Performance Of Small Firms Research Articles

How does informal entrepreneurship influence the performance of small formal firms? A cross-country institutional perspective

ABSTRACT We advance understanding of how competition from informal entrepreneurial firms influences the performance of small formal (registered) firms. We also investigate the role of tax and law related institutions in shaping differently the performance outcomes of the competition between informal and formal firms. Empirical evidence from the analysis of 11,988 observations in 110 emerging countries indicates that, on average, informal firms affect adversely the performance of small formal firms. These negative effects however are stronger in institutional environments with burdensome courts of law but tend to be weaker in environments with burdensome tax regulations. Our analysis extends the rational exit perspective of informality and shows how competition from informal firms affects the performance of small formal firms. It also specifies how contingencies associated with law- and tax-specific institutions across emerging countries influence this relationship.

EXPLORING THE DIVERSITY WITHIN THE WORKPLACE OF SMALL FIRMS IN KOGI STATE, NIGERIA

This study aimed at exploring diversity within the workplace of Small Firms in Kogi State, Nigeria. The study used survey research design. Descriptive statistics, mean score from Likert scale, ANOVA and multiple Regressions were used for data analysis. The study found that age has significant effect on job satisfaction of employees; and that religion, educational background and job experience have strong significant effect on small firms’ organizational outcomes in Kogi State. The finding further indicated that gender difference affects organizational performance, job satisfaction, productivity, competitive advantage and customers’ satisfaction. The study concluded that age has significant positive effect on job satisfaction; and other factors such as religion, educational background and job experience of employees only affect the performance of small firms in Kogi State positively. This study therefore recommended that owner-managers of small firms should take cognizance of age as it affects job satisfaction of employees; and should strategically manage factors such as religion, educational background and job experience of employees as they affect performance

Access to Finance and Performance of Small Firms in South Africa: the Moderating Effect of Financial Literacy

The failure rate of small medium and micro enterprises (SMMEs) is very high in SouthAfrica. One of the challenges faced by SMMEs is inaccessibility to external finance. There is ageneral low level of financial literacy amongst small business owners in South Africa leading to illinformed financial decisions. Financial literacy is an important knowledge resource for financialdecision-making but little research has focused on how financial literacy affects the performance ofSMMEs. The aim of the study was to examine if financial literacy moderates the relationship betweenaccess to finance and performance of SMMEs in South Africa. The cross-sectional survey methodwas used for data collection in a quantitative study. Descriptive statistics, Pearson correlation andhierarchical regression were used for data analysis. The Cronbach’s alpha was used as a measure ofreliability. The findings indicated that the relationship between access to finance and financial literacyis significant. The findings also showed that financial literacy moderates the relationship betweenaccess to finance and performance of SMMEs. Empirically, the study added to the body of literatureon financial literacy, access to finance and performance of SMMEs. Practically, recommendations toimprove the financial literacy of SMMEs are suggested.

Cooperating to enhance the supply chain performance of Saudi Arabian manufacturing organisations

This study provides a comparative analysis of the impact of cooperation on supply chain performance in small and medium size firms (SMEs) and large manufacturing organisations operating in Saudi Ar...

Quality and performance in small accounting firms

The purpose of this study is to investigate the relationship between three central dimensions of quality in small accounting firms and firm performance. The three dimensions of quality investigated are: human resource (HR) quality, information technology (IT) quality and service quality. Firm performance is measured in two different ways: perceived performance and return on sales (ROS). We tested the hypotheses in a sample of 506 small Norwegian accounting firms. The results indicate that service quality relate positively to perceived performance and ROS. Human resource quality is positively related to perceived performance, but not ROS. IT quality is not related to perceived performance and negatively related to ROS. This study contributes to the literature by providing empirical evidence for a positive relationship between service quality and firm financial performance and has important implications for accounting firms and their clients.

