Small Business and entrepreneurship policy

There are two key approaches to entrepreneurship, each of which has different implications for small business policy (Danson 2002). The first conceives of entrepreneurship as an economic process and can be traced to the work of Joseph Schumpeter who developed the concept of creative destruction to describe the entrepreneurial process that led to the simultaneous elimination of old industries and activities and the creation of new activities through the commercial application of new ideas. While entrepreneurship as a process of creative destruction might include start up activity amongst small firms, it does not exclusively involve small firms as large firms may contribute to the entrepreneurial process through the generation of new knowledge and by assisting in financing the development of new ideas amongst small firms. Although innovation occurs in large as well as small firms, the literature on small enterprise innovation draws heavily on Schumpeter’s depiction of the central role of the entrepreneur in the process of creative destruction, whereby the economic system is transformed from within and new cycles in economic life emerge in which new industries and markets replace old industries and markets. Schumpeter argued that entrepreneurs drove the process of innovation and that innovation was a stimulus to economic development and involved the development of new products, processes, methods of production or new forms of commercial or financial organisation (Schumpeter 1911). At a time when technological development and structuraleconomic change are occurring at a rapid pace, small firm innovation is seen to be critically important because empirical evidence, although not undisputed, indicates that SMEs make an important contribution to radical innovations in new industries (Nooteboom 1994). The second view of entrepreneurship focuses on the individual entrepreneur more than the entrepreneurial process. The entrepreneur is depicted as an owner of small businesses, and is regarded as having particular personal characteristics such as self-reliance, individual initiative and self-motivation. Entrepreneurs are also considered to have a behavioural orientation towards the exploitation of new ideas and opportunities. They are the risk takers who are able to see an opportunity and pursue it commercially despite the uncertainty of rewards. The capacity to plan, manage and lead is also seen to be identifying characteristics of entrepreneurs. Different small business policy approaches arise from these different perspectives on entrepreneurship. Small business policy approaches that emphasise the process by which new ideas are generated and applied commercially arise from the first and broader view of entrepreneurship. Policies designed to generate a population of risk taking and self-motivated individuals with highly developed management and commercial skills are more in keeping with the second approach, which is focused on the individual entrepreneur rather than the entrepreneurial process.

Ties that blind? How strong ties affect small business owner-managers’ perceived trustworthiness of their advisors

This research investigates how a strong personal relationship (strong tie) between a small business owner-manager and his professional or informal advisor affects the relationship between the advisor's recent performance and the owner-manager's perceptions of the advisor's trustworthiness in terms of ability, benevolence and integrity. A negative moderating effect could point to a 'tie that blinds': the owner-manager may be less critical in evaluating the advisor's perceived trustworthiness in light of their recent performance, because of the existing personal relationship. A conceptual model is constructed and examined with survey data comprising 153 young Finnish businesses. The results show that strong ties increase the owner-manager's perception of the advisor's integrity, disregarding their recent performance. For professional advisors, strong ties reduce the impact of recent performance in the owner-manager's evaluation of their ability. For informal advisors, a strong tie makes it more likely that their benevolence will be evaluated highly in light of their recent performance. While the results show that 'ties can blind' under certain circumstances, the limitations of the study raise the need for further research to specify these contextual factors and examine the causal link between the choice of advisor and business performance.

The mobile Internet and small business : an exploratory study of needs, uses and adoption with full-adopters of technology

The technological environment in which contemporary small and medium-sized enterprises (SMEs) operate can only be described as dynamic. The exponential rate of technological change, characterised by perceived increases in the benefits associated with various technologies, shortening product life cycles and changing standards, provides for the SME a complex and challenging operational context. The primary aim of this research was to concentrate on those SMEs that had already adopted technology in order to identify their needs for the new mobile data technologies (MDT), the mobile Internet. The research design utilised a mixed approach whereby both qualitative and quantitative data was collected to address the question. Overall, the needs of these SMEs for MDT can be conceptualised into three areas where the technology will assist business practices; communication, eCommerce and security.

