Job Creation and Job Destruction by Small Firms: An Empirical Investigation for the Dutch Manufacturing Sector

This paper studies the differences in behaviour of small and large firms, concerning job creation and job destruction, in the Dutch manufacturing sector over the period 1978–1991. We find that both job creation and job destruction rates are higher in small firms than in large ones. In addition, we found that the persistence of jobs created in slumps are much higher for small firms than for large firms. Persistence rates of job destruction are, however, less connected to the state of the business cycle and increase with firm size. More importantly, small firms seem to reallocate their jobs in a continuous way, as job turnover moves independent of the business cycle. Large firms, on the other hand, reallocate counter-cyclically. An obvious explanation for this phenomenon is that small firms are better equipped to adjust to shifts in economic circumstances. Large firms adjust only slowly and for them reallocating jobs in a recession is more advantageous than in a boom.     

Mixed Motives and Ethical Decisions in Business

Discerning the motives that lead businesspeople to make ethical decisions in economic contexts is important, for it aids the moral evaluation of such decisions. But conventional economic theory has for too long assumed an egoist model of motivation, to which many contrast an altruist view of ethical choices. The result is to see business decision making as implying dilemmas. On the other hand, we argue, if one assumes multiple motives, economic and ethical, in ordinary business decisions, a more fruitful model of ethical motivation in such decisions emerges. In this paper multiple motives are assumed to be the norm in a world of large organizations, complex decisions and stakeholder management. An example of a technology acquisition decision, with environmental overtones is presented in illustration of this approach. A method for discerning motives, primarily in terms of behavioural efficacy is presented. On this basis a two step approach to morally evaluating mixed motives in business decisions is proposed. First, the fit of motives with substantive ethical values should be ascertained, and then the efficacy of moral motives in yielding ethical behaviour and outcomes should be determined. This approach, we conclude, offers a much more concrete model of the actual role of moral motives in business decision making. It also signals the importance of moral learning in organizations.     

Small business growth through geographic expansion: A comparative case study

Although the small business sector as a whole is achieving phenomenal growth, an important concern in the field has been identifying the problems, challenges, and success characteristics associated with the prudent growth of individual firms. A strategy utilized by many small firms to achieve their growth objectives is one of geographic expansion. This approach involves expanding a firm’s business from its original location to one or more additional geographic sites, and is particularly well suited for firms that cannot expand in their present location but believe that their products or services may be appealing to consumers in other markets.Surprisingly, despite the prevalence of geographic expansion as a means of small firm growth, this is a neglected area of small business research. Although researchers have examined the common challenges associated with small firm growth, a small business that expands from one location to several locations is subject to a number of potentially unique challenges. For example, during the course of opening a new geographic site, a small business manager will be confronted with the task of managing an existing business and a start-up at the same time. The challenge created by this undertaking, along with the other challenges associated with geographic expansion, have not been specifically identified. An improved understanding of these challenges may help small firm managers maximize their changes of leading successful expansion efforts.As a result of the lack of research in this area, this study used a comparative case study methodology to develop a theoretical model of the antecedents of effective small business geographic expansion. The model was developed in two steps. First, a preliminary model of the antecedents of effective small business geographic expansion was developed from the existing small business growth literature. Second, using analytic induction, the preliminary model was compared with the experiences of five small businesses that have engaged in a growth strategy of geographic expansion for the purpose of developing a more thorough and more valid theoretical model. A unique attribute of the sample is that not all of the businesses have been successful in their expansion efforts. Two of the five small businesses included in the study have had failed expansions, providing us the rare opportunity to contrast failed expansion efforts against successful ones.The model that emerged from this approach supports the notion that geographic expansion involves a unique set of managerial challenges. The consistent evidence across the five case studies indicated that effective small business geographic expansion involves the following six major areas of concern: planning for growth, managing growth, reasons for growth, expansion site characteristics, a set of moderator variables, and expansion performance.Among the implications of the study is that the unique nature of the geographic expansion process adds a layer of complexity to firm growth that exacerbates the need for planning. Along with the normal challenges involved with adding structure to accommodate growth, a firm that engages in geographic expansion must do this in an unfamiliar location, where the market potential and legitimacy of the firm’s business concept is untested. The consistent evidence that emerged from the cases is that planning helps attenuate these challenges. In addition, the recruitment and selection of qualified personnel to staff expansion sites is a critical activity, along with networking in the expansion site locations to establish organizational legitimacy. Three variables were found to moderate the relationship between managing growth and expansion performance. Learning and flexibility were found to have a positive influence on the managing growth expansion performance relationship, whereas environmental turbulence was found to have the opposite impact. Finally, a complex set of relationships emerged from the study pertaining to expansion site characteristics. For instance, the evidence generated across the cases suggested that planning helps a firm develop a set of heuristics for expansion site selection, which helps a firm avoid placing a site in an undesirable location.     