Cooperating to enhance the supply chain performance of Saudi Arabian manufacturing organisations

This study provides a comparative analysis of the impact of cooperation on supply chain performance in small and medium size firms (SMEs) and large manufacturing organisations operating in Saudi Arabia. Then, we investigate the moderating effects of both cost and responsiveness strategies on the links between cooperation and supply chain performance of SMEs and large firms. To this end, we first empirically identify the underlying dimensions of cooperation, agile strategies, cost strategies, and supply chain performance. Second, a series of regression analyses is undertaken to estimate the impact of the study's constructs on the supply chain performance of SMEs and large firms. The results are discussed comparatively within the contexts of both Saudi Arabia and the Middle East. The study makes a significant contribution to the extant literature through obtaining and analysing cross-company size survey data of cooperation practices, responsiveness, and cost strategies in emerging country markets.

Firm capabilities and export performance of small firms: A meta-analytical review

Despite its importance, there is no clear understanding of the impact of small firms’ capabilities (networking, innovation, and marketing) on their export performance. This article attempts to address this issue with a meta-analysis of 74 recent empirical studies comprising 76 independent samples and covering more than 30 countries. We found that innovation, marketing, and networking capabilities positively influence export performance of small firms. However, the context-dependent nature of these relationships demands a more fine-grained examination. The variations in the ES of these relationships are explained by the role of external business environmental factors prevailing in the country of origin of the firm (developing/developed country and individualism/collectivism culture). We examined the divergent results provided by empirical studies using the moderator analysis. The findings of this article shed light on the role of small firms’ capabilities in enhancing export performance in different contextual settings.

Entrepreneurial strategy making in tourism organisations: a systematic review and future research agenda

PurposeUsing a state of the art CIMO literature review the paper develops a framework of the relationship between strategy making in the small tourism firm context and four performance outcomes.Design/methodology/approachThe paper uses the CIMO literature review method, adapted from the wider management literature to structure and integrate the existing fragmented literature base.FindingsPremised on the literature review, a framework of the relationship between strategy making and firm performance in context is posited. Emerging from a dominant owner/manager in a deeply embedded context strategy making influences firm performance across four dimensions. The influence is dynamic, continually subject to modification in a changing environment often mediated through emerging technology.Research limitations/implicationsThe CIMO method provides an integrated framework of the relationship between strategy making and small firm performance in context hence overcoming limitations of the fragmented nature of the research landscape. Emerging from the review key future research trajectories is posited.Practical implicationsWhile highlighting the relationship between strategy making and performance, the proposed framework implies owner/managers play the key role in strategy making with opportunities and challenges in modifying existing strategy making emerging from owner/manager embeddedness. Opportunities for improved policy interventions are posited.Originality/valueThe paper applies the systematic review to the relationship between strategy making and the small tourism firm.

THE EFFECTS OF KNOWLEDGE SPILLOVERS AND ALLIANCE PORTFOLIO DIVERSITY ON PRODUCT INNOVATION AND FIRM GROWTH

This study examines the extent to which the intra-industry knowledge spillover and a firm’s alliance portfolio diversity have an effect on product innovation performance and the growth of different size of firms. A model was proposed and empirically tested using structural equation modelling with Bayesian estimation. The data was extracted from the Colombian innovation survey EDIT from 2011 to 2016 and comprised a sample of 913 manufacturing firms. The results demonstrated that less-developed and resource-scarce settings, such as Colombia, foster interfirm collaboration regardless of their size. Nevertheless, even when considered the positive and significant effect of collaboration, spillovers are the most relevant external knowledge source in explaining the product innovation performance and growth of small and medium firms. The findings also showed that knowledge spillovers can be detrimental to the large firms’ outcomes, possibly associated with a weaker appropriability regime and the loss of knowledge derived from outgoing spillovers.

Entrepreneurial orientation and international opportunity development by SMEs: The mediating role of decision-making logic

ABSTRACT Research on international entrepreneurship has studied entrepreneurial orientation’s influence on the international performance of small and medium-sized firms (SMEs), but scholars need to learn more about the mechanisms that allow a firm to translate its entrepreneurial orientation into new opportunities to enter foreign markets. In this study, we employ effectuation theory to investigate this association and to enhance the understanding of international opportunity development by resource-poor SMEs. Our analysis of 164 SMEs in New Zealand supported the mediating role of effectual and causal decision-making logics in the association between entrepreneurial orientation and international opportunity. Our study contributes to the literature on international entrepreneurship and entrepreneurial orientation and helps SMEs to successfully translate their entrepreneurial orientation to foreign market entries.

