Small firm performance: assessing the interaction between entrepreneurial style and organizational structure

Abstract

Poor marketing is widely accepted as one of the key reasons to explain success and failure of small firms. There is less agreement, however, about whether these types of business should adopt a classic strategic management approach to marketing. Some writers are now proposing that an entrepreneurial marketing style is more appropriate in the smaller firm. Although this concept is gaining acceptance, there apparently exists no quantitative evidence to support the hypothesis that an entrepreneurial style will definitely enhance the overall performance of the small firm. Covin and Slevin (1988) have tested this hypothesis for large firms in the USA. Presents a project which aims to repeat their study in the UK SME sector and gain further understanding of the relationship between performance, style, structure and organizational capabilities. Demonstrates that a move towards being more entrepreneurial and adopting an organic management structure may assist overall performance. Reinforces the view that it is probably not wise to recommend owner/ managers should adopt an entrepreneurial style without also advising them to implement concurrent consideration of the appropriateness of their current organizational structure. Discriminant function analysis suggests that style and organicity may influence internal organizational capabilities in areas such as innovation, employee productivity and the management of quality. Recognizes that the study was, however, unable in the SME sector to validate the Covin Slevin hypothesis that only two forms of organization (conservative/mechanistic and entrepreneurial/ organic) can achieve high overall performance.