Small Firms Research Articles

Benefits and Practices of Social Media Marketing on Small-Medium Enterprises (SMES) in Subic Bay Metropolitan Authority

In the 21st century, e-commerce technology has garnered significant interest from researchers and management, driven by the internet’s rapid growth. This has enabled customers to personalize websites according to their preferences. This study aimed to identify the benefits that small and medium-sized enterprises (SMEs) can gain from using social media to interact with customers, focusing on social media marketing tactics and their advantages. It provided insights into the challenges faced by entrepreneurs in prominent urban areas within the Subic Bay Metropolitan Authority (SBMA) and the managerial requirements for ensuring consumer satisfaction. The study concentrated on six key areas: profiling SMEs based on specific elements, identifying primary social media platforms used by SMEs in Subic Bay, evaluating potential benefits for SMEs, assessing the extent of social media engagement by SMEs, gathering input on ethical standards in social media marketing, and developing “RJM 24-points Proposed Guidelines for Social Media Practices.” Employing a descriptive methodology, data were collected from 51 respondents via structured questionnaires and supplemented by random interviews with proprietors, IT personnel, and managers. Statistical techniques such as percentage, weighted mean, Likert scale, and ranking were used for data analysis. Key findings revealed that increased brand visibility and feedback were the most probable benefits, while accessibility and advertising were the most commonly used social media practices. Ethical practices emphasize maintaining honesty, transparency, and authenticity in marketing efforts. The study provided several recommendations for improving social media marketing approaches for SMEs. These included encouraging financial businesses to diversify their products or focus on niche markets, motivating entrepreneurs to start micro or small firms to leverage low entry barriers and market adaptability, and prioritizing support for early-stage companies to enhance their chances of long-term success and profitability. Keywords: Electronic Shopping, Small Medium Enterprises (SME’s), Social Media Marketing Practices, Special Economic Zones

Rethinking inter-firm dynamics from a small firm perspective: the case for inter-organizational bullying

PurposeThis paper aims to explain how the dynamics of inter-firm relations between small and large firms can, in the case of some behaviours, be interpreted as inter-organizational bullying.Design/methodology/approachThis paper draws on a qualitative approach adopting the critical incident method to explore the subjective experiences of 13 individual managers and owners of small service businesses in dealing with the representatives/executives of the large corporations they serviced. The method facilitated an investigation of the significant occurrences identified by the small-firm respondents about the undue advantage taken by the large firms. This was found to be more than simple occasional opportunistic or unfair business practices perpetrated by representatives of the large firms but, instead, involved bullying.FindingsThe results revealed that large corporations actively, though covertly, sought to take advantage of their small service providers by resorting to bullying practices. Intimidation, opportunism, use of deceitful or unfair business practices, as well as abuse of power, were manifestations of inter-organizational bullying committed by the large and powerful corporations. The contrasting characteristics of size, access to resources, economic and market power were identified as strong impediments against building effective ethical relational exchanges between the large corporations and their small service providers.Research limitations/implicationsThe study's findings provide valuable insights into the root causes and consequences of inter-organizational bullying. However, it is crucial to interpret these results in the context of this specific study. It is worth nothing that these findings primarily represent the self-perception of inter-organizational bullying among small service providers and may not capture other viewpoints or aspects of the industrial sector. Replicating this study in different sectors could enhance the generalizability of the conclusions drawn.Practical implicationsThis analysis is valuable in understanding what constitutes the phenomenon referred to as inter-organizational bullying. It also assists to understand the conditions when large firms exhibit such behaviours and their implications on the well-being of relevant stakeholders.Social implicationsFirstly, the business partners should maintain a healthy relationship if they want to avoid incidents of bullying, which can harm the performance of the relationship. In doing so, they need to reduce the level of uncertainty in their business relationships through the transparent information exchange, formulating commonly agreeable contracts and enhancing communication procedures. They also need to put aside their self-interest, but rather strive for achieving results that will be beneficial to both parties.Originality/valueThis exploratory study offers a novel and unexplored way of theorizing inter-organizational bullying, as well as uncovering its antecedents and impacts on the welfare of small businesses, particularly small service providers.

Women’s Leadership in Fintech: Cross-Country Evidence

Abstract This paper provides key insights into women’s representation in the fintech industry, and descriptively examines the association between female leadership and firm performance in this industry. Using novel data from fintech firms in over 80 countries, we find that women leaders in this industry remain scarce. Our analysis reveals that firms founded by women are associated with lower firm performance as measured by their estimated revenue and funding acquired, especially for small firms. On the other hand, there is a positive association between gender diversity in executive board and firm performance, especially for mid-to-large sized firms.

