Business Survival and Success of Young Small Business Owners

Little empirical evidence provides insight in person-oriented drivers of business survival and success of small business owners. In this paper I perform a duration analysis of business survival amongst young white (self-employed) small business owners in the U.S. Compulsory exits are distinguished from voluntary exits. This enables an alternative definition of business success: the longer one can survive and prevent inLvoluntary exit, the more successful one is. Potential drivers of survival are derived from recent empirical evidence in related studies. The potential drivers of success are also derived from historical economic thinkers such as Marshall and Schumpeter. The estimated hazard rates are affected by characteristics of the small business owner and business conditions.     

The Response of Small Business Owners to Changes in Monetary Policy

The small business sector of the economy accounts for half of private gross domestic product and well over half of private sector employment. Little is known about how these firms and the banks that serve them are affected by changes in monetary policy. Using data from the monthly surveys of the members of the National Federation of Independent Business, the impact of unexpected (between meeting) Federal Reserve announcements on owner expectations and hiring and spending plans are examined. Using interviews filled out during the month, “before” and “after” groups are analyzed to assess the impact of Federal Reserve announcements on firm behavior. Narrowing the analysis period to just days before and after Federal Reserve announcements permits the assessment of owner responses uncontaminated by other events. Changes in owner expectations and spending and hiring plans are shown to be translated into subsequent changes in actual spending and hiring that are often the opposite of what is suggested by conventional economic theory. Firms that do not use debt respond in the same way as those regularly active in credit markets. The results provide additional insight and richness to our understanding of the transmission channels through which monetary policy impacts the real economy.     

Raising Response Rates in Mail Surveys of Small Business Owners: Results of an Experiment

Mail surveys of small business owners have notoriously low response rates, creating the potential for substantial error in surveys of this population and diminishing the credibility of research conducted on small firms. The author recently carried out an experiment as part of a larger project involving 16,000 small business owner/members of the National Federation of Independent Business (NFIB). The experiment's purpose was to ascertain survey treatments that might enhance mail survey response among small business owners. Results showed that none of the six treatments examined improved response rates enough to warrant its routine use over the alternative, nor did any combinations of treatments help. The implication is that commonly used treatments, for example prenotification, often are unproductive.     

Women Entrepreneurs: A Comparison of International Small Business Owners in Poland and the Czech Republic

Women entrepreneurs from two Central European countries with relatively new market economies were interviewed for this research. The authors describe the experiences and motivation of these women international business owners and compare them to the literature on women entrepreneurs in North America. Cross-culturally, women entrepreneurs share many of the same motivations for starting a business, and experience similar challenges to making their enterprises successful. North American models of entrepreneurship are also examined. The findings suggest a universal model for entrepreneurship. Suggestions for government policies are put forward. Managerial and theoretical implications are also presented and new directions for research on women entrepreneurs are suggested.     

The Golden Rule and Business Ethics: An Examination

The phenomenon of globalization of markets has been accompanied by calls for a globalization of ethical norms. One principle often referred to in such calls is the so-called Golden Rule. The rule, often stated as Do unto others as you would have others do unto you, has long been used and referenced in the business literature. But those who use it often do so without full realization of the rule itself and what it stands for. This paper examines the history, meaning, and problems of the rule and attempts to show, through a case analysis, how these problems surface when using the rule in a business context. In so doing it attempts to clarify exactly what the rule means and how it can fit into a universal code of morality.     

Differences in Psychological Strategies of Failed and Operational Business Owners in the Fiji Islands*

This study investigates the differences between failed and operational businesses from a psychological perspective. The sample included 71 operational and 20 failed business owners from Suva, the capital of Fiji. It was hypothesized that operational business owners more often employ a detailed and long‐term planning strategy, whereas failed business owners more often pursue a reactive strategy, that operational business owners set more specific and more difficult goals, and that they have a higher degree of human capital than failed entrepreneurs. The data were analyzed using discriminant analysis. Results confirmed the hypotheses regarding planning and goal specificity.     

Linking HRM and Small Business Performance: An Examination of the Impact of HRM Intensity on the Productivity and Financial Performance of Small Businesses

Attempts to explore empirically the link between HRM and firm performance are numerous. Yet, research on this link remains restricted to large companies. Little is known about the extent to which the existing results extend to small businesses. The purpose of the present study is to develop and test a conceptual framework linking HRM to financial performance that fits small businesses. The central question is whether the development of an intensive HRM is profitable for smaller organizations. For the development and optimization of the conceptual framework, we rely on human capital theory and bankruptcy prediction models. Using structural equation modeling, we study the mediating effect of voluntary turnover and productivity on the relationship between HRM intensity and one year lagged financial performance. The results show both productivity and profitability enhancing effects as well as a cost increasing impact of HRM intensity.     

