopolies. Although privately-owned small businesses now make up an important part of the Chinese economy, collectively-owned firms are much more important (Byrd and Lin 1989). Relative [TABULAR DATA FOR TABLE 1 OMITTED] to urban collectives, rural collectives (namely, township and village enterprises, or TVEs), have played an important role in accelerating China's phenomenal growth and shaping its economic reforms (Jefferson, Rawski, and Zheng 1992). Although the management of Chinese TVEs has received increased scholarly attention, the majority of the writing has been anecdotal in nature. Few scholars have vigorously examined the issue either empirically or theoretically (Nee 1992). In order to help redress this deficiency, this study aims to illuminate how strategy aligns with environment and how this alignment influences the performance of small TVEs. We argue that small TVEs strategically respond to the external environment as wary prospectors in order to ensure their survival and growth. This implies that these small businesses are proactive and innovative in aligning with environmental characteristics such as dynamism and complexity. [TABULAR DATA FOR TABLE 2 OMITTED] Overall, the results based on the analysis of a survey of top managers in small TVEs located in Southern China support our predictions. TVEs in China TVEs are all those rural non-state enterprises that are subordinate to township or village governments and are owned and operated collectively. They represent an intermediate property form which has been shaped by a rapidly changing environment where market forces are incrementally replacing the state planning mechanism and encouraging greater efficiency and flexibility in business. According to China's Statistical Yearbook (1995), there were 24.94 million TVEs and 120.18 million employees working in these organizations in 1994. In the same year, the share of industrial production by TVEs was 30.46 percent of the nation's total; TVEs have thus become one of the country's dominant output contributors (China Statistical Yearbook 1995). While about 70 percent of large firms, particularly those owned by the state, have undergone losses in the past years, TVE net profits and contributed taxes have been increasing (see Table 1). In no other transitional economies have TVEs played such a dynamic role. An overwhelming majority of TVEs are small businesses. As Table 1 shows, the average TVE in all sectors had fewer than six employees in 1995. The average net fixed assets for TVEs were US $3,881 (in 1995). TVE development has been going on for only a short time, and administrative restrictions have hindered their expansion. The dependence of the bulk of TVEs on their own retained earnings and on funds raised within the township or village to meet investment needs has also limited their size. Interestingly, despite their small size, TVEs are relatively efficient. …

Female Business Owners in Singapore and Elsewhere: A Review of Studies

Abstract: Singapore is well established as an international business center with its large number of multi-national companies (MNCs), considerable international trading, and famous international port Although it has been thriving for some decades, its continued growth may be largely dependent on how creative its small business owners can be Women contribute substantially to the development of small businesses, especially those in the service sector - an important and growing part of the Singapore's economy In this article we review the literature to assess what motivates women in general, and Singaporean women in particular, to set up their ventures Various factors contributing to the success of female business owners in Singapore and elsewhere and the problems they may face are also surveyed We further examine the business and personal profile of Singaporean female business owners and compare such characteristics to those of small business owner/managers globally from America and Canada to the UK and Australia Personal Profile Table 1 summarizes demographic information on female business owners from several academic studies Lee-Gosselin and Grise (1990) observed Canadian women business owners to be between 31 and 45 years old and married with an average of 24 children, and Burdette (1990) described US female owner/managers as mostly under 51 and married with few children Deng, Hassan, and Jivan's (1995) Asian study noted the majority of women business owners in the region to be in their 30s and early 40s Similarly, Singaporean female entrepreneurs have an average age of 41, are mostly married, and have an average of two children (Teo 1996) Female business owners are generally well educated, with the majority having at least a secondary education In Australia, for example, slightly more than 25 percent of those female business owners interviewed by Breen, Calvert, and Oliver (1995) held a university degree, while another 182 percent also held a higher degree Only a minority of 153 percent had not completed secondary school In comparison, Teo (1996) found most of the female Singaporean business owners to have at least 10 years schooling, while 35 percent held first or postgraduate degrees, 15 percent had professional or polytechnic qualifications and 50 percent had completed secondary-level education Results from both Collerette and Aubury (1991) and Teo (1996) indicated that prior to setting up their ventures, the majority of female business owners, Canadian or Singaporean alike, had previous work experience Breen, Calvert, and Oliver (1995) found that Australian female business owners were similarly experienced The type of experience women possess prior to setting up their new venture, however, is not always homogeneous across countries: while Burdette (1990) observed that the work experience for most American female owner/managers was in a business similar to their current one, in Australia two-thirds of the women surveyed had previous managerial experience in a different industry than their current business, though more than a quarter of the female business owners had experience in the same industry as their current business [TABULAR DATA FOR TABLE 1 OMITTED] Business Profile Although the business types for female-owned businesses are broadly distributed, the majority of female business owners in Singapore seem to be in the service and retail industries (Teo 1996) This may be the result of the high start-up costs involved in the manufacturing and construction sectors, as well as prospective female business owners' lack of prior experience and technological skills in such sectors Consequently, female-owned businesses in Singapore usually started as small service and retail ventures with few employees and grew to became progressively more established-the majority of Singapore female-owned businesses have been in operation for an average of nine years (Teo 1996) …

The Impact of Marketing Research Activity on SME Export Performance: Evidence from the UK

