Small Entrepreneurial Firms Research Articles

Parentalistic leadership and crisis responses by small entrepreneurial firms

Parentalistic leadership and crisis responses by small entrepreneurial firms

Perceptions of Management Control in Post-acquisition Integration Context Through Sense-making: An Interpretive Case Study

The purpose of this qualitative case study was to explore perceptions of a management control system (MCS) in a post-acquisition integration context through sense-making using interpretive case study methodology. The study draws from the theories of the two types of bureaucratic formalization, sense-making in organizations and MCSs. The study material consists of semi-structured interviews with the managers at the corporate, divisional, and business unit levels. At the time of the study, the case company was growing through several acquisitions per year, which created constant challenges with post-acquisition integration and a need for more formal MCS. The article shows how the backgrounds of the acquired business units are related to the perceptions of the MCS. We found that the identity threat and retrospection were properties of sense-making that explained the business unit managers’ attitudes towards the corporate MCS. Particularly prior experiences of production-centred line-manager positions in small entrepreneurial firms seem to foster coercive perceptions of MCS. The results of this study contribute to MCS literature.

Evaluation of the critical success factors of dynamic enterprise risk management in manufacturing SMEs using an integrated fuzzy decision-making model

To succeed, a firm essentially needs to take the right amount of risk. Thus, the great significance of risk management has attracted many researchers to focus on how to implement enterprise risk management (ERM) systems most effectively. Generally, smaller entrepreneurial firms have to cope with this challenge more informally. Most manufacturing small and medium-sized enterprises (SMEs) are family companies; as a result, family dynamics greatly impact how such companies do business. The q-rung orthopair fuzzy set (q-ROFS) provides a wide window for the preference elicitation of decision-makers (DMs). Inspired by the advantages of the q-ROFS, in the current paper, a novel decision framework, the q-ROF-entropy-rank sum (RS)-additive ratio assessment (ARAS), called the “q-ROF-entropy-RS-ARAS” approach, is developed. The q-ROF-entropy-RS approach is applied to compute the weights of critical success factors (CSFs) for dynamic ERM in SMEs, and the q-ROF-ARAS model is used to assess enterprise preferences. An empirical case study is conducted to evaluate the CSFs for dynamic enterprise risk management in SMEs. Additionally, the comparison and sensitivity investigation are carried out to show the superiority of the developed framework.

Effects of key leadership determinants on business sustainability in entrepreneurial enterprises

PurposeToday’s small enterprises are forced to rethink their business-as-usual management and shift toward corporate sustainability. The empirical paper responds to a crucial quest for many modern leaders and entrepreneurs, specifically small business owners in emerging economies. This paper aims to answer what they can do to increase long-term financial performance and enhance stakeholder satisfaction, thereby contributing to long-term business sustainability.Design/methodology/approachUsing a convenience sampling, data were collected from a sample of 280 business leaders and entrepreneurs of small enterprises across industries in an emerging economy of Thailand. This study used a sustainable leadership research framework. Factor analysis and multiple regression analysis were used for data analysis.FindingsSeven valid and reliable leadership factors were uncovered as new underlying leadership constructs to examine business sustainability in small entrepreneurial enterprises in Thailand. Results from multiple regressions revealed two significantly positive factors or drivers (i.e. trusting, innovative team orientation and strong, shared vision) for enhanced two sustainability performance outcomes (i.e. financial performance and stakeholder satisfaction). The findings thus contribute to advance our limited knowledge about the contextualised constructs and possible theoretical development of the developing research realm.Research limitations/implicationsSuccessful small entrepreneurial organisations in Thailand and other emerging economies that wish to improve their business sustainability are suggested to adopt the essential leadership and management practices (i.e. trusting, innovative team and strong, shared vision). Future studies may examine data from a larger sample size and other countries to expand our limited understanding in different contexts.Practical implicationsThe resulting practical insights can be used to guide business leaders, entrepreneurs, practitioners and policymakers towards making strategic priorities and investments for improved business competitiveness, resilience and sustainability in small entrepreneurial enterprises. Overall, this study may be a starting point for further investigation on developing entrepreneurial growth and business sustainability in small sustainable enterprises across emerging economies.Originality/valueThe paper responds to calls for more contextualised research studies in the evolving multidisciplinary field of entrepreneurial leadership and business sustainability, particularly in an emerging economy of Thailand. It also unveils the essential strategic leadership factors that positively drive business sustainability in small entrepreneurial firms. And, it empirically examines the effects of diverse strategic leadership factors and multiple sustainability performance outcomes in a single study. It further proposes an emergent leadership-performance model for entrepreneurial business sustainability in the context-specific study. Above all, it advances the currently limited empirical knowledge in the emerging research front towards more sustainable futures.

Examining the relationship between strategic alliances and the performance of small entrepreneurial firms in telecommunications

An alliance is an effective strategy for knowledge-intensive businesses in competition. Yet, little is known about how strategic alliances work within small firms in the telecommunications industry, which plays an essential part in the COVID-19 pandemic infrastructure. The purpose of this article is to examine the impact of strategic alliance on firm performance among small entrepreneurial firms (SEFs) in the telecommunications industry. The study uses structural equation modeling to analyze primary data obtained from a sample of 74 small entrepreneurial firms in the telecommunications sector. We find that strategic alliances significantly and positively impact partners’ performance in terms of financial, operational, and organizational effectiveness among small entrepreneurial firms in the telecommunication sector. Drawing on the findings, we recommend small entrepreneurial firms pay particular attention to pre-alliance and post-alliance issues, including partner similarity, alliance experience, partner’ reputation, complementary skills, industry scope, commitment to improving trust and skill, and collaboration to boost performance. In addition, based on the results of this study, we discuss research implications for challenges of telecommunications SEFs in the time of the COVID-19 pandemic crisis.

Consumers' perceptions of product quality and entrepreneurial survival: evidence from the craft brewery industry

Purpose Most studies of entrepreneurial failure do not have good measures of consumers' perceptions of product quality. As a result, perceived quality in entrepreneurial success is often omitted. The craft brewery industry is comprised of small entrepreneurial firms selling an experience good making it an ideal study setting. Using online beer reviews, the authors examine how perceptions of beer quality and the size of brewery production influence entrepreneurial success of microbreweries and brewpubs.Design/methodology/approach Using data from the Brewers Association and over 12 million reviews from beeradvocate.com between 2002 and 2016, the authors examine the relationship between perceived product quality to firm survival. Perceived quality is measured using online beer reviews. The authors expect larger microbreweries will survive longer as will breweries with higher perceived quality. The authors use a conditional log-log hazard model to estimate survival for microbreweries and brewpubs.Findings A one standard deviation increase in the beer ratings reduces the probability of exit by 26% for a microbrewery and 19% for brewpubs. The authors find that larger microbreweries have a lower hazard of exiting.Originality/value Entrepreneurs in the brewing industry start as home brewers before beginning commercial enterprises. Scaling up production is difficult. The initial size of their brewery is an important determinant of their success. Likewise, the perception of the quality of their beer as measured by consumer ratings gives a good market indication about future survival. This research is one of the few studies to examine the influence of perceived quality on firm survival in a growing industry.

DESIGNING LIGHTWEIGHT OPEN INNOVATION: A CONCEPTUALISATION OF HOW LARGE FIRMS ENGAGE WITH SMALL ENTREPRENEURIAL FIRMS

There is increasing scholarly interest in how large corporations engage in open innovation with small entrepreneurial firms, with synergies potentially producing positive outcomes for both the involved parties and the surrounding ecosystem. “Lightweight models” of open innovation (LOIs) have recently been introduced, governed by trust and relationships rather than by equity ownership and transactional control. This paper introduces a design framework and an alignment model for LOIs, based on 19 inductively generated and highly interrelated design elements associated with five design themes. The study uses empirical data from 18 LOI initiatives in Sweden, and the framework explains important differences in their motives, value propositions, innovation localizations, involved participants, and forms of interactions. Applying a value perspective to open innovation highlights two different value logics, suggesting that LOI initiatives can approach value by emphasizing either value creation or value capture. These logics may greatly influence other important design elements of LOIs.

User-entrepreneurship and innovation: does customer involvement and learning orientation matter?

PurposeThis paper aims to investigate the process of innovation in firms founded by user-entrepreneurs. It also empirically investigates the role of customer involvement and user-entrepreneurs’ learning goal orientation in the innovation process.Design/methodology/approachA survey design is used to collect data from entrepreneurs managing small businesses. A total of 255 entrepreneurs responded to the survey questionnaire. The partial least square structural equation model was used to test the measurement and structural model.FindingsResults suggest a positive association of user-entrepreneurship with innovation and customer involvement. Results also confirmed that customer involvement mediates the relationship between user-entrepreneurship and innovation. In addition, results suggest that the higher learning orientation (LO) of user-entrepreneurs plays a vital role in innovation by strengthening the relationship between user-entrepreneurship and customer involvement.Research limitations/implicationsThe study focuses on small entrepreneurial firms with less than equal to or less than 250 employees. The results may not be generalizable to larger user-entrepreneurial firms. Also, this study is based on American entrepreneurs. Therefore, the results may not be generalizable to other countries.Practical implicationsEvidence for the role of customer involvement and LO in the innovation process can be used by entrepreneurs and small business owners in hiring and training decisions. Also, the findings suggest the important role played by customers in the innovation process. Firms can use this insight to involve their customers in the product development process to secure better innovation outcomes.Originality/valueThis study contributes to the innovation and entrepreneurship literature by emphasizing the critical role of customer networks in user-entrepreneurs’ innovation performance. It offers a process model that offers empirical evidence supporting the positive role of customer involvement in new ventures. It highlights the role of the LO of user-entrepreneurs in the customer engagement process.

How effectuation, causation and bricolage influence the international performance of firms via internationalisation strategy: a literature review

PurposeThis study aims to investigate the antecedents of the internationalisation strategy i.e., effectuation, causation and bricolage on the international performance of the firm.Design/methodology/approachIn total, the study uses 138 peer-reviewed articles on effectuation, causation, effectual/causal decision-making logics and related issues such as the impact of antecedent factors of international strategy (i.e. effectuation, causation and bricolage) on the international performance of the firm.FindingsEven though the theory of effectuation was formulated in 2001, to a large extent it has still not moved away from the realm of small entrepreneurial firms. The development of effectuation logic has accelerated in recent years, but the bulk of the research still focusses on small entrepreneurial firms rather than on the application of the theory in larger, non-entrepreneurial firms. Furthermore, effectuation theory would benefit from being developed into the realm of psychology and sociology.Originality/valueThis study offers a conceptual model on how effectuation, causation and bricolage influence internationalisation strategy, which, in turn, impacts the international performance of the firm. Furthermore, the study discusses the effectual logic for larger firms. The exponential growth of studies on effectuation during recent years, i.e. 2017 to the first quarter of 2020, shows that researchers have responded to calls by leading authors stating that effectuation theory is a field with great potential for further theoretical developments. This study presents a literature review of the critical issue of the engagement of internationalisation strategies with effectuation, causation, bricolage and the international performance of the firm compared to the earlier literature review for the period 2001–2016 by Matalamäki (2017) and Karami et al. (2019) on effectuation and internationalisation.

External supports, innovation efforts and productivity: Estimation of a CDM model for small firms in developing countries

Financial constraints have been identified as a major drawback of innovation activities and productivity of small entrepreneurial firms, especially in developing countries. While external financial supports provide incentives for innovation, we know much less about their effects in the context of developing market firms. This paper fills this research gap by proposing a modified version of the Crepon, Duguet, and Mairesse (CDM) model that estimates the effects of funds from the state, federal and foreign governments on innovation activities and productivity of small and medium-sized enterprises. We test the model on a firm-level dataset based on two waves of Nigeria innovation survey (NIS). The econometric results reveal that these sources of financial supports have heterogeneous effects on the knowledge input, innovation outputs and productivity. In addition, firm-level factors, in particular, innovation cooperation, human capital, export activities, firm age and size have considerable impacts on innovation capacity and firm productivity.

Toward A Theory Of Supply Chain Entrepreneurial Embeddedness In Disrupted And Normal States

The daunting effects of COVID‐19 have motivated large firms to rethink supply chain designs and practices. As a potential contribution to such change, we introduce the concept of supply chain entrepreneurial embeddedness (SCEE), which we define as the degree to which a large firm integrates small entrepreneurial business capabilities (e.g., creativity, ingenuity, resourcefulness, rapid decision‐making, and swift execution) within its supply chain. We theorize that SCEE can be realized via at least three mechanisms—acquiring (i.e., purchasing one or more small entrepreneurial firms), allying (i.e., building cooperative alliances with such firms), and assimilating (i.e., mimicking how such firms behave). We suggest that SCEE is valuable under normal conditions, but its value increases under duress. Grounded in the concepts of structural inertia, requisite variety, mutualism, and real options, our core premise is that SCEE enables large firms to better navigate multiple and multidirectional concurrent changes in supply and demand, which in turn enhances firm performance. We contextualize this core premise by theorizing that greater end‐user proximity (wherein SCEE is located close to the final customer) and service centricity (wherein competition is primarily based on the service dimension of product–service bundles) enhance SCEE’s positive effects.

Equity, Personal Collateral and Capital Structure of the Small Entrepreneurial Firm

We develop an entrepreneur-focused model for the capital structure of small and entrepreneurial firms. Our model moves from a minimal remuneration that the entrepreneur has to ask because of the risk they incur in the venture and makes two adjustments: first, it takes into consideration entrepreneurs’ overall personal wealth since the grater the personal wealth not invested in the venture the smaller the adverse impact suffered by the entrepreneur; second it includes as wealth invested in the venture the debt collateralized/guaranteed by personal assets (net of any asset that the firm has to repay that loan). Then, we explore how the model adjusts in order to take into consideration the peculiarities of entrepreneurial start-ups, established small entrepreneurial firms and mature and solid ones. Our model suggests that entrepreneurs are more concentrated than usually expected and that equity is not necessarily the most expensive source of finance since debt collateralized/guaranteed by personal assets can be a very expensive source. Our model provides also additional justification for firms to use expensive trade.

Credit scoring of micro and small entrepreneurial firms in China

It is difficult for micro and small entrepreneurial firms (MSEFs) to access external financing from formal financial institutions because financial institutions cannot obtain sufficient and reliable credit information about MSEFs. With the development of the internet and data collection technologies, more and more data can be accessed from different sources, and logistic regression model often suffers from bad performance. In this paper, we propose a credit scoring model using composite MCP logistic regression and firstly apply the proposed method to predict the probability of default of MSEFs in China. The proposed method can carry out parameter estimation and automatic bi-level selection of variables simultaneously with respect to the grouping structure of variables. Empirical results of MSEFs with complex grouping structure data have shown that the proposed method outperforms forward stepwise logistic regression, MCP logistic regression and group MCP logistic regression. In addition, we find that gross salary, tax paid, bank and injury insurance information of MSEFs are the most important factors to predict the probability of default.

Workforce agility and its links to emotional intelligence and workforce performance: A study of small entrepreneurial firms in India

Small businesses play a crucial role in the economy; however, small entrepreneurial firms often lack expertise and resources, meaning that it is challenging to run such businesses successfully. Using data from a survey of six small entrepreneurial firms in India, this research sets out to explore the relationship between workforce performance and emotional intelligence, looking in particular at the role that workforce agility plays. Workplace performance is split into three categories; task performance, adaptive performance, and contextual performance. Our results show that workforce agility acts as a mediator between emotional intelligence and work performance, but only in relation to adaptive and contextual performance; it does not have any significant influence on task performance. Against the backdrop of a volatile and uncertain business environment, we conclude by drawing a number of inferences from our work that small entrepreneurial firms could use to improve employee productivity and performance.

Entrepreneurial practices of collaboration comprising constellations

PurposeThe purpose of this paper is to explore empirically and theoretically collaborations, which small entrepreneurial firms establish with other firms, stemming from innovation processes within the original firm.Design/methodology/approachThe article advances “entrepreneurship as practice” (EaP) using practice theory, employing specifically the concept of constellations. Three specific constellations emerge, each characterized by particular practices, purposes and outcomes. The empirical material stems from a collective case study of 32 entrepreneurial firms regarding 40 innovation projects.FindingsThe findings suggest that innovation practices in entrepreneurial firms stimulate new collaborations forming specific constellations, which in turn lead to learning and further innovation.Research limitations/implicationsThe theoretical framework developed extends EaP and practice theory by casting light on how constellations are, their forms, shapes and outcomes. The findings extend existing research on collaboration for innovation and contribute to practice theory by modeling different constellations and their structures.Practical implicationsThe practical implications of the findings for entrepreneurial firms arise from understandings of how different constellations may influence further learning and innovation.Originality/valueThe originality of the study is the identification and exposition of distinctive constellations of collaboration stemming from entrepreneurial innovation. This study exposes that innovation is differently open, whether the collaboration is interdependent, incorporated into the collaboration or independent from the other collaborative partners, with implications for learning and for innovation outcomes. The findings give insight into the enabling and limiting factors of each constellation, factors which may facilitate or hinder learning and innovation.

Consumer privacy and the future of data-based innovation and marketing

Digitization makes it easier for firms to build their innovation and marketing efforts around consumers' personal data. In this research, we employ a privacy perspective based on contextual integrity to examine how such practices can trigger privacy concerns. We propose that small entrepreneurial firms are often at a particular disadvantage compared to large incumbent firms. At the same time, we also highlight that there are several strategies firms can use to mitigate privacy concerns and that in some circumstances, privacy concerns may also exert positive effects on data-driven marketing by stimulating privacy innovation and providing a source of competitive advantage.

Consumer Privacy and the Future of Data-Based Innovation and Marketing

Digitization makes it easier for firms to build their innovation and marketing efforts around consumers' personal data. In this research, we employ a privacy perspective based on contextual integrity to examine how such practices can trigger privacy concerns. We propose that small entrepreneurial firms are often at a particular disadvantage compared to large incumbent firms. At the same time, we also highlight that there are several strategies firms can use to mitigate privacy concerns and that in some circumstances, privacy concerns may also exert positive effects on data-driven marketing by stimulating privacy innovation and providing a source of competitive advantage.

Early Entry to Verify Quality Stimulates Breakthrough Innovations

Most OECD-countries provide financial subsidy programs to stimulate the entry and growth of small entrepreneurial firms. However, the best strategy for innovative entrepreneurs might be to make an early entry to signal innovation quality and overcome asymmetry problems. Thereby, entrepreneurs can induce a preemptive bidding competition among incumbents and receive a higher acquisition price. This stimulates entrepreneurs to develop breakthrough innovations that will raise welfare.

Maintenance and creation of roles during socialization processes in entrepreneurial small firms: An institutional work perspective

Entrepreneurial small firms (ESFs) are characterized by a permanent dynamic of innovation not only regarding their commercial offers, but also their organizational processes. Potentially, newcomers play a key role in the maintenance of this innovation dynamic, but there is a lack of knowledge regarding their socialization. In this research, we develop an understanding of socialization processes in ESFs by taking an institutional work perspective. Through a qualitative, longitudinal and inductive research design based on two case studies, we make several contributions. First, we identify different socialization activities enforced jointly and separately by newcomers and insiders. Second, we explain the dynamics of these activities with the achievement of two socialization outcomes: maintenance of institutionalized roles and the creation of new ones. Our results enrich the organizational socialization literature by introducing a new field of enquiry and by showing that role creation can be a major distal outcome of socialization processes. We also develop new perspectives on institutional work by demonstrating the importance of newcomers and the dimensions of agency at play during socialization processes.

Recent Literature Review on Effectuation

The purpose of this study is to summarize the state of research in the theory of effectuation and to examine its strengths and weaknesses. In total 78 peer review articles are used in this study based on the effectuation which is a decision-making logic. Despite the fact the theory of effectuation was formulated in 2001, still to a large extent, it has not moved away from the realm of small entrepreneurial firms. The development of the effectuation logic has been accelerated in recent years, but still, the bulk of the research focuses on small entrepreneurial firms rather than towards the application of the theory on larger non-entrepreneurial firms. Furthermore, the effectuation theory would benefit from its evolution into the realm of psychology and sociology. The exponential growth of studies on effectuation during recent years i.e. 2017-2019 shows that researchers respond to the calls by leading authors that the effectuation theory is a field with a great potential for further theoretical developments. Conclusion, implications, limitations and future research avenues are discussed.