Micro-family-owned business : transitory survival mechanism or long term wealth creator?

Principal Topic: Entrepreneurship is key to employment, innovation and growth (Acs & Mueller, 2008), and as such, has been the subject of tremendous research in both the economic and management literatures since Solow (1957), Schumpeter (1934, 1943), and Penrose (1959). The presence of entrepreneurs in the economy is a key factor in the success or failure of countries to grow (Audretsch and Thurik, 2001; Dejardin, 2001). Further studies focus on the conditions of existence of entrepreneurship, influential factors invoked are historical, cultural, social, institutional, or purely economic (North, 1997; Thurik 1996 & 1999). Of particular interest, beyond the reasons behind the existence of entrepreneurship, are entrepreneurial survival and good ''performance'' factors. Using cross-country firm data analysis, La Porta & Schleifer (2008) confirm that informal micro-businesses provide on average half of all economic activity in developing countries. They find that these are utterly unproductive compared to formal firms, and conclude that the informal sector serves as a social security net ''keep[ing] millions of people alive, but disappearing over time'' (abstract). Robison (1986), Hill (1996, 1997) posit that the Indonesian government under Suharto always pointed to the lack of indigenous entrepreneurship , thereby motivating the nationalisation of all industries. Furthermore, the same literature also points to the fact that small businesses were mostly left out of development programmes because they were supposed less productive and having less productivity potential than larger ones. Vial (2008) challenges this view and shows that small firms represent about 70% of firms, 12% of total output, but contribute to 25% of total factor productivity growth on average over the period 1975-94 in the industrial sector (Table 10, p.316). ---------- Methodology/Key Propositions: A review of the empirical literature points at several under-researched questions. Firstly, we assess whether there is, evidence of small family-business entrepreneurship in Indonesia. Secondly, we examine and present the characteristics of these enterprises, along with the size of the sector, and its dynamics. Thirdly, we study whether these enterprises underperform compared to the larger scale industrial sector, as it is suggested in the literature. We reconsider performance measurements for micro-family owned businesses. We suggest that, beside productivity measures, performance could be appraised by both the survival probability of the firm, and by the amount of household assets formation. We compare micro-family-owned and larger industrial firms' survival probabilities after the 1997 crisis, their capital productivity, then compare household assets of families involved in business with those who do not. Finally, we examine human and social capital as moderators of enterprises' performance. In particular, we assess whether a higher level of education and community participation have an effect on the likelihood of running a family business, and whether it has an impact on households' assets level. We use the IFLS database compiled and published by RAND Corporation. The data is a rich community, households, and individuals panel dataset in four waves: 1993, 1997, 2000, 2007. We now focus on the waves 1997 and 2000 in order to investigate entrepreneurship behaviours in turbulent times, i.e. the 1997 Asian crisis. We use aggregate individual data, and focus on households data in order to study micro-family-owned businesses. IFLS data covers roughly 7,600 households in 1997 and over 10,000 households in 2000, with about 95% of 1997 households re-interviewed in 2000. Households were interviewed in 13 of the 27 provinces as defined before 2001. Those 13 provinces were targeted because accounting for 83% of the population. A full description of the data is provided in Frankenberg and Thomas (2000), and Strauss et alii (2004). We deflate all monetary values in Rupiah with the World Development Indicators Consumer Price Index base 100 in 2000. ---------- Results and Implications: We find that in Indonesia, entrepreneurship is widespread and two thirds of households hold one or several family businesses. In rural areas, in 2000, 75% of households run one or several businesses. The proportion of households holding both a farm and a non farm business is higher in rural areas, underlining the reliance of rural households on self-employment, especially after the crisis. Those businesses come in various sizes from very small to larger ones. The median business production value represents less than the annual national minimum wage. Figures show that at least 75% of farm businesses produce less than the annual minimum wage, with non farm businesses being more numerous to produce the minimum wage. However, this is only one part of the story, as production is not the only ''output'' or effect of the business. We show that the survival rate of those businesses ranks between 70 and 82% after the 1997 crisis, which contrasts with the 67% survival rate for the formal industrial sector (Ter Wengel & Rodriguez, 2006). Micro Family Owned Businesses might be relatively small in terms of production, they also provide stability in times of crisis. For those businesses that provide business assets figures, we show that capital productivity is fairly high, with rates that are ten times higher for non farm businesses. Results show that households running a business have larger family assets, and households are better off in urban areas. We run a panel logit model in order to test the effect of human and social capital on the existence of businesses among households. We find that non farm businesses are more likely to appear in households with higher human and social capital situated in urban areas. Farm businesses are more likely to appear in lower human capital and rural contexts, while still being supported by community participation. The estimation of our panel data model confirm that households are more likely to have higher family assets if situated in urban area, the higher the education level, the larger the assets, and running a business increase the likelihood of having larger assets. This is especially true for non farm businesses that have a clearly larger and more significant effect on assets than farm businesses. Finally, social capital in the form of community participation also has a positive effect on assets. Those results confirm the existence of a strong entrepreneurship culture among Indonesian households. Investigating survival rates also shows that those businesses are quite stable, even in the face of a violent crisis such as the 1997 one, and as a result, can provide a safety net. Finally, considering household assets - the returns of business to the household, rather than profit or productivity - the returns of business to itself, shows that households running a business are better off. While we demonstrate that uman and social capital are key to business existence, survival and performance, those results open avenues for further research regarding the factors that could hamper growth of those businesses in terms of output and employment.