Abstract: Belief in the value of information for enhancing decisions by reducing uncertainty has increasingly led to the consensus that the growth and even survival of today's business entities will depend on their strategies for handling and processing information (Deshpande and Zaltman 1982; Turner 1991; Glazer 1991). Equally, in marketing literature, although there are examples of successful marketing decisions being taken on the basis of intuition and acumen, it is frequently proposed that decisions based on marketing research information are an important factor in overall business success (Kohli and Jaworski 1990; Narver and Slater 1990). That said, most of the research that investigates the nature of marketing information and its relationship to business performance has involved the relation between domestic markets and domestic marketing. However, in international marketing, it has been argued that the increased uncertainty posed by extending business to an unfamiliar market with unfamiliar environmental conditions intensifies the need for marketing information (Terpstra 1967; Johanson and Vahlne 1977; Douglas and Craig 1983). Despite the agreement that marketing information is central to business success in both domestic and international contexts, there have been surprisingly few empirical studies that specifically examine the link between marketing research and company performance in the international domain. A number of recent seminal works have begun to explore the special issues surrounding the collection, use, and effects of marketing information in international and export marketing; the majority of studies pertain to the sources of export information used by exporters, the organization of research activities, the data collection methods employed, and the factors affecting the use of export information (Hart, Webb, and Jones 1994; Crick, Jones, and Hart 1994; Diamantopoulos and Horncastle 1997). Yet there remains a gap in empirical research examining the relationship between the marketing information-collecting behavior of exporting firms and their performance. Given the financial implications of embarking upon the collection of detailed marketing information or of making erroneous decisions, this gap in empirical research is somewhat surprising. The research described in this article explores the relationship between such information gathering behavior and export performance. Further, this study focuses on small and medium-size enterprises (SMEs), for which previous research has identified a number of factors that impede marketing research activity (McDaniel and Parasuraman 1986; Fann and Smeltzer 1989; Kagan, Lau, and Nusgart 1990; Peridis 1992). Such research has also suggested that "academics and marketing professionals alike can aid small businesses by providing and disseminating evidence establishing the value of market research" (Callahan and Cassar 1995, p.8). The Contribution of Marketing Information to Export Success Several empirical studies have concluded that marketing research is indeed an important element in companies' success formulae. For example, Hooley and Lynch (1985) give evidence that the level of use of marketing research is positively related to company effectiveness, while Hart (1987) and Baker, Hart, and Black (1988) report that more successful companies carry out marketing research, in sharp contrast to less successful companies. Focusing on small firms, Dolinger (1984, 1985) found a positive relationship between the use of environmental information and small firm financial performance. Despite these studies which appear to support the link between marketing research and performance, a number of researchers argue that to look for a direct relationship is to over-simplify the issue of how information is used within companies (Piercy 1983, 1985). Specifically, the investigation of the use of information and its eventual impact on company performance is argued to be confounded by a host of organizational factors such as power and politics, organizational structure and interactions, as well as senior management factors(1) (Deshpande and Zaltman 1982). …

The Debt Structure of Small Businesses Owned by Women in 1987 and 1993

Abstract: An important phenomenon in the U.S. economy in the last twenty-five years has been the rapid growth of women-owned businesses. In 1972, women owned under five percent of all businesses and produced less than one percent of total sales (Bureau of the Census 1976). By 1992, women-owned businesses accounted for 34 percent of all businesses and produced nearly 20 percent of total sales (Bureau of the Census 1996). based on recent estimates of small business activity supplied by the Board of Governors of the Federal Reserve System, women-owned businesses now comprise 27 percent of the 5.5 million small businesses in the U.S. (Cole and Wolken 1996). Even though female ownership of small businesses has increased significantly over the past 25 years, many women who own small businesses claim they have less access to the market for financial capital than men who own similar businesses. While previous literature has offered no evidence of price discrimination in financial capital markets, advocacy groups still claim that female business owners face discrimination (Ando 1985 and Peterson 1981). If real discrimination occurs in the financial services market, one would expect women-owned businesses to receive less favorable treatment by lenders than men-owned businesses, even when the quality of the business is the same. The borrower could receive less favorable treatment in a number of ways: having to pay higher loan prices; being offered smaller loan amounts; being refused credit from a mainstream lender, making it necessary for the borrower to search for non-conventional lenders; or being offered only non-traditional debt instruments. The purpose of this study is to determine whether women-owned small businesses had less access to traditional leases and loans from institutional lenders (primarily commercial banks) in 1987 and 1993 than men-owned small businesses. The next section reviews previous literature on financial credit access by women-owned businesses. Subsequent sections present the empirical models and the results and conclusions derived from this study. Literature Review The literature on the financial structure of women-owned businesses has focused on the relative financial success of women- and men-owned small businesses, the perceived reluctance of lenders to loan money to women-owned business borrowers, and the demand for financial capital by women- and men-owned small business borrowers. The literature presents conflicting evidence on the relative financial success of women- and men-owned small businesses. Several reasons have been cited for the relatively lower level of financial success realized by women-owned businesses. The most persuasive reasons suggest that: (1) women-owned businesses are relatively small; (2) the business owners lack relevant business experience; and (3) they tend to be concentrated in business classifications earning relatively low profits (Aldrich and Auster 1986; Aronson 1991; Lascocco et al. 1991). Other authors suggest that men- and women-owned small businesses have similar financial characteristics. In the rural economy, women-owned businesses appear to have significantly lower gross sales than men-owned small businesses; however, the factors influencing the business' success are the same for women- and men-owned small businesses (Tigges and Green 1994). When examining women-owned businesses in specific service industries (for example, food and drink, computer and software sales, and health), women-owned businesses are similar to men-owned businesses in earnings, earnings growth rates, and business failure rates (Kalleberg and Leicht 1991). This literature on the financial success of women-owned businesses suggests that they are less successful financially than men-owned small businesses, except in rather specific industries. Apart from the demographic characteristics of the business (size, age and Standard Industrial Classification), women-owned businesses may not be given the opportunity to succeed because they lack financial and human capital resources. …

Effect of End-User Personal and Systems Attributes on Computer-Based Information System Success in Malaysian SMEs

Abstract: Small and medium-size enterprises (SMEs) need to play a very crucial role in achieving Malaysia's aspiration to become a fully-developed nation by the year 2020(1). The manufacturing sector is expected to spearhead the drive to fulfill this vision. In view of that, the Malaysian government is constantly trying to promote and upgrade Malaysian SMEs to provide a strong and competitive industry for the success of large enterprises. According to a survey in 1994, there were about 12,000 small and medium-size enterprises in Malaysia, comprised 88 percent small enterprises and 12 percent medium-size enterprises. Although these SMEs accounted for about 84 percent of the total manufacturing establishments in Malaysia, they contributed only about 28 percent of total value added and provided only about 33 percent of employment in the manufacturing sector. The relatively low contribution of Malaysian SMEs to the total value added of the manufacturing sector is seen as a bottleneck in achieving the rapid industrialization of the nation. Enhancement of the technical capabilities of Malaysian SMEs, through a greater and more diffusion of sophisticated technology among them, is often an effective way to improve their productivity and competitiveness. In spite of the availability of various government assistance programs (including technology acquisition and skills enhancement programs), the effectiveness of technology adoption among SMEs is an issue of great concern to the Malaysian government. A review of prior literature indicates that several factors may have a direct or indirect impact on the effectiveness of technology adoption or on the success of computer-based information systems (see Cragg and King 1993; Ein-Dor and Segev 1978; DeLone 1988; Raymond 1985; Montazemi 1988). Ein-Dor and Segev (1978) suggested that computerization is less likely to succeed in smaller organizations than in larger organizations. They largely attributed the absence or failure of many computerization projects among SMEs to their lack of resources. However, with the advent of the microcomputer and the significant fall in the prices of hardware, coupled with the availability of relatively cheap and user-friendly small business applications, more and more SMEs have found it feasible and necessary to computerize their information systems in this era of intense competition. The introduction of the microcomputer has given rise to end-user computing. The expected principal benefits of end-user computing are direct user-control of information processing, which should enhance systems usage, satisfaction, and performance. In the end-user computing environment, user resistance is often cited as a serious systems implementation problem. Hence, positive attitudes towards computers have to be cultivated and encouraged among employees to ensure success of computerization efforts. In the end-user computing environment, an issue of interest is whether the personal characteristics of the end-user and the manner of technology adoption, as well as the capabilities of the computer-based information system (CBIS), can influence the perceived success of the CBIS in the small business context. An understanding of the factors from the end-user perspective that influence the success of CBIS in a firm should be pertinent to the formulation of strategies to motivate and facilitate successful adoption of information technology (IT) among SMEs. The objective of this study is to investigate whether the personal characteristics of the end-user and attributes of the CBIS can affect the perceived success of CBIS in Malaysian SMEs. In past research, the perceived success of CBIS has been found to be significantly and positively correlated with the profitability, perceived growth, and future utilization of computer technology in firms (Cron and Sobol 1983). Previous Studies Several factors have been found to be significantly associated with the success of information systems. …

