Management development in small firms

This paper is a review of the literature concerning management development in small firms. It looks at the benefits in terms of growing a small firm and whether the lack of management skills contributes to their failure. In addition, this paper looks at some of the barriers to management development, including the attitudes and characteristics of the entrepreneur, and also looks at learning models that may be appropriate for small firms. The paper also looks at the authors’ views on the effectiveness of management development for small firms, the barriers to learning as well as the skills required. Management development programmes are now widely accepted as a means of improving the competitiveness of firms and the economy as a whole. Although management education and training has, in the past, been designed mainly for larger firms, there is a growing awareness of the requirements of small businesses. Government initiatives designed to encourage start‐ups and to boost the growth of small firms have emphasized the importance of management development. This review of the literature shows that, on balance, management development programmes are effective for small firms. The main benefits appear to be survival and growth, reduction in failure and improvement in performance. The skills required include leadership and management, developing management systems and techniques and team building. Other skills include planning, delegation and financial management. The paper concludes that there is a need for further research into the effectiveness of management development programmes, the skills required and the barriers to learning in small firms and, also, whether they have an impact on the survival, growth and profitability of small firms.     

Business planning in successful small firms

Strategic planning has been widely publicized during the last decade, but what has been accomplished by this management activity in smaller, high-growth firms? Business plans have been widely recommended for start-up funding, but we have noted additional uses for business plans in pratice. This article reports methods and results of strategic planning and written business plans in high-growth ‘INC. 500’ firms. In spite of a variety of obstacles, over half of the firms conduct strategic planning on a regular basis. Results of this study show that fast-growth firms develop written business plans as a product of strategic planning, mainly by five key management personnel. Written business plans are used more for internal management purposes than for start-up funding. Finally, the completion of strategic planning is positively associated with a firm's profitability. Based on survey and interview data, this article describes a four-phase model to help ensure effective integration of strategic planning processes and the resulting written business plans.     

Finance and innovation in British small independent firms

This paper is concerned with the effects of internal and external capital investment funding patterns on the innovativeness of British small independent firms. By using a combined sample of firms from the relatively prosperous South East and the more problematic Scottish development region, an additional diverse regional economic perspective is given to data initially presented in a national context. Beyond a presentation of the extent of external borrowing, the paper seeks to establish the characteristics of firms obtaining external funds and to assess whether this external capital borrowing sub-sample is mainly comprised of low technology firms in decline, or of high technology firms fueling innovation-led expansion. Data is included on the role of both public and private loan agencies in the external funding process. Conclusions are based on the pattern of results and focus on ways in which the delivery of financial aid might be improved to assist expansion, particularly in fast growing high technology small firms.     

Survival and strategy of small/micro firms

 There is no doubt that small firms have shown a great tenacity to survive despite many adverse influences. This is especially surprising in view of the apparently low profits and frequent failures. This paper aims to provide an empirical insight into the diverse problems and means of survival of small/micro firms. The research focused on the konnyaku industry, which predominantly is neither fast-growing nor prone to failure but, instead, has average performance and survival. The purpose of this article is to shed some light on the business alliances and competition in this industry in which members of a sanchi do not cooperate but compete against each other.     

How large and small firms can grow together

Recent research into the trading relationship between small and large firms reveals the extent and nature of the dependence of small firms on their large customers. The consequences of dependence for the birth and growth of small firms, and hence for public policy, are described within the context of the small firm as an ‘independent’ economic unit. One such consequence is that the procurement policies and practices of large firms can act as a barrier to entry and a constraint on the growth of new small firms. Although dependence imposes costs on the small firm, collaboration between large buyers and small sellers confers substantial benefits on the latter, particularly at entry and in the early stages at growth.     

The role of small firms in the emergence of new technologies

It is clear from research policy statements throughout Europe and in the USA and Japan that governments are becoming increasingly interested in the well-being of small firms. This is based on a belief in their ability to generate employment, their potential for the industrial regeneration of the so-called development areas and their ability to produce technological innovations. It is to this latter issue—the innovation potential of small firms—that this article is addressed. Further, while most studies of the role of small firms in innovation have been concerned with ‘innovation counts’ and have adopted a rather static approach, we are here concerned with their role in the dynamics of the introduction and diffusion of new technologies, specifically semiconductors and computer aided design (CAD). Moreover, there has in the past been a tendency to emphasize the role of the small firms or the role of large firms in innovation; we reject this rather sterile view and demonstrate the interrelationship between the two. In both areas—semiconductors and CAD—the initial breakthroughs were made in the R&D laboratories of large companies which produced components and equipment for their own use; it was through the actions of new technology-based small firms that these innovations were diffused into more general use. Again in both cases, the basic technological know-how, the entrepreneurs themselves and often the risk capital, derived from the original innovating large companies. Thus, policies that do not take into account the dynamic complementarities between the large and the small clearly are of only limited utility.     

