Independent financial advisors: open innovation and business performance

The purpose of this paper is to examine the behaviour of small independent financial advisors (IFAs) in terms of their involvement in networks and open innovation. A mail survey of small IFAs was undertaken utilising previously validated scales to assess business performance in relation to networking and open innovation. Results indicate that IFAs involvement in networks and open innovation can assist business performance. The managerial implications are that IFAs and other financial services organisation sector firms may be able to achieve higher sales growth by participating in networks and engaging in open innovation. This paper provides an original empirical assessment of possible strategies to enhance sales growth in small financial service sector firms facing volatile market conditions.     

External Relationships and the Small Business: A Review of Small Business Alliance and Network Research*

In order to thrive, small businesses are often advised to develop relationships with external organizations that have the potential to assist business development, survival, and growth. A focus on the external relationships of the small business underlines the vital importance of external resources in moving a small business toward increased success and profitability. Covering the period from 1990 to 2002, this paper reviews the small business literature as it relates to the use of these external relationships (such as organizational partnerships, networks, and alliances). In response to both academic and practitioner demand for further research in this area, an exhaustive analysis of the relevant literature was conducted and three “meta” research questions representing the connections within this literature were formed. The resource‐based view of the firm, resource dependency theory, and punctuated equilibrium theory are proposed as useful starting points for exploring these research questions and can give direction for moving forward in this research area.     

Learning Networks as an Aid to Developing Strategic Capability among Small and Medium-Sized Enterprises: A Case Study from the Irish Polymer Industry

Strategic decision making within small to medium-sized enterprises (SMEs) is a necessary element for business growth. SMEs must adapt and become more efficient and dynamic within current business paths and in finding new paths. Traditional philosophies are not focused on delivering new capabilities or developing new business paths. Learning networks are cooperative associations of partner firms that share knowledge, physical resources, and expertise to improve current performance and to advance new business paths. Ireland has emerged as a significant net contributor of plastics to the global medical device, telecommunications, and ophthalmic sectors. The role of the first polymer network as a catalyst for both new business development and increased technological enhancement is advanced in this study of Mould-Tech, an Irish polymer manufacturing firm. Adaptation of dynamic learning networks as expounded in this study present participant firms with new opportunities both to learn and earn—that is, to enhance and acquire new capabilities and to grow their businesses.     

Influence of family ownership on small business growth. Evidence from French SMEs

The performance implications of family ownership have been studied extensively. However, studies that investigate the influence of family ownership on small business growth remain scarce and suffer from several shortcomings. To remedy these shortcomings, this paper uses a very large sample of French SMEs to explore the relationship between family ownership and small business growth. First, this study shows that there is a negative, although non-monotonic, relationship between family ownership and small business economic growth. Second, it explores the channel through which family ownership affects firm growth. Results suggest that firms with greater family ownership are prone to below-potential rates of economic growth, given their internal financing resources. Overall, the results suggest that small family businesses have a propensity to deliberately limit their growth (i.e., they adopt conservative growth behavior).     

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.     

Building an integrative model of small business growth

The purpose of this article is to develop an integrative model of small business growth that is both broad in scope and parsimonious in nature. Such a “big picture” model provides an opportunity (1) to gauge how much we really know about small business growth, when we simultaneously consider the constructs from the dominant perspectives, (2) to assess the contribution of each of these perspectives, (3) to examine the indirect effects that some constructs from one perspective might have on small business growth through constructs from another perspective, and (4) to consider different levels of analysis. Based on an analysis of data from 413 small businesses, we derive a set of propositions that suggest how entrepreneurial orientation, environmental characteristics, firm resources, and managers’ personal attitudes directly and/or indirectly influence the growth of small businesses.      

The economics of trust, norms and networks

The theme of this paper is that trust, norms and networks are critical contributors to social capital, itself a critical determinant of economic growth. Numerous factors have contributed in recent years to the decline of social capital, restraining business and national competitiveness. It is in the interests and part of the responsibility of business to address this issue; this provides an economic imperative – complementary to the ethical imperative – for business to take socially responsible governance seriously.     