Quick Response Adoption in the Apparel Manufacturing Industry: competitive advantage of innovation

Abstract: In recent years, off-shore apparel manufacturers have significantly eroded the U.S. market share of domestic firms. For example, whereas the dollar value of apparel imports almost doubled between 1985 and 1992, accounting for 50 percent of U.S. retail sales, the number of people employed by U.S. apparel manufacturers declined almost 20 percent from 1980 to 1992 (Barrett, Ramey, and Ostroff 1996; U.S. Bureau of the Census 1993). The apparel manufacturing industry is especially vulnerable to off-shore competition because historically it has been comprised primarily of small and medium-size firms (Hunter 1989). Such firms, especially those of small size, often lack the resources and capital that make it possible to compete on a broader scale. This circumstance is paradoxical in that traditionally the flexibility that allowed small firms to respond quickly to fashion change was considered a competitive advantage rather than a weakness. Without the resources to compete, however, flexibility is inconsequential. A business can gain sustainable competitive advantage by innovations in technology or concepts as well as in products. Quick Response (QR), a program developed by textile and apparel manufacturers and retailers around 1985 as a way to cope with problems challenging the apparel industry, uses a combination of strategies to reduce inventory levels, improve merchandise quality, increase worker productivity, increase stock turnover, and reduce merchandise markdowns and inventory costs (Kurt Salmon Associates 1990). Fundamentally, QR is a way to gather information about consumer preferences and to reflect them in production decisions in a timely manner. To comply with consumers' needs, QR relies on sales data. Through computerized information systems, sales data are transmitted and transformed as useful information that reveals consumers' preferences and reactions, and decisions are then made promptly to respond to what consumers want. With QR, cooperative relationships are established among textile mills, apparel manufacturers, and retailers to allow faster movement of information and products from design to retail sale. However, while Acs and Audretsch (1993) have suggested that small and new enterprises can make important contributions to innovation, Davig anti Brown (1992) have indicated that small manufacturing firms focus more on operations than on marketing when developing firm strategies. This suggests that the use of QR strategies relative to manufacturing or marketing may differ among small, medium-size, and large apparel manufacturing firms. This is of particular interest since small (fewer than 50 employees) and medium-size (50 to 250 employees) firms comprise the majority of U.S. apparel manufacturers, although large apparel firms account for a disproportionate share of the total volume of apparel shipments (U.S. Bureau of the Census 1995; Ko 1993; Hunter 1989). An examination of QR adoption by small, medium-size, and large apparel manufacturers might shed light on whether QR strategies are perceived to sustain and increase competitive advantage for small apparel manufacturing firms. Theoretical Framework: Diffusion of Innovation The theoretical framework of this study is based on diffusion of innovation, a process that communicates a change - a new object, concept, or technology - to members of a social system over a period of time (Rogers 1983). According to Mahajan, Muller, and Bass (1990), the diffusion process includes four key elements: innovation, communication channels, time, and social systems. For this study, the change or innovation is QR and the social system is the apparel manufacturing industry. According to Rogers (1983), the diffusion process assumes that within a social system an innovation is introduced, communicated, evaluated, and consequently either adopted or rejected. In earlier diffusion studies related to this topic, researchers examined how certain variables - characteristics of the adopters, perceived attributes of an innovation, and communication channels (by stages) in the innovation-adoption decision process - affected the adoption process (Rogers 1983). …

Analysis of Growth Stages in Small Firms: A Case Study of Automobile Ancillaries in India

Abstract: Small and medium-sized enterprises (SMEs) play a key role in generating employment, promoting innovation, engendering competition, and creating economic wealth (Sengenberger, Loveman, and Priore 1990). The long tradition of promoting small-scale enterprise in India is being re-examined in light of its success in creating a sector with the potential of performing all the above roles. In a study of the pre-1990s period, Sandesara (1988) concludes that small firms experienced a decline relative to large-scale industries in terms of five important parameters - number of factories, fixed capital, number of employees, output, and value added. In the post-liberalization era, this issue has assumed renewed importance. The small-scale sector in India has now been identified by the government as one that can assist in generating additional employment, indigenizing technology, and leveraging cheap labor and flexibility of operations to create competitive advantage for Indian industry. As a result, the government recently raised the asset size limit used to define small firms for government aid eligibility to include what had been defined as the medium-size sector. Thus small firms can now openly pursue a growth objective without running the risk of losing their small firm status and all the accompanying promotional subsidies. In an investigation into the reasons why some SMEs grow and others don't, Hay concludes that "over the long term it is internal rather than external barriers to growth that exert the decisive influence upon SMEs' rate of growth. The key internal growth constraint is managerial capacity and the unwillingness on the part of owner-managers to incur the risks associated with growth" (1994, p. 288) In a study that draws lessons for India's SMEs on the basis of inter-country case study comparisons, Nanjundan (1994) observes that the size of enterprises does not crucially determine business performance measured either in economic or social terms. Instead, business performance depends decisively on organization structure and public and private policies which influence development. Research Objective Growing small firms need to be freed from both internal and external policy constraints to growth. To formulate more directed policy packages for growth promotion, we need to design a framework that can discriminate between differing levels of growth orientation and internal capacity for growth in individual firms within the small-scale sector and to identify the growth stage of the firm. The present article tries to assess the growth orientation of a sample of small-scale Indian firms located in a common industrial cluster. These firms belong to the automobile ancillary sector, a recognized "sunrise" industry in post-reform India. This will enable us to differentiate between the management practices followed by small and medium-size enterprises in this industry on the basis of the growth stage of the firm. Survey of Literature Growth Stage Identification Attempts at systematic categorization of the problems and growth patterns of firms have used business size as one dimension and maturity or growth stage as another. Gibrats's Law (firm growth is independent of firm size) has been found to hold in the limit only for mature firms or for firms that entered the industry at the same time (Jovanovich 1982). Churchill and Lewis (1983) observe that these general models are inappropriate for small businesses. Thus, researchers have proposed alternative frameworks to understand the nature, characteristics, and problems of a diverse variety of small-scale firms. Patel (1995) suggests an approach based on identifying the dominant crisis type for analyzing growth stages in small-scale units. His framework matches the dominant management problems of the firm to its years of existence. In this model, a start-up crisis and a cash crisis are experienced in the first three years; delegation and leadership crises arise in three to seven years; finance and prosperity crises appear in seven to ten years; and management-succession crises can be expected at ten years onwards. …

