New venture development: The costs and benefits of public sector assistance

In recent years there has been an extraordinary level of entrepreneurial activity occurring in the United States. Venture start-ups, new incorporations even bankruptcies are reaching record numbers. Concurrent with the increase in entrepreneurial activity has been an effort within the Reagan Administration to privatize public sector programs designed to aid new and small, ongoing business ventures. The premise behind this movement is that private sector initiatives can better, and more efficiently, serve the needs of entrepreneurs and small business managers and can also offer new business opportunities for some entrepreneurs. At the same time, however, privatization could reduce the assistance programs currently targeting fledgling ventures, many of which are unable to afford a private consultant.The purpose of this article is to examine the economic impact of one public sector assistance program, the Small Business Development Center (SBDC), in terms of its contributions to new venture initiation in Georgia and South Carolina. The focus on the SBDC program is appropriate since over 50% of the counseling activities of most of the centers is devoted to pre-venture clients, i.e., individuals or groups considering starting a business. This study is important and timely, not only in respect to assessing the effectiveness of public sector assistance programs for pre-ventures, but also for assessing whether it is worthwhile from an economic perspective, to offer assistance to such individuals in the first place.Although it is difficult to be precise in attributing cause to effects in dynamic business ventures, our study indicates that the Small Business Development Center's client sample experienced a greater than expected number of business starts, and a higher than expected rate of survival. The results suggest that the net taxable sales, generated by these new ventures in 1984. was approximately $20 million in Georgia and $10 million in South Carolina. Results also suggest that almost 500 new jobs were created in Georgia and 600 new jobs were created in South Carolina between 1981 and 1984 as a result of successful business starts among SBDC pre-venture clients.While such figures are impressive, the bottom line of this study is that the new tax revenues generated by client firms exceeded the cost of delivering the services. Specifically, our conservative estimates suggest a $3.80 to $1.00 and $1.50 to $1.00 benefit to cost ratio for the center's pre-venture consulting services in Georgia and South Carolina, respectively. Furthermore, the value attached to the assistance received, by the entrepreneurs themselves, closely paralleled our estimates, lending additional validity to our conclusions. Resource constrained entrepreneurs can obtain effective business assistance from the SBDC free-of-charge, and the benefits to society accruing from this service far outweigh the cost of providing them.     

Effects of federal socioeconomic contracting preferences

The 8(a) business development program supports small disadvantaged U.S. federal contractors through benefits such as set-aside and sole-source contracts, management and technical assistance, and mentor-protégé relationships with established firms. This study examines the effectiveness of the 8(a) program at producing positive firm-level outcomes by comparing 8(a) firms with those participating in other preferential contracting programs with different benefits. The average 8(a) program participant performs well relative to baseline firms that do not receive contracting preferences; however, these effects are driven directly by funding and not by broader stimulation of sound business practices as intended by program designers. Program participants perform similarly to service-disabled veteran-owned businesses, which benefit from comparable contract preferences but none of the mentorship, administrative support and management assistance offered to 8(a) firms. While growing at similar rates, 8(a) firms are substantially more likely to go out of business than firms in this comparison group.     

Measuring Ethnic Community Involvement: Development and Initial Testing of an Index*

This paper builds on the work of Chaganti and Greene, who distinguish between ethnic minority entrepreneurs/small business owners who are very involved with their ethnic community and those who are not. We extend their work by developing an Index of Ethnic Community Involvement based not only on personal but also business characteristics. We utilize a large sample size (698 interviews with entrepreneurs), drawn from five ethnic groups, and develop a valid and reliable (0.69) Index of Ethnic Involvement (IEI) with a strong emphasis on social capital theory. Our initial analysis shows the IEI predicts some personal and business characteristics. Future development will include building regression models to predict business outcomes. The IEI, when fully developed, promises to be useful for targeting assistance, education and training programs, and policy initiatives for entrepreneurs and small business owners according to the level of ethnic community involvement.     

Who benefits most? The effects of managerial assistance on high- versus low-performing small businesses

This study investigates the relationship between outside managerial assistance and small business performance using a conditional quantile regression approach. The model was tested using a sample of 902 ventures that received managerial or technical assistance from the U.S. Small Business Administration's Entrepreneurial Development Resource Partners. Results show that outside assistance for primary business functions, such as marketing strategy, promotional strategy, financial management and general management, is more effective for firms with lower levels of financial performance. Outside assistance for secondary business functions, such as human resources and obtaining capital, is likely to have a greater impact on firms in the middle- to upper-quantile levels. Based on the results, we propose that managerial outside assistance providers should employ different approaches for firms with lower versus higher levels of financial performance.     

