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.     

Clustering of small agro-processing firms in Indonesia

Small-scale industries in Indonesia provide more than 65% of total manufacturing employment. Sixty-three percent of small-scale firm employment is in firms that are clustered. A cluster is defined statistically in Indonesia as at least 20 firms in a village. For some agro-processing industries, such as bamboo plaiting, clustering does not involve interaction among firms; for others, notably the furniture industry, clustering firms make joint marketing efforts, subcontract each other, and share large orders. This article uses two recent case studies in the agro-processing sector—the furniture and the palm sugar industries—in Central Java. We argue that the target market of the industry (local or international) influences the nature of the contracts and other forms of interaction in the clusters. Targeting an international market requires formal contracts, more focus on marketing, and separate roles for finishing firms and subcontracting firms. Policy should be directed at enabling clusters to shift to the international market by improving contract enforcement regulations, vocational training, and providing opportunities for group lending.     

我国高新技术企业规模与创新分布

利用 960家高新技术企业的调查结果 ,分析了我国高新技术企业规模与企业创新能力之间的关系 .企业规模以企业雇员数量作为分类 ,按照国际通用的分类标准分析了各个规模层次的企业创新费用、R&D费用、销售额及创新率的分布规律 .在将研究结果与国外学者的研究结果和一般工业企业的情况进行了比较之后发现 :(1 )高新技术企业 R&D强度随着企业规模的增大呈阶梯下降趋势 ;(2 )创新强度大体呈现“凸 U”型分布 ;(3)相当一部分小型高新技术企业的创新效率较低     

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.     

Information systems,inter-functional collaboration and innovation in Taiwanese high-tech manufacturing firms

This article investigates whether (1) cross-functional integration within a firm and the use of information systems (IS) that support information sharing with external parties can enhance integration across the supply chain and wider networks and (2) whether collaboration with customers, suppliers and other external parties leads to increased supply chain performance in terms of new product development and introduction of new processes. Data from a high-quality survey carried out in Taiwan in 2009 were used, and appropriate econometric models were applied. Results show that the adoption of IS that enhance information sharing is vital not only for the effective communication with suppliers and with wider network members, but their adoption also has a direct effect across a firm's innovative effort. Cross-functional integration appears to matter only for the introduction of an innovative process. Collaboration with customers and suppliers affected a product's design and its overall features and functionality, respectively.     

External knowledge search,absorptive capacity and radical innovation in high-technology firms

Open innovation and absorptive capacity are two concepts based on the idea that companies can leverage the knowledge generated externally to improve their innovation performance. The aim of this paper is to analyse the joint effect of open innovation and absorptive capacity on a firm's radical innovation. Open innovation is expressed in terms of external search breadth and depth strategies and absorptive capacity is described by distinguishing between potential and realized absorptive capacity. In order to test our hypotheses, we carried out empirical research in firms operating in high-technology industries. The results indicate that internal routines and processes for absorbing external knowledge help explain radical innovation as they show a significant effect of potential and realized absorptive capacity. Also, there is a moderating effect of absorptive capacity on open innovation. Specifically, potential absorptive capacity exerts a positive effect on the relationship between external search breadth and depth and radical innovation. Realized absorptive capacity moderates the influence of external search breadth. These findings confirm the complementary nature of absorptive capacity and open innovation search strategies on radical innovation.     

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.     

Strategies for business model innovation: How firms reel in migrating value

This paper brings together firm-level research on business models and industry-level research on value migration to examine patterns of business model innovation. We draw on qualitative data from 14 cases and 68 interviews in the computer and telecommunications industries to demonstrate how business model innovation is sensitive to industry-wide forces of value migration. Based on our analysis we conclude that when value is rapidly migrating across industries and between firms, proactively substituting key elements of the primary business model provides a better fit with the new value landscape than launching secondary business models in parallel. We suggest four underlying mechanisms that link business model innovation, value migration and subsequent outcomes. Unpacking business model innovation allows us to discuss contingencies for the main business model strategies, specifically in terms of limitations to—and opportunities of—changing the primary business model and the practice of parallel business models.     

Internationalization, innovation and entrepreneurship: business models for new technology-based firms

New technology-based firms, particularly those that develop their business around a new technological platform, are likely to be impacted by globalization, in terms of both pace of innovation and pressure of competition. For these firms, strategic decisions and growth processes are characterized by a deep inter-relationship amongst the processes of internationalization, innovation and entrepreneurship; processes which have tended to be examined independently in distinct bodies of literature. In practice strategic decisions concern each of these processes and address issues such as organizational boundaries, location of the operational activities, what activities to focus on and selection of value partners. The business model by which firms operate needs also to accommodate the spatial dimensions indicated by globalization; and the emergence of global technology markets. Little is known to date about the extent to which business models accommodate or are adapted to internationalization, innovation and entrepreneurship. This paper presents a review of the business model literature from which a generic business model framework is derived, identifying and introducing the main elements of these processes as the firms?? focus, modus and locus. This contribution makes a clear distinction between the business model and the strategy concepts and highlights the relevance of location decisions??not considered by extant business model literature to date. While our discussion draws on the high technology new venture as our primary example, we believe our business model conceptualization has general applicability.     

Exploring the effects of creative CEO leadership on innovation in high-technology firms

This study introduces two dimensions of strategic leadership, termed operational and creative specifically developed for top executives of high-technology firms. Creative leadership reflects a CEO's emphasis on developing social and human capital and investing in the firm's internal knowledge development. We contrast this with operational leadership which reflects a CEO's ability to explore new paths of growth as well as exploit existing ones by redefining and extending the boundaries of the firm to new product and market domains. Hypotheses relating these two dimensions of leadership with innovation quantity, innovation resonance and novelty are tested using a sample of 77 high-technology firms.     

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.     

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.     

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.     

Home country institutions and exports of firms in transition economies: Does innovation matter?

We draw on institutional theory and the resource-based view to analyze the relation between home-country governance imperfections and the export intensity of firms in transition economies, including an examination of the moderating role of innovation. We propose that greater governance imperfections result in lower export intensity and that innovation mitigates the constraints of operating with weak home-country institutions. Analyses of panel data from the Business Environment and Enterprise Performance Survey (BEEPS) on firms from transition economies provide support for our arguments. Our findings allow us to conclude that although firms from transition economies face difficulties to export due to the regulatory constraints of their home countries, a strategy based on innovation represents a viable way of overcoming these limitations.     

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.     

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.