Organizational Learning: An Empirical Assessment of Process in Small U.K. Manufacturing Firms

Organizational learning is increasingly being mentioned in the literature as a mechanism for assisting small firm survival. There exists, however, limited empirical evidence to validate the benefits claimed for the concept. A survey of small U.K. manufacturing firms was undertaken to ascertain whether entrepreneurial firms use higher-order (or double-loop) learning. Additional research aims included assessing whether organizational learning confers information management advantages and contributes to the upgrading of managerial competencies. The results suggest entrepreneurial firms do utilize higher-order learning and are able to manage information more effectively than non-entrepreneurial firms. Some evidence was found to support the view that higher-order learning influences certain managerial competencies. The implications of these findings are discussed and proposals presented on the needs for further research     

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.     

Learning Orientation and Performance Satisfaction as Predictors of Small Firm Innovation: The Moderating Role of Gender

Research on innovation in the context of small entrepreneurial firms is limited. Limited available studies on innovation in small firms are devoted mostly to firms operating in knowledge-intensive or technology industries and ignore the vast majority of small firms operating in traditional and less knowledge-intensive sectors of the economy. The rapid pace of technological change and the intensifying environmental turbulence in our economy influence all firms, including the majority of small firms that are perishing at a faster rate. Innovation is a key competitive tool for survival in a turbulent environment. Thus, it is important to understand factors influencing innovation in small firms. In this paper, we explore how learning orientation, a small-firm owner’s satisfaction with firm performance, and the firm owner’s gender influence innovation in small firms. We test the proposed model on a sample of small firms located in the United States of America.     

Performance expectations of small firms considering radical product innovation

Performance expectations influence business decisions such as investment decisions and demand for supplies, particularly in small firms with limited strategic planning. Despite widespread use of performance expectations by firms and governments when making sales forecasts and economic outlooks, surprisingly little research exists about how small firms form performance expectations. This paper contributes to reduce this knowledge gap by analyzing performance expectations of small firm managers operating in markets with radical product innovations. This paper proposes a model and hypotheses, which explain performance expectations of small firm managers based on firms' current success, radical product innovation, and variables that indicate firms' ability to respond to customer needs for radical product innovation. Data from 200 decision-makers in a real decision-making context support the model. The results show that performance expectations in small firms are only to a limited extent a naïve extrapolation of current success: radical product innovation and small firm's ability to respond to customer needs for radical product innovation influence performance expectations.     

Quality Practices for a Competitive Advantage in Smaller Firms

This exploratory study examines the quality practices used in smaller entrepreneurial firms. The current literature defines flexibility as one of the primary competitive priorities for smaller firms. This study develops an exploratory proposition that relates the characteristics of quality systems used by small firms, and their value, to the competitive priority of flexibility. A survey of 184 small firms in the U.S. was conducted using the classification scheme for quality systems consistent with the Malcolm Baldridge National Quality Award (MBNQA) performance criteria. Overall, the results support the proposition that small firms tend to employ quality practices that enable change and that position the firm to pursue flexibility as a competitive priority. The paper concludes with a discussion of the insights generated by the findings and directions for future research.     

Moderators on international diversification of advanced emerging market firms

Firms from advanced emerging markets are becoming notable players in the global marketplace. This study seeks to examine how these firms expand to international markets successfully. Drawing on R&D intensity and learning capability, this study finds that an s-shaped relationship exists between firm internationalization and performance. The results also show that R&D intensity and learning capability significantly strengthen the impact of internationalization on firm performance. These results imply that R&D intensity and learning capability are the main drivers of success for firms from advanced emerging markets in foreign markets.     