Financial Reporting of Small Business Entities in Canada*

Financial reporting for small business entities (SBEs) has been the subject of much debate and concern by the accounting bodies (institutes) in Canada, the United States, the United Kingdom, Ireland, Australia, New Zealand, and other countries. The main issue for the standard setters is whether they should have one set of standards for all companies or two sets of standards (one for big companies and one for SBEs). The main objective of our study is to examine whether SBEs in Canada should have their own new set of Generally Accepted Accounting Principles (GAAP) or should they continue to use big GAAP used by public companies. To address this issue in the Canadian environment, we sent out a questionnaire to a sample of managers and owners of small businesses, preparers, auditors, and users of small business accounts. These stakeholders were asked to identify the purposes of SBE financial statements, their levels of satisfaction or dissatisfaction with the present accounting standards for SBEs, the burdens imposed on the preparers of the financial statements, and the weaknesses of the present standards. Furthermore, they were asked to give the expected advantages of adopting new standards, after having ranked four models of financial reporting of SBEs. The results are quite interesting. Stakeholders indicated that financial statements of SBEs are prepared mainly for taxation purposes and borrowing. They are not satisfied with the present standards because they are costly to comply with and very complex. The burden of producing SBE financial statements can be reduced by simplifying the present standards. The new standards would mean a shorter and simpler form of financial statements. It is hoped that the results of this study will provide the standard setters in Canada and other countries with an indication of the future direction for SBE reporting and accounting.     

Overview of Collaborative Entrepreneurship: An Integrated Approach Between Business Decisions and Negotiations

In recent years, the complex, turbulent and changing environment in which firms operate has greatly intensified. A new era of continuous innovation has emerged in which knowledge is the key asset, and whose exploitation determines success for many firms. In this context, it is generally accepted that effective knowledge management depends heavily on a company’s ability to collaborate, both inside (Collective Entrepreneurship) and outside (Collaborative Entrepreneurship) the organization. Collaboration enables a firm to be entrepreneurial and continuously innovative by exploring new markets. Continuous innovation and market exploration are the building blocks of collaboration. Therefore, the aim of this paper is to develop the concept of Collaborative Entrepreneurship, linking the most relevant issues with the concept of Collective Entrepreneurship, from a preliminary integrative approach. From this approach, three elementary dimensions are emphasized: strategy, structure and management philosophy. Strategy refers to the shared common project among collaboration partners; Structure concerns the flexibility of structures and adaptation to environmental changes; and Management Philosophy is about trust. Also, networks within the firm and among firms could form the basis of Collaborative Entrepreneurship in the context of negotiation and decision processes. A brief overview of the content of each of the articles included in this special issue on Collaborative entrepreneurship is presented following this article.     

Do Banks Price Owner–Manager Agency Costs? An Examination of Small Business Borrowing

Ang, Cole, and Lin (2000) provide evidence that supports the theoretical work of Jensen and Meckling (1976) on agency costs. As a further examination, I conduct a test to determine the economic significance of owner–manager agency conflicts. Using the same data source and empirical framework as Ang, Cole, and Lin (2000), I test to determine if banks charge a premium when extending loans to firms with various ownership structures. In empirical tests, I find that banks do not require an owner–manager agency premium either through increased interest rates or through the requirement of collateral. Instead, I find that the interest rate is significantly affected by the length of the longest banking relationship, the number of banking relationships, firm age, and firm size. Additionally, the requirement of collateral is significantly affected by the number of banking relationships, the debt position of the firm, and firm size.     

An Examination of Entrepreneurship Centers in the United States: A National Survey

This study fills a gap in previous research by performing an in-depth analysis of 146 entrepreneurship centers in the United States. This two-part study looks at the characteristics of the entire sample of entrepreneurship centers and then examines the differences between top-ranked centers and nonranked centers. The findings indicate that top-ranked centers have three times as many endowed chairs as nonranked centers. Top-ranked centers also offer more comprehensive graduate programs. Overall, top-ranked centers have more resources and personnel. The findings of this study will assist students, faculty, staff, administrators, directors, and other stakeholders of entrepreneurship centers.     

Determinants of Small Business EDI Adoption: An Empirical Investigation

Given the importance of widespread adoption for the success of electronic data interchange (EDI) and the "much-slower-than-anticipated" growth of EDI adoption in small businesses, in this study we aimed to identify the key determinants of small business EDI adoption. Based on prior research on IT/EDI adoption in large/small organizations, a model that incorporates 7 factors that are hypothesized to have influence on the EDI adoption decision was developed and empirically tested against data collected from 627 small businesses, with 38% of them having already adopted the technology. The findings suggest that in the eyes of small businesses, EDI still is not considered as something that enables a business to gain major strategic benefits or competitive advantages. Although perceived costs are found to be major impediments to adoption, small businesses tend to have an "unbalanced" treatment between direct and indirect benefits, focusing more on those that are immediate and direct rather than on long-term, indirect benefits. Furthermore, prior EDI experience and perceived level of support from the vendor are also important determinants of EDI adoption in small businesses. Implications to Internet-based EDI systems are also discussed.     