Small Business as a Supplement in the People's Republic of China (PRC)

Abstract: During the past 20 years, several nations that formerly embraced communism, including those with centrally-planned economies, have totally rejected that ideology. They have allowed market forces to transform the economy and have allowed independent small business owners to become major economic players. In the late 1970s, the People's Republic of China (PRC) developed policies of reform that opened it up to the world. Numerous new programs directed the people of China toward a prosperous entrepreneurial sector, especially in the townships and villages. These programs, however, did not abandon the socialist ideology inherent to the PRC, but sought to maintain it as the basis for its policies, with small business as a supplement to the socialist market economy. This article will consider the nature of the integration of socialism and small business in China. Recent History of Business in China On October 1, 1949, the Communist Party of China (CPC) declared the inauguration of the People's Republic of China (PRC), and all private enterprises were absorbed into the state sector of the economy. Small shops were converted into retail outlets for state-produced goods. At first the retailers were entitled to earn a profit, but it soon became obligatory to join a cooperative. No major changes in this policy occurred until 1978, when the nation adopted its third constitution, which led to the legalization of small business. The fourth constitution followed in 1982, placing China's modernization within the guidelines of socialism. The nation's fundamental laws specify four central principles: (1) adherence to the path of socialism; (2) adherence to the dictatorship; (3) adherence to the leadership of the Communist Party of China; and (4) adherence to Marxist-Leninism and to the ideology of Mao Zedong. One article of the constitution stipulates that the private economy in both urban and rural areas should supplement the socialist economy of public ownership. Another article allows the National People's Congress to amend the constitution, and in March 1993, such an amendment proclaimed that China will practice a "socialist market economy." Since this amendment, a siying quiyejia (private enterprise) is defined by the state as a firm owned by individuals and providing jobs for eight or more employees. Under this definition, over 200,000 owner-managers, partners, and shareholders are proprietors of 100,000 private enterprises in China, employing almost 2 million people. Enterprises employing fewer than eight employees are called geteihu, literally "one-man businesses." In rural areas, the xiangzhen qiye evolved, operated by members of an extended family. Chinese Culture and Small Business To understand the current Chinese attitude toward small business, it is important to understand some of the underlying cultural influences on it. One very important influence is Confucianism, the major religion in China. Although Confucianism does not encourage small business per se (Jones and Sakong 1980), it does value hard work, diligence, and frugality (Petersen 1971), qualities that Weber (1904-1905) linked to small business . Wu (1983) suggested that Chinese cultural values also include: (1) a high propensity to save and reinvest business earnings; (2) a universally strong desire to secure a better education for their children, who would then be expected to carry on the business and often do; and (3) a strong sense of loyalty and mutual obligation within the Chinese extended family. Shapero (1984) observed that overseas Chinese in Southeast Asia value small business more than do people from other cultural groups, and Dana (1986-1987) noted the success of Chinese small business owners in Singapore, Vietnam (Dana 1994), and Laos (Dana 1995). The Return of Small Business Without abandoning its ideology, the PRC initiated its program of reform in 1978, and in the following year the State Council of China officially endorsed the policy of encouraging small business owners as a supplement to the socialist economy. …

Event Sponsorship: An Exploratory Study of Small Business Objectives, Practices, and Perceptions

Abstract: Event, or community, sponsorship allows organizations to reach their target market with less clutter than other communications methods, exposes the product/service directly to the market, and provides an excellent mechanism for the organization to give back to the community by which it is supported. Event sponsorship, or sponsorship marketing, refers to supporting various types of event ranging from local Little League teams, educational partnerships, and health fairs, to college basketball teams, around-the-world sail boat races, professional auto racing, and even to the Olympic Games. Sponsorship varies widely in a number of aspects including event type, dollar expenditure, extent of professional planning and objectives, number and type of participants, media exposure, and geographic context. Whether the type of sponsorship is financial, media, or in-kind support (Cicora 1991), the list of company benefits derived from it can range from publicity, to product sales, image enhancement, or even improved employee morale (Decker 1991). Many organizations are now investing in sponsorships of the arts and education to enhance their corporate image. Sporting events, however, continue to be the biggest draw. Although a great deal of the literature regarding sponsorship focuses on large corporations and international events, potential benefits for small businesses sponsoring small local and regional events are also impressive. Many small events are less likely to receive corporate funding and are more dependent upon local and regional organizations for support. Similarly, small businesses often cannot afford to sponsor large events. The community identity available from partnerships between local events and local and regional small businesses can offer small businesses major opportunities in terms of community relations, marketing objectives, and employee relations (employees are often involved in these events as community members). While large international corporations may need the media reach of an international event to achieve their objectives, the proper partnering of smaller businesses and events may achieve those same objectives on a smaller scale within the resources of both organizations involved. Regardless of the type or level of sponsorship, more companies have begun to take their sponsorship decisions seriously. Terrazas (1995) indicates that these decisions are no longer made based solely on corporate citizenship but rather on the match between the community benefits of the sponsorship and the marketing objectives of the organization. However, this move toward viewing sponsorship as a marketing vehicle is inconsistent with earlier perceptions in which organizations' sponsorship objectives were primarily to assist the community, a particular cause, or group. Some organizations, such as John Paul Mitchell Systems, feel strongly that businesses must have a conscience in selecting socially responsible sponsorships even at the community level (Skiing 1996). Other organizations see sponsorship as the perfect vehicle for improving employee motivation, helping entertain clients, and reaching a specific target audience with the organization's message (Nation's Business 1995). Research Focus Little research interest has been directed toward sponsorship. Most existing literature emphasizes the rewards available, discusses ways to maximize those rewards, or simply features case studies. The majority of this literature tends to focus on large organizations and large sponsorships. The purpose of this study was to investigate sponsorship objectives, opinions, and practices with a focus on smaller organizations. The research had two phases. An initial exploratory stage involved a focus group session with small business owners. This session was conducted in the summer of 1996. The objective of the session was to probe the participants' opinions of, involvement in, and objectives of sponsorship. …