The Influence of Domestic Interfirm Networks on the Internationalization Process of Taiwanese SMEs

This study investigated how domestic interfirm networks contribute to a better understanding of the internationalization process of Taiwanese small and medium enterprises (SMEs) in the automobile and textiles sectors. The rapid growth of business networks in Taiwan's newly internationalizing firms provides an appropriate context in which to study the emergence and evolution of such networks. Findings from the in-depth case studies indicate that domestic interfirm networks are a major factor in the decision to internationalize. Furthermore, the benefits of assured orders in an unknown international market coupled with the availability of market information from other network partners can be a potential source of competitive advantage for the internationalized SME.     

Policy Interventions for Industrial Network Formation: Contrasting Historical Underpinnings of the Small Business Policy in Japan and the United States

This article examines the role of policies in promoting inter-firm networks, by contrasting policy frameworks for small businesses in Japan and the United States. While the policies in two countries share similarities in many respects, different historical underpinnings have led small business policies to play different roles in economies of Japan and the United States. This paper analyzes how Japan's small business policy came to encourage inter-firm collaborations over the course of its history, while policies in the United States have not had explicit orientation toward the development of inter-firm networks until the 1990s.     

Managing Network Resource and Organizational Capabilities to Create Competitive Advantage for SMEs in a Volatile Environment

By considering embedded opportunities and threats in today's dynamic business environment, this study proposes that small‐ and medium‐sized enterprises (SMEs) can exploit the ties of interfirm networks to access external resources and information, thus enhancing their organizational agility and absorptive capacity in a variable business environment and enabling superior organizational performance. This study enables SMEs to combine the external resources embedded in strategic networks with internal organizational capabilities including organizational agility and absorptive capacity to create an idiosyncratic competitive advantage in a chaotic business environment.     

The Value of Information Integration in Meeting Delivery Dates

In this article, we consider the value of shared information within a business network. To make the problem concrete, we focus on a specific operational problem: How the final supplier to the customer determines promised delivery dates. In a traditional supply chain, the final supplier has little or no information on the delivery performance of intermediate suppliers and thus, has limited information with which to set delivery dates. On the other hand, in an information-integrated business network, the final supplier's enterprise resource planning (ERP) system can interact with all the intermediate suppliers' ERP systems to determine exactly how far ahead or behind schedule the network is in meeting the needs of a specific customer. This information should improve the final supplier's ability to set realistic delivery dates. We attempt to quantify the value of this information and determine precisely why it is valuable so that management can best exploit information integration.

We use a modeling approach in this research, beginning with simple analytic models and progressing to more realistic simulation models. Our analytic model establishes an important principle: Information integration not only significantly improves the average on-time delivery performance of a business network, but also dramatically improves its worst-case performance. Because customer dissatisfaction is generally associated with worst-case performance, information integration may be highly beneficial even if its effect on average on-time delivery is small. Simulation models allow us to compare the performance of more realistic business networks. These models suggest, for example, that the value of information integration is dependent on both the structure of the network itself (whether serial or arborescent) and on the typical customer order date in the production cycle. These insights allow us to begin to identify the types of business networks in which information integration will have the highest value.     

Understanding consumption and entrepreneurship in subsistence marketplaces

This article describes exploratory research on how consumers and small entrepreneurs navigate subsistence marketplaces, with particular emphasis on social networks, a central characteristic of these contexts. Existing studies have characterized subsistence contexts as 1-to-1 interactional marketplaces due to the prevalence of face-to-face interactions among consumers and sellers when evaluating products, making purchases, and operating small businesses. This research uses survey methods to study these networks, paying particular attention to how individuals interact within them, the kind of information being shared, their influence on purchase decisions and business decisions, and finally, their impact on the marketplace skills of subsistence consumers and entrepreneurs. Consideration of both consumers and entrepreneurs provides perspective on the role of social networks from both sides of the business transaction. The article also discusses implications for business research and practice.     

