Contribution of Resource-Based View and Entrepreneurial Orientation on Small Firm Growth

[EN] This research provides a useful framework for identifying a small firms’ propensity to engage in entrepreneurial orientation. We examine the impact of the Entrepreneurial Orientation (EO) as a main resource and capability on small firm’ growth. The growth seems to come out as an important demonstration of the entrepreneurial orientation of small firms (Davidsson, 1989; Green and Brown, 1997; Janney and Gregory, 2006). Thus, this research builds on prior conceptual research that suggests a positive integration between entrepreneurial orientation and resource-based view. In the first instance, the research will focus on reviewing literature in the emerging area of entrepreneurial orientation as it applies to growth oriented small firms and resource-based view of the firm. Secondly, an empirical study was developed based on a stratified sample of small firms of manufacturing industry. Data were submitted to a multivariate statistical analysis and a linear regression model was performed in order to predict the influence of the resources and capabilities on small firms’ growth. In this sense, we consider the construct growth as a dependent variable and the ones relates with resources and capabilities (entrepreneur resources, firm resources, networks and EO) as independent variables. The research results suggest a set of resources and capabilities that promote the growth of the small firms. Also, the EO seems to have a predictive value on growth. Explaining variables related with resources and capabilities and EO were identified as essential in growth oriented small firms. It was still possible to conclude that the entrepreneurial firms which grew seem to have resources and develop more capabilities and take advantage in the search for those competences. This attitude reflects on the EO of the firm. This study has important implication for both researchers and practitioners. It highlights the necessity of firms to develop superior EO of all their members and also to invest on better resources and consequently superior capabilities as a way of reaching higher levels of growth. While previous authors have attempted to analyse certain aspects of this process (linkage between entrepreneurial orientation and growth), this research developed a framework that combines these and others factors (resource-based view) pertinent to growth oriented small firms. The results support the necessity to identify explicative variables of multiple levels to explain the growth of small firms. The adoption of an entrepreneurial orientation as an indispensable variable to the growth oriented small firms seems pertinent.

Assessing the Transaction Costs of Firms in the EU ETS: Lessons form Ireland

Until now, there has been little empirical evidence that EU Emissions Trading Scheme (ETS) transaction costs are incurred at firm level. The transaction costs (internal costs, capital costs, consultancy and trading costs) incurred by Irish firms under the EU ETS during its pilot phase (2005-2007) were measured and analysed. Evidence for the sources of transaction costs, their magnitude and the distribution of costs shows that these were mainly administrative in nature. Considerable variation in costs was found due to economies of scale, as the costs per tonne of CO2 were lower for participants with larger allocations. For the largest firms - accounting for over half the emissions - average transaction costs were €0.05 per tonne. However, for small firms, average transaction costs were €2.02 - over 18% of the current allowance price. This supports the concerns that transaction costs are excessive for smaller participants. The immediate policy implication is that additional attention will be needed to address different sizes of firms, number of installations per firm, and the size of the initial allocations.

Digital loyalty card 'Big Data' and small business marketing: Formal versus informal or complementary?

This article proposes that a complementary relationship exists between the formalised nature of digital loyalty card data, and the informal nature of small business market orientation. A longitudinal, case-based research approach analysed this relationship in small firms given access to Tesco Clubcard data. The findings reveal a new-found structure and precision in small firm marketing planning from data exposure; this complemented rather than conflicted with an intuitive feel for markets. In addition, small firm owners were encouraged to include employees in marketing planning.

Two divergent ways to manage HR and to get to the top: an exploratory study in micro firms

Aim of the paper: The purpose of this paper is to examine human resources management practices (HRM practices) in small firms and to improve the understanding of the relationship between this kind of practices and business growth. This exploratory study is based on the resource-based view of the firm and empirical work carried out in two small firms by relating HRM practices with the firms’ results. Contribution to the literature: This is an in-depth study of HRM practices and its impact on performance growth in micro firms, isolating and controlling for most of the contextual and internal variables considered in the literature that relate HRM to growth. Firm growth analysis was broadened by the use of several dependent variables: employment growth and operational and financial performance growth. Some hypotheses for further research in identifying HRM practices in small business and its relation with firm growth are suggested. Methodology: Case study methodology was used to study two firms. The techniques used to collect data were semi-structured interviews to the owner and all the employees, unstructured observation at the firms’ facilities (during two days), entrepreneur profile definition (survey answer) and document data collection (on demographic characterization and performance results). Data was analyzed through content analysis methodology, and categories derived from the interviews’ protocols and literature. Results and implications: Results revealed that despite the firms’ organizational characteristics similarities, they differ significantly in owners’ motivation to grow, HRM practices and organizational performance and growth. Future studies should pay special attention to owner willingness to grow, to firms’ years of experience in business, to staff’s years of experience in their field of work and turnover. HRM practices in micro/small firms should be better defined and characterized. The external image of management posture relating to longitudinal financial results and growth should also be explored.