How Small Business Advisory Program Delivery Methods (Collective Learning,Tailored, and Practice‐Based Approaches) Affect Learning and Innovation

Past studies relate small business advisory program effectiveness to advisory characteristics such as advisory intensity and scope. We contribute to existing literature by seeking to identify the impact of different advisory program methods of delivery on learning and subsequent firm innovation behavior. Our research is based on a survey of 257 Australian firms completing small business advisory programs in the three years preceding the research. We explore the range of small business advisory program delivery methods in which our surveyed firms participated and, with reference to the literature on organizational learning and innovation, we analyze predictors of firms' learning ability and innovativeness based on the identified delivery methods. First, we found that business advisory programs that involved high levels of collective learning and tailored approaches enhanced firms' perceptions of their learning of critical skills or capabilities. We also found that small business advisory programs that were delivered by using practice‐based approaches enhanced firms' subsequent organizational innovation. We verified this finding by testing whether firms that have participated in small business advisory services subsequently demonstrate improved behavior in terms of organizational innovativeness, when compared with matched firms that have not participated in an advisory program.     

Higher aims fulfilled: The Social Capital Academy as a means for advancing underrepresented students in comprehensive university business schools

Current research underscores how a college education can reflect broader social inequality via the disproportionate flow of resources to elite universities and advantaged students. In contrast, underresourced comprehensive universities disproportionately serve minority, first-generation, and working-class students. This article argues that the comprehensive university is uniquely positioned to reduce social inequality and that the comprehensive university undergraduate business school (CUUBS) should test a new approach to education. The article also advocates a substantive response to social inequality by (1) focusing on undergraduate business education within comprehensive universities rather than MBA programs in well-funded, elite business schools, (2) implementing a strategic emphasis on career-related jobs (CRJs) for underrepresented students, and (3) helping students pursue CRJs via the development of a Social Capital Academy (SCA). This article describes the benefits of an SCA for underrepresented students, its requirements and benefits for universities and business communities, and the possibilities for scaling the program to address social inequality. Future applications of the SCA to STEM-related fields are also explored.     

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.     

Wages,Health Insurance and Pension Plans: The Relationship Between Employee Compensation and Small Business Owner Income

Small business owners claim that their ability to provide higher wages and more frequent employee health insurance and pension benefits is severely constrained by the profitability of their firms. This paper examines the proposition that employee wage levels, provision of employee health insurance, and sponsorship of an employee pension plan are associated with small business owner income. A large trade-association survey supplies the data for the inquiry. Regression analysis (OLS and logistic) demonstrates that all three forms of employee compensation are tied to business owner income. Further, the business owner income variable "washes out" the generally accepted relationship between size of business and wages, though not the relationships between size of the business and the presence of health insurance nor between the size of business and the presence of pension benefits. The regressions also indicate that unit costs of health insurance and pension benefits are higher for those employing 10 or fewer and 20 or fewer respectively compared the other small businesses.     

The Determinants of Latent Entrepreneurship in Japan

This paper examines regional characteristics affecting the latent entrepreneurship in Japan, focusing on regional macroeconomic indicators, existing density of establishments and human capital, and business start-up assistance programs by local governments. We define two types of people having the latent entrepreneurship as follows (1) persons merely wishing to be a self-employed worker, and (2) persons preparing to be a self-employed worker out of the former definition. Total cash earnings and the unemployment rate, which are the macro economic indicators, had positive effects on latent entrepreneurship in Japan. Judging from the significance of their estimations, the latent entrepreneurship is explained by the “Push hypothesis”. If we examine the problem more closely, it is necessary for us to identify government assistance programs which make the latent entrepreneurs more self-employment.     

From Sydney to Shanghai

We are together!"Together"is the core value of AustCham Shanghai,a busi- ness organization founded for and by its members.This non-gov- ernment,non-partisan and non-profit organization with strong in- formation collection by contacting local and Australian commu- nity benefits its 350 members,and over 220 corporate members with a 1000+ card carrying mernbers,nearly 50 srnall business     

Active labor market programs’ effects on entrepreneurship and unemployment

Many countries are turning to active labor market programs (ALMP) to increase individuals’ incentive to start a business and to reduce unemployment, but research on the effectiveness of such programs has produced mixed results and is still inconclusive at the macroeconomic level. This article examines the importance of ALMP targeted at entrepreneurship to explain cross-country differences in aggregate entrepreneurship rate. By using GEM data over the period 2002–2013 on OECD countries, our results show a positive impact of ALMP on the rate of necessity entrepreneurship but no significant effect on the rate of opportunity entrepreneurship. We further established that generous unemployment benefits reduce the positive outcome of ALMP on the aggregate rate of necessity entrepreneurship. Moreover, because most businesses started out of necessity do not create new jobs, we find that the economic spin-off of such programs in terms of unemployment reduction is very limited.     

Alternative Instructor Roles in Cross-Cultural Business and Management Training

This article describes a continuum of instructor roles in cross-cultural business and management training. Instructional effectiveness can be achieved in each role if the goals of the training program and the instructor's cross-cultural competencies are appropriately matched. Limiting cross-cultural training in business and management to truly "multicultural" instructors is unnecessarily restrictive in many instances. Training programs can achieve effectiveness while utilizing the contributions of a diverse range of business and management specialists.     