Entrepreneurship and Economic Development in Less Developed Countries

This essay seeks to uncover the distinguishingfeatures of small firms in Victorian Britain, and looks at the role of the family in the creation and survival of firms in what was a dangerously volatile business world characterised by low business morality. Based on a series of case studies, it suggests that although second and third generation firms were uncommon, the family played a critical if often informal role in maintaining stability and generating an environment of trust, and in those situations where family partnerships and inter-generational succession did exist, the characteristics of ownership and succession at the level of the smaller firm appear to have stimulated rather than prevented innovation and growth. Different types of family firm and family contribution are examined, and the latter part of the essay looks at family firm networks and entrepreneurial strategies such as market internalisation within a family network.     

Best practice network business model for internationalization of small and medium enterprises

Small and medium enterprises’ entry to international markets leads to their continuous growth and facilitates national and global economic development. In an attempt to substantiate these outcomes, they seek to acquire best practices and experiences in order to facilitate entering, surviving, and growing in global markets. To address this challenge practically, the present paper introduces a media for networking and a system for transferring internationalization best practices across small and medium enterprises under the concept of Best Practice Network. Subsequently, the paper tries to depict Best Practice Network as a viable business and establish a guideline for implementing it by developing its business model. To achieve this objective, the authors have administered multi-case study research among the top managers of international small and medium enterprises in the information and communication technology sector of Iran. The resulting model is based on business model ontology and proposes a bird’s eye view of the Best Practice Network including product, customer interface, infrastructure management, and financial aspects. Moreover, by proposing a media for sharing related best practices, this paper can lead to the decline of the stage theory of internationalization and can excel the born global theory of small and medium enterprises.     

Effects of family ownership and management on small business equity financing

Equity financing is important in financing growth but its special features in small business have not been well addressed in the finance or entrepreneurship literature. Since many small firms have family involvement and research shows that family firms have both advantages and disadvantages in managing agency costs, how family involvement and agency issues interact to affect equity financing in small business is an important topic of research. This study examines the effects of family ownership and management on two dimensions of small business equity financing, the use of equity financing and the use of public equity financing within the agency theory of financing. The results show that family involvement and agency issues interactively and separately influence equity financing in small business.     

Gender as a determinant of small business performance: Insights from a British study

The performance of small businesses, that is the ability of small firms to contribute to job and wealth creation through business start-up, survival and growth, has been an important area of policy and academic debate in the 1980s. Surprisingly little has been written about gender and small business performance. Our literature search revealed only a small number of studies of any substance on this subject, though over forty made some mention of it, Most studies shied away from direct examination of quantitative performance measures (such as jobs created, sales turnover, annual growth), tending to concentrate on qualitative measures of success or failure. The paper examines small business performance and gender using data obtained from a survey of 600 (300 women, 300 men) Scottish and English small business ownermanagers, part of a three year study on the impact of gender on small business management. Analyses suggest that the relationship between gender and small business performance is complex, but that gender still appears to be a significant determinant even after other key factors are controlled for.     

Regional Business Networks and the Diffusion of American Management and Organisational Models to Norway, 1945–65

The effort to diffuse American principles of management, organisation and production after the Second World War was a strong movement involving most West European countries, including small countries dominated by small companies. This article focuses on the outcome of this process by taking a regional perspective in a recipient country. The study is based on an examination of business networks in one small Norwegian region, M?re and Romsdal, between 1945 and 1965. The dominant form of industrial organisation in the region was characterised by flexible specialisation. Since many researchers have claimed that the diffusion of the mass production model was the core of Americanisation, it might be assumed that differences in industrial organisation would have acted as a counterforce within this diffusion process. This article, however, shows that in the case of the M?re and Romsdal region, the Americans showed a remarkable skill in adjusting to local circumstances. Instead of counteracting the dominant local industrial organisation, the diffusion process strengthened local traditions in developing networks between independent small companies.     

