Challenges facing small-firm managers in growing manufacturing firms

Joakim Tell

doi:10.1186/s13731-015-0023-7

Abstract

The purpose of this article is to better understand the management challenges facing managers in small growing firms. Empirical data have been collected in Sweden through structured observations (approx. 20,000 min) of the working days of six top managers in fast- and six managers in slow-growing small manufacturing firms in order to compare managerial behaviour in two different contexts. Managers in small firms are engaged in many different activities, but a small number of activities tend to take up the majority of the managers’ time. These activities can be classified as either operational or administrative. There are notably small differences (both in variance and differentiation) between the behaviours of managers in fast- and slow-growing firms; actually, there are more similarities than differences. There is also surprisingly little time spent by the managers on strategic work, even in the group of fast-growing firms. This might explain why growth and innovation in many cases come to a halt or even decline in these firms and represents such a challenge for the managers when they do not prioritize strategic work. The study shows that managerial work in small firms is characterized by a generic behaviour and that the managers mainly use a habitual and limited behavioural repertoire. Many managers have difficulties in changing their mainly operational and administrative behaviour and thus the underlying strategy of the firm. They are ‘stuck’ in a path-dependency mindset, even though the development of the firm might require another strategy taken by the manager, as a response to meet environmental demands.

Highlights

How is rapid small-firm growth described in the academic literature? In reviewing the literature, there are many different attempts made to explain this relation
The focus in this article is on the analytical level of the leader, sometimes referred to as the upper-echelon perspective (Hambrick and Mason 1984), which contends that firm performance is a reflection of its manager, or as Morrison et al (2003, p. 418) write concerning characteristics associated with growth in small firms: ‘It would appear that there is a common, dominant thread woven through these characteristics, that is, the human factor of the owner manager’
A total of approx. 15 % of the manager’s time is spent on strategic activities, and when there is no difference in the length of time spent between the managers in the two studied groups, as well as no difference in the variation or differentiation of their focus on different activities, it seems that managerial behaviour cannot explain the difference in growth between firms

Summary

Introduction

How is rapid small-firm growth described in the academic literature? In reviewing the literature, there are many different attempts made to explain this relation. There has been an ever-increasing interest in the relatively few small firms that grow fast and the question of what makes some small firms grow while the bulk of them do not and why it is so hard for small firms to continue and grow (for a conceptual review of the relationship between the manager and growth in small firms, see Andersson and Tell (2009)). The focus in this article is on the analytical level of the leader, sometimes referred to as the upper-echelon perspective (Hambrick and Mason 1984), which contends that firm performance is a reflection of its manager, or as Morrison et al Numerous studies have focused on this relationship from the perspective of managerial efficiency (Kotter 1982), business performance (Thomas 1988), and firm growth (Russel et al 1994)

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