Smoking in public: A moral imperative for the most toxic of environmental wastes

Cigarette smoke is the most dangerous of the toxic elements in our environment. Smoking is responsible for almost 500 000 deaths each year in the United States — more than any other environmental toxin. The medical evidence is clear, mainstream and sidestream smoke kills people, and anyone who participates in the spreading of this smoke is acting unethically. Yet, when there are no governmental laws that ban smoking in public, most business-people allow smoking in their places of business. These businesspeople are acting in an unethical manner, a manner which endangers customers and employees. This paper examines the impact on the environment of smoking in public and concludes that businesses must move quickly to ban smoking, or we will need nationwide, uniform legal restrictions to force ethical action in this critical area.Dr. David M. Ludington is the Senior Professor of Business Administration at Culver-Stockton College in Missouri. Before teaching, he held management positions at the National Bank of Detroit and The University of Michigan. He was also a partner in a management consulting firm. He has published a number of articles in the areas of business ethics, strategic marketing and strategic management. He is currently finishing a book on business ethics. He also assists companies in developing an ethical orientation.     

A Meta-Analysis of Research on Information Technology Implementation in Small Business

The small business sector is one of the fastest growing sectors of the economy. The firms in this sector are becoming increasingly dependent on information systems (IS) for their operations. Traditional research in IS has primarily focused on large corporations. The problems, opportunities, and management issues encountered by small business in the IS area are unique, and research is too limited to provide useful guidelines. This study compares the research literature on IS implementation and research on IS in small business, examines the commonality and differences, and identifies research gaps. An overall research framework is developed to review the research in the two areas and determine areas of opportunity. As a follow-up of this analysis, a research model is developed to explore the factors influencing the adoption of computer-mediated communication technologies in small business. The model incorporates some of the innovation factors that are identified as potential gaps in the earlier analysis. The research model evaluates the impact of 6 factors-perceived usefulness, cost, compatibility, top management support, competitive advantage, and size-on the adoption of computer-mediated communications technologies. A telephone interview was used to collect data from 207 firms. The results of data analysis reveal that competitive advantage, top management support, and size are important determinants of adoption of computer-mediated communication technologies.     

The Competitive Characteristics of U.S Manufacturers in the Machine Tool Industry

This paper examines the competitive characteristics of U.S. manufacturers in the machine tool (MT) industry. After several decades of decline, this industry has recently shown signs of a modest but sustained recovery. Empirical evidence from a national survey of 104 MT producers suggests that the revival of this sector has been driven by a combination of factors, including renewed export involvement, improved customer support, and better product design. Although most MT companies are small-to-medium-sized enterprises (SMEs), the survey data show that very small SMEs are poorly represented in the recovery thrust of the industry as a whole. Our principal conclusion is that the MT industry has been following an export-led path toward stabilization, but that certain types of small producers are unlikely to thrive for very long. The most serious problems facing small producers include shrinking local markets, import competition, shortages of skilled labor, and cyclical demand.     

Corporate Governance and Corruption: Ethical Dilemmas of Asian Business Groups

This study looks at how the corporate governance of family-owned business groups, the most dominant form of private sector organising in Asia, deals with different forms of corruption during the course of common business transactions. As a part of an ethnographic study conducted in 2007 to look at the impact of corporate governance reforms in the Philippines, one of the emergent themes from the study was the presence of significant corruption in the business environment of the country. A total of 40 semi-structured interviews were conducted with board members from business groups and senior public sector officials supplemented by document analysis of media articles and other text and participant observation. Using Rose-Ackerman’s typology of petty and grand corruption, results show the dilemmas faced when trying to operate within the precepts of corporate governance whilst dealing with the practical reality of corruption in public sector institutions. The results of the study provide empirical evidence into corruption’s impact on Asian business groups and contribute to knowledge on the links between strong institutions and the efficacy of corporate governance.     

Financial intermingling in small family businesses

This study examines financial intermingling in small family businesses. We define a family business as one in which at least two family members work and the business is owned and managed by one of the family members. This study compares the determinants of intermingling in family and non-family businesses. The empirical results show that family businesses are not significantly different from non-family businesses in terms of intermingling once other business and household characteristics are controlled for. For both family and non-family businesses, differences in financial intermingling are primarily characterized by differences in business characteristics and household net worth. We conclude that intermingling of household and business financial resources are probably more influenced by business characteristics and household net worth than by other household characteristics or whether a business is a family business.     