Small firms and the failure of national skills policies: adopting an institutional perspective

Both skills and small firms have been increasingly prominent in policy agendas across the world in recent years. Skills are now seen as being crucial to economic prosperity, yet evidence consistently shows much lower levels of training, on average, in small firms than in larger businesses. Policy makers in various countries have sought to address this perceived problem and to stimulate skills development in small firms, but have attempted to do so in different ways and with varying degrees of success. It is this divergence in national skills policies, as well as its causes and implications for skill formation in small firms, that this paper seeks to illuminate. In doing so, it adopts an ‘institutional’ perspective that advances current understanding of how and why skills policies adopted in different countries appear to have varying effects on small firms. Through employing this institutional analysis, the paper promotes an awareness of how historical, social and economic forces in the ‘corporatist’ systems, found for example in Germany and Scandinavia, tend to provide a more supportive context for skills development in small firms than the liberal free market systems found elsewhere in the world, such as in the USA, Canada and the UK – which is highlighted as an illustrative case in this paper.     

Crisis challenges of small firms in Macao during the COVID-19 pandemic

This research develops a framework that combines crisis stages, stakeholder engagement, and crisis challenges. The framework is applied to small firms in Macao during the 2019 novel coronavirus disease (COVID-19) pandemic crisis. We conduct a qualitative study based on semi-structured interviews with the leaders of six small firms in Macao. The findings suggest that the COVID-19 pandemic has turned into a “normal” context, which blurs the traditional crisis termination stage. We also find that participating firms engage more with internal stakeholders than external ones. The strategies adopted by small firms include flexible human resource (HR) practices, cost reduction, enhancing customer relations, and using government support schemes. These strategies are effective in the short term; firms need to pay attention to diversity and learning for the long term.     

Relationship Marketing,Knowledge Management Systems and E-Commerce Operations in Small UK Accountancy Practices

Some firms are using relationship marketing linked to knowledge management systems to achieve competitive advantage. Limited empirical evidence exists on the contribution that relationship marketing and knowledge management systems can make towards market success. E-commerce provides an opportunity to assess possible relationships that may exist between relationship marketing; knowledge management systems and market performance. A survey of small UK accounting practices suggests that adopting a relationship marketing orientation can enhance market performance. Those practices, which have adopted a relationship marketing orientation, tend to have established knowledge management systems and be involved in ecommerce. The implications of these findings are discussed and proposals made about further research needs.     

Antecedents of the propensity to learn management practices and their impacts on firm outcomes in emerging markets: A Bayesian Model Averaging approach

This article explores the factors that motivate firms to learn new management practices. The hypotheses are empirically tested using a representative sample of 3676 small, medium and large firms from four South Asian countries and across all main sectors of economic activity. Given that we know little about the antecedents of the propensity to learn management practices in emerging markets, the study employs Bayesian Model Averaging approach to overcome the potential issue of model uncertainty. The results reveal that market competition, resource allocation towards internal and external R&D, good quality mobile network coverage and the use of external certified financial auditors have all positive and significant effects on the propensity to learn management practices. The results also suggest that private intellectual property rights protection in the context of inefficient legal systems can deter firms from learning, perhaps in fear of legal ramifications. Finally, the study shows that firms with a higher propensity of learning management practices are more likely to become profitable while exhibiting higher levels of both potential and actual innovation.     

New technologies and technological information in small businesses

The use of new management and production technologies is essential for most small businesses if they are to improve their competitiveness and thus face up to increasing national and international competition. This presupposes access to scientific, innovative, and technological information, making firms aware of developments in technology and the resources available for obtaining and using the technology correctly.Many authors have already shown that small businesses lag far behind large firms in their use of new technologies. Some reasons put forward to explain this include the more generally limited resources of small firms and a national structure for the production and transfer of new information that is poorly adapted to small business needs. However, assuming that some gap between small and large firms actually exists, how can we explain that most small firms nevertheless not only survive, often for a very long time, but also produce a return comparable to large firms?One way of doing this is to study the situation of small businesses by using methods adapted to the small business sector and not developed for large firms. It is important to analyze not only the characteristics of the firms themselves, but also what they do to become competitive.Our own research in the small business field has shown that the lag in terms of new computer technologies has decreased considerably in recent years, and also that it tends to be smaller in many industries if specific advanced technologies are added. The perspective also changes if we examine the innovation capacity of small business, and its ability to develop niches or to work on smaller and more specific markets.The same applies to technological watch. An inquiry following a case study shows that small firms use different channels according to their objectives and turn to networks to overcome the limits of the information transfer system they use. They evaluate information by comparing different sources, and they use iterative techniques and intuition to complete their information and to decide on their investments. New technology acquisition by small and large firms cannot be compared; for small firms, it is an entrepreneurial act that in no way resembles the behavior of larger firms.However, to understand small businesses, further research is required into their behavior in different kinds of decision-making situations. To do this, we need tools developed specifically for the small business sector, free of any presumption of the supposedly better performance of large-scale production.     