The challenge in managing working capital in an emerging economy: The case of Bangladesh

The paper seeks to determine whether management can offset an increase in the age of inventory with a reduction in the age of receivables, and which variable is more important in managing the overall cash conversion cycle. Using data from 2011 to 2020 on 77 non-financial companies listed on the Dhaka Stock Exchange, we applied the generalized method of moments regression with a specific goal of examining the impact of receivables and inventory on profitability. When limiting the total amount tied up in working capital is a goal, a legitimate question is whether a firm can limit the total amount tied up in receivables alone, with inventory alone, or net the total reduction. Both variables should have a similar financial cost of working capital. This paper strongly indicates that in managing working capital, the focus needs to be on receivables management. Losing control of receivables will impact profitability much more than managing inventory, and the option to balance an increase in the age of receivables through a decrease in inventory is generally not possible. The results also indicate that larger firms generally do a better job than smaller firms.

Small Business Empowerment Strategy in the Agricultural Sector Through Digital Entrepreneurship

This study looks at how digital entrepreneurship is being used by small enterprises in the agriculture industry to empower them. It focusses on how this is affecting market access, production efficiency, and bolstering competitiveness. The advent of digital transformation has presented small enterprises with novel prospects to surmount customary constraints, including restricted availability of markets, finance, and technology. This research employs a qualitative methodology and a case study approach to investigate how small agricultural firms might use digital technologies, like e-commerce platforms and the Internet of Things (IoT), to increase market access and productivity. In-depth interviews with small business owners, technology suppliers, and other stakeholders were used to gather data. Direct observation and document analysis were also used. The results of this study show that small enterprises' operational efficiency and revenue are greatly increased when digital entrepreneurship is implemented. Collaboration with a range of stakeholders, including the government and academic institutions, and sufficient digital literacy have shown to be crucial for the effective execution of this plan. This study also emphasises how crucial it is to create both domestic and global business networks in an effort to increase market penetration and boost the competitiveness of small enterprises in the agriculture industry. In order to increase the sustainability and competitiveness of small enterprises in the agriculture sector, this study makes recommendations based on its results for policy makers and industry participants to assist the widespread adoption of digital entrepreneurship.

Africa's Manufacturing Puzzle: Evidence from Tanzanian and Ethiopian Firms

Abstract Recent growth accelerations in Africa are characterized by declining shares of the labor force employed in agriculture, increasing labor productivity in agriculture, and declining labor productivity in modern sectors such as manufacturing. To shed light on this puzzle, this study disaggregates firms in the manufacturing sector by average size, using two newly created firm-level panels covering Tanzania (2008–2016) and Ethiopia (1996–2017). The analysis identifies a dichotomy between larger firms with superior productivity performance that do not expand employment and small firms that absorb employment but do not experience much productivity growth. Large, more productive firms use highly capital-intensive techniques, in line with global technology trends but significantly greater than what would be expected based on these countries’ income levels or relative factor endowments.

Utilizing the Internet of Things (IoT), Artificial Intelligence, Machine Learning, and Vehicle Telematics for Sustainable Growth in Small and Medium Firms (SMEs)

New technologies like the Internet of Things (IoT), artificial intelligence, machine learning, and vehicle telematics have tremendous potential to improve SMEs business processes, increase efficiency, and reduce costs to obtain a competitive advantage. However, the application of these technologies is also associated with certain difficulties for SMEs to adopt and incorporate them in their business processes due to limited resources, knowledge and funds. The advancement in technologies such as IoT and the digitization and datafication of physical infrastructure and processes are causing massive shifts across fields. While an increasing number of devices are being connected to the internet and are capturing large volumes of information about operations, users and the physical environment, new opportunities are arising to leverage that big data for better analytics and automation. The purpose of this paper is to assess how SMEs can apply IoT, AI, machine learning and vehicle telematics for sustainable development by enhancing business processes, data analysis, predictive maintenance and efficient supply chain and transportation.

Heterogeneity in the competition-cost of equity relation

We explore the effect of firm heterogeneity on the implied cost of equity. To this end, we exploit two opposing effects of competition on the cost of equity: its negative effect on a firm's exposure to systematic risk and its positive effect on a firm's agency costs when it acts as a managerial disciplining device. Using a U.S. sample comprising 4764 firms from 1986 to 2017, we find that, on average, competition reduces equity costs by diminishing managerial expropriation, but increases these costs for small and distressed firms as they are more exposed to systematic risk. This agency costs link holds in developed countries only.