Succession Planning in Family Businesses: A Study from East Anglia, U.K

Abstract: There are many similarities in the succession problems of chief executive officers, whether their businesses are large or small, whether private or publicly-held. However, the chief executive of a family business has additional problems which arise simply because it is a family business. For example, the problem of finding a successor is not limited to the person with the most suitable track record and abilities, but has the added complications of family membership and expectations. Much of the literature covers the reasons why founders and chief executives should plan for their succession. The benefits of planning are well explored and clearly support the idea that most founders who do not sell the business when they retire wish their businesses to continue and probably wish it to stay in the family. The literature (Daft 1992; Francis 1993; Morgan 1986) provides reasons to plan for succession, including minimizing taxation, continuation of the lousiness, development of expertise, employee relations, and strategic goals. In many cases, small firms are negligent in succession planning. The literature (Leach 1991; Lynn 1974; Kets de Vries 1988; Scase and Goffee 1987) provides a number of reasons why succession planning does not happen, even when the owner/manager knows that it should. These include feelings of immortality, lack of a suitable successor, a surfeit of suitable successors, and fear of retirement. The aims of this article were to answer the following questions regarding succession issues in family businesses: (1) Do the owner/managers of local family-owned businesses have a succession plan, however informal? (2) Does the formulation of a succession plan depend upon the age of the owner/manager? (3) Does the formulation of a succession plan depend upon which generation of the family is currently manger of the business? (4) Does the gender of the owner/manager have any influence on the formulation of a succession plan? (5) Does succession planning vary according to the business sector in which the company operates? (6) Does succession planning depend on the extent to which the manager owns the business? (7) Does succession planning depend upon the size of the business? (8) What factors do existing managers consider to be important in preparing their successor for office? and (9) If owner/managers do have a succession plan, what is it? Research Design The sample consists of small firms in East Anglia, U.K. The area is rural and, until relatively recently, has not had the benefit of convenient access to England's highway system. Major highways have recently been constructed, and the development of adjoining port cities has given the area an important economic boost; unemployment has been at least two percent below the national average since 1981. People in the area are relatively close-knit, which required that attention be paid to anonymity and privacy issues in the research design. Table 1 Comparison of Planners and Non-Planners (n = 21; rounded to the nearest percent) Planning for Not planning for succession succession Breakdown of total respondents 38 62 Intending to retire not in foreseeable future 38 77 within 2 years 12 8 within 5 years 12 - within 10 years 38 15 By age of owner/manager under 44 - 31 45-54 50 38 55-65 50 31 By generation of current incumbent founders of business 38 39 2nd generation 62 22 3rd generation - 39 By business sector manufacturing 38 23 retail 25 31 wholesale 25 8 service 12 38 By ownership owners/majority shareholders 62 53 minority shareholders 38 47 A questionnaire was designed, pilot-tested, and sent out with a covering letter. …

The Training and Development Needs of Owner-Managers of Small Businesses with Export Potential

Abstract: Problem Definition Quebec's small businesses are currently facing the challenge of increased competition as a result of new open markets, especially the recent free trade agreement between Canada and the United States. In such a context, the ability to export is becoming a critical factor in the development and long-term survival of many small and medium-sized firms. As Joyal, Julien, and Deshaies (1993) pointed out, this element is particularly crucial for the more vulnerable firms. These authors identified a number of key factors for determining vulnerability, including size, industry sector, investment potential, and the quality of available computerized production equipment. The results of their study showed that nearly 53 percent of small and medium-sized firms did not export and were not contemplating the possibility in the short- or medium-term. This high percentage is somewhat worrying in the present competitive context. In June 1992, Quebec's Minister of International Affairs, John Ciaccia, deplored the fact that only 13 percent of all Quebec's small businesses exported their products, when nearly 50 percent of the province's economy depended on them (La Presse 1992). Moreover, the share of exports in Quebec's manufacturing sector seems to have fallen slightly in general terms since the early 1980s (Farah-Lajoie 1992). Observations such as these have led to a number of studies aimed at discovering why small business owner-managers do not consider exporting. The results have shown that small firms face certain obstacles to exporting, including lack of information on opportunities and markets (Philippe 1990; Ali and Swiercz 1991; Dichtl, Koeglmayer, and Mueller 1990; Brooks and Rosson 1982); poor knowledge of the distribution and marketing tools required (Kedia and Chokkar 1986; Ogram 1982; Kathawala et al. 1989); and lack of the financial resources required to face the complexities of exporting (Nelson 1984; Chenier and Prince 1990). Beyond these more technical and situational factors, however, it was also found that one of the most important obstacles is the unwillingness of small business owner-managers to consider exporting (Nevin and Cavusgil 1981; Chenier and Prince 1990; Sandberg and Hofer 1987). Amesse and Zaccour (1991) observed that the decision of small firms to export (or not) is profoundly influenced by the owner-manager, and in particular by his or her perceptions and attitudes. Miesenbock (1988) supported these findings, stating that the main decision-maker in the management of a small business becomes the key variable in the internationalization process. A number of other authors have also identified clear differences between the owner-managers of exporting and nonexporting firms in terms of their perceptions of the risks and difficulties associated with the export process and their personal orientation toward international trade (Sharkey, Lim, and Kim 1989; O'Rourke 1985; Axinn 1988; Cavusgil and Naor 1987; Daniels and Goyburo 1976; Ogram 1982). Finally, Leo, Monnoyer-Longe, and Philippe (1992) emphasized the importance of the owner-manager's determination to take the firm into the export market. Given the considerable impact of the owner-manager's personal attitude on the firm's decision to export, it is relevant to consider the various paths available to help owner-managers overcome barriers to exporting and to encourage more internationally-oriented business behavior. In this respect, training and development may offer a potentially interesting solution. As Joyal (1993) pointed out, one of the elements frequently mentioned by respondents in his research with Julien and Deshaies (1993) was the need for training to better satisfy requests from outside markets. Both the business community and the government/parapublic sector are aware of the need to intervene at the executive level to encourage internationalization through training and export support programs. …

