Trust and strong ties in the selection and evaluation of business advisors by small firms

Principal Topic A small firm is unlikely to possess internally the full range of knowledge and skills that it requires or could benefit from for the development of its business. The ability to acquire suitable external expertise - defined as knowledge or competence that is rare in the firm and acquired from the outside - when needed thus becomes a competitive factor in itself. Access to external expertise enables the firm to focus on its core competencies and removes the necessity to internalize every skill and competence. However, research on how small firms access external expertise is still scarce. The present study contributes to this under-developed discussion by analysing the role of trust and strong ties in the small firm's selection and evaluation of sources of external expertise (henceforth referred to as the 'business advisor' or 'advisor'). Granovetter (1973, 1361) defines the strength of a network tie as 'a (probably linear) combination of the amount of time, the emotional intensity, the intimacy (mutual confiding) and the reciprocal services which characterize the tie'. Strong ties in the context of the present investigation refer to sources of external expertise who are well known to the owner-manager, and who may be either informal (e.g., family, friends) or professional advisors (e.g., consultants, enterprise support officers, accountants or solicitors). Previous research has suggested that strong and weak ties have different fortes and the choice of business advisors could thus be critical to business performance) While previous research results suggest that small businesses favour previously well known business advisors, prior studies have also pointed out that an excessive reliance on a network of well known actors might hamper business development, as the range of expertise available through strong ties is limited. But are owner-managers of small businesses aware of this limitation and does it matter to them? Or does working with a well-known advisor compensate for it? Hence, our research model first examines the impact of the strength of tie on the business advisor's perceived performance. Next, we ask what encourages a small business owner-manager to seek advice from a strong tie. A recent exploratory study by Welter and Kautonen (2005) drew attention to the central role of trust in this context. However, while their study found support for the general proposition that trust plays an important role in the choice of advisors, how trust and its different dimensions actually affect this choice remained ambiguous. The present paper develops this discussion by considering the impact of the different dimensions of perceived trustworthiness, defined as benevolence, integrity and ability, on the strength of tie. Further, we suggest that the dimensions of perceived trustworthiness relevant in the choice of a strong tie vary between professional and informal advisors. Methodology/Key Propositions Our propositions are examined empirically based on survey data comprising 153 Finnish small businesses. The data are analysed utilizing the partial least squares (PLS) approach to structural equation modelling with SmartPLS 2.0. Being non-parametric, the PLS algorithm is particularly well-suited to analysing small datasets with non-normally distributed variables. Results and Implications The path model shows that the stronger the tie, the more positively the advisor's performance is perceived. Hypothesis 1, that strong ties will be associated with higher perceptions of performance is clearly supported. Benevolence is clearly the most significant predictor of the choice of a strong tie for external expertise. While ability also reaches a moderate level of statistical significance, integrity does not have a statistically significant impact on the choice of a strong tie. Hence, we found support for two out of three independent variables included in Hypothesis 2. Path coefficients differed between the professional and informal advisor subsamples. The results of the exploratory group comparison show that Hypothesis 3a regarding ability being associated with strong ties more pronouncedly when choosing a professional advisor was not supported. Hypothesis 3b arguing that benevolence is more strongly associated with strong ties in the context of choosing an informal advisor received some support because the path coefficient in the informal advisor subsample was much larger than in the professional advisor subsample. Hypothesis 3c postulating that integrity would be more strongly associated with strong ties in the choice of a professional advisor was supported. Integrity is the most important dimension of trustworthiness in this context. However, integrity is of no concern, or even negative, when using strong ties to choose an informal advisor. The findings of this study have practical relevance to the enterprise support community. First of all, given that the strength of tie has a significant positive impact on the advisor's perceived performance, this implies that small business owners appreciate working with advisors in long-term relationships. Therefore, advisors are well advised to invest into relationship building and maintenance in their work with small firms. Secondly, the results show that, especially in the context of professional advisors, the advisor's perceived integrity and benevolence weigh more than ability. This again emphasizes the need to invest time and effort into building a personal relationship with the owner-manager, rather than merely maintaining a professional image and credentials. Finally, this study demonstrates that the dimensions of perceived trustworthiness are orthogonal with different effects on the strength of tie and ultimately perceived performance. This means that entrepreneurs and advisors should consider the specific dimensions of ability, benevolence and integrity, rather than rely on general perceptions of trustworthiness in their advice relationships.