How environmental and organizational complexity affects opportunity recognition and exploitation in development projects

Principal Topic: Project structures are often created by entrepreneurs and large corporate organizations to develop new products. Since new product development projects (NPDP) are more often situated within a larger organization, intrapreneurship or corporate entrepreneurship plays an important role in bringing these projects to fruition. Since NPDP often involves the development of a new product using immature technology, we describe development of an immature technology. The Joint Strike Fighter (JSF) F-35 aircraft is being developed by the U.S. Department of Defense and eight allied nations. In 2001 Lockheed Martin won a $19 billion contract to develop an affordable, stealthy and supersonic all-weather strike fighter designed to replace a wide range of aging fighter aircraft. In this research we define a complex project as one that demonstrates a number of sources of uncertainty to a degree, or level of severity, that makes it extremely difficult to predict project outcomes, to control or manage project (Remington & Zolin, Forthcoming). Project complexity has been conceptualized by Remington and Pollock (2007) in terms of four major sources of complexity; temporal, directional, structural and technological complexity (See Figure 1). Temporal complexity exists when projects experience significant environmental change outside the direct influence or control of the project. The Global Economic Crisis of 2008 - 2009 is a good example of the type of environmental change that can make a project complex as, for example in the JSF project, where project managers attempt to respond to changes in interest rates, international currency exchange rates and commodity prices etc. Directional complexity exists in a project where stakeholders' goals are unclear or undefined, where progress is hindered by unknown political agendas, or where stakeholders disagree or misunderstand project goals. In the JSF project all the services and all non countries have to agree to the specifications of the three variants of the aircraft; Conventional Take Off and Landing (CTOL), Short Take Off/Vertical Landing (STOVL) and the Carrier Variant (CV). Because the Navy requires a plane that can take off and land on an aircraft carrier, that required a special variant of the aircraft design, adding complexity to the project. Technical complexity occurs in a project using technology that is immature or where design characteristics are unknown or untried. Developing a plane that can take off on a very short runway and land vertically created may highly interdependent technological challenges to correctly locate, direct and balance the lift fans, modulate the airflow and provide equivalent amount of thrust from the downward vectored rear exhaust to lift the aircraft and at the same time control engine temperatures. These technological challenges make costing and scheduling equally challenging. Structural complexity in a project comes from the sheer numbers of elements such as the number of people, teams or organizations involved, ambiguity regarding the elements, and the massive degree of interconnectedness between them. While Lockheed Martin is the prime contractor, they are assisted in major aspects of the JSF development by Northrop Grumman, BAE Systems, Pratt & Whitney and GE/Rolls-Royce Fighter Engineer Team and innumerable subcontractors. In addition to identifying opportunities to achieve project goals, complex projects also need to identify and exploit opportunities to increase agility in response to changing stakeholder demands or to reduce project risks. Complexity Leadership Theory contends that in complex environments adaptive and enabling leadership are needed (Uhl-Bien, Marion and McKelvey, 2007). Adaptive leadership facilitates creativity, learning and adaptability, while enabling leadership handles the conflicts that inevitably arise between adaptive leadership and traditional administrative leadership (Uhl-Bien and Marion, 2007). Hence, adaptive leadership involves the recognition and opportunities to adapt, while and enabling leadership involves the exploitation of these opportunities. Our research questions revolve around the type or source of complexity and its relationship to opportunity recognition and exploitation. For example, is it only external environmental complexity that creates the need for the entrepreneurial behaviours, such as opportunity recognition and opportunity exploitation? Do the internal dimensions of project complexity, such as technological and structural complexity, also create the need for opportunity recognition and opportunity exploitation? The Kropp, Zolin and Lindsay model (2009) describes a relationship between entrepreneurial orientation (EO), opportunity recognition (OR), and opportunity exploitation (OX) in complex projects, with environmental and organizational contextual variables as moderators. We extend their model by defining the affects of external complexity and internal complexity on OR and OX. ---------- Methodology/Key Propositions: When the environment complex EO is more likely to result in OR because project members will be actively looking for solutions to problems created by environmental change. But in projects that are technologically or structurally complex project leaders and members may try to make the minimum changes possible to reduce the risk of creating new problems due to delays or schedule changes. In projects with environmental or technological complexity project leaders who encourage the innovativeness dimension of EO will increase OR in complex projects. But projects with technical or structural complexity innovativeness will not necessarily result in the recognition and exploitation of opportunities due to the over-riding importance of maintaining stability in the highly intricate and interconnected project structure. We propose that in projects with environmental complexity creating the need for change and innovation project leaders, who are willing to accept and manage risk, are more likely to identify opportunities to increase project effectiveness and efficiency. In contrast in projects with internal complexity a much higher willingness to accept risk will be necessary to trigger opportunity recognition. In structurally complex projects we predict it will be less likely to find a relationship between risk taking and OP. When the environment is complex, and a project has autonomy, they will be motivated to execute opportunities to improve the project's performance. In contrast, when the project has high internal complexity, they will be more cautious in execution. When a project experiences high competitive aggressiveness and their environment is complex, project leaders will be motivated to execute opportunities to improve the project's performance. In contrast, when the project has high internal complexity, they will be more cautious in execution. This paper reports the first stage of a three year study into the behaviours of managers, leaders and team members of complex projects. We conduct a qualitative study involving a Group Discussion with experienced project leaders. The objective is to determine how leaders of large and potentially complex projects perceive that external and internal complexity will influence the affects of EO on OR. ---------- Results and Implications: These results will help identify and distinguish the impact of external and internal complexity on entrepreneurial behaviours in NPDP. Project managers will be better able to quickly decide how and when to respond to changes in the environment and internal project events.