Corporate financial distress prediction in a transition economy

AbstractForecasting financial distress of corporations is a difficult task in economies undergoing transition, as data are scarce and are highly imbalanced. This research tackles these difficulties by gathering reliable financial distress data in the context of a transition economy and employing the synthetic minority oversampling technique (SMOTE). The study employs seven different models, including linear discriminant analysis (LDA), logistic regression (LR), support vector machines (SVMs), neural networks (NNs), decision trees (DTs), random forests (RFs), and the Merton model, to predict financial distress among publicly traded companies in Vietnam between 2011 and 2021. The first six models use accounting‐based variables, while the Merton model utilizes market‐based variables. The findings indicate that while all models perform fairly well in predicting results for nondelisted firms, they perform somewhat poorly in predicting results for delisted firms in terms of various measures including balanced accuracy, Matthews correlation coefficient (MCC), precision, recall, and score. The study shows that the models that incorporate both Altman's and Ohlson's variables consistently outperform those that only use Altman's or Ohlson's variables in terms of balanced accuracy. Additionally, the study finds that NNs are generally the most effective models in terms of both balanced accuracy and MCC. The most important variable in Altman's variables as well as the combination of Altman's and Ohlson's variables is “reat” (retained earnings on total assets), whereas “ltat” (total liabilities on total assets) and “wcapat” (working capital on total assets) are the most important variables in Ohlson's variables. The study also reveals that in most cases, the models perform better in predicting results for big firms than for small firms and typically better than in good years than for bad years.

Business model redesign through effectual action in times of crisis

ABSTRACT This paper explores why and how some small firms rapidly redesign their business models, while others wait for environmental turbulence to subside. Using multiple case studies, we analyzed changes made to 28 business models by 26 Australian firms, two months after the first COVID lockdown. We discover effectual action patterns utilized as firms redesigned their business models. Three key findings shed light on how effectuation drive entrepreneurial action, first we uncover how framing and entrepreneurial reframing plays a critical role in the contingency effectuation principle. Second our findings show that resources at hand is a necessary, but not sufficient condition for business model redesign. Third partnering, experimentation and affordable loss in combination is most strongly related to small firm business model innovation. Our proposed effectual action framework contributes to the effectuation literature, addressing calls to examine the underlying mechanisms and dynamics that explain effectual action and business model redesign.

Risk tolerance towards research and development investment: the role of firm size and technology intensity

ABSTRACT This research examines how risk tolerance towards research and development (R&D) investment varies by firm size and technology intensity using a case study of four groups of manufacturing firms (i.e. large high-tech firms, small high-tech firms, large low-tech firms, and small low-tech firms) in South Korea. Our research contributes to the literature by offering the first empirical application quantifying different risk tolerances towards R&D investment of firms of varying sizes and technology intensities using total factor productivity and optimal portfolio frontiers. We find that the risk tolerance towards R&D investment is proportional to firm size, and high-tech firms tend to be more risk tolerant than low-tech firms given the same firm size. Furthermore, we find that large low-tech firms have a greater tolerance for risk than small high-tech firms when the present guaranteed return is lower, but risk tolerance is reversed as the current guaranteed return increases. These findings could be used to inform R&D project funding decisions in particular, our finding of higher risk tolerance of small high-tech firms with higher present guaranteed return suggests that government subsidies for R&D investment may function as the present guaranteed return for small high-tech businesses.

Achieving Optimal Business-IT Alignment in Small Firms: A Dynamic Perspective

This study uses Charmaz's (2006) constructivist grounded theory to examine how small enterprises dynamically connect IT adoption with business goals. To explore small company IT alignment practices, the research uses a qualitative approach to conduct in-depth interpretive interviews with 31 owner-managers. The study methodically analyses grounded data to find processes and concept interrelationships, examining contextual elements, actions, reactions, repercussions, and results. This analysis creates a new framework for business-IT alignment: adaptation, anticipation, synchronisation, and collaboration. Each state shows how small enterprises balance technological and commercial goals, presenting a detailed view of how they do so. This reactive alignment method allows small enterprises to adapt their IT plans to external changes or business needs. Anticipation is a proactive alignment strategy that positions organisations to strategically harness technological advances by anticipating future business and IT needs. Synchronisation occurs when IT and business strategy match in real time, harmonising IT systems and business operations. Collaboration involves deeper integration where IT and business goals are co-created through communication and cooperation. The study's methodology helps policymakers, researchers, and small firm owner-managers predict and analyse business-IT alignment behaviours. This methodology diagnoses alignment states and improves IT adoption strategies and business objectives-IT integration. These findings are important for IT-business alignment theories, especially in small enterprises with resource restrictions and unpredictable contexts.