Do Export Activities Improve Small Firm Performance? Evidence from Indonesia

"Research Aims: This study investigates the link between involvement in direct export activities and firm performance, with reference to small and medium-sized enterprises (SMEs) in Indonesia. Design/Methodology/Approach: The study employed primary data collected from questionnaires administered to 271 exporting SMEs in seven provinces in Jawa-Bali Region. The OLS and GLM regression techniques were employed to estimate the export impact model. Research Findings: The results show that export activities bring the highest performance improvement in product quality, moderate improvement in marketing and networking techniques, total sales, total profit, production technique or technology and worker productivity, and least improvement in domestic sales. SMEs' exports-induced performance improvement is positively affected by firm size, owners' education, the presence of foreign investors, and assistance from central government agencies, negatively affected by years of exporting, and shows an inverted U-shaped relationship with export intensity. Theoretical Contribution/Originality: The discourse of firm internationalization theories should not only focus on pre-export activities, but also post-export activities. Further, the discourse on the relationship between firm performance and degree of internationalization should consider non-linear relationship. Managerial Implications in the Southeast Asian Context: SMEs should keep actively participating in the government's export assistance programs in their post-export stage. Especially, exporting SMEs should maintain and strengthen their relationships central government agencies. In order to maintain and expand their export activities, SMEs may consider partnership with foreign investors. Research Limitations and Implications: Future research may investigate the specific export stimuli and export barriers that SMEs encounter in post-export stage. The scope of the study can be expanded to provincial or country comparison in Southeast Asia, taking into account differences in social and economic characteristics, or specified to a particular province/region or product group/industry. Other definitions of SMEs-such as those based on asset or turnover size-might be attempted. Data accuracy may also be improved through the use of factual (quantitative) data to replace some perceptual data used in the current study. "

Effect of Strategic Intent on Performance of Small and Medium Scale Printing Press Firms in Abuja, Nigeria

Purpose: This study investigates the effect of strategic intent on the performance of small and medium scale printing firms in Federal Capital Territory (FCT), Abuja, Nigeria. 
 Methods: The population of the study included all the small and medium scale printing press in Abuja which is 226 and the sample size of 68. A multiple regression model was formulated to estimate the effect of strategic intent (vision, mission, and objectives) on performance (growth) of small and medium scale printing press firms in Abuja. The study also adopted a control variable such as finance to have a better coefficient of determination. 
 Findings: The study found that strategic intent had a positive and significant effect on the growth of small and medium scale printing press firms in Nigeria. The study also found that finance (collateral, access to finance, and insufficient finance) had a negative and insignificant effect on the growth of small and medium scale printing press firms in Nigeria. 
 Implication: Small and medium printing press firms in Abuja, FCT should communicate their vision, mission statement, and objectives to their employees. The microfinance banks in collaboration with the central bank of Nigeria should minimize collateral conditions in obtaining microcredit from microfinance banks.

Collaborative entrepreneurship, diversity management, and entrepreneurial performance of small and medium scale firms in Nigeria

Purpose: This paper investigates the effects of collaborative entrepreneurship and diversity management on entrepreneurial performance. Research methodology: A cross-section survey of 110 employees from the construction and auto-service SME in Nigeria was adopted, and multiple regression analysis via SPSS version 15 was used to analyze the hypothesized relationships. Results: The result shows a statistically significant relationship for external collaborative entrepreneurship and diversity management on firm performance. Limitations: The inability to collect data from all the major cosmopolitan cities in Nigeria where a larger pool of ethnically- diverse workforce resides limits the generalizability of the finding. Contribution: Entrepreneurs and small and medium scale enterprises in construction and auto works will find this work useful for effective collaboration. Keywords: Entrepreneurship, Collaboration, Diversity management, Ethnicity, Performance, Nigeria

ROOT CAUSE ANALYSIS FOR CONDUCTING UNIVERSITY’S COMMUNITY SERVICE TO MICRO AND SMALL FIRMS

The study aims to identify the root problems facing by the small firm that further can guide the university to implement the most appropriate treatments to enhance the partnering small firm's business performance. A qualitative approach was employed, primarily conducting in-depth interviews and brainstorming with business owners, employees, store managers, and consumers of "Wajik Tapai" in Riau Province, in the framework of root cause analysis. The result reveals that the distinct causes identified as the driver of the small firm's income stagnation can be rooted in four perspectives, i.e., product durability, non-ergonomic working layout with a traditional process, conventional/offline marketing, and variability of product.

