Business Growth and Performance and the FinancialReporting Practices of Australian Manufacturing SMEs

This article describes an explanatory study of the impact of financial reporting practices upon business growth and performance outcomes amongst small and medium-sized enterprises (SMEs) engaged in manufacturing in Australia. The study is able to establish some statistically significant bivariate associations between the extent and frequency of financial reporting undertaken and certain measures of SME growth and performance. However, the state of financial reporting practices becomes subsumed by other important influences in multivariate analysis. Management is a complex activity affected by a myriad of interacting internal and external factors, and must inevitably be undertaken in an holistic manner in SMEs. Particular practices make a contribution to the whole task without necessarily standing out as all-embracing solutions to problems generally encountered. Thus, it is argued that improved financial reporting should be realistically viewed as simply part of a broader competence in financial management which, taken together with other functional capabilities, is likely to lead to more effective and efficient management of SMEs and significantly improve their prospects.     

Investigating a neglected part of Schumpeter’s creative army: what drives new-to-the-market innovation in micro-enterprises?

This paper tests a theoretical model to evaluate e-business capability and value in the fast growth small-to-medium enterprise (SME) context. We propose that e-business value depends on how fast growth SMEs deploy IT resources, strategic planning, culture, and business partnerships to develop e-business capability and business process competence which help these companies to achieve outstanding business performance. Structural equation modelling is employed to test our theoretical conceptualization on a cohort of 310 Australian fast growth SMEs across different industrial sectors. The results show that IT resources, strategic IT alignment, market orientation, and business partnerships do contribute significantly and indirectly to SME performance through the development of e-business capability and business process competence. Our study provides an initial empirical evidence to understand the relationship between IT and entrepreneurial SME performance. These findings have important implications for research and business practices.     

As Different as Chalk and Cheese? The Relationship Between Entrepreneurial Orientation and SMEs’ Growth: Evidence from Russia and Finland

The purpose of this study is to investigate the relationship between entrepreneurial orientation (EO) and firm growth and the moderating role of business environment for Russian and Finnish small- and medium-sized enterprises (SMEs). For hypothesis testing, structural equation modeling is applied to the data set of 104 Russian and 117 Finnish privately owned SMEs. Results show that while in the Finnish market context EO dimensions are directly associated with firm growth, in the emerging Russian market the relationship is moderated by the dynamic and hostile environment. The results also provide evidence of the nature of EO for SMEs operating in Russia.     

SMEs and the fallacy of formalising CSR

There exists increasing pressure for small and medium‐sized enterprises (SMEs) to engage in corporate social responsibility (CSR) practices, including social reporting. Curiously in this promotional programme of CSR reporting, the only group whose ideas are not sought in this debate are the SME leaders themselves. The present ethnographic field analysis, based on discussions within entrepreneurs' circles, tends to suggest that the argument for expanding formalisation of CSR to SMEs rests upon several fallacies. It implicitly assumes that an apparent solution for large multinationals can be transposed to SMEs, and it underestimates the drawbacks of bureaucracy. Moreover, many SMEs experience inconsistency between the idealistic CSR communication of some large companies and their actions, especially in the supply chain. The author concludes that reports do not constitute the validation for real CSR, nor the proof of superior ethical behaviour. Formalisation can even be counterproductive. Conversely, the absence of social reporting does not imply that SMEs do not behave responsible. CSR in SMEs needs a specific approach, adapted to the informal nature and entrepreneurial character of the small business. The essence of CSR lies in the implementation of responsible business practices. It lies in the right attitudes, in the corporate culture, not in formalisation.     

Proactive CSR: An Empirical Analysis of the Role of its Economic, Social and Environmental Dimensions on the Association between Capabilities and Performance

Proactive corporate social responsibility (CSR) involves business practices adopted voluntarily by firms that go beyond regulatory requirements in order to actively support sustainable economic, social and environmental development, and thereby contribute broadly and positively to society. This empirical study examines the role of the economic, social and environmental dimensions of proactive CSR on the association between three specific capabilities—shared vision, stakeholder management and strategic proactivity—and financial performance in small and medium enterprises (SMEs). Using quantitative data collected from a sample of 171 Australian SMEs in the machinery and equipment manufacturing sector and employing structural equation modelling, we find that the adoption of practices in each CSR dimension by SMEs is influenced slightly differently by each capability, and affects financial performance differentially. The study also demonstrates the importance of the interaction between the three dimensions of proactive CSR in positively moderating the deployment of each individual CSR dimension to generate financial performance. Paying primary attention to the economic dimension of proactive CSR and selectively focusing on social and environmental elements of proactive CSR that drive and support the economic dimension are of key importance to sustainable long-term financial success for SMEs.     

Do Entrepreneurial SMEs Perform Better Because They are More Responsible?

Many scholars have investigated the direct impact of entrepreneurial orientation (EO) on performance, but this direct association seems both spurious and ambiguous because many parameters may have an indirect influence on this relationship. The present study thus considers sustainable practices—environmental practices, social practices in the workplace (SPW), and social practices in the community (SPC)—as three probable mediators in the relationship between EO and performance, which is considered in terms of its financial and non-financial dimensions. We seek to show to what extent small- and medium-sized enterprises’ (SMEs) sustainable practices are useful assets, which are supported by EO, to improve performance. Using a structural equation modeling approach, data collected from 406 French SMEs were tested against the model. Our findings reveal that EO has a positive impact on the implementation of sustainable practices and that SPW partially mediate the link between EO and performance. Taken together, these findings suggest that EO plays a role in indirectly promoting performance by enhancing certain human resource management practices.     