Neo‐Marshellian Equilibrium versus Schumpeterian Creative Destruction: Its Impact on Business Research and Economic Policy

A cold war exists in faculties of business and economics. It is fought between the neo‐Marshellians that advocate the elegant simplifying assumption of equilibrium and the Schumpeterians that believe that economic growth is driven by the recognition of new opportunities and the capture of associated benefits through innovation. This fundamental disagreement is referred to as a cold war because the battles are fought indirectly with discussions of wealth transfer (instead of wealth creation), big firms versus small firms (instead of innovative firms versus noninnovative), and stability and managed earnings versus Sarbanes–Oxley and full disclosure. This note points out that this conflict does in fact exist and then provides a review of the literature and support for the Schumpeterian position as it relates to small business and associated economic policy. The literature is provided by one of the pioneers in this field, Professor Bruce Kirchhoff, as his last direct contribution to the field that he championed for decades.     

Responsible family ownership in small‐ and medium‐sized family enterprises: an exploratory study

The concept of responsible ownership was originally developed with reference to large, publicly held firms. However, the relevance of small‐ and medium‐sized closely held firms, such as family firms, in all economies and the specific governance and organisational characteristics of these firms require further examination of the responsible ownership concept and its operationalisation. Based on the existing literature, we define the construct of responsible family ownership to fill this gap in responsible ownership theory. We propose a scale that can be used to assess the responsible family ownership construct in small‐ and medium‐sized family enterprises. The data used in this exploratory study were collected in an ad hoc survey answered by a representative sample of 84 small‐ and medium‐sized family enterprises. The study contributes to the responsible ownership literature by presenting the responsible family ownership construct, a key driver of balance in family and firm systems that is therefore critical to the health of small‐ and medium‐sized family enterprises. In addition, a scale is proposed as a means to operationalise the construct and to derive practical implications for the governance of this kind of firms.     

Combinative capabilities and organizational learning in latecomer firms: the case of the Korean semiconductor industry

The emergence of firms from East Asian countries in advanced high-technology sectors such as semiconductors, is one of the striking features of world business developments over the course of the past decade. Explanations for the successes of such firms are commonly given in terms of transient, external or contingent factors, such as low costs or government subsides or just plain luck. In this paper an alternative account is given, based on resource leverage and organizational learning undertaken by the latecomer firms themselves. The paper develops a model of technological learning by latecomer firms, and then demonstrates its applicability in the case of the creation of a semiconductor industry in Korea. Data is presented to support the proposition that it is indeed single-loop and double-loop organizational learning that underpins these firms’ successful entry strategies. This approach sheds light on the strategies to be followed by firms in advanced countries when they seek to enter knowledge-intensive, high-technology sectors.     

Modelling Small Firms' Decisions to Export – Evidence from Manufacturing Firms in Finland, 1995

In this paper, I model small firms' decisions to export by applying an existing model of the theory of diffusion of innovations and test the predictions of the model with data on Finnish SMEs. The model, incorporating so-called epidemic learning and rank effects, describes nicely the different phases of this decision-making process. The data used in the empirical analysis has been collected by interviewing directors of small industrial firms especially for this study. The results suggest, among other things, that the development of exporting in a small firm is particularly influenced by the language skills of the entrepreneurs, and that the smaller the firm, the faster is the adoption of the export strategy. In addition, the development of exporting has been faster in firms that have started exporting in the 1990s than in firms that began exporting before the '90s.     

