Entrepreneurial action, innovation and business performance: the small independent businessYannis Georgellis; Paul Joyce; Adrian Woods
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006801
Using a sample of some 300 small independent businesses, drawn from Central London, the paper examines how entrepreneurial behaviour affects business performance. It is argued that small businesses motivated by a desire to grow in terms of sales and/or employees and to survive in a dynamic and competitive environment need to be innovative. However, to what extent they will innovate successfully depends on their capacity to plan ahead, their capacity to innovate and their willingness to take risk. It is shown that entrepreneurial businesses are characterised by these competencies that allow them to innovate and thus develop and grow successfully. Not surprisingly, not all small businesses are equipped with these three competencies owing to their diverse array of strengths and weaknesses arising from the diversity in the managerial motives and aspirations of entrepreneurship. These results highlight the importance of the capacity to innovate and the capacity to plan ahead as strong predictors of small businesses’ performance.
The promotion of Hungarian small and medium‐size enterprises in accordance with guidelines for European Union enlargementÉva Sándor‐Kriszt
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006802
The basis of international comparative analysis is the harmonisation of the different conceptual systems of the discipline under investigation in various countries. The enterprises, which are the spring of the economy, can be grouped in different ways in the different countries. The goal of this paper is to compare the Hungarian practice with that of the European Union (EU), the European OECD countries and the USA. Following a short overview of the terminology, this paper seeks an answer to the question of how Hungary became – in less than a decade – a country of small enterprises. Phenomena such as the breaking up of huge companies or dismantling into small and medium‐size enterprises and the increasing number of newly founded small‐size businesses sooner or later lead to changes in the policies of these enterprises and thus contribute to the development of a functioning market economy. The map of the Hungarian economy had changed significantly by the end of the 1990s. A radical shift in the size and types of companies was brought about by market economy forces, which led to a transformation. As a result, the process of accession to the EU was begun. In the preliminary and preparatory stages, the opportunities for small and medium‐size enterprises (SMEs) must be enhanced, as presently the economic significance of SMEs in Hungary is smaller than their strategic importance. All these objectives are supported by concrete and long‐term governmental strategies and measures.
Public policy and SME performance: the case of Northern Ireland in the 1990sMark Hart; Seamus McGuinness; Maureen O’Reilly; Graham Gudgin
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006803
Recent research has demonstrated that small firm performance in Northern Ireland has benefited from the availability of a comprehensive and well‐funded programme of selective financial assistance provided by the Local Enterprise Development Unit (LEDU), the small business agency for the region. Such assistance to small firms was seen to overcome many of the constraints of doing business in a peripheral location such as Northern Ireland. However, one question remains unanswered by that research and that is the precise way in which LEDU financial assistance impacts upon business performance. One interpretation of the research to date could be that the relatively better performance of LEDU‐assisted small firms is due to the fact that they are more likely to be faster growing businesses in the first instance, because either they are self‐selecting in presenting themselves for LEDU assistance or else the LEDU engages in a “creaming” process, which results in the granting of assistance to the more successful firms in Northern Ireland. In order to probe further into the impact of LEDU assistance, it is necessary to examine the differential impact on growth of the wide range of support programmes and initiatives for small firms operated by the small business agency in Northern Ireland. This paper will report the results of the first stage of such an analysis by analysing the business performance of two broad groups of LEDU‐assisted clients who have received different levels of assistance in the 1990s – “Growth” and “Established” clients. The analysis is based on information drawn from a specially created database of approximately 1,600 small firms who were in receipt of LEDU financial assistance in the period 1991‐97. The analysis of the employment and turnover performance of LEDU‐assisted firms revealed that Growth clients grew faster than Established clients in the 1991‐97 period and provides tentative evidence that a more intense and directed package of assistance is clearly associated with faster business growth. The age of Growth firms was much older than Established LEDU clients and, therefore, this differential growth performance cannot be related to a simple life‐cycle explanation. The shift in LEDU policy in the 1990s towards a greater concentration of effort on firms with growth potential would appear to have been successful.
Feasibility of strategic alliance as an entry strategy into markets dominated by major competitorsKhai Sheang Lee; Guan Hua Lim; Jiuan Tan
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006804
Although the benefits of strategic alliances are well documented, whether strategic alliances can be a viable entry strategy option for small and medium‐size enterprises (SMEs) to successfully penetrate markets held by major incumbent suppliers is less clear. In this paper, strategic alliances are shown to be an effective entry‐cum‐deterrence strategy for SMEs to successfully penetrate markets that are well established and dominated by major corporations. In addition, the conditions under which SMEs can use strategic alliances as an entry strategy without restricting themselves to target only those markets ignored by bigger firms are identified. In terms of methodology, this paper follows a deductive approach – one based on game theory, to examine explicitly the reactions of bigger firms to the entry of SMEs into their markets, specifically taking into account the resource limitations faced by SMEs. To verify that the theoretical arguments presented are consistent with practice, two cases of the use of strategic alliances by SMEs as an entry strategy to penetrate markets dominated by major corporations are examined. The practices and experiences of these SMEs were found to be consistent with the theoretical arguments presented here.
Factors in the growth of micro‐enterprises (Part 2): exploring the implicationsLew Perren
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006805
This research examines micro‐enterprises pursuing gradual growth. The research findings and implications are provided in two parts. Part 1 was presented in Volume 6, Number 4 of the Journal of Small Business and Enterprise Development (JSBED) (Perren, 2000). It developed an empirically verified framework that explains how growth was influenced by a myriad interacting factors; this led to a discussion of the policy implications of the framework. Part 2 explores the managerial implications of the framework. A diagnostic toolkit is systematically developed to encourage micro‐enterprise owner‐managers and advisers to explore the influences on the interim growth drivers identified in part 1. It is hoped this will help them to highlight ways of “compensating” deficits in particular factors and to think creatively about growth opportunities. The audience has changed from academics and policy‐makers to owner‐managers, so the diagnostic toolkit avoids technical language and employs a Socratic questioning approach to encourage free‐thinking and self‐analysis.
“Professionals at work” – transition in a small service firmMonder Ram
2000 Journal of Small Business and Enterprise Development
doi: 10.1108/EUM0000000006806
Small professional service firms constitute an important segment of the small business population. Explanations of the emergence, employment potential and economic contribution of such firms have been much debated. Yet, comparatively little is known of the “people dimension” in such enterprises, particularly in firms undergoing some form of organisational transition. This paper aims to examine the interplay of work relations and “growth” in the particular case of WhitCo (an organisation that was attempting the transition from its entrepreneurial beginnings to a more formally configured set‐up). The study, which is based on an ethnographic investigation in the case firm over a year‐long period, addresses three issues: the motivations for growth in the small professional service firm; the manner in which attempts at organisational transition impinge upon “collegial” patterns of work relations typical in these firms; and the importance of interpersonal relations to “growth”. The study provides a rare insight into the management of social relations within a firm typical of many in the business services sector. It highlights the critical role of “people management” to shaping the trajectory of small firm growth.