Liability of principal contractor for independent subcontractor considered by the High Court

Case note of Leighton Contractors Pty Ltd v Fox (2009) 258 ALR 673 ----- In Leighton Contractors Pty Ltd v Fox (2009) 83 ALJR 1086 ; 258 ALR 673 the High Court considered the liability of a principal contractor for the negligence of independent subcontractors on a building site. In its decision, the court considered the nature and the scope of the duty owed by principals to independent contractors.

News blogs and citizen journalism : new directions for e-journalism

Even for a casual observer of the journalistic industry it is becoming difficult to escape the conclusion that journalism is entering a time of crisis. At the same time that revenues and readerships for traditional publications from newspapers to broadcast news are declining, journalistic content is being overtaken by a flotilla of alternative options ranging from the news satire of The Daily Show in the United States to the citizen journalism of South Korea’s OhmyNews and a myriad of other news blogs and citizen journalism Websites. Worse still, such new competitors with the products of the journalism industry frequently take professional journalists themselves to task where their standards have appeared to have slipped, and are beginning to match the news industry’s incumbents in terms of insight and informational value: recent studies have shown, for example, that avid Daily Show viewers are as if not better informed about the U.S. political process as those who continue to follow mainstream print or television news (see e.g. Fox et al., 2007). The show’s host Jon Stewart – who has consistently maintained his self-description as a comedian, not a journalist – even took the fight directly to the mainstream with his appearance on CNN’s belligerent talk show Crossfire, repeatedly making the point that the show’s polarised and polarising ‘left vs. right’ format was “hurting” politics in America (the show disappeared from CNN’s line-up a few months after Stewart’s appearance; Stewart, 2004). Similarly, news bloggers and citizen journalists have shown persistence and determination both in uncovering political and other scandals, and in highlighting the shortcomings of professional journalism as it investigates and reports on such scandals.

