Deriving an Empirical Development Taxonomy for Manufacturing SMEs Using Data from Australia's Business Longitudinal Survey

Abstract

This novel methodological paper describes the first stage of an on-going research effort to derive, characterise and employ an empirically-based development taxonomy for small and medium-sized enterprises (SMEs) in the manufacturing sector using panel data recently made available from Australia's Business Longitudinal Survey. Exploratory cluster analysis is used with key enterprise age, size and growth variables to discover if there appear to be any stable development pathways evident in the data. Each of four annual data collections is separately examined, and then comparisons are made of the resulting cluster analysis outcomes over time. Descriptive statistics for various enterprise characteristics facilitate interpretation of the cluster analysis solutions. Using the clusters as markers or signposts over time, three relatively stable SME development pathways are discernible in the longitudinal panel results. The first is a low growth pathway apparently leading to the traditional or life-style SME configuration (around 70 per cent of the panel). The second is a moderate growth pathway possibly leading to the capped growth SME configuration (around 25 per cent of the panel). And the third is a high growth pathway seemingly leading to the entrepreneurial SME configuration (around 5 per cent of the panel). These findings are clearly in accord with the observed rarity of substantial growth amongst SMEs world-wide.