Work Book: Innovation in Small Firms

Abstract

This chapter has provided an overview of the small business sector and the nature of small business management. Small firms are a major source of employment and economic growth throughout the world and provide a management environment that is very different from that found in large organisations. A problem in understanding the small business sector is the lack of agreed definitions as to what an SME is. Most SMEs lack the resources of large firms and are dependent on one or two key owner-managers for their long-term survival. Small firms are typically less formal that their large counterparts, and are run more for lifestyle than for growth by their owners. Entrepreneurs can own a small business, but not all small business owners are entrepreneurs. Most small business owners are oriented toward lifestyle and task management rather than risk taking, innovation and growth. Small businesses are often undercapitalised and their owners lack management skills.