Board members’ contribution to strategic decision-making in small firms

This article explores how the boards of small firms actually undertake to perform strategic tasks. Board strategic involvement has seldom been investigated in the context of small firms. We seek to make a contribution by investigating antecedents of board strategic involvement. The antecedents are “board working style” and “board quality attributes”, which go beyond the board composition features of board size, CEO duality, the ratio of non-executive to executive directors and ownership. Hypotheses were tested on a sample of 497 Norwegian firms (from 5 to 30 employees). Our results show that board working style and board quality attributes rather than board composition features enhance board strategic involvement. Moreover, board quality attributes outperform board working style in fostering board strategic involvement.     

Supervisors' participation in quality efforts in large and small manufacturing firms

Supervisors' participation in quality efforts in large n = 77 and small n = 113 manufacturing firms in the motor vehicle parts and accessories industry SIC 3714 was examined. While a majority of the supervisors of both types of firms agreed that top management was committed to quality, less than 27 of the supervisors indicated that they were satisfied with management support for quality efforts. A majority of the supervisors of both firm types also stated that they were committed to the organization and did not work under a great deal of tension. Unlike supervisors of large firms, a majority of the supervisors of small firms reported that they received training in quality and that workers responded positively to supervisors' quality efforts. Compared to small firms, supervisors of large firms . felt a significantly higher workload p < 0 01 , significantly lower top management commitment p < 0.05 , and . received less encouragement p < 0 05 for their quality efforts.     

The board advisory tasks in small firms and the event of crises

In this article we examine what affects the board of directors’ involvement in the advice to management, with emphasis on the influence of crises on the board advisory tasks performance. Based on a survey of 881 small Norwegian firms, we analyse responses from CEOs in order to determine whether and to what extent the board is actively involved in the governance process during crises through providing advice. The study has two major contributions to board research in general and research of into small firms in particular. The first is the go beyond the “usual suspects” of board size, CEO duality, and board independence when looking for determinants of board involvement in advice. The second contribution is a clearer understanding of board involvement during crises. Our results show that board member diversity becomes particularly important during crises, since this provides the CEO and firm access to a more diverse pool of competences and experiences. We also find that crises moderate the effects of incentive on the board’s involvement in advice. This evidence sheds new light on the determinants of directors’ involvement in board tasks, suggesting that directors’ incentive to perform certain board tasks vary according to the contingent situation the firm is experiencing.     

Human resource development in technology-driven small and medium size firms: case study of a small Korean firm

 The purpose of this study was to suggest a conceptual framework for the dynamic skill formation process based on relevant environments. First, after categorizing the types of task at the work-flow level, such as regular maintenance tasks, nonregular maintenance tasks, regular improvement tasks, and nonregular improvement tasks, this study identified conceptually how these tasks are related to the ways by which individuals learn (single-loop learning/double-loop learning versus OJT and Off-JT). This study also tried to apply the above conceptual model to the Korea context (e.g., Company W) for external validity. Company W is well known among Korean small firms for its innovative human resources management. The study shows that, generally, Company W gained a competitive advantage using the dynamic conceptual model of the skill formation process suggested in this study. OJT, On the job training; Off-JT, off the job training.     

Researching small firms and entrepreneurship: Past, present and future

This paper seeks to stimulate debate on the agendas, methodologies and methods used in the field of small business and entrepreneurship. The paper raises questions regarding the research agendas pursued and provides some pointers for the direction of future research. Integral to this is the argument that there is a need to reflect on the condition of small-business research and to raise the quality of research by employing robust research methods. This may involve questioning the role of small firms and entrepreneurship in society rather than merely advocating them and the policy measures taken when supporting and/or developing the small business sector. The dominance of specific viewpoints, the methodologies used in small business studies, and the consequences of these in relation to the development of a coherent scientific field of small business studies are also discussed. Examples of research activity are discussed to illustrate these themes. Overall, the paper argues that entrepreneurship and small business is a lucrative area for research. However, if the field of inquiry is to flourish, it needs to be approached from a more critical perspective, instead of merely accepting normative, or even strongly ideologically driven, standpoints now dominant in so many studies. This has implications for research agendas, methodologies and ultimately research methods training.     