Mobile data technology for small business : needs, uses, and adoption

The technological environment in which contemporary small and medium-sized enterprises (SMEs) operate can only be described as dynamic. The exponential rate of technological change, characterised by perceived increases in the benefits associated with various technologies, shortening product life cycles and changing standards, provides the SME a complex and challenging operational context. The primary aim of this research was to identify the needs of SMEs in regional areas for mobile data technologies (MDT). In this study a distinction was drawn between those respondents who were full-adopters of technology, those who were partial-adopters and those who were non-adopters and these three segments articulated different needs and requirements for MDT. Overall the needs of regional SMEs for MDT can be conceptualised into three areas where the technology will assist business practices, communication, e-commerce and security.

Factors affecting entry-level Internet technology adoption by small business in Australia : evidence from three cases

The adoption of Internet technologies by the small business sector (SMEs)The adoption of Internet technologies by the small business sector is important to their on-going survival. Yet, given the opportunities and benefits that Internet technologies can provide it has been shown that Australian small businesses are relatively slow in adopting them. This paper develops a model from recent literature on the facilitators and inhibitors to the adoption of Internet technologies by small business. Cross-case analysis of findings from three case studies are presented. Findings indicate that perceived lack of business benefit, mistrust of the IT industry and lack of understanding of Internet technologies are major inhibitors to Internet adoption by small business.

Mobile data technologies and small business adoption and diffusion : an empirical study of barriers and facilitators

The technological environment in which contemporary small- and medium-sized enterprises (SMEs) operate can only be described as dynamic. The exponential rate of technological change, characterised by perceived increases in the benefits associated with various technologies, shortening product life cycles and changing standards, provides for the SME a complex and challenging operational context. The primary aim of this research was to identify the needs of SMEs in regional areas for mobile data technologies (MDT). In this study a distinction was drawn between those respondents who were full-adopters of technology, those who were partial-adopters, and those who were non-adopters and these three segments articulated different needs and requirements for MDT. Overall, the needs of regional SMEs for MDT can be conceptualised into three areas where the technology will assist business practices; communication, e-commerce and security

How does small business impact on utilization of industry-led supply chain innovation capacity

This research uses confirmatory factor analysis and structural equation modelling to examine how organizational size - made up of four dimensions - control, resources, trust and complexity - impacts on utilization of industry-led supply chain innovation capacity in a traditional agribusiness industry, the Australian beef industry. It confirms small business rather than larger business accords greater importance to exploiting supply chain dynamic capabilities, particularly in relation to utilizing industry –led supply chain innovation capacity. For small business in Australian beef supply chains, being agile and able to adapt and align their business practices with supply chain partners is integral to ensuring these businesses remain relevant and competitive in this market. In theoretical terms this is supported by authors in the dynamic capabilities literature as they argue these types of capabilities enable organizations to innovate faster (or better), often leading to the creation of newer sources of competitive advantage.

Learning in and beyond small business advisory programmes

The purpose of this paper is to analyse how participants learn in small business advisory programmes and to explore the impact of these learning programmes on the development of reflective learning dispositions in participants. The research involves two case studies of small business advisory programmes in Queensland, a state of Australia. One involves training in the use of GPS/GIS technology amongst rural SMEs and the other seeks to develop improved management and operational capabilities in regional and metropolitan manufacturing SMEs. Face to face semi-structured interviews were conducted throughout rural, regional and metropolitan Queensland with participants, trainers and senior executives in the administering organisations that ran the programmes. Learning in these programmes occurs through a combination of interaction with others and the adoption of practice-based and learner-centred processes. The impact of the programmes on participants includes the development of reflective learning dispositions, improved confidence in learning and appreciation of the value of new knowledge to their business. The research suggests that small business training programmes have the potential to affect the development of critical reflective learning dispositions in participants which is of fundamental importance to the development of a learning or knowledge economy.