The role of relational capabilities in developing the capacity for supply chain innovation

The purpose of this paper is to gain a better understanding of the types of relational capabilities supply chain participants develop to enable ongoing supply chain innovation capacity building that produces improved business outcomes. This is exploratory research using qualitative data gathered by using five interviews, with the Australian road freight industry as the context. Two key relational capabilities and the improvement of four key business outcomes were identified as being present in the interaction of freight transport service providers with members of their supply chain. The data also demonstrates that by entering into competence building relationships with customers and suppliers firms can build capabilities that will increase their capacity for supply chain innovation. Even in short term arm’s length relationships firms can acquire improved skills behaviours and practices that enhance their operation effectiveness and the efficiency of the supply chain relationships.

Learning, language and leadership : conduits to dynamic public service networks

Networks are having a profound impact on the way society is organised at the local, national and international level. Networks are not ‘business as usual’. The defining feature of networks and a key indicator for their success is the strength and quality of the interactions between members. This relational power of networks provides the mechanism to bring together previously dispersed and even competitive entities into a collective venture. Such an operating context demands the ability to work in a more horizontal, relational manner. In addition a social infrastructure must be formed that will support and encourage efforts to become more collaborative. This paper seeks to understand how network members come to know about working in networks, how they work on their relationships and create new meanings about the nature of their linked work. In doing so, it proposes that learning, language and leadership, herein defined as the ‘3Ls’ represent critical mediating aspects for networks.

Traps for the unwary : reform stories of private sector managers entering public service

The purpose of this research is to capture and interpret the stories of “outsider” managers who make the transition to the public sector. These experiences are considered in the context of efforts to shift public management culture in a direction consistent with meeting contemporary demands placed on public sector organisations. It is often noted that an important strategy for changing culture is the infusion of outsiders. Outsiders are thought to bring new perspectives that, through a dialectical process (Van de Ven 1995), create the potential for change. While there have been cross-sector comparisons (Broussine 1990; Silfvast 1994; Redman 1997), little attention has been given to the experience of those who make the transition in the context of efforts to reform public sector management culture. Not only is the infusion of private sector managers into the public sector a potential culture change strategy, it is also a personal experience for those who make the transition. Boundary crossing is typically an anxiety provoking experience (Van Maanen & Schein 1979) and the quality of this experience influences decisions to commit, engage, disengage or exit. The quality of the experience is likely to be affected by how the public organisation responds to people making this transition, that is, their investment in people processing (Saks 2007). The cost of recruitment and selection processes at middle and senior management levels warrants a greater research focus on this transition. In this paper we argue that the experiences of those who make the transition from private to public sectors has much to tell us about the traps that transition managers experience in making this change, the implications for injecting outsider managers as a strategy for achieving public management culture change, and how reform-oriented public organisations can manage the transitions of outsider managers into the public sector in order that best value might be achieved for both the individual and organisational change goals.

Human resource management and innovation: what are knowledge-intensive firms doing?

An undeniable shift in focus from traditional production companies to Knowledge-Intensive Firms (KIFs) poses challenges for academics and practioners alike. In particular, effective management of an organization's human resources has become a critical issue for ensuring sustained innovation capacity. The relationship between Human Resource Management (HRM) in KIFs is however still a largely unexplored arena. The objective of this paper is to explore this relationship in an effort to identify HRM practices that support innovation. To this end, the paper includes reviews of the literature relevant to HRM and innovation in KIFs and four case studies from companies in Denmark and Australia that have been recognized for excellence in innovation. On the basis of content analyses conducted on the case data, some preliminary conclusions are posited regarding the role of HRM in KIFs. More specifically, the findings from this study suggest that while there are commonalities between HRM practices in traditional manufacturing companies and KIFs, there are also important differences, especially in terms of staffing practices. The paper contributes by offering recommendations for management of HRM in innovative KIFs and potential avenues for research to further develop our understanding of how HRM can support innovation in KIFs.