Innovation and market development: the experience of small firms in a peripheral economy

This paper summarises some results from a study of innovation in the small firm sector in Northern Ireland. Following a discussion of the nature and extent of innovative activity, and of the motives for innovation, the paper focuses on the relationship between performance, as measured by changes in turnover and export market development, and innovation.     

Firm capabilities and export performance of small firms: A meta-analytical review

Despite its importance, there is no clear understanding of the impact of small firms’ capabilities (networking, innovation, and marketing) on their export performance. This article attempts to address this issue with a meta-analysis of 74 recent empirical studies comprising 76 independent samples and covering more than 30 countries. We found that innovation, marketing, and networking capabilities positively influence export performance of small firms. However, the context-dependent nature of these relationships demands a more fine-grained examination. The variations in the ES of these relationships are explained by the role of external business environmental factors prevailing in the country of origin of the firm (developing/developed country and individualism/collectivism culture). We examined the divergent results provided by empirical studies using the moderator analysis. The findings of this article shed light on the role of small firms’ capabilities in enhancing export performance in different contextual settings.     

Effect of best management practices on the performance and productivity of small firms

Abstract

Recent research on productivity finds that best management practices are a crucial but neglected element in explaining firm productivity. This stream of research also focuses on why a large number of firms may not implement best management practices despite their apparent benefits. In this paper, we examine the adoption of best management practices in small leveraged buyout (LBO) firms. Our choice of small LBO is motivated by the fact that these firms undergo extensive restructuring and, therefore, there is an opportunity to study the adoption process of best management practices. The findings show that buyout companies introduce best management practices (operations, monitoring, targets and incentive-related practices) at different stages of their development, and more importantly, these practices evolve in response to changes in various firm-level characteristics. For example, companies emphasizing cost leadership tend to follow targets and monitoring related practices while firms following a differentiation strategy are more likely to implement incentives and operations related management practices. Buyout sponsors’ board representatives and new CEO also play a critical role in the adoption of these best management practices which are linked to superior firm performance, measured as growth in revenues, productivity and return on assets.     

Using knowledge within small and medium-sized firms: A systematic review of the evidence

This paper provides a systematic review of the literature on how small and medium-sized enterprises (SMEs) use and acquire knowledge. The review was undertaken as part of the Economic and Social Research Council's Evolution of Business Knowledge Programme. The paper describes the systematic review protocol and provides a detailed explanation of the methods used. From the review, it is evident that SME knowledge research concentrates primarily on the acquisition and use of knowledge, treating it as an asset that is transferred by routines. The findings suggest that research is focused in three main areas. First, on the influence and abilities of the entrepreneur to extract, use and develop knowledge resources. Secondly, on firm-wide systems and the social capital that facilitates knowledge exploration and exploitation. Thirdly, on the provision of knowledge and learning experiences through government policy. From a practical perspective, the review concludes that policies encouraging entrepreneurship and economic regeneration need to be more flexible and sensitive to the often complex contexts within which knowledge is used by SMEs. From a research perspective, and given the flexible, opportunity-oriented and often novel nature of SMEs identified in these studies, there is a need to consider the relational and embedded qualities of knowledge by which these characteristics are framed; qualities that resist conceptualization as some form of separable, material asset.     

An examination of the strategic and operational impact of global sourcing on UK small firms

This paper presents three in-depth case studies of UK small manufacturers from the electronics manufacturing industry with global supply chains. There is no overlap in products, suppliers or customers and over time, each has developed a distinct and different strategy for managing an extended supply chain. The outcomes and experiences though are not markedly different. The operational challenges they encounter around quality and delivery, as well as the strategic dimensions of information asymmetry and capability fit are discussed. The study identifies the financial risks the firms are exposed to, the constraints to innovation and the wider strategic implications for long-term business performance.     

Knowledge management in multinational firms

Multinationals by their very nature are network firms. They are therefore able to leverage their networks to effectively manage dispersed knowledge assets. They do this by tapping into a number of local clusters to assimilate and integrate knowledge. However, knowledge traffic is almost always two-way, so that clusters have much to gain from both intentional and unintentional knowledge outflows from MNEs. Thus, MNEs can serve as conduits between clusters, so that their network knowledge contributes to the health of all the clusters in which it operates.