The Double-Edged Sword of Serving: Servant Leadership, Motivational Climate, and Small Firm Performance

Servant leadership has been linked to a large number of organizational outcomes. However, little is known about the mechanisms that explain the servant leadership-outcomes relationship. This study examines whether perceived motivational climate explains the link between servant leadership and small firm performance. Perceived motivational climate has two components: a mastery climate, in which cooperation, development, and effort are rewarded, and a performance climate, in which competition and rivalry are rewarded. Given servant leadership’s focus on learning and growth, we hypothesized that servant leadership would stimulate a mastery climate and hinder a performance climate. We tested these assertions in a multi-source, time-lagged study of 120 small accountancy firms. The results show that servant leadership was positively related to mastery climate, which in turn was positively related to firm-level helping behavior. Servant leadership was negatively related to performance climate, which in turn was positively related to financial performance. Thus, servant leadership comes as a double- edged sword; it positively relates to a mastery climate and thereby stimulates firm-level helping behavior but negatively relates to financial performance through suppressing a performance climate.

Partner Innovation Collaboration and Management Support Toward Innovation Speed and New Product Performance in Small Manufacturing Firms

The purpose of this study was to examine and analyze the role of partner innovation collaboration and management support on innovation speed, and its implications towards new product performance in small manufacturing firms. This study took samples in the category of small manufacturing firms in the food & beverage sector, shoes & bags sector, craft sector, and diverse sector. Then, this study uses primary data using a questionnaire distributed to 95 owners or managers of small manufacturing firms in the Bandung and surrounding areas. Data analysis uses structural equation modeling based on partial least square with the help of SmartPLS 3.0. The results showed that partner innovation collaboration had a positive and significant effect on innovation speed, then management support had a positive and significant effect on innovation speed, then innovation speed had a positive and significant effect on new product performance, most recently the role of partner innovation collaboration also had a positive effect and significant to new product performance. The R-Square calculation results show that partner innovation collaboration and management support influence 0.432 on innovation speed, then partner innovation collaboration and innovation speed have an effect of 0.637 on new product performance. This study implied that small manufacturing firms to utilize an innovation collaboration with partners and allocate more time, effort, thought, costs in the effort to innovation, and be able to create an atmosphere of work together with employees that support innovation activities. Further research is to include moderation variables that support the improvement of new product performance such as absorptive capacity and technological uncertainty. Keywords: management support, partner innovation collaboration, innovation speed, new product performance

The impact of entrepreneurs' environmental analysis strategy on organizational performance

Abstract The purpose of this paper is to assess the impact of entrepreneurial innovation strategies in environmental analysis and its impact on the performance of rural SMEs in developing countries, particularly in Kenya. The paper argues that improvements in rural SMEs through sustainable environmental analysis strategies can boost the performance of small firms in rural areas. A sample of 272 rural enterprises in Kenya was used as a framework. Partial least squares regression and correlation models are used for content analysis. The results show a nonsignificant influence of environmental instability on the performance of small firms in rural areas. However, by incorporating entrepreneurial invention strategies into environmental scanning, the results indicate a positive impact on the performance of rural SMEs. Entrepreneurs need to be aware of the importance of environmental innovation strategies to cope with disturbances and dynamism of the environment underpinning the performance of rural SMEs. The study suggests that policymakers need to create a conducive business environment through entrepreneurship training and business incubation programs for rural SMEs. The results provide information on the environmental analysis strategy and innovation management theory in defining the future of small business reengineering in rural areas.