Realising competitive advantage through HRM in New Zealand service industries

An emerging source of competitive advantage for service industries is the knowledge, skills and attitudes of their employees. Indeed, achievement of a 'service quality' culture, considered imperative for competitive advantage in service organisations, supposedly results from the use of best practice human resource management (HRM), and from a strategic approach to their implementation. This paper empirically explores the use of these dimensions of HRM as a source of competitive advantage. It finds high-performing service organisations actively engage best practices across the areas of recruitment and selection, training and development, communication and team working. Evidence of a strategic approach to the implementation of these practices is also found.

Challenges in residual service life assessment for refurbishment

A need for an efficient life care management of building portfolio is becoming increasingly due to increase in aging building infrastructure globally. Appropriate structural engineering practices along with facility management can assist in optimising the remaining life cycle costs for existing public building portfolio. A more precise decision to either demolish, refurbish, do nothing or rebuilt option for any typical building under investigation is needed. In order to achieve this, the status of health of the building needs to be assessed considering several aspects including economic and supply-demand considerations. An investment decision for a refurbishment project competing with other capital works and/or refurbishment projects can be supported by emerging methodology residual service life assessment. This paper discusses challenges in refurbishment projects of public buildings and with a view towards development of residual service life assessment methodology

Taking a 'reality' check : expanding pre-service teachers' views on pedagogy and diversity

The outcomes of a two-pronged 'real-world' learning project, which aimed to expand the views of pre-service teachers about learning, pedagogy and diversity, will be discussed in this paper. Seventy-two fourth-year and 22 first-year students, enrolled in a Bachelor of Education degree in Queensland, Australia, were engaged in community sites outside of university lectures, and separate from their practicum. Using Butin's conceptual framework for service learning, we show evidence that this approach can enable pre-service teachers to see new realities about the dilemmas and ambiguities of performing as learners and as teachers. We contend that when such 'real-world' experiences have different foci at different times in their four-year degree, pre-service teachers have more opportunities to develop sophisticated understandings of pedagogy in diverse contexts for diverse learners.

Defining reference service life : an open innovation approach

The endeavour to obtain estimates of durability of components for use in lifecycle assessment or costing and infrastructure and maintenance planning systems is large. The factor method and the reference service life concept provide a very valuable structure, but do not resolve the central dilemma of the need to derive an extensive database of service life. Traditional methods of estimating service life, such as dose functions or degradation models, can play a role in developing this database, however the scale of the problem clearly indicates that individual dose functions cannot be derived for each component in each different local and geographic setting. Thus, a wider range of techniques is required in order to devise reference service life. This paper outlines the approaches being taken in the Cooperative Research Centre for Construction Innovation project to predict reference service life. Approaches include the development of fundamental degradation and microclimate models, the development of a situation-based reasoning ‘engine’ to vary the ‘estimator’ of service life, and the development of a database on expert performance (Delphi study). These methods should be viewed as complementary rather than as discrete alternatives. As discussed in the paper, the situation-based reasoning approach in fact has the possibility of encompassing all other methods.

Uptake of an OHS code of practice by Australian construction firms

The Australian construction industry is moving towards the implementation of a voluntary code of practice (VCP) for occupational health and safety (OHS). The evidence suggests that highly-visible clients and project management firms, in addition to their subcontractors, will embrace such a code, while smaller firms not operating in high-profile contracting regimes may prove reticent. This paper incorporates qualitative data from a research project commissioned by Engineers Australia and supported by the Australian Contractors’ Association, Property Council of Australia, Royal Australian Institute of Architects, Association of Consulting Engineers Australia, Australian Procurement and Construction Council, Master Builders Australia and the Australian CRC for Construction Innovation. The paper aims to understand the factors that facilitate or prevent the uptake of the proposed VCP by smaller firms, together with pathways to adoption.