Beyond Size: Predicting Engagement in Environmental Management Practices of Dutch SMEs

This study focuses on the prediction of the engagement of small- and medium-sized enterprises (SMEs) in environmental management practices, based on a random sample of 689 SMEs. The study finds that several endogenous factors, including tangibility of sector, firm size, innovative orientation, family influence and perceived financial benefits from energy conservation, predict an SME’s level of engagement in selected environmental management practices. For family influence, this effect is found only in interaction with the number of owners. In addition to empirical research on SMEs’ environmental behavior, this article draws on the ecological modernization literature as well as the theory of planned behavior.     

The Link Between Small Business Governance and Performance: The Case of the Ghanaian SME Sector

ABSTRACT

The present study set out to examine corporate governance practices of SMEs in Ghana and whether there is any linkage between these governance practices and financial performance. We employed two levels of interaction to achieve our objectives: The first is an interview for a general understanding of governance issues in the SME sector and the subsequent design of a questionnaire for an exploration of the linkages between governance issues and firm financial performance by employing a linear model. The study reveals that governance structures in SMEs are jointly influenced by credit providers and business ethical considerations. The regression results show that board size, size of audit committees, corporate ethics and the proportion of outsiders on the audit committees have negative impact on financial performance while independence of the board and the presence of audit committees enhance firms' financial performance. The findings have some policy implications in that it shows that exporting SMEs are relatively profitable. It is recommended that in an attempt to promote exports, the legal and regulatory environment should be conducive for these firms.     

Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector

Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.     

Managing the human resource in Indian SMEs: The role of indigenous realities

This paper discusses how issues of people management are addressed in Indian small and medium enterprises (SMEs). It also highlights the indigenous approaches to human resource management (HRM) that have surfaced in the Indian SME context. The research formulation has been built on the mapping of people-management practices in two SME case studies, one of which is also a family-based organization. The analysis shows that indigenous realities in HRM in Indian SMEs relate mainly to the provision of financial, emotional and social support to the workforce; employee involvement (EI) practices; recruitment; skill development; managing employee relations; and managing vis-à-vis labor law framework. The paper argues that in the sphere of people management in SMEs, the willingness to innovate and formalize the HR systems is constrained by a kind of bounded rationality, i.e., the owners of SMEs mostly believe that they are already doing what is humanly possible in this regard. The analysis has an important message for concerned practitioners—in order to realize their full potential and to progress towards fulfilling their vision; SMEs eventually have to intertwine indigenization and formalization for their people management approaches.     

Ethics-focused dynamic capabilities: a small business perspective

Our analysis of survey data of US small and medium-sized enterprises (SMEs) explores (1) whether firms have ‘dynamic’ capabilities that change their ethics-focused operational capabilities; (2) what effects those dynamic capabilities have on both ethical and competitive performance; and, (3) whether those effects are contingent on a firm’s entrepreneurial characteristics. Our survey reveals that about a quarter of SMEs self-report high levels of these ethics-focused dynamic capabilities. We use hierarchical OLS to analyze the survey data to find that the general effect of these capabilities is positive on an SME’s ethical performance, and that the performance effects are contingent on an SME’s degree of entrepreneurial orientation and sensitivity to changes in the business context. The main implication is that the extent of heterogeneity in types, roles, and performance effects of ‘higher-than-operations-level’ capabilities is likely underestimated in current dynamic capabilities theory and application.     

创业板中小企业商业模式创新效率评价

随着网络经济的飞速发展,有关商业模式的研究成为企业家和学者共同关注的焦点,特别是商业模式创新在全球商界已经引起前所未有的重视。作为高成长中小企业的代表,创业板中小企业在商业模式创新方面有明显的特点,同时商业模式的创新性也成为中小企业保持高成长性的基础和保障。     

What drives the export performance of small and medium-sized subcontracting firms? A study of Korean manufacturers

Building on the resource-based view and network theory, we propose and test a framework of export antecedents of subcontracting small and medium-sized enterprises (SMEs). Whereas the internationalization of firms has been extensively studied in general, little is known about what drives the exports of subcontracting SMEs which play a very important role in the manufacturing sectors of East Asian economies. These subcontracting firms operate under very different conditions from other companies, resulting in specific ways they leverage their resources, capabilities and customer networks. An analysis of survey data from 1733 subcontracting SMEs in three South Korean manufacturing industries reveals that the firms’ export orientation and export intensity are related not only to their technological resources and their executives’ managerial capabilities, but also to features of their subcontracting network ties. Our study suggests that due to the specific nature of their business, subcontracting firms’ internationalization antecedents need to be analyzed in the context of their business environment which is strongly shaped by their customer relationships.     

Responsibility and Informal CSR in Formal Cameroonian SMEs

In this article, we explore the implicit conceptions of business ethics and social responsibility of owners?managers of small and medium enterprises (SME) in Cameroon. While using a hermeneutical approach, our main objective is to clarify how Sub-Saharan African business people themselves understand and define corporate responsibility in their particular economic and political environment. Our aim is not to deliver an empirical study of business practices and management behavior in SMEs. We wish to discuss which responsibilities they themselves judge to be relevant and which can legitimately be attributed to them by third parties. Secondly, we relate our findings to other empirical work on SMEs, in Africa and elsewhere. It is shown that there are similarities with the way in which SMEs in Europe interpret their responsibility, but also striking differences. Further, we relate our findings to some theoretical controversies around corporate social responsibility (CSR) in SMEs, to questions about evaluation tools for CSR in the SME context, and to the role of CSR with respect to poverty alleviation in developing countries.     

Adoption and Implementation of Internal Marketing Systems by Ghanaian Small- and Medium-Sized Enterprises

This paper explores the concept of internal marketing (IM) as an internal supportive system that could provide the infrastructure for a strategic business take-off. It investigates how IM, as a concept, is understood and made practical in the context of Ghanaian small- and medium-sized enterprises (SMEs). This qualitative research method was used due to