Increasing the Effectiveness of Export Assistance Programs

Abstract

This study focuses on the export assistance needs of small and medium-sized firms in the California EnviroTech industry. The objectives of this study are to: (1) provide public sector assistance providers research-based recommendations to increase the effectiveness of their export assistance programs to the EnviroTech industry; and (2) promote the advantages of a single industry study as the basis for providing public sector export assistance.     

The Day After Grant-Aid: Business Development Schemes for Small Rural Firms in Lagging Areas of Greece

This paper investigates the need for providing follow up business development instruments to small rural businesses that have benefited from grant aid assistance schemes. A sample of 76 small rural businesses in lagging areas of insular Greece is included in the present survey, and ranks thirteen possible business growth instruments. It is found that business development instruments are ranked according to each firm's economic and human capital characteristics. Furthermore, most firms need the concurrent provision of more than one instrument. Likewise, a mixture of business specific schemes, regulatory interventions and infrastructure projects, better serves their business development needs. Results from the present survey indicate that an integrated business development strategy in lagging areas of Greece should be supported by modern, flexibly tailored combinations of assistance, using complex, multi-instrument sets of support to development efforts.     

Quality improvement programs: Tools for international competitive advantage

There is growing concern about the long-run success of U.S. industries in the face of increasing foreign competition. Product quality is a strategic business issue. In an effort to gain competitive advantage, some firms are implementing organization-wide quality training programs. Many firms have still to recognize the benefits of a quality orientation, however. This article examines how quality programs are implemented in organizations. It considers factors leading to success in developing a quality orientation and compares the Japanese and American approaches. © 1992 John Wiley & Sons, Inc.     

Small Firm Finance, Credit Rationing, and the Impact of SBA-Guaranteed Lending on Local Economic Growth

Increasingly, policymakers look to the small business sector as a potential engine of economic growth. Policies to promote small businesses include tax relief, direct subsidies, and indirect subsidies through government lending programs. Encouraging lending to small business is the primary policy objective of the Small Business Administration (SBA) loan-guarantee program. Using a panel data set of SBA-guaranteed loans, we assess whether or not SBA-guaranteed lending has an observable impact on local economic performance. We find a positive and significant (although economically small) relationship between the relative levels of SBA-guaranteed lending in a local market and the future per capita income growth in that market.     

At the Center of the Action: Innovation and Technology Strategy Research in the Small Business Setting

In this essay, we offer perspectives on the future of small business research. These comments cover a range of issues unique to the future of small-business-focused research from "somewhat-broad" to "more-narrow," and address: (1) the problems and promise of better theory building, (2) the range of opportunities for theory-building research, (3) new vantage points for theory-building using the "social responsibility" of small business as a research lens, and (4) the future direction of research in technological entrepreneurship. We conclude with a summary of this "look to the future," and call for the innovative and provocative research that can keep contemporary small business management research at the center of the academic action.     

Strategic Options in the Digital Era

The collapse of the dot-com euphoria coupled with the downturn in the business cycle is driving many firms to abandon their high-growth strategies in favor of current earnings. This article argues that, whilst hedging against adverse future conditions, firms must retain an ability to seize up-side business benefits by framing IT investments as strategic options. The authors use three illustrative examples to develop a strategic management process that they term the "Strategic Options Navigator". They conclude by drawing implications for CEOs, CIOs and CFOs.     

Socially Responsible Processes of Small Family Business Owners: Exploratory Evidence from the National Family Business Survey

The purpose of this exploratory study is to ascertain the impact of family, business, and community factors on the socially responsible processes of small family businesses, and investigate the influence of financial success and attitudes toward community on these processes. The research is grounded in the Sustainable Family Business Theory, which has been enhanced to include the interactive and collaborative action, both economically and socially, of family businesses and their communities. Data are from the National Family Business Survey, 2000 panel. The processes studied include interpersonal transactions in the form of community leadership and holding an elected or appointed office, and resource transactions in the form of providing financial or technical assistance in community development, and providing donations to local programs. Models assessed the probability and intensity of assistance provided by family businesses. The findings indicate that the social and economic climate of the community may contribute to the performance of responsible actions by businesses because human, social and financial capital resources from both the family and the business can be used to solve problems in the community. The most robust result was that individuals with very positive attitudes about their local communities were more likely to serve in leadership positions and make financial and technical contributions to the community. Business owners in economically vulnerable communities were willing to assume more responsibility to fill leadership positions in the community and make substantial contributions of financial and technical assistance than those in less vulnerable communities. Policymakers must recognize the many contributions of family businesses and forge rural developmentpolicies that not only help sustain existing businesses and fuel the engine of economic growth, but encourage human capital development, and, in turn, enhance the contributions of the family and the business to their community.     

Member Experience,Use of External Assistance and Evaluation of Business Ideas

How do members' experience and external interactions shape evaluation of the team's business idea? With a sample of 74 teams that participated in a business idea competition, we showed that experience as defined by size, mean work experience, and assistance from individuals with business founding experience related positively to the teams' business idea evaluations. The benefits of external founders are more pronounced for smaller than for larger teams. Having a founder in the team did not relate to idea evaluation but interaction effects showed smaller sized teams had worse evaluations if they did not have a founder in the team.