Uptake of an OHS code of practice by construction firms : barriers and enablers in an Australian industry

The Australian construction industry, reflecting a global trend, is moving towards the implementation of a voluntary code of practice (hereafter VCP) for occupational health and safety. The evidence suggests that highlyvisible clients and project management firms, in addition to their subcontractors, look set to embrace such a code. However, smaller firms not operating in high-profile contracting regimes may prove reticent to adopt a VCP. This paper incorporates qualitative data from a high-profile research project commissioned by Engineers Australia and supported by the Australian Contractors’ Association, Property Council of Australia, Royal Australian Institute of Architects, Association of Consulting Engineers Australia, Australian Procurement and Construction Council, Master Builders Australia and the Australian CRC for Construction Innovation. The paper aims to understand the factors that facilitate or prevent the uptake of the VCP by smaller firms, together with pathways to the adoption of a VCP by industry.

Mapping the regulatory environment : implications for construction firms

As regulators, governments are often criticised for over‐regulating industries. This research project seeks to examine the regulation affecting the construction industry in a federal system of government. It uses a case study of the Australian system of government to focus on the question of the implications of regulation in the construction industry. Having established the extent of the regulatory environment, the research project considers the costs associated with this environment. Consequently, ways in which the regulatory burden on industry can be reduced are evaluated. The Construction Industry Business Environment project is working with industry and government agencies to improve regulatory harmonisation in Australia, and thereby reduce the regulatory burden on industry. It is found that while taxation and compliance costs are not likely to be reduced in the short term, costs arising from having to adapt to variation between regulatory regimes in a federal system of government, seem the most promising way of reducing regulatory costs. Identifying and reducing adaptive costs across jurisdictional are argued to present a novel approach to regulatory reform.

Analysing the internationalisation readiness of firms

The internationalisation of firms has gained much research attention since the 1970s. However, the behavioural aspect of firms’ during their pre-internationalisation phase has not been sufficiently explored. This research proposes that a pre-internationalisation focus would not only offer an additional perspective to the study of firm internationalisation but would also address the significant research gap in studies that are theoretically based around the Uppsala Model. This study views the development of a firm from its pre-internationalisation phase into an international firm in accordance with the Uppsala Model’s ‘state’ to ‘change’ aspect transition, with ‘internationalisation readiness’ established as the missing link between these two aspects. During the pre-internationalisation phase, a firm is exposed to a wide variety of internal and external stimuli that triggers an impulse for foreign market expansion. The perception of these stimuli and the attitudinal commitment taken by the firm’s decision-makers, as well as the firm’s resource capabilities and the moderating effect of lateral rigidity, are influential towards an internationalisation decision. This paper argues the significance of adopting the pre-internationalisation phase as a research platform and the importance of analysing firms’ internationalisation readiness. A method is proposed for the development of an Internationalisation Readiness Index that could be used for measuring a firm’s propensity to commence its first export operation.

The role of product involvement in e-service evaluations

This paper provides conceptual and empirical insights into consumers’ evaluations of online services and their consequent behavioural intentions. We show that behavioural intentions in online contexts are driven primarily by two factors, namely online service satisfaction and perceived service quality. Perceived sacrifice and service quality are found to have an indirect effect on online service satisfaction through their influences on perceived value associated with the online service. In addition, we examine the moderating effects of product involvement and discuss the implications of our research findings.

Teacher educators embrace philosophy: reflections on a new way of looking at preparing pre-service teachers

Over the last decade in Australia, the role of the teacher has changed. Teachers are now expected to model and foster in their students a wide range of skills such as critical thinking, self-regulated learning, knowledge of self and others and lifelong learning. These changes are having a significant impact on the design of pre-service teacher education programmes, with university educators re-evaluating the teacher training curriculum and embedded pedagogical processes in order to consider how they might develop these skills in pre-service teachers. One approach is to consider the processes and practices inherent in philosophical inquiry. This paper reports on three participants’ reflections of a 12-week philosophy programme that was conducted for teacher educators at Queensland’s University of Technology (QUT) in 2008. The programme was facilitated by teachers from Buranda State School who have been teaching philosophy in their P-7 school for more than ten years. This paper provides insight into teacher educators’ reflections on the philosophy programme and the associated changes and challenges of implementing such a programme in pre-service teacher education degrees.