Australia's Aboriginal Small Business Owners: Challenges for the Future

Abstract: The Aboriginal peoples of Australia have faced a variety of different social, legal, and economic challenges in adapting to European settlement over the last two centuries. However, despite the removal of legal impediments and a revival in Aboriginal culture and population in recent years, the number and success rate of their small business owners remain limited. This article provides an overview of Australia's Aboriginal business operators: the causes of success and failure, and the future opportunities and problems that they confront. Background Australia's indigenous peoples are one of the oldest cultures in the world. Their presence on the continent goes back at least 40,000 years. In contrast, European settlement only began in 1788, with the arrival of the first English settlers in Sydney. At the time, the Aboriginal population was estimated to be about 750,000 (McGrath 1989). It was characterized by a complex social structure, a rich religious and ceremonial life, widespread hunter-gatherer economic activity, and a strong attachment to the land (Rickard 1992). As in so many other parts of the globe, European settlers quickly had a dramatic and largely negative impact on Australia's indigenous peoples. New diseases, displacement from their original lands, and armed conflict began the process of social destruction (Reynolds 1982). This was so extensive that by 1900 the indigenous population had declined to less than 40,000 (Dingle 1988). During the nineteenth and twentieth centuries, successive state and federal administrations also intervened by forcibly removing many Aborigines from their homelands, relocating many onto reservations and separating children from their families (McGrath 1989; Human Rights and Equal Opportunity Commission 1997). Until 1967, most Aborigines were not permitted to vote or to claim Australian citizenship, nor were they included in the Commonwealth census. As a result, most Aborigines were forced into a marginal existence. Those in rural and regional communities often found employment working on European pastoral stations set up on their own land. Most of this work was unpaid; remuneration was largely in kind. It was not until the 1940s that Aborigines began to receive monetary wages for this work, and such a practice did not become widespread for another twenty years. In contrast, Aborigines living in urban areas found themselves in a variety of poorly paid jobs, where work was usually marginal and uncertain. Participation in the white Australian economy almost exclusively took the form of providing labor for European businesses. There were few opportunities for Aborigines to establish their own independent enterprises. As a result, many became dependent on welfare programs provided by governments and charity organizations for their survival (Graetz and McAllister 1994). Coupled to this was the widespread usurpation of Aborigines' legal ownership of their land. Unlike many other countries (such as neighboring New Zealand), European colonization was never formalized by any formal treaty between the occupying colonial power (in this case, the United Kingdom) and the original inhabitants. As a result, Aborigines were not held to have valid claims to their own land. This doctrine of "terra nullius" was finally thrown out by the nation's High Court in 1992. By that time, it was impossible to provide effective restitution for much of the lands already lost. As a result, Aborigines today have only limited rights to claim back some land, such as vacant Crown (public) properties (ATSIC 1998a). Despite all this, Aboriginal society has shown itself to be a remarkably resilient and robust culture. In recent years it has become clear that the decline in the indigenous population has been reversed (Graetz and McAllister 1994). The number of Aborigines is still small, and represents only about 2 percent of the nation's total population, but is J growing rapidly. …

Manufacturing Strategies of Network-Based Small Firms: Observations on the Textile Industry in Taiwan

Abstract: It is well recognized that small entrepreneurial firms play an important role in a nation's economic development. They are often sources of new ideas, materials, processes, and services that larger firms may be unable or reluctant to provide (Robbins 1994). Megginson et al. (1994) noted that people have a much higher opinion of small firms than of large firms, in part because a small firm is characterized by individual freedom, risk-taking, initiative, thrift, frugality, and hard work. However, many small business ventures have failed because of inadequate financing and inadequate management. The latter inadequacy is characterized by a lack of business knowledge, inadequate planning, and inexperience (Megginson et al. 1994). Because of the lack of resources associated with their size, small firms may develop business networks. A business network can be defined as linkages among firms. It provides external sources for various types of input that complement or substitute for a given firm's inadequacies (Malecki and Tootle 1996). Nohria and Eccles (1992, p.2) pointed out that "the model of organization that is considered characteristic of the New Competition is a network of lateral and horizontal interlinkages within and among firms." In order to "enhance competitiveness, both large and small firms have deployed various approaches to re-position their competitive priorities regarding cost, quality, and flexibility, so as to satisfy customer needs. Paying more attention to strategic decisions that serve to improve manufacturing functions represents one of these approaches and reflects a recognition of the crucial role of manufacturing strategy in defining competitive advantage (see Montagno et al. 1995, for example). Various studies on manufacturing strategies have tried to provide guidelines for the effective development of manufacturing strengths as a means to achieve competitive goals. However, much of the insight derived from this research is oriented toward the management within an individual firm rather than toward the constituents of the entire network. A review of the literature also reveals that empirical studies on manufacturing strategies tends to focus on large firms. This is partly due to the fact that the management procedures in small firms are unlikely to be institutionalized or documented. As strategic management places an ever-increasing emphasis on the synthesis of efforts within the supply chain, it is useful to investigate manufacturing strategies from the viewpoint of both an individual establishment and an entire network. The objective of this research is to the explore manufacturing strategies and the competitive priorities of networked small firms in Taiwan. In particular, this research examines the manufacturing operations of networked small firms in contrast to those of large integrated companies in the textile industry. A study of this kind may provide information useful to understanding how small firms can thrive in a competitive environment. Insights into the operations of small firms may also help the government formulate policies which facilitate the development of the nation's economy. Furthermore, this investigation of manufacturing strategies in Taiwan may provide a range of insights into the Chinese approach to management. Through an in-depth field survey, we examine the manufacturing strategies of the network, discuss its competitive priorities, and suggest several propositions concerning the management of network-based production systems. Research Background and Framework Background Small firms have flourished over the past four decades in Taiwan and have played a major role in the manufacturing industry (Liu, Liu, and Wu 1995). Several studies have found that a great deal of the success of small firms can be linked to the effective networking of their production systems. For example, Wu (1994) noted that a cooperative network links various specialized and mutually supplemented processes, thereby creating a production system of high flexibility and capability. …