Change in the size distribution of UK firms

This paper examines the extent of change and stability in the population of UK firms through time in terms of its size distribution, as defined by number of employees. It was empirically found that the distribution of employment by firm size remained surprisingly constant over the 1987–1989 period. A major implication of this finding is that in times of very high net job creation (involving high gross job creation and loss), factors are at work in the economy to keep the population distribution of firms (in terms of employment concentrations) more or less stable. It is hypothesised that a natural concentration exists for each different size band, and that as change takes place, the proportion of total employment based in the size band will tend towards this natural level.The rise in the proportion of employment in small firms, and the comparatively high job creation ability of small firms in recent times has come about in part because of negative rather than positive macro-economic influences. In recession, small firms in aggregate in spite of their individual volatility, are the most resilient. In prosperous times they do not increase their proportion of employment share, while in times of recession they do. Our results imply that large firms have a very significant, if not the most significant, bearing upon aggregate employment trends. On the other hand, small firms inherently have more potential to create jobs than large firms.The majority of public expenditure and legislative support for UK business is directed at large firms, as a result of culture and tradition. Even with the benefit of this support, large firms in recent decades have still performed badly, in job generation terms. In contrast, small firms have shown an inherent advantage in their ability to create jobs. A shift of government expenditure and legislative support from large to small firms would further enhance and realise the potential of small firms to benefit the economy and create jobs.     

Confronting the implications of the Cournot model with industry and firm data

This paper derives testable implications of the standard Cournot models and confronts these implications with real world data. Though we cannot expect that real world may be characterized by a simple static homogeneous model, it is surprising that little empirical work exists on testing the implications of this most popular model of oligopoly and non cooperative game theory.We make use of three data sets for manufacturing industry, two of them on the firm level, one about firms grouped according to their size. The relation of the results to the predictions of the Cournot model is discussed, as well as its relation to alternative oligopoly models. We specifically focus at the question whether the implications of the oligopoly models on the performance of large versus small firms are in line with the data.     

Corruption and industrial dualism in less developed countries

This paper provides an explanation for the observation that developing countries tend to have a higher degree of dualism in the size distribution of firms and a relatively smaller proportion of large firms than do developed countries. This paper builds a model where large 'formal' firms attract rent seeking activities from the government while small firms do not. In the model, there exists a 'competitive fringe' of small firms and a formal market consisting of Cournot competitors. The number of formal firms is made endogenous and is a function of the degree to which the government can extract rents. This ability to extract rents is itself posited as a function of the degree of corruption in a country's government. Thus, it is the high degree of corruption in developing country governments that contributes to the dual nature of their industrial structure. The model predicts that the higher the degree of corruption, the fewer (and larger) are the formal firms, the lower is social welfare and the greater is dead-weight loss, and the higher are government rents. An examination of the size distribution of 16 countries and their degree of corruption shows that the degree of corruption is a good predictor of the percentage of large firms in an economy.     

Strategies,technologies, and organizational learning for developing organizational innovativeness in emerging economies

Innovativeness is an important organizational capability for competitive advantage sustainability in the dynamic environment of Asia's emerging economies. Drawing upon dynamic capability theory, this study develops a research model of organizational innovativeness development for firms in emerging economies. The proactive strategic orientations reflected by entrepreneurship and technology oriented strategy provide important visions for organizational innovativeness. Further, the utilization of knowledge management systems and organizational learning are identified as intervention processes that translate these strategic orientations into real innovation capability. A survey involving 114 firms operating in China was conducted for hypothesis testing. The empirical results provide strong support and advance the knowledge of organizational innovativeness development for firms in Asia's emerging economies.     

Peculiarities of public sector clients in service innovations

This paper analyses knowledge-intensive business service firms and their innovation activities in the context of federal government procurement with empirical evidence from Swiss information technology firms. The paper contributes to the growing literature on knowledge-intensive business services by expanding the concept to also capture public sector clients. It focuses in particular on the ways in which having a public sector client influences a knowledge-intensive business service firm’s ability to innovate, opportunities for interactive learning with their clients, and ways in which having a public sector client allows a firm to diversify. The paper shows that having a federal agency as a client is quite different from a private sector client particularly with regard to multi-party systems on the client side, the importance of informal interactions, and the role of public reputation.