Analysis of Project Success Factors and Project Success Criteria in Micro and Small Firms: Evidence from Slovenia

Analysis of Project Success Factors and Project Success Criteria in Micro and Small Firms: Evidence from Slovenia

The First Small Firm Effect: Early Career Experience and Employees’ Transition to Entrepreneurship

The First Small Firm Effect: Early Career Experience and Employees’ Transition to Entrepreneurship

Circumventing the Hurdles: How Small Firms Bypass Institutional Challenges in a Developing Economy

Circumventing the Hurdles: How Small Firms Bypass Institutional Challenges in a Developing Economy

Allocating labor across small firms: Experimental evidence on information constraints

We document interest in labor reallocation among small firm owners in Ghana; 60% and 41%, respectively, self-report willingness to hire or work for the average local firm owner. Firm owners also exhibit high willingness-to-pay for information on a random subset of hiring firms and jobseeking firm owners during a Becker–Degroot–Marschak exercise. Conditionally random variation in access to this information generates immediate labor adjustments within and between firms, though rarely of firm owners themselves, and impacts firm closure 5-months post-intervention. Our findings suggest that labor market information of this kind is both valuable and actionable in our context.

Measuring process innovation outputs and understanding their implications for firms and workers: Evidence from Pakistan

New processes significantly affect firms and workers; however, due to a lack of quantitative metrics, our understanding of the measures, determinants, and impacts of new processes remains limited. Drawing on unique data from Pakistan, we analyze five different metrics of process innovation output: cost reduction, defect rate reduction, reduction in production cycle time, increase in production capacity, and improvement in product quality. We find that the breadth and depth of innovative capabilities, level of competition, and availability of market sources of knowledge are important inducers of process innovation, and that smaller firms are more likely to introduce new processes and are better able to transform them into higher output. All five process innovation outputs are associated with higher labor productivity and sales expansion; however, there is considerable heterogeneity in the size of these impacts. We did not find that adopting new processes led to lower employment.

Firms’ digitalization during the COVID-19 pandemic: a tale of two stories

Abstract The COVID-19 pandemic accelerated the digital transformation of businesses. Using a unique global panel dataset, this paper documents the patterns of digital adoption during the pandemic across firms in 57 (mostly developing) countries. The data show the tale of two stories. On one hand, the pandemic drove firms to increase the use of digital platforms and invest in digital solutions. On the other hand, the digital divide increased across several dimensions. There remain substantial gaps between small and large firms as well as across sectors, particularly for new investments in digital solutions. Firms that did not use any digital platform or channel before the pandemic, also lagged in their response to the pandemic, increasing the gap with those that were more digitally ready. Moreover, although the share of online sales across firms for all size groups increased, there is a growing concentration of online sales among top firms. The paper analyzes some of the factors associated with this increase in the digital divide and discusses the policy implications addressing the widening digital divide and leveraging the benefits of rapid digitalization.

Analisis Implementasi Pembiayaan Kredit Usaha Rakyat (KUR) Syariah dalam Meningkatkan Pendapatan UMKM: Studi Kasus pada Pegadaian Cabang Mandala

This study employs a descriptive qualitative methodology, using field research. The objective of this research is to determine the impact of Pegadaian's involvement in enhancing the revenue of micro, small, and medium companies (UMKM) through the utilization of Shariah People's Enterprise Credit (KUR). This study employs interviews, observations, and documentation as methods for data collection. This research demonstrates the significant role of Kur Shariah Pegadaian in facilitating small and medium-sized companies (UMKM) in acquiring the necessary finance for company expansion and development. In addition, the Kur shariah pegadaian significantly boosts the profits or revenue of small and medium-sized firms (UMKM) to a far greater extent than previously.

Non-Big 6 audit firms’ access to external resources through inter-organisational relationships

Small audit firms try to reduce their resource constraints in serving clients by creating inter-organisational relationships (IORs) through membership in accounting networks or in agreements with individual firms. Through these relationships, firms have access to audit manuals/methodology, personnel, and may perform joint audits and joint marketing of their audit services. We identify the existence of IORs from PCAOB Form 2 filings and test whether audit quality and fees vary cross-sectionally as a function of the specific resource obtained from the IOR. We find evidence that firms with access to audit technology through IORs charge higher audit fees and provide higher quality audits, in terms of smaller clients’ performance-matched discretionary accruals, higher auditors’ likelihood of issuing going concern opinions to financially distressed clients, and fewer audit deficiencies identified in PCAOB inspection reports. The findings highlight the importance of access to audit technology through IORs in improving small audit firms’ real and perceived audit quality.