Cultural identities of Chinese business: networks of the shark-fin business in Hong Kong

From a global standard, shark-fin consumption certainly violates international norms on bio-diversity and endangers the existence of the shark species. Furthermore, the commercial shark-fin industry generates additional adverse environmental impacts. Nevertheless, shark-fin consumption has served an important role in the cultural aspect of Chinese ‘foodway’. More importantly, the business relations and networks behind this industry have never been comprehensively studied. In so doing, this paper employs first hand interviews with the traders and processors, as well as official statistics from the government of Hong Kong, to come up with one of the most comprehensive and in-depth pieces of research on the business relations and the cultural aspects of shark-fin business in Hong Kong. In addition, we will explore the theoretical as well as the cultural dimensions of shark-fin business in trying to question the meaning of Chinese business networks. One of the key findings of this piece of research is that the collective activities of shark-fin consumption, business relations and networks are embedded along the historically, socially and culturally constructed Chinese identity. The implication is that such orchestration between culture and business can have far-reaching consequences to other Chinese businesses.     

The role of networks in the entrepreneurial process

The extent to which the entrepreneur interacts with the networks in his local environment during the process of starting a new firm was studied. This study was based on the premise that, during this process, he is seeking not only the resources of equipment, space, and money, but also advice, information, and reassurance. Consequently the help and guidance received from both the formal networks (banks, accountants, lawyers, SBA) and the informal networks (family, friends, business contacts) will influence the nature of the firm substantially.The study was conducted in St. Joseph County, Indiana, a county that has experienced the same economic problems as many other towns in the midwest smoke-stack belt during the 1970s. In 1982, in response to this general decline in the business climate, a fund was raised to create and manage a new industrial strategy. Before this, there was no collective strategy for nurturing either the small firm or the new firm. Therefore, in order to determine the extent to which an interventionist strategy was appropriate, a research project was designed that posed three basic questions: what does the environment look like; does it need changing; and, if so, in what ways? This article reports part of that study—a survey of firms that had started in the county in the previous five years (1977–1982). It was concerned with two issues: the characteristics of the St.Joseph County entrepreneur and the usage of the formal and informal networks.The results of the survey show that the aggregate characteristics of the St. Joseph County entrepreneur are similar to those found in other studies. The new firms were founded by local people from small firms who started their small firms in similar industries that were local in nature. Moreover, the majority (90%) not only started small, but also grew very little subsequently—firms that have been classified elsewhere as life-style ventures. It is to be expected that such people would have a strong local network, both formal and informal, particularly in a county with a population of only 220,000. However, the results of the second part of the study showed that the main sources of help in assembling the resources of raw materials, supplies, equipment, space, employees, and orders were the informal contacts of family, friends, and colleagues. The only institution that was mentioned with any regularity was the bank, which was approached towards the end of the process when many of the resources were assembled and the elements of the business set in the entrepreneur's mind. This was not because the formal sources were unwilling to offer guidance, but rather that the entrepreneur and his social network appeared to be unaware of what was available. Moreover, in using only business contacts, family, and friends, the entrepreneur was likely to re-create the elements of previous employment, even when he was starting business in an entirely new market. Further, there was no significant difference between growth and no-growth firms. It would appear that in this county, the formal network was uniformally inefficient.This research shows that a major aim of the new strategy should be to increase the awareness of the community to the formal sources and types of help that are available. However, whilst most of the institutions are prepared to solve specific problems, they are not in the business of diagnosis or counseling. The network needs a hub or an enterprise office.The data on the start-up process and the role of networks in relation to new firms are very sparse and often anecdotal. This study was conducted in one environment, a small midwest county with a jaded entrepreneurial tradition. Further studies are necessary. Research questions include the extent to which networking is crucial in the start-up process, the length of time it took for the sophisticated networks of Boston's Route 128 and California's Silicon Valley to develop, and the effect of different geographic, cultural, and economic conditions. Only in this way is it possible to determine the extent to which regional, regeneration strategies for new firm creation should be county specific rather than state or country wide.