Businesspeople: Academics need your help to make business research relevant

In the last two decades, industry-university collaborations (IUCs) in research and development in the hard sciences have become increasingly more successful and common. In contrast, successful IUCs in softer social sciences, such as business, remain relatively uncommon. But business research requires an even higher degree of collaboration than research in the hard sciences if its results are to be relevant to businesspeople. Fortunately, business academics are becoming more and more interested in collaborating with businesspeople. The purpose of this article is to motivate businesspeople to collaborate as well. We do this by showing the businessperson the historical origins of business research’s irrelevance, by describing the benefits the business world could receive from collaborative research, by showing why collaboration is especially needed in social sciences such as business, and by showing why academics cannot do relevant business research without practitioners’ help. Specifically, we will show that the businessperson’s help is needed to ensure that their priorities are met, to formulate the right research questions, to provide relevant data, and to contribute their problem-solving inventiveness.     

Were Small Producers the Engines of Growth in the Canadian Manufacturing Sector in the 1980s?

Small firms are often seen to be the engines of growth. There are two main sources of empirical evidence that are adduced to support this conclusion. The first is that job creation has been coming mainly from small firms. The second is that the share of employment accounted for by small firms has increased in the past two decades. Both of these sources rely on a simple metric-employment. This paper asks whether changes in this metric affect the view of the role that small firms play in the growth process.The first section of the paper maintains employment as the measure that is used to evaluate the importance of small firms but modifies the raw measure of employment to correct for the fact that small firms pay lower wages than large firms. When this is done, small producers are no longer found to outperform large producers in terms of job creation over the 1970s and 1980s in the Canadian manufacturing sector.The second section of the paper changes the metric used to evaluate relative performance by moving from employment to output and labour productivity. The paper demonstrates that while small producers have increased their employment share dramatically, they have barely changed their output share. Small firms have been falling behind large firms both with respect to wages paid and labour productivity.     

Networks and business development: Convict businesspeople in Australia, 1817–24

This article uses social network analysis to examine accounting records in order to establish and analyse business relationships. It applies this methodology to accounting transactions recorded at Australia's first bank, the Bank of New South Wales (BNSW) in order to establish whether a business network existed among ex-convict businesspeople in Sydney during 1817–24. Uncertainty regarding distance from suppliers and credit facilities, lack of markets and business connections plus the social stigma of ‘convictism’ meant that it was difficult but not impossible for ex-convicts to establish businesses. The network among BNSW shareholders and depositors served the purpose of pooling of resources and information and alleviating uncertainty.     

New international business perspectives on Pakistan

What image comes to mind when one thinks of Pakistan? Prior to the attacks of September 11, 2001, and the subsequent invasion of Afghanistan, many businesspeople had little information about this ancient land. Recently, Pakistan has come to the world's attention as a powerful ally in the U.S.‐led war against terrorism. Situated at the crossroads of the Middle East, Southeast Asia, China, and member nations of the former Soviet Union, Pakistan has long been a leading player in regional political and economic activity. This article presents some new perspectives on Pakistan as a market worthy of a closer look. We survey Pakistan's history and geography, as well as its sociocultural, political‐legal, economic, and competitive environments with a view to identifying new opportunities for foreign investors and global marketers. Current business trends and marketing opportunities are discussed, concluding with an outlook for future growth and development. Valuable insights are offered to businesspeople interested in doing business in Pakistan, a little‐studied but vitally important newly industrializing country (NIC) and big emerging market (BEM). © 2004 Wiley Periodicals, Inc.     

The Significance of Customer Base in the New Economy: Satisfaction and Perceptions of Success among Small Suppliers and Small Nonsuppliers1

Outsourcing of operations from large businesses to small business suppliers has become a prominent feature of the new global economy. This paper compares the perceived success and work satisfaction of small businesses that supply goods and services to other businesses compared with other small businesses. Small business suppliers and their customers may be engaged in a mutually beneficial relationship, or small suppliers may be disadvantaged as a result of the relationship. Using data from interviews with 715 small business operators, partial support was provided for the disadvantaged position. Suppliers had lower perceived business success compared with other small businesses when other variables were controlled. However, there was no difference in job satisfaction.     

The Fourth Pillar? An assessment of the Situation of the Finnish Biotechnology

The success in constructing a flourishing information and telecommunication cluster has encouraged Finland to seek equal possibilities in other knowledge-intensive industrial branches. Presently, biotechnology is seen as an auspicious business area. Like in other parts of Europe, Finnish biotechnology concentrates mainly on pharmaceutical industries. More than 70 percent of the human resources of Finnish biotechnology industries is settled in this industrial branch.Despite large investments and financing, modern biotechnology industries are still a marginal industrial branch in the Finnish economy. Its turnover in 1999 was only one percent of the total GNP. The wide spectrum of Finnish higher education and the close relations of co-operation between universities and industries can open up promising prospects. Finland's technology-affirmative attitudinal climate works in the same direction. This progress can be delayed by a lack of highly skilled human resources, which is already a problem in the IT sector. The small size and minor experience in global markets have also limited the success of the Finnish firms.     