Bank market concentration, relationship banking and small business liquidity

This paper examines two contrasting interpretations of how bank market concentration (Market Power Hypothesis) and banking relationships (Information Hypothesis) affect three sources of small firm liquidity (cash, lines of credit and trade credit). Supportive of a market power interpretation, we find that in a highly concentrated banking market, small firms hold less cash, have less access to lines of credit, and are more likely to be financially constrained, use greater amounts of more expensive trade credit and face higher penalties for trade credit late payment. We also find support for the information hypothesis: relationship banking improves small business liquidity, particularly in a concentrated banking market, thereby mitigating the adverse effects of bank market concentration derived from market power. Our results are robust to different cash, lines of credit and trade credit measures and to alternative empirical approaches.

Encouraging small firm up-take of SCM using education: a future research agenda

The success of supply chain management (SCM) practices often depends on small firms in the supply chain adopting these practices, yet they are often reluctant to do so. The existing literature mostly explores SCM adoption barriers rather than approaches to encourage adoption. This paper argues that an educational perspective has promise, and proposes a research agenda which should guide future studies by all researchers studying small firm SCM up-take. The agenda encompasses the diversity of small firms, the major educational players, appropriate types of education approaches and the theoretical framework to underpin this research. The paper then gives an example of how this research agenda can be applied to a specific research project which will explore the impact of the Supply Chain Knowledge Centre (SCKC), a state of the art SCM education facility developed by GS1 Australia, on small firm SCM up-take.

Small firm e-business adoption : a critical analysis of theory

Purpose – The paper critiques a range of theories and evaluates their ability to provide a lens for explaining the idiosyncratic nature of small firms and their e-business adoption decisions.

Design/methodology/approach – This literature review firstly summarises the existing research evidence that shows that small firms are idiosyncratic when it comes to e-business adoption. It then critiques theories commonly used in the literature in this field to examine the extent to which they take this small firm idiosyncrasy into account when explaining e-business adoption decisions.

Findings – The critical analysis shows that no commonly-used theory adequately explains small firm adoption of e-business because each omits important aspects of small firm idiosyncrasy. The analysis suggests that an integrated theoretical framework is needed. Preliminary ideas on this framework are provided.

Originality/value – Existing research generally applies a small number of selected theories and formulates research models of adoption factors. However, there is no systematic analysis of theories in this field and no consensus about theoretical frameworks. This paper addresses this limitation of the literature by critically evaluating the commonly used theories in terms of their individual suitability as lenses for explaining small firm e-business adoption.

Towards a theory of the small firm: theoretical aspects and some policy implications

Includes bibliography

Examining the role of networking capability in small and medium firm internationalization

While research on SME internationalization has increased, there remains a lack of relevant theory on the SME internationalization process. The literature reports that small firms overcome their resource poverty-based constraints to internationalization by developing network relationships. Networking enables SMEs to acquire much needed internationalization process knowledge, and knowledge for the development of innovative products and services for this internationalization. However, networking activity has not yet been conceptualized and measured as a competitive capability in internationalization research. Drawing on the capability-based theory of competitive strategy, this paper conjectures that internationally entrepreneurial SMEs build and nurture distinctive networking capabilities, enabling them to acquire new knowledge. These learning capabilities enable them to pursue innovation thereby facilitating nternationalization. Data from Australian firms largely supports the conceptual framework. Implications for theory and practice are presented.

Comparing the conditions for small business and entrepreneurship in Sweden and Australia: Lessons for the European Charter for Small Enterprises

A growing body of literature is concerned with explaining cross-national performance of small business and entrepreneurs in advanced economies. This literature has considered a range of policy and institutional variables which create an environment supportive of small firms and entrepreneurial activities including macroeconomic variables such as taxation, labour market regulation, social security and income policy; regulatory factors such as establishment legislation, bankruptcy policy, administrative burdens, compliance costs, deregulation and competition policy; and cultural factors such as social and cultural norms that support entrepreneurship. However, this literature has not always distinguished between the policy environment of small firms operating in different industry sectors. The purpose of this paper is to examine the institutional and policy environment of small firms in knowledge intensive sectors. The characteristics of the business environment of particular relevance to knowledge intensive firms are somewhat different from the conditions for entrepreneurship and small business success more generally. This paper compares the science, technology and industry infrastructure of Australia, Denmark, Sweden with other OECD countries. The purpose of the paper is to identify cross-national differences in the business environment of small knowledge intensive firms. The paper seeks to explore whether particular institutional environments appear to be more supportive of small firms in knowledge intensive sectors.