Small business entity tax concessions : through the eyes of the practitioner

The often competing imperatives of equity, simplicity and efficiency in the income tax regime, particularly the notion of simplicity, has been most evident within Australia’s small business sector over the last decade. In an attempt to provide tax simplification and reduce the tax compliance burden faced by Australian small businesses, provisions collectively referred to as the ‘simplified tax system’ or STS were introduced. The STS was designed to provide eligible small businesses with the option of adopting a range of ‘simplified’ tax measures designed to simplify their tax affairs whilst at the same time, reducing their tax compliance costs. Ultimately, a low take-up rate and accompanying criticisms led to a remodelled and rebadged concessionary regime known as the ‘Small Business Entity’ (SBE) regime which came into effect from 1 July 2007. This paper, through a pilot study, investigates the SBE regime though the eyes of the practitioner. In line the Australian Federal Government’s objective of simplification and reduced compliance costs, the purpose of the study was to (1) determine the extent to which the SBE concessions are being adopted by tax practitioners on behalf of their clients, (2) gain an understanding as to which individual SBE tax concessions are most favoured by practitioners, (3) determine the primary motivation as to why tax practitioners recommend particular SBE concessions to their clients, and (4) canvass the opinions of practitioners as to whether they believed that the introduction of the SBE concessions had met their stated objective of reducing tax compliance costs for small businesses. The findings of this research indicate that, while there is a perception that the SBE concessions are worth embracing, contrary to the policy intent, the reasons behind adopting the concessions was the opportunity to minimise a clients’ tax liability. It was revealed that adopting particular concessions had nothing to do with compliance costs savings and, in fact, the SBE concessions merely added another layer of complexity to an already cumbersome and complex tax code, which resulted in increased compliance costs for their small businesses clients. Further, the SBE concessions allowed tax practitioners the opportunity to engage in effective tax minimisation, thereby fulfilling the client advocacy role of the tax practitioner in maximising their clients’ tax preferences.

Small business entity tax concessions : through the eyes of the practitioner

Australia’s small business sector has pursued often-competing imperatives of simplicity, equity and efficiency in the income tax regime (particularly focusing on the notion of simplicity) over the last decade. In 2001, there was an attempt to provide such simplification and reduce the compliance burden faced by Australian small businesses through the ‘simplified tax system’ (‘STS’). However, despite amendments over the years, the regime is much criticised. This article explores how the STS (now known as the ‘small business entity’ regime or ‘SBE’) is utilised from the perspective of tax practitioners, by analysing their recommendations to small business clients in respect of the regime. The results indicate that practitioners believe the regime did nothing to simplify the tax system for small businesses or reduce tax compliance costs. Indeed, the practitioners believed that the introduction of small business concessions had actually achieved the opposite result — it had increased tax compliance costs for their small business clients. However, tax practitioners still recommend the regime highly because it minimises their client’s tax liability.

Small business prosperity and wellbeing : an alternative measure for success among small business owners

This study investigated the influences of business prosperity on small business owners’ wellbeing with gender as a moderator. A sample of 687 Australian small business owners from the Household, Income and Labour Dynamics in Australia Survey (HILDA) from 2008 to 2010 was utilised. Findings suggest that procedural utility contributed to small business owners’ wellbeing over economic utility. Procedural utility was significantly related to small business owners’ wellbeing for males and females. However, economic utility contributed only to male small business owners’ wellbeing. In order to increase the understanding of these findings it is suggested that more theoretical work regarding gender differences in procedural and economic utility should be carried out.

Business process management in small business : a case study

Small Businesses account for a significant portion of the Australian business sector. With Business Process Management (BPM) gaining prominence in recent decades as a means of improving business performance, it would seem to only be a matter of time before it gains momentum within the Small Business sector. One may even question why it has not already achieved more traction within the sector. This case study involves a BPM initiative to develop process infrastructure in an establishing Small Business. It explores whether mainstream BPM tools, techniques and technologies can be applied in a Small Business setting. The chapter provides a background to the case organisation, outlines the activities undertaken in the BPM initiative and distils key observations drawn from participation in the initiative and consultation with stakeholders. Based on the case study experiences, a number of implications are identified for further consideration by the BPM discipline as it continues to address the question of how it can become more widely adopted amongst Small Businesses.