Small Firms and Economic Transformation in Bulgaria

The pace of transition to a market economy has been slower in Bulgaria than in some other east European countries in the 1990s. Output levels in the state owned sector, which has not yet been subject to mass privatisation, have fallen sharply and there has been a dramatic increase in unemployment. There has however also been a rapid growth in the number of small firms, and the ability of this sector to generate new jobs will be an important component of labour market dynamics in the future. Some of the main characteristics of this emergent sector are identified on the basis of a sample survey of nearly 400 small Bulgarian firms, covering competitiveness, entrepreneurship, innovation, networking, labour relations and business performance of the small firms. Key features of a subset of small firms with an orientation towards employment growth are identified.     

Towards an Understanding of Ethical Behaviour in Small Firms

Allthough small business accounts for over 90% of businesses in U.K. and indeed elsewhere, they remain the largely uncharted area of ethics. There has not been any research based on the perspective of small business owners, to define what echical delemmas they face and how, if at all, they resolve them. This paper explores ethics from the perspective of small business owner, using focus groups and reports on four clearly identifiable themes of ethical delemmas; entrepreneurial activity itself, conflicts of personal values with business needs, social responsibility and the impact of owners' personality on business ethics. The mechanisms for resolving ethical dilemmas is not at all clear, as there appears to be a web of filters which are used in an inter-connected way. However a common starting point for resolving an ethical delemma which involves others is based on identifying who it is (e.g., a friend or institution) and the quality of the relationship with that person. The research yielded a rich source of material on business ethics and it is clear that future researchers must focus on this sector if business ethics is to make significant advances.     

Does Bank Consolidation Hurt the Small Business Borrower?

The recent wave of mergers in the commercial banking sector in the United States has led to tremendous industry consolidation. Some fear that such consolidation will leave the small business borrower with fewer opportunities to obtain bank credit. This study uses regression analysis to empirically determine if consolidation has caused larger banks to abandon relationship loans extended to small businesses over time. If so, this leaves small business borrowers with two distinctly different choices, a low interest rate loan from a large bank for those small business borrowers who qualify or a high interest rate loan from a small bank for those who do not. The results of this study support this theory, and find consolidation has raised small business loan rates at small banks and lowered rates at large banks, ceteris paribus.     

Small Italian wine producers’ internationalization: The role of network relationships in the emergence of late starters

This paper aims to examine how network relationships influenced the internationalization of small Italian wine producers characterized as late starters. It is based on four cases. It shows that foreign tourists helped these firms to expand internationally: they identified business opportunities, suggested firms to contact importers, contacted importers themselves to get access to the same wine in their home country or provided foreign market knowledge. Thus, small wine producers should pay more attention to attracting tourists and creating network relationship with them. Several other network relationships ? for instance, with friends and relatives, Italian expatriates and other business partners ? also advanced the case firms’ internationalization. Moreover, they were affected by lack of time and resources, language barriers and other factors. Thus, all these aspects also need managers’ attention. Furthermore, they should take a more strategic approach towards internationalization and understand that not all internationalization attempts succeed or result in continuous orders.     

Strategies and Instruments for Organising CSR by Small and Large Businesses in the Netherlands

This paper analyses the use of strategies and instruments for organising ethics by small and large business in the Netherlands. We find that large firms mostly prefer an integrity strategy to foster ethical behaviour in the organisation, whereas small enterprises prefer a dialogue strategy. Both large and small firms make least use of a compliance strategy that focuses on controlling and sanctioning the ethical behaviour of workers. The size of the business is found to have a positive impact on the use of several instruments, like code of conduct, ISO certification, social reporting, social handbook and confidential person. Also being a subsidiary of a larger firm has a significant positive influence on the use of instruments. The most popular instrument used by small firms is to let one member of the board be answerable for ethical questions, which fits the informal culture of most small firms. With respect to sectorial differences, we find that firms in the metal manufacturing and construction sectors are more actively using formal instruments than firms in the financial service sector and retail sector. The distinction between family and non-family firms hardly affects the use of instruments.     

Plant Size,Nationality, and Ownership Change

This paper asks whether the motivations behind mergers manifest themselves in different ways across small versus large plants, and between foreign- and domestic-owned plants. The sample consists of all the manufacturing plants in Canada between 1973 and 1999 and is divided into size quartiles by industry and grouped into foreign- and domestic-owned producers. We find that characteristics that are postulated to be associated with the type of synergy upon which ownership changes rely are found to be important factors leading to plant ownership changes across most size classes. However, the importance of synergies increases across size classes in domestic plants. Foreign-owned plants are more likely to experience control changes than domestic plants across all size classes. These differences are closely related to the characteristics possessed by foreign plants that offer takeover synergies. There is also evidence of a managerial failure motive for mergers in the foreign sector that is not found in the domestic sector.