Technological diversification within UK’s small serial innovators

This paper investigates the determinants of technological diversification among UK’s small serial innovators (SSIs). Using a longitudinal study of 339 UK-based small businesses accounting for almost 7000 patents between 1990 and 2006, this study constitutes the first empirical examination of technological diversification among SMEs in the literature. Results demonstrate that technological diversification is not solely a large firm activity, challenging the dominant view that innovative SMEs are extremely focused and specialised players with little technological diversification. Our findings suggest a nonlinear (i.e. inverse-U-shaped) relationship between the level of technological opportunities in the environment and the SSIs’ degree of technological diversification. This points to a trade-off between processes of exploration and exploitation across increasingly volatile technology regimes. The paper also demonstrates that small firms with impactful innovations focus their innovative activity around similar technological capabilities while firms that have introduced platform technologies in the past are more likely to engage in technological diversification.

Factors affecting end-user computing sophistication in small business

This thesis describes research on End-User Computing (EUC) in small business in an environment where no Information System (IS) support and expertise are available. The research aims to identify the factors that contribute to EUC Sophistication and understand the extent small firms are capable of developing their own applications. The intention is to assist small firms to adopt EUC, encourage better utilisation of their IT resources and gain the benefits associated with computerisation. The factors examined are derived inductively from previous studies where a model is developed to map these factors with the degree of sophistication associated with IT and EUC. This study attempts to combine the predictive power of quantitative research through surveys with the explanatory power of qualitative research through action-oriented case study. Following critical examination of the literature, a survey of IT Adoption and EUC was conducted. Instruments were then developed to measure EUC and IT Sophistication indexes based on sophistication constructs adapted from previous studies using data from the survey. This is followed by an in-depth action case study involving two small firms to investigate the EUC phenomenon in its real life context. The accumulated findings from these mixed research strategies are used to form the final model of EUC Sophistication in small business. Results of the study suggest both EUC Sophistication and the Presence of EUC in small business are affected by Management Support and Behaviour towards EUC. Additionally EUC Sophistication is also affected by the presence of an EUC Champion. Results are also consistent with respect to the independence between IT Sophistication and EUC Sophistication. The main research contributions include an accumulated knowledge of EUC in small business, the Model of EUC Sophistication, an instrument to measure EUC Sophistication Index for small firms, and a contribution to research methods in IS.

An examination of the appropriateness of the contemporary strategic management models for the Greek small manufacturing enterprises

The starting point of the project was the observation that strategic management is absent in small businesses. The first objective of the project was to examine the reasons causing this situation in Greece, the second one, to examine the appropriateness of the contemporary models of strategic planning for the Greek S.M.E.s, and the third to examine the appropriateness of the alternative approaches to strategic management for the Greek S.M.E.s. The term appropriateness includes (a) the ability of managers to use the models and (b) the ability of the models to assist the managers. The results of the research indicate that none of the two above conditions exists, hence, it is suggested that the contemporary models of strategic management are inappropriate for the Greek S.M.E.s. Many previous research projects on the topic suggest that since the strategic decision making process in S.M.E.s is informal, the whole process is absent or ineffective. Current trends in S.M.E.s' strategic management do not consider the informality of the strategic decision making process as a kind of managerial illness, but as a managerial characteristic. The use of sophisticated data collection and analytical methods does not indicate successful strategic decisions, but it indicates the method large firms use to manage their strategy. According to the literature review, the S.M.E.s' managers avoid the use of the contemporary models of strategic management, because they do not have the knowledge, the resources or the time. Another thesis, expressed by some firms' specialists, suggests that small firms are different from large ones, hence their practice of strategic management should not follow the large firm's prototypes.

Technical entrepreneurship in the UK:an examination of the relationship between the previous occupational background of the technical entrepreneur and the management of the small technology-based venture

With the growing appreciation of the contribution of small technology-based ventures to a healthy economy, an analysis of the individual who initiates and manages such ventures - the technical entrepreneur - is highly desirable, predominantly because of the influence of such an individual on the management and future strategy of the venture. An examination of recent research has indicated that a study of the previous experience and expertise of the entrepreneur, gained in previous occupations, may be highly relevant in determining the possible success of a new venture. This is particularly true where the specific expertise of the entrepreneur forms the main strategic advantage of the business, as in the case of small technology-based firms. Despite this, there has been very little research which has attempted to examine the relationship between the previous occupational background of the technical entrepreneur, and the management of the small technology-based firm. This thesis will examine this relationship, as well as providing an original contribution to the study of technical entrepreneurship in the UK. Consequently, the exploratory nature of the research prompted an inductive qualitative approach being adopted for the thesis. Through a two stage, multiple-site research approach, an examination was made of technical entrepreneurs heading award-winning technology-based small firms in the UK. The main research questions focused on management within the firm, the novelty and origin of the technology adopted, and the personal characteristics of the entrepreneur under study. The results of this study led to the creation of a specific typology for technical entrepreneurs, based on the individual's role in the development of technology within his previous occupation.