Small Firm Sector Research Articles

The The Influence of Microfinance Programmes on Women Owned SME Development in Mashonaland West Province of Zimbabwe

Women have benefited greatly from financial support from a variety of sources, including MFIs, in their active participation and involvement in the expansion of the economy and the creation of employment possibilities in the small and medium firm sector. The prosperity of society is largely attributed to Women Small and Medium Enterprises (SMEs) development, which is also linked to economic growth and development, bettering living conditions, generating new employment opportunities, and technical advancement. This study sought to establish the Influence of Microfinance products on women-owned SMEs development in Mashonaland west province of Zimbabwe. . A pragmatist paradigm research philosophy was adopted. A mixed research approach was used. A cross sectional survey research design a self-constructed structured questionnaire and an interview guide was used to collect data. The study targeted women SMEs who have been receiving Microfinance services in Mashonaland West Province of Zimbabwe. Three hundred and seventy seven women SMEs were exposed to the questionnaire and 30 were exposed to interviews. Descriptive statistics such as mean and standard deviation were used for data analysis. To test the research hypothesis the researcher used structural equation modelling in AMOS and data collected was presented in tables and figures. Cronbach’s alpha (α) was used to determine reliability after data collection and the researcher tested for discriminant validity by comparing average variances extracted (AVE) against squared inter construct correlations. The study found out that the women SMEs are aware of the Microfinance products and services and are using some of the products. It was also found that there is a positive relationship between Microfinance products and women-owned SMEs development. However MFIs are not offering non-financial products to women SMEs and also Microfinance institutions are putting more societal pressure on poor women by extorting money from them with excessive interest rates. . Also lack of collateral was another barrier which hinders women from accessing MFIs products. These findings add something new to the body of existing knowledge. The government is argued to intervene so that MFIs would charge reasonable rates and also MFIs to provide the appropriate products that helps women-owned SMEs to develop. Finally, it is suggested that similar research be conducted with MFIs management and employers as responders. This could result in fresh contributions to the study.

Labor productivity response of the micro-and-small-firm sector to business entries and exits

ABSTRACT This article investigates whether differences in business entry and exit rates explain differences in average, municipality-level labor productivity in the micro- and small-firm (MSF) sector. We focus on the case of Chile, exploiting an exogenous source of variation to exit rates—an exceptional event when the tax authority closed tens of thousands of ostensibly inactive firms in 2003—to instrument metrics of business dynamism in regression models of labor productivity. Pooled and panel instrumental variable (IV) estimations confirm that even the sector comprising the smallest firms in a less developed country can raise its productivity in the face of increased competition, knowledge inflows, and the release of resources.

African Labour Migration and the Small Firm Sector in Japan

African Labour Migration and the Small Firm Sector in Japan

Informality and structural change: evidences from microenterprises in India's unorganised manufacturing sector

PurposeThis article analyses the structural change in microenterprises located at India's unorganised manufacturing sector in terms of output mix, choice of technique and productivity during the last few decades.Design/methodology/approachBased on data collected from a quinquennial survey of unorganised firms, this study attempts productivity analysis by using the growth accounting technique.FindingsThe paper finds that there is a significant structural change which has occurred in the small firm sector in Indian manufacturing. The share of capital-intensive industries has increased substantially in recent years. Further, though small firms are more labour intensive, the labour productivity and total productivity of these firms are very low. The falling labour productivity and rising capital intensity indicates replacement of labour with capital in Indian small firm sector.Practical implicationsLow productivity of the sector is a cause for concern and this needs to be addressed by making the sector more competitive in the world market. To achieve this, policies should be designed so that small firms reach the efficient scale of production.Originality/valueThis is the first paper which examines structural changes in the Indian MSME sector. The findings have strong implications for creation of a viable ecosystem of entrepreneurship in the country.

Exploring the role of goal setting and external accountability mechanisms in embedding strategic learning plans in small firms