Learning Opportunities and Learning Behaviours of Small Business Starters: Relations with Goal Achievement,Skill Development and Satisfaction

Learning is a vital issue for small business starters, contributing to short- and long-term business performance, as well as to personal development. This study investigates when and how small business starters learn. It specifies the situations that offer learning opportunities, as well as the learning behaviours that small business starters can employ in order to learn from these opportunities. In a cross-sectional, quantitative study of recently started small business founders, learning opportunities and learning behaviours are related to three outcome measures: a performance outcome (goal achievement), a personal growth outcome (skill development), and an affective evaluation outcome (satisfaction). The results show the importance of learning opportunities and learning behaviours in influencing these outcome variables, albeit not always in the directions we hypothesized.     

Small Business and Empirical Perspectives in Business Ethics: Editorial

In this editorial to a collection of papers on ethics in small firms, the case is made for greater use of high quality empirical research on business ethics. Sociological perspectives have much to offer to the field of business ethics that continues to be dominated by normative, moral philosophy. The second contribution of the paper is to argue for a re-orientation away from the large multi-national firm as a benchmark subject of business ethics research. One important point of view to be included is that of the small firm, which remains the dominant organisational form throughout all the OECD countries.     

The Effect of Business Regulations on Nascent and Young Business Entrepreneurship

We examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business – such as the time, the cost, or the number of procedures required – are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. [Djankov et al. 2002, ‹The Regulation of Entry’, Quarterly Journal of Economics 117(1), 1–37] between the speed and ease with which businesses may be established in a country and its economic performance – and the enthusiasm with which this link has been grasped by European Union policy makers – our findings imply this link needs reconsidering. Prepared for: Small Business Economics (2007), Special issue GEM conference 2005     

Small Business Entrepreneurship in the High Technology Services Sector: An Assessment for the Edge Cities of the U.S. National Capital Region

The Washington D.C., National Capital Region is surrounded by a series of edge cities. These edge cities developed rapidly in the 1980s and are tied to extensive commercial and retail centers within the larger urban field. Economically they focus on the delivery of high technology information-oriented services and are populated by small and medium sized firms. The region has been recently titled "The Capital Netplex" because of its concentration on advanced information network technologies. An examination of the intra-regional differential associated with firm size, start up rates and industrial composition is evaluated. An assessment of the economic impact of the Netplex firms on the regional economy and selected policy issues are examined.     

Business Dilemmas and Religious Belief: An Explorative Study among Dutch Executives

This paper explores the relationship between religious belief and the dilemmas Dutch executives confront in daily business practice. We find that the frequency with which dilemmas arise is directly related to various aspects of religious belief, such as the belief in a transcendental being and the intensity of religious practice. Despite this relationship, only 17% of the dilemmas examined involve a religious standard. Most dilemmas originate from a conflict between moral and practical standards. We also find that 79% of the identified dilemmas stem from a conflict between two or more internalized standards of the executive.Johan Graafland is a Professor of Economics, Business and Ethics at Tilburg University and Director of the Centre for Corporate Social Responsibility at the Department of Philosophy of Tilburg University. He has published articles in The Journal of Business Ethics, Business Ethics: A European Review, Philosophia Reformatica, Journal of Corporate Citizenship, Applied Economics, Economics Letters, Oxford Bulletin of Economics and Statistics, Empirical Economics, Journal of Policy Modelling, Public Finances/Finances Publique, Economic Modeling, Journal of Public Economics and others. His current research interests are corporate social responsibility and philosophy of economics.Muel Kaptein is a Professor of Business Ethics and Integrity Management at the RSM Erasmus University, where he chairs the Department of Business-Society Management. Muel is also a Director at KPMG Integrity and Investigation Services. He has published articles in a number of journals, including The Journal of Business Ethics, Business & Society Review, Organization Studies, Academy of Management Review and European Management Journal. His most recent books are The Six Principles of Managing with Integrity (Spiro Press) and The Balanced Company (Oxford University Press). His research interests include the management of ethics, the measurement of ethics and the ethics of management. Muel is a Section Editor of the Journal of Business Ethics.Corrie Mazereeuw-van der Duijn Schouten is a senior researcher at the Centre for Corporate Social Responsibility at Tilburg University, the Netherlands. She has several years of experience as business consultant in the field of organizational change and group processes within organizations. Her research interests include leadership, religion and corporate social responsibility. She is currently working on a PhD thesis on religion and leadership.