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 critical competences needed for innovative organizational inter-firm and intra-firm integration

In today's highly challenging business environment, an innovative and systemic approach is imperative to survival and growth. Organisational integration and technological integration, are often seen as a catalyst of change that could lead to significant improvements in organisations. The levels of improvement in inter and intra firm integration should arise from a detailed understanding and development of competences within and between organisations. Preliminary findings suggest that lack of trust across organisational cultures within the firms has a negative influence on the development of the capabilities to integrate and align technological innovations and hinders implementation and the effectiveness of the operations. Additionally, poor communication and conflict effects customer satisfaction. Firms need to transfer the competences that support cooperative integration, developed through interaction with supply chain partners, to their relationship arrangements with other supply chain partners, as these are key to ensuring low operational costs.

The legality of tissue transplants for the benefit of family members in the UK and Australia : implications for saviour siblings

The ethics of creating ‘saviour siblings’ for the benefit of another has received much attention, but little consideration has been given to the legal position of those saviours born who may be asked to provide tissue for transplantation to another during childhood. This article examines the ethical issues surrounding minor donation as well as the existing legal framework in the UK and Australia that regulates minors providing tissue for the benefit of another. Against this background the position of minor saviours, who are called upon to donate bone marrow or peripheral blood stem cells, is examined. This analysis suggests that the law does not provide sufficient protection for minor saviours who are called upon to donate to another. It is argued that specific ethical obligations are owed to saviours—that ought to be reflected in the law—in order to protect them from exploitation while they remain minors.

Firm social, cultural and intellectual capital : strategic indicators of international client satisfaction

Despite the increasing significance of the construction industry as an emerging sector of the Australian economy, there is inadequate research performed on construction design firms in terms of theoretical and empirical foundations. Although past research has identified the barriers and success factors for firm market entry, evidence suggests that to date no research has explicitly explored the sustainability of construction design firms in international markets. SMEs and their approach to firm internationalisation differ significantly from large manufacturing firms and a vast majority of construction design firms operate as SMEs. This paper develops a sustainable business model for construction design SMEs, which rely upon the development of clear Client Following (CF) versus Market Seeking (MS) strategies to support internal firm strategic and operational management. The understanding of these strategies is vital as the application of either will shape the design management approach of firms, which would in turn impact on the sustainability of these firms in foreign markets. Long-term sustainability of firms in international markets relies heavily upon client satisfaction. Client and project team participants’ communication during various design processes has often been problematic and the added difficulty of communicating across international boundaries further compounds the problem of capturing and maintaining client’s requirements. Therefore this paper develops a model for economic sustainability of Australian construction design firms working in international markets by exploring factors that affect client satisfaction across international boundaries, through the development of business performance indicators. These include not only the critical financial capital but also other ‘softer’ indicators, namely: social, cultural and intellectual capital. These act as a firm’s measure of success and the acquisition of this type of capital will provide significant advantages to firms’ success, hence sustainability in international markets.

The relationship between construction firm strategies and innovation outcomes

Survey results provide a preliminary assessment of the relative contribution of a range of tactical business strategies to innovation performance by firms in the Australian construction industry. Over 1,300 firms were surveyed in 2004, resulting in a response rate of 29%. Respondents were classified as high, medium or low innovators according to an innovation index based on the novelty and impact of their innovations and their adoption of listed technological and organizational advances. The relative significance of 23 business strategies concerning (1) employees, (2) marketing, (3) technology, (4) knowledge and (5) relationships was examined by determining the extent to which they distinguished high innovators from low innovators. The individual business strategies that most strongly distinguished high innovators were (1) ‘investing in R&D’, (2) ‘participating in partnering and alliances on projects’, (3) ‘ensuring project learnings are transferred into continuous business processes’, (4) ‘monitoring international best practice’, and (5) ‘recruiting new graduates’. Of the five types of strategies assessed, marketing strategies were the least significant in supporting innovation. The results provide practical guidance to managers in project-based industries wishing to improve their innovation performance.

The impact of internal and external market orientations on firm performance.

The role of internal marketing in developing organisational competencies is identified as a key area for continued research (Rafiq and Ahmed, 2003). One competence of particular interest to marketers is market orientation. This paper examines the impact of internal marketing, operationalised as a set of internal market orientated behaviours (IMO) on market orientation (MO), and consequently organisational performance, and provides the first quantitative evidence to support the long held assumption that internal marketing has an impact on marketing success. Data from UK retail managers were analysed using structural equations modelling employing LISREL software. These data indicate significant relationships between internal market orientation, employee motivation and external marketing success (market orientation, financial performance and customer satisfaction). Our results also support previous findings indicating a positive impact of external market orientation on customer satisfaction and financial performance. For marketing practitioners, the role of internal market orientation is developing marketing strategies is discussed.