THE RELATIONSHIPS BETWEEN TECHNOLOGICAL TURBULENCE, FLOW EXPERIENCE, INNOVATION PERFORMANCE AND SMALL FIRM GROWTH

The main objective of the paper is to address the question of how to foster innovation and small firm growth under different levels of technological turbulence. Specifically, the paper examines the relationship among risk-taking, arising from different levels of technological turbulence, flow experience, innovation and small firm growth (i.e. market share and ROI growth). The underlying premise of our research is that there are substantial differences in low and high technological environments in terms of the relationships of risk taking, flow at work, innovation and small firm growth. Based on a survey among 188 entrepreneurs, the paper tests the proposed relationships in technological diverse environments with structural equation modelling. The results show that, when the level of technological turbulence is high, flow experience is significantly related to innovation and small firm growth, while in low-technological turbulence environment such relationships are not present. The study contributes to the entrepreneurial literature by demonstrating that in highly turbulent environments, flow experience may promote entrepreneurs’ innovation and the efficiency of small firm performance. The study also provides new empirical insights about the relationship between entrepreneurs’ behaviour, which is influenced by environmental conditions, on the one hand and innovation and small firm growth on the other hand.

Embracing the duality of consideration and initiating structure: CEO leadership behaviors and small firm performance

PurposeThis paper examines the relationship between chief executive officers' (CEOs') leadership behaviors (consideration and initiating structure) and firm and individual performance (i.e. profitability, affective commitment and employees' willingness to change) in small and medium-sized firms (SMEs) that need to adapt to changing environments.Design/methodology/approachSurvey data was collected from SMEs (28 firms, 235 employees) in the accounting industry along with objective performance register data (profit and return on assets). The predicted model was tested with multilevel structural equations modeling (MSEM) using a maximum likelihood estimator.FindingsThe CEO leadership behavior of initiating structure was positively related to firms' profitability, while the CEO leadership behavior of consideration was positively related to employees' willingness to change and affective commitment.Practical implicationsSmall accounting firms typically offer standard services that are now being replaced by digital solutions. These firms have an incentive to offer new services, such as business advisory services. Therefore, leaders should embrace the duality of consideration and initiating structure to gain employees' willingness to change and optimize overall firm performance.Originality/valueThe paper contributes to leadership literature by examining a novel context (CEO consideration and initiation of structure in SMEs in uncertain environments) using a combination of firm performance measures (e.g. objective outcomes at the firm level and employees' willingness to change as a new measure at the individual level). In addition, it reports a comprehensive test of the full model using MSEM, the findings of which demonstrate the importance of dual leadership behaviors for CEOs.

Impact of policy initiatives and collaborative synergy on sustainability and business growth of Indian SMEs

Purpose The influence of sustainability practices, especially those related to the environment and society in driving business growth is evident from the annual sustainability reports of big corporations. Also, there has been a plethora of research relating sustainability performance to the financial performance of these companies. However, in the case of small and medium-sized enterprises, a very limited research study has been done so far considering the societal and environmental aspects of their business operations. Small and medium enterprises (SMEs), especially those in the emerging economy have grossly neglected their responsibilities and obligations towards the environment and society. SMEs are considered as growth engines for any nation. However, literature has shown that a large percentage of SMEs across the world fail within a few years of their incorporation. This paper aims to verify the relationship between sustainability performance and business growth for SMEs in the developing economy. Design/methodology/approach In the paper, the authors have tried to develop a model taking a sample of 200 SMEs from Indian leather and chemical sectors and find out how the factors like collaborative synergy and government policy initiatives impact the sustainability performance of small and medium firms and how in turn, their improved sustainability performance helps them to drive sustainable business growth. Data were mainly collected through primary survey and also from the company websites. Findings Empirical results of the study reveal that both policy initiatives and collaborative synergy positively influence the firm’s sustainability performance and, in turn, the company’s business growth is positively impacted by their enhanced sustainability performance. Company size was found to have a moderating effect on this relationship. Originality/value There are theoretical and conceptual papers elaborating on the importance of adoption of sustainability practices in SME business operations but no empirical study has been conducted to mathematically relate the factors of sustainability and business growth. The authors have tried to build a model relating the factors of sustainability improvement with those of the business growth of the firm and also verified the influence of control variables like company size on the proposed relationship.