Technology Uptake in Small and Medium-Sized Enterprises: Some Evidence from New Zealand

Abstract: The gap between research examining technology uptake in the manufacturing sector and industry perceptions about their own technology adoption needs hampers the technology responsiveness of small and medium-sized enterprises (SMEs). In the New Zealand context, for example, many small businesses have been wary of, or indifferent to, alliances with university and public or private sector research groups. They perceive the involvement to be too theoretical, unrelated to either their pragmatic business considerations or the specifics of production processes. Conversely, some researchers have faced constraints of access and funding which have limited their involvement with and contribution to SMEs, even when they have relevant applied technological, management, or educational expertise to offer. Policy-makers have for some time wrestled with ways of bridging this divide. The New Zealand government, under the auspices of the Foundation for Research, Science, and Technology, have identified the need for strategic and tactical research relating to technology uptake and has funded a series of projects which link researchers to SMEs in a series of applied programs with strong connections to the Manufacturers' Federation and industry sector groups. Many of these projects interrelate with the complementary goals set by TRADENZ, the New Zealand government export agency, which is charged with promoting the internationalization of industry by increasing the number of exporters, the scale and quality of product, and the sophistication of international relations and technology transfer partnerships. Economic Significance of SMEs in New Zealand The New Zealand research agenda explicitly acknowledges the importance of small and medium-size enterprises to economic development. SMEs are of increasing significance in the New Zealand economy, both in terms of wealth creation and numbers employed. The total number of enterprises in 1996, excluding farms, was 225,996 (see Table 1). SMEs, defined in the New Zealand context as entities with fewer than one hundred employees, accounted for 99.4 percent of all companies, leaving fewer than 1,500 enterprises in the large category. Indeed, 85 percent of all businesses in New Zealand employ five people or less (Cameron, Massey, and Tweed 1997). Another way to measure economic contribution is in terms of employment (see Tables 1 and 2). SMEs currently employ 60 percent of the New Zealand workforce - nearly 800,000 people. Bearing in mind New Zealand's comparatively small population base overall (3.77 million in total), it is no surprise that microbusinesses (0-5 people) predominate. An obvious trend of the last decade is the strong growth in the number of smaller businesses, which suggests it is smaller enterprises, rather than big business and corporations, which offer the greatest employment potential (McGregor and Tweed 1998; see Table 2). Future economic prosperity for New Zealand depends on the survivability, [TABULAR DATA FOR TABLE 1 OMITTED] performance, and growth of these enterprises. While the search continues for an accurate predictive model of SME performance, a recent synthesis of four international studies, identifying the key characteristics of growth firms, revealed a strong emphasis on technology uptake (Chaston and Mangles 1997). SMEs: Cultural Norms and Personal Characteristics The relationship between cultural norms, personal characteristics, and technology uptake has received little international attention in the literature to date. However, it is intuitively reasonable to suggest that some well-identified personal characteristics of many small business owner/managers may inhibit growth potential through technology enhancement, where that development requires independent specialized expertise. This is because owner/managers may regard outsider help or independent scrutiny as interfering with their autonomy. As Jennings and Beaver (1997) note, the nature of managerial activity expands or contracts with the characteristics of the person fulfilling the roles(s), and such expansion or contraction is partly conditioned by the adaptive needs of the context in which the business operates, and is partly dependent upon the personality and needs of the owner/manager. …

Small business in small islands: a case study from Fiji

Abstract: Historically, the economic performance of small island states has been viewed in a critical, often fatalistic, light. Smallness brings with it an inability to exploit domestic scale economies, a lack of commercial or diplomatic clout, and given that small island nations are often distant from major commercial hubs, they often incur the added costs associated with insularity and remoteness. Small territories have high import sensitivities and relatively narrow export bases which render them especially vulnerable to exogenous shocks, such as fluctuations in world commodity price levels, military interventions, and environmental mishaps. With gross national expenditure often outpacing local value added, aid and personal remittances are often sought to balance budgets. Smallness is therefore synonymous with being powerless, vulnerable, and non-viable (Bray 1987; Bune 1987; Commonwealth Consultative Group 1985; Harden 1985). More recently, however, a second position has claimed that smallness is an inherent advantage and is characteristically associated with above-average economic growth. Small nations are ideal subjects for fine-tuning the internal and external balances necessary to secure competitiveness. They are able to switch quickly and flexibly from one policy direction to another. A few sizeable investments can swiftly alter the shape of the economy and perceptions about viable strategies. Moreover, small states, by definition, are commercially non-threatening and with their relatively insignificant product volume and value, tend to achieve preferential market access and avoid discriminatory trade treatment more easily than other larger countries. "Small is beautiful" because it is adaptable, manageable, and prone to attract sympathetic responses from potential sponsors, clients, or trading partners (Baldacchino and Greenwood 1998; Chiew 1993; Harberger 1988; Schumacher 1973; Srinivasan 1986; Trist 1980). A Different Perspective Increasingly, it is becoming evident that both the optimistic and pessimistic positions represent stereotypically biased views of the economic condition and prospects of small island nation states and territories. The debilitating effects of smallness, especially where coupled with lack of natural resources and remoteness, cannot be simply dismissed in a flourish of unsubstantiated enthusiasm. Market fragmentation, a limited labor supply and skill depository, and inadequate access to technology and investment capital are widespread and have real constraining effects. The result is often a rent-seeking economic structure, limited industrialization, a relatively large bloated public sector, and a very small private sector. The latter is also mainly engaged in commercial, import-oriented wholesale and retail trade. Export products are largely restricted to primary cash crops which experience deteriorating terms of trade beyond local control. Some export-led industrialization fuelled by foreign investment and technology has been set up, but its viability has required heavy subsidies, concessionary conditions, and often depressed wages - all necessary to make up for the other uncompetitive transaction costs (Connell 1988; Sklair 1991). On the other hand, it would be equally naive to dismiss the inherent potential of small island territories because their survival depends on a steady and substantial level of transfers from outside. Many small island beneficiaries have been more intent on assuring or deepening their dependency than on achieving some degree of self-reliance. Such an attitude is geared towards preserving the small island's consumptive capacity, generally above average on a global scale. It is also a politically convenient stance because it can be used to justify protectionist and interventionist policies. This article charts a course between economic hope and despair. It acknowledges that in spite of all the real difficulties faced, there exist some successful local ventures in these small insular locations. …

The Importance of Older Consumers to Small Business Survival: Evidence from Rural Iowa