Continuation rates and reasons for removal among Implanon® users accessing two family planning clinics in Queensland, Australia

Background - This study examined demographic profile, continuation rates and reasons for removal among Implanon^® users accessing two family planning clinics in Queensland, Australia. Study Design - A retrospective chart audit of 976 women who attended for implant insertion over a 3-year period between May 2001 and May 2004. Results - Continuation rates showed that at 6 months after insertion, 94% of women continued, 74% continued at 1 year and 50% continued at 2 years. Metropolitan women were more likely than rural women to discontinue use because of dissatisfaction with bleeding patterns. Cox regression analysis showed that those attending the regional clinic experienced significantly shorter time to removal. Conclusions - Implanon® continuation rates and reasons for removal differ between clinics in metropolitan and rural locations. A cooling-off period did not affect the likelihood of continuation with Implanon®. Preinsertion counselling should emphasize potential changes in bleeding patterns.

Every player wins a prize? Family provision applications and bequests to charity

This research deals with the interaction of family provision law and charitable bequests in wills, including qualitative research relating to the practical issues arising with both legal practitioners and charities’ bequest officers.

Listening, sharing understanding and facilitating consumer, family and community empowerment through a priority driven partnership in Far North Queensland

Objectives: This paper provides an example of a mental health research partnership underpinned by empowerment principles that seeks to foster strength among community organizations to support better outcomes for consumers, families and communities. It aims to raise awareness among researchers and service providers that empowerment approaches to assist communities to address mental health problems are not too difficult to be practical but require long-term commitment and appropriate support. Methods: A collaborative research strategy that has become known as the Priority Driven Research (PDR) Partnership emerged through literature review,consultations, Family Wellbeing Program delivery with community groups and activities in two discrete Indigenous communities. Progress to date on three of the four components of the strategy is described. Results: The following key needs were identified in a pilot study and are now being addressed in a research-based implementation phase: (i) gaining two-way understanding of perspectives on mental health and promoting universal awareness; (ii) supporting the empowerment of carers, families, consumers and at-risk groups through existing community organizations to gain greater understanding and control of their situation; (iii) developing pathways of care at the primary health centre level to enable support of social and emotional wellbeing as well as more integrated mental health care; (iv) accessing data to enable an ongoing process of analysis/sharing/planning and monitoring to inform future activity. Conclusion: One of the key learnings to emerge in this project so far is that empowerment through partnership becomes possible when there is a concerted effort to strengthen grassroots community organizations. These include social health teams and men’s and women’s groups that can engage local people in an action orientation. Key words: Aboriginal, empowerment, Indigenous, mental health.

The family attitude scale : reliability and validity of a new scale for measuring the emotional climate of families

Research on outcomes from psychiatric disorders has highlighted the importance of expressed emotion (EE), but its cost-effective measurement remains a challenge. This article describes development of the Family Attitude Scale (FAS), a 30-item instrument that can be completed by any informant. Its psychometric characteristics are reported in parents of undergraduate students and in 70 families with a schizophrenic member. The total FAS had high internal consistency in all samples, and reports of angry behaviour in FAS items showed acceptable inter-rater agreement. The FAS was associated with the reported anger, anger expression and anxiety of respondents. Substantial associations between the parents' FAS and the anger and anger expression of students was also observed. Parents of schizophrenic patients had higher FAS scores than parents of students, and the FAS was higher if disorder duration was longer or patient functioning was poorer. Hostility, high criticism and low warmth on the Camberwell Family Interview (CFI) were associated with a more negative FAS. The highest FAS in the family was a good predictor of a highly critical environment on the CFI. The FAS is a reliable and valid indicator of relationship stress and expressed anger that has wide applicability.

Internal audit quality, audit committee independence, growth opportunities and firm performance

This study explores whether the relation between internal audit quality and firm performance is associated with firm characteristics of information asymmetry and uncertainty (growth opportunities) and certain governance controls (audit committee effectiveness). The results from this preliminary study of 60 Malaysian companies show that the association between internal audit quality and firm performance is stronger for firms with high growth opportunities and that this positive association is weakened by increasing audit committee independence. These findings demonstrate the internal auditors conflicting roles and question the governance recommendations that require all members of the audit committee to be non-executive directors.