Assessing the impact of floods and flood legislation on residential property prices

The changing development and population sprawl in major cities, especially those located in high rainfall areas, has resulted in the need to review and re-assess potential flood impacts in these cities. In many cases these new flood lines and flood maps have placed residential property that was previously considered to be flood free to now be considered to be potentially flood liable. Previous research based in Sydney and the UK has identified the fact that residential property that has been subject to flooding has a decreased price and higher investment risk than flood free property in the same location. These studies have also shown that the greatest impact on residential property subject to flooding is just following a flood event. In June 2009, Brisbane City Council released revised flood maps for the Greater Brisbane region and these maps have identified areas that have not previously been considered flood liable. This paper will analyse the sale performance of flood liable streets in the main flood areas of Brisbane over the period January 1990 through to June 2009, to determine the variation in price for these flood liable areas to the residential property immediately adjoining them. The average sale price will be tracked on both a geographic location and socio-economic basis.

Measuring performance of municipal real estate : softening the impact of financial crisis to local governments

Asset management in local government is an emerging discipline and over a decade has become a crucial aspect towards a more efficient and effective organisation. One crucial feature in the public asset management is performance measurement toward the public real estates. This measurement critically at the important component of public wealth and seeks to apply a standard of economic efficiency and effective organisational management especially in such global financial crisis condition. This paper aims to identify global economic crisis effect and proposes alternative solution for local governments to softening the impact of the crisis to the local governments organisation. This study found that the most suitable solution for local government to solve the global economic crisis in Indonesia is application of performance measurement in its asset management. Thus, it is important to develop performance measurement system in local government asset management process. This study provides suggestions from published documents and literatures. The paper also discusses the elements of public real estate performance measurement. The measurement of performance has become an essential component of the strategic thinking of assets owners and managers. Without having a formal measurement system for performance, it is difficult to plan, control and improve local government real estate management system. A close look at best practices in public sectors reveals that in most cases these practices were transferred from private sector reals estate management under the direction of real estate experts retained by government. One of the most significant advances in government property performance measurement resulted from recognition that the methodology used by private sector, non real estate corporations for managing their real property offered a valuable prototype for local governments. In general, there are two approaches most frequently used to measure performance of public organisations. Those are subjective and objective measures. Finally, findings from this study provides useful input for the local government policy makers, scholars and asset management practitioners to establish a public real estate performance measurement system toward more efficient and effective local governments in managing their assets as well as increasing public services quality in order to soften the impact of global financial crisis.

Business process extensibility

Vendors provide reference process models as consolidated, off-the-shelf solutions to capture best practices in a given industry domain. Customers can then adapt these models to suit their specific requirements. Traditional process flexibility approaches facilitate this operation, but do not fully address it as they do not sufficiently take controlled change guided by vendors’ reference models into account. This tension between the customer’s freedom of adapting reference models, and the ability to incorporate with relatively low effort vendor-initiated reference model changes, thus needs to be carefully balanced. This paper introduces process extensibility as a new paradigm for customising reference processes and managing their evolution over time. Process extensibility mandates a clear recognition of the different responsibilities and interests of reference model vendors and consumers, and is concerned with keeping the effort of customer-side reference model adaptations low while allowing sufficient room for model change.

The candidate : a novella and examination of Australian Gothic crime fiction

Australia is a land without haunted castles or subterranean corridors, without ancient graveyards or decaying monasteries, a land whose climate is rarely gloomy. Yet, the literary landscape is splattered with shades of the Gothic genre. This Gothic heritage is especially evident within elements of nineteenth century Australian sensation fiction. Australian crime fiction in the twentieth century, in keeping with this lineage, repeatedly employs elements of the Gothic, adapting and appropriating these conventions for literary effect. I believe that a ‘mélange’ of historical Gothic crime traditions could produce an exciting new mode of Gothic crime writing in the Australian context. As such, I have written a contemporary literary experiment in a Gothic crime ‘hybrid’ style: this novella forms my creative practice. The accompanying exegesis is a critical study of a selection of Australian literary works that exhibit the characteristics of both Gothic and crime genres. Through an analysis of these creative works, this study argues that the interlacing of Gothic traditions with crime writing conventions has been a noteworthy practice in Australian fiction during both the nineteenth and twentieth centuries and these literary tropes are interwoven in the writing of ‘The Candidate’, a Gothic crime novella.