Abstract: Small retail businesses in rural areas must compete for their limited consumer base with nearby giant discount and chain stores. Many rural community residents are enticed to shop beyond the local marketplace, creating a leakage of tax income from the community and reducing net sales for small retail business managers (Papadopoulos 1980; Stone 1995). Outshopping, coupled with consequences arising from agricultural adjustments and population outmigration, has been found to greatly reduce the survival rate of small independent retailers in several rural communities in the U.S. (Aryes, Leistritz, and Stone 1992; Bryant 1989) and in several rural communities located in the United Kingdom, Finland, Norway, Sweden, and Greece (Jussila, Lotvonen, and Tykkylainen 1992; Monk and Hodge 1995; Simmons and Kalantaridis 1996). Retail concerns in several rural Midwestern U.S. communities have decreased from 60 percent of all business establishments to 33 percent (Strange 1996). Although small business managers in rural communities are often dependent on a changing economic environment, they can also be responsive to these changes as active decision-takers. Rural retail businesses faced with declining numbers of customers can employ various adaptive strategies. For example, two strategies have been successfully employed by rural retail shop owners in Lapland, Finland (Jussila, Lotvonen, and Tykkylainen 1992). The efficiency strategy concentrates on reducing overhead or production costs by focusing on a specific segment of the customer market. As a second solution, the small business manager pays more attention to market differentiation and attempts a market increase by combining new activities or service offerings. Although several studies have attempted to assess the causes of rural consumer outshopping behavior, little is understood about those consumers who inshop - meaning those who choose to shop with local businesses (Anderson and Kaminsky 1985; LaForge, Reese, and Stanton 1984; Miller and Kean, 1997a; Samli, Riecken, and Yavas 1983). For small retail businesses that are located in rural areas, identifying potential consumers from a limited population base (efficiency strategy) and accurately interpreting the likelihood of their adopting specific products or services offered to meet their needs (entrepreneurial strategy) require an understanding of the rural community and its marketplace. Generally, one of the first steps in developing a focused or target market strategy of efficiency is to analyze the characteristics of potential customers. Through analyses of demographic and psychographic information, consumers in a market can be segmented by identifiable characteristics differentiating them from others in the market area (Solomon 1994). Demographic information describes characteristics of the population such as age or income, whereas psychographic information frequently pertains to consumers' lifestyle or activities, in addition to their personality as expressed by their interests and opinions (Mowen 1990). Additional psychological aspects of the consumer are also important. Knowing something about rural residents' attitudes, motivations, and behavior with regard to their interests in and opinions of the community and its marketplace will further the rural retailer's ability to efficiently target viable segments in the rural community (Jarratt and Polonsky 1993). Demographic analyses of age trends have identified consumers in both the baby boom and elderly age segments as critically important to marketers in several regions of the U.S. (Mowen 1990). As the first consumers of the baby boom generation (born between 1946 and 1964) pass their fiftieth birthday, their consumption behavior will continue to affect marketing strategies for many years to come. The "senior citizens" or elderly market is traditionally defined as consumers aged 65 years and older (Lambert 1979; Tongren 1988). Lengthening life spans and the celebrating of 75 million baby boomers' 65th birthday beginning in the year 2011 will result in a great increase in the elderly population. …

Preserving Culture through Small Business: Government Support for Artisans and Craftsmen in Greece

Abstract: While literature and governments often link entrepreneurship with innovation, Greece uses small business as a means to preserve cultural tradition. The result of ethnographic field research, this global perspective is about the efforts to promote long-term development of rural, small-scale enterprises in traditional sectors of the Greek economy. Schumpeter (1911), and many after him, linked entrepreneurship with innovation (Barnard 1949: Baumol 1968; Drucker 1974; and Mintzberg 1973). Governments have also associated entrepreneurial behavior with innovation, and numerous policies have been designed to promote innovation among entrepreneurs. For example, the government department known as Industry, Science and Technology Canada instituted the Manufacturing Productivity Improvement Program to assist innovative entrepreneurs in adopting modern technology. In France, various networks have been established to promote technological innovations, among them the Agences Regionales d'Information Scientifique et Technologie (regional agencies for scientific and technological information) and the Centres Regionaux d'Innovation et de Transfert Technologiques (regional centers for innovation and technological transfer). Similar attempts have been initiated in newly industrialized countries. In Singapore, for instance, the Small Business Bureau provides a grant for the promotion of technological upgrading (Dana 1987). Even less-developed nations have developed interest in innovation. As discussed in Dana (1996), an example is the Trust Fund for the Development of Small Industry in Mozambique. Thus, various efforts have focused on encouraging innovation and new technologies within the small business sector. Although the same is true in Greece, innovative technologies are not the prime concern of the Greek government. Rather, emphasis is placed on assisting artisans and craftsmen. The artisan as an entrepreneur is discussed by Stanworth and Curran (1976), while the craftsman is addressed by Chandler (1962), Dunkelberg and Cooper (1982), Filley, House, and Kerr (1976), Smith (1967) and Woo, Dunkelberg, and Cooper (1988). The purpose of this article is to illustrate how the artisanal handicraft sector in Greece has been singled out to be given special priority. The Hellenic Organization for Medium- and Small-Size Enterprises and Handicrafts The Hellenic Organization for Medium- and Small-Size Enterprises and Handicrafts is commonly referred to by its acronym, EOMMEX. Under the supervision of the Ministry of Industry, Research, Technology and Trade, the organization was created by laws passed in 1977 and amended in 1984 and 1991. EOMMEX is a non-profit organization funded by the Greek government and by European Union sources. Its activities are dedicated to maintaining an environment favorable for the long-term development of small-scale entrepreneurs, with special attention being given to handicrafts. Activities include keeping barriers to entry at a minimum and enhancing the economic climate to maximize the probability of success of those doing business in the sector. As well, EOMMEX is actively involved in providing artisans with a wide range of comprehensive services, including training, financial assistance, and marketing. The organization also subsidizes the interest rates on loans to small business owners, and makes available letters of guarantee. EOMMEX employs 650 specialists in Athens and in twenty-six regional offices. It also operates offices in Brussels, Frankfurt, and New York, facilitating collaboration with partners abroad. All of its services are provided free of charge. The Handicraft and Artisan Sector It is of particular interest for EOMMEX to reinforce the arts and crafts sector while preserving traditional handicraft products. Both artistic and technical assistance are provided, as are the marketing and promotion of handicraft products. In various regions, handicraft centers have been established. …