PurposeThis paper explores the role of goal setting and external accountability mechanisms in embedding strategic learning plans in small firms. The research question asks, how are strategic learning plans embedded in small firms?Design/methodology/approachInsights from in-depth action research carried out with three small firm owner-managers (OMs) inform the study.FindingsFindings present valuable insights into how small firms learn strategically, and the link between OM goal setting and external accountability mechanisms in pursuit of embedded learning. A framework for embedding strategic learning plans in small firms is presented.Research limitations/implicationsThis study offers a contribution to knowledge in the areas of small firm learning, strategic planning and social learning theory. While the sample size is small, data and case protocols are in place which allow for replication of the study. As the research is embedded in social learning theory, alternative theoretical frameworks may shed a different light on the research question.Practical implicationsThe study may be of interest to practitioners working in the design, development, delivery and evaluation of learning interventions for small service firms. Given the importance of the small firm sector to the global economy, the research may also be of interest to government agencies, who strive to protect the survival and growth of small firms generally and who set aside resource amounts each year to fund training programmes for small firm OMs.Originality/valueThe research contributes to the body of existing knowledge in the small firm setting concerning social learning theory and small firm learning strategies. It has identified a link between OM goal setting and external accountability mechanisms in pursuit of sustainable organisational learning in small firms and offers a framework for embedding strategic learning plans in small firms. The study answers calls for a more robust framework to advance understanding of how OMs learn and whether that learning is consequently embedded in the organisation. The proposed framework can be used as a guideline for support organisations in assisting small firms in reaching their learning potential. It can also be used by small firms in the attainment of strategy learning capability.

Exploring the role of goal setting and external accountability mechanisms in embedding strategic learning plans in small firms

PurposeThis paper explores the role of goal setting and external accountability mechanisms in embedding strategic learning plans in small firms. The research question asks, does an external learning intervention influence how strategic learning plans are embedded in small firms?Design/methodology/approachInsights from in-depth action research carried out with three small firm owner-managers (OMs) inform the study.FindingsFindings present valuable insights into how small firms learn strategically, and the link between OM goal setting and external accountability mechanisms in pursuit of embedded learning. A framework for embedding strategic learning plans in small firms is presented.Research limitations/implicationsThis study offers a contribution to knowledge in the areas of small firm learning, strategic planning and social learning theory. While the sample size is small, data and case protocols are in place which allow for replication of the study. As the research is embedded in social learning theory, alternative theoretical frameworks may shed a different light on the research question.Practical implicationsThe study will be of interest to practitioners working in the design, development, delivery and evaluation of learning interventions for small service firms. Given the importance of the small firm sector to the global economy, the research may also be of interest to government agencies, who strive to protect the survival and growth of small firms generally and who set aside resource amounts each year to fund training programmes for small firm OMs.Originality/valueThe research contributes to the body of existing knowledge in the small firm setting concerning social learning theory and small firm learning strategies. It has identified a link between OM goal setting and external accountability mechanisms in pursuit of sustainable organisational learning in small firms and offers a framework for embedding strategic learning plans in small firms. The study answers calls for a more robust framework to advance understanding of how OMs learn and whether that learning is consequently embedded in the organisation. The proposed framework can be used as a guideline for support organisations in assisting small firms in reaching their learning potential. It can also be used by small firms in the attainment of strategy learning capability.

Small Firms, Institutions and Interactions: Low-Technology Innovations from the Perspective of Critical Realism

Sectors or industries characterized by limited or no use of technology to innovate are called lowtechnology (LT) sectors. They are usually dominated by small firms. Identifying a dearth of academicand practitioner work, this paper helps explain how institutions within a small-firm sector and interactions of these firms with institutions influence the occurrence or non-occurrence of LT innovation. Marble sector firms primarily located in north-west Pakistan have been selected for this purpose. Advocating the need for critical realism that has been an often ignored paradigm in management research, this paper offers a unique perspective on the paradigm's fundamental tenets which are events, objects, mechanisms and causal powers through an extensive and robustqualitative analysis using case study methodology. Findings reveal strong normative and cognitive institutions but weak regulative institutions with varying levels of consistencies or otherwise in terms of small firms' interactions with these institutions. Interestingly, cognitive institutions emerge as the main barrier to LT innovation which is a key contribution of this paper along with a hard tofind critical realist perspective. Keywords: Low-technology innovation, LT innovation, institutions, interactions, critical realism

Co-operation and competition in production and exchange: the “district” form of industrial organization and development

This paper considers the role of co-operation and competition in production and exchange—and the “district” form of industrial organization and development. It examines Alfred Marshall’s theory of industrial districts—localized groups of small firms and their suppliers that were at the heart of Britain’s industrial development. However, with the emergence and growth of very large and successful vertically integrated firms—and as the conventional wisdom evolved to view large size as the next stage in industrial evolution—the small firm sector was progressively marginalized. In this process, Marshall’s dynamic and evolutionary approach to industrial organization was abandoned. However, the discovery of competitively successful agglomerations of small firms in Italy during the 1960s served as the motivation for construction of a new theory of the “Marshallian” industrial district, pioneered by Giacomo Becattini and Sebastiano Brusco. The success of these modern industrial districts in securing inter-firm co-operation and channelling their joint efforts towards quality upgrading and product and process innovation, at a time when large firms and the “Fordist” mass production model were generally in decline, brought them to the attention of the international research and policy community. Since then, the literature on this form of industrial organization has proliferated; and Marshall’s methodology and theory has proven remarkably resilient in explaining the dynamic, non-equilibrium processes involved in their development, evolution and performance over time.

Perspectives on the Potential for Social Media to Improve Communication in Small Business–Bank Relationships

Relationships with the small business sector have traditionally been largely neglected by banking institutions. However, as a result of recent turmoil in the world's economy and the ongoing impact of the recession, banks find themselves in a quandary about how best to support those within the small firm sector in times of tight credit. With increasing regulation, market fragmentation and increased competition, banks face real challenges to improve communication and establish profitable and long-term relationships with their small firm clients. Through conceptual modelling and empirical research, this paper explores the small business– bank relationship and examines the extent to which social media may facilitate more effective communication in that relationship. A qualitative research methodology uncovers perceptions of both senior bank executives and small firm owner-managers with respect to the perceived value social media can bring to communication within the small firm–bank relationship. The findings indicate that bankers saw little merit in any communication opportunities afforded by social media, while the owner-managers could see great value in such new media channels for improved communication. Through theoretical modelling, the differences in perception were classified at the levels of context, content and competency. It is concluded that, while social media could add value to the small firm–bank relationship, the medium would be most effective when used in a secondary capacity to personal face-to-face relationship building.

Labor reallocation and firm growth: benchmarking transition countries against mature market economies

Abstract This paper uses firm-level survey data to study labor reallocation and firm growth in the transition countries over 1996–2005, including benchmarking against developed market economies. The data shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in comparable surveys of developed market economies. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies. We also find evidence of Kuznet-Chenery type structural change across sectors. JEL codes L11, O12, P31.

Does banking development matter for new firm creation in the informal sector? Evidence from India

There is little evidence on the effect of banking development on firm creation in the small firm sector. This paper examines whether differences in banking sector penetration across Indian districts explain the differences in firm start-ups in Indian informal sector. Our empirical strategy lies in examining the effect of the spread of banking facilities at the district level on new firm formation in the informal sector for the period 1994–1995 to 2010–2011. Our results confirm that local bank availability is associated with significant increase in enterprises in the informal sector and the effect is more pronounced for larger enterprises in the sector.

Building institutional capacity: from pervasive individualism to sustained coordination in small firm sectors

The small-business sector faces a persistent dilemma: small firms often lack the human skills and financial resources to modernize and compete. How, then, can small firms overcome collective action problems to forge sector-wide modernization? This paper examines the political dynamics and the process of institutional change that underpin successful industrial upgrading through a comparative, longitudinal analysis of two policy experiments aiming at the modernization of small firm sectors in Portugal. Relying on comparative-historical analysis and process tracing, this study shows that successful industrial upgrading relies on intense and sustained political action, led by strong and stable interest leadership, in the pursuit of well-defined developmental benchmarks, and relying on the implementation of political, organizational and financial strategy according to a specific logic and sequence.

Banking support for entrepreneurial new venturers

PurposeIn light of the current global economic turmoil and ongoing recessionary pressures, the purpose of this paper is to examine the relationship between banks and those seeking to launch and develop entrepreneurial small businesses. The authors aim to explore how the quality of that relationship can impact the level of financial support for start‐up and early‐stage business ventures.Design/methodology/approachCurrently economic confidence is at a generational low, the financial services sector is in turmoil and relationships and understanding between the banks and the small business sector have become increasingly toxic. On top of this, the nature of relationships between banks and entrepreneurial new venturers are seen to be persistently determined by the interests of banks. This research seeks to provide new insights to how these relationships have and might yet evolve. In light of the exploratory nature of the research, a qualitative research methodology was considered appropriate.FindingsA number of issues were identified that indicate that the relationship between small firms and their banks appears to be very damaged. Of concern to banks was the general antipathy with which they were viewed by the entrepreneurs in the study where the pervasive view was one of general hopelessness and lack of trust and confidence. Participants viewed banks as insensitive and lacking in any empathy around their circumstances as small firms in stressful economic conditions.Research limitations/implicationsGiven the qualitative nature of this research, based on a small sample of participants it is not intended to be generalizable to a wider population. A number of valuable insights emerge from the research around management challenges that exist at the micro relationship level between banker and entrepreneur. The need for meaningful relationship management by banks with small business clients based on a longer‐term perspective, empathetic and specialist knowledge and informed advice emerged as issues within this research, as did the relationship benefit of having greater stability in local branch staffing levels.Practical implicationsThe research suggests that there are consequences where localised decision making has been largely removed from UK banks' retail branch networks and managers appeared to be disempowered from making local judgments on the financing needs of small firm customers. However, such an environment can create an opportunity for bank managers to choose to engage with small firm clients in a more personal way. Limiting this potential however is the recognition that such an engagement would demand significant disaggregation in banking services, with all the targeted resource implications that would imply.Originality/valueRecent studies have highlighted the need for further research into how banks might provide better support to those within the small firm sector in times of tight credit, particularly given the current turmoil in the world's economy and the on‐going impact of the ensuing recession. This research provides a number of new insights to the challenges facing local bank managers in developing and maintaining positive relationships between themselves and entrepreneurial new venturers.

Patterns of Integration: Low Educated People and Their Jobs in Norway, Italy and Hungary

The paper looks at how the distribution of jobs by complexity and firms' willingness to hire low educated labor for jobs of different complexity contribute to unskilled employment in Norway, Italy and Hungary. In search of how unqualified workers can attend complex jobs, it compares their involvement in various forms of post-school skills formation. The countries are also compared by the weight of small firms, which are assumed to assist low skilled workers through interpersonal relationships.The data suggest that unskilled employment in Norway benefits from synergies between work in skill-intensive jobs, intense adult training, informal learning and involvement in civil activities. In Italy, workplaces requiring no literacy skills at all have the largest contribution but small businesses tend to employ low educated workers at a large scale even in highly complex jobs. In Hungary, insufficient skills (relative to Norway) and an undersized small-firm sector (relative to Italy) set limits to the inclusion of the low educated. An extreme degree of social isolation is likely to deteriorate their skills and jobs prospects further.

Analysing, pursuing and networking: Towards a validated three-factor framework for entrepreneurial competence from a small firm perspective

Moving beyond general personal traits as predictors for success, a growing volume of research acknowledges that entrepreneurial core processes are enabled by specific competencies which can be learned, further refined and developed. The research objective of this article is to develop a framework for entrepreneurial competence in a well-defined small firm sector by elaborating and empirically validating an existing categorization of entrepreneurial competence. The dataset includes 348 small firm owner-managers who participated in an educational programme, established to pursue new business opportunities in the Dutch agri-food sector. Exploratory factor analysis and confirmatory factor analysis revealed that three domains constitute the heart of entrepreneurial competence in this small firm context: ‘analysing’, ‘pursuing’ and ‘networking’. These three competence domains provide professionals active in sector development, small business support and (vocational) education with an empirically valid framework of clearly discernible elements of entrepreneurial competence. This framework also encompasses insights on education and learning.

Understanding ICT adoption in the small firm sector in Southern Africa

PurposeThis paper aims to examine information and communications technology (ICT) adoption among small hotel businesses in South Africa, Botswana and Zimbabwe.Design/methodology/approachThis qualitative research is based on seven case studies that fall within the South African and European Union small and medium enterprises (SMEs) definitions. The case studies are constructed on the basis of 60 semi‐structured interviews and supporting secondary data. The authors adopt the Gibbs et al. model which identifies and brings together ICT adoption factors that include government role, environmental attributes, owner/manager attributes, organisational attributes and social networks. Archer's epistemological bootstrapping technique is applied for analysing the data. In addition, Zappala and Gray's stage model is used to gauge the level of ICT uptake reached by each case study. In this way, the authors incorporate an important additional element for examining ICT adoption.FindingsApart from providing rich insights into the ICT adoption process, the results highlight the individual distinctive behavioural characteristics as well as the stage of ICT adoption reached by each case study. The paper finds that case studies that operated in a stable business environment; with organisational readiness; financial and owner manager support seemed readily engaged in ICT adoption. Social networks played a crucial role, especially among those small businesses with resource constraints.Research limitations/implicationsThe findings from seven individual cases in the three South African Development Community (SADC) countries have limited cross‐case and cross‐national comparisons owing to the distinctive organisational characteristics of the SMEs. Furthermore, the selection of case studies from a single sector of small hotel businesses results in data which only reflect the experiences of SMEs in typical urban locations of Johannesburg, Gaborone and Harare. The implications of these limitations mean that further data are needed from other small firm sectors and more SADC countries in order to gain a better understanding of ICT adoption among SMEs in the region.Originality/valueThe findings contribute to the literature on ICT adoption among SMEs in South Africa, Botswana and Zimbabwe. The results bring new insights from small hotel businesses and help to explain ICT adoption, which is relatively under‐researched in these SADC countries.

Convergence in Institutions and Market Outcomes: Cross-Country and Time-Series Evidence from the Beeps Surveys in Transition Economies

This paper uses firm-level data from the Business Environment and Enterprise Performance Surveys (BEEPS) to study the process of convergence of transition countries with developed market economies. The primary focus of the study is on competition and market structure, finance and the structure of lending to firms, and how firms respond to the economic environment by restructuring; we are able to do this because the BEEPS cover thousands of firms from virtually all transition countries over a long time period (1996-99 through 2002-05), as well firms from developed market economies, thus providing a set of natural benchmarks. We find substantial evidence of convergence of transition countries with developed market economies in a number of dimensions. The pattern of growth at the country, sectoral and firm level shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in the BEEPS surveys of developed market economies. Our interpretation of the evidence on competition is that there is an initial move by firms into niches to exploit local market power, and later in transition entry and domestic competitive pressure increases. In finance, the increasing reliance on retained earnings in transition countries reflects a maturation of the sector as new firms come to rely less on informal and family sources of finance. The scale of restructuring and innovation activity is as high or higher in transition economies as in developed market economies. Interestingly, we find evidence of an inverse-U shape pattern, with the peak of restructuring activity taking place in 2002, the middle of the period analyzed. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies.

An exploration of small firm psychological contracts

It is argued here that more sophisticated frameworks of analysis than currently exist are required to support deeper understanding of small firm employment relationships. A psychological contract framework is adopted, presenting data on three small firm case studies and contrasting this with existing perspectives on small firm employment relationships. The degree of heterogeneity demonstrated in employment relationships in the small firm sector leads to the argument that a single typology of `small firm' employment relationships is not possible. While small firms may differ in nature to large firms, there is a range of forces in so heterogeneous a sector that go to create employment relationships and a narrow framework, especially one predicated upon notions of size, will not adequately reflect the complexities of the relationships under consideration. A broader, less deterministic, framework such as the psychological contract supports the development of more nuanced understandings of small firm employment relationships.

Convergence in Institutions and Market Outcomes: Cross-Country and Time-Series Evidence from the BEEPS Surveys in Transition Economies

This paper uses the BEEPS firm-level data to study the process of convergence of transition countries with developed market economies. The primary focus of the study is on competition and market structure, finance and the structure of lending to firms, and how firms respond to the economic environment by restructuring; we are able to do this because the BEEPS cover thousands of firms from virtually all transition countries over a long time period (1996-99 through 2002-05), as well firms from developed market economies, thus providing a set of natural benchmarks. We find substantial evidence of convergence of transition countries with developed market economies in a number of dimensions. The pattern of growth at the country, sectoral and firm level shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in the BEEPS surveys of developed market economies. Our interpretation of the evidence on competition is that there is an initial move by firms into niches to exploit local market power, and later in transition entry and domestic competitive pressure increases. In finance, the increasing reliance on retained earnings in transition countries reflects a maturation of the sector as new firms come to rely less on informal and family sources of finance. The scale of restructuring and innovation activity is as high or higher in transition economies as in developed market economies. Interestingly, we find evidence of an inverse-U shape pattern, with the peak of restructuring activity taking place in 2002, the middle of the period analyzed. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies.

Entrepreneurship education

PurposeThe focus of this paper is to highlight the synergies and mutual benefits associated with a range of entrepreneurship education initiatives for a combination of internal and external stakeholders.Design/methodology/approachThe paper provides a description of four entrepreneurship education initiatives in operation at the University of Limerick, Ireland. Detail on the objectives of the initiatives, the content, delivery, assessment and benefits of these initiatives is provided.FindingsEntrepreneurship and enterprising activity are widely regarded as instrumental for economic growth, for balanced regional development and for the creation of jobs. Educational institutions need to ensure that graduates are capable of acting in an enterprising manner in the workplace either as an entrepreneur or as an intrapreneur in paid employment. This double objective can materialise through the provision of entrepreneurship education, within either a business or a technical course. Additionally, these same programmes can also be an effective mechanism for the provision of targeted training programmes for skills enhancement in the owner/manager and the creation and facilitation of linkages and working relationships with the small business community. Involvement in technology transfer and industry‐based research activities also provides benefits to the small firm.Practical implicationsThe paper presents challenges for educators and educational institutions on how they perceive and address the needs of their stakeholders by extending the traditional paradigm of what constitutes the role of an educational institution. The need to engage with external stakeholders in programme design and delivery requires commitment by educational institutions and requires educators to change their knowledge and teaching perspective. The findings have implications on how entrepreneurship education initiatives are designed, delivered and assessed to meet the needs of different stakeholders.Originality/valueThis paper and its conclusions add to the debate on the importance of linking educational institutions and industry, especially the small firm sector, by suggesting a number of methods of collaboration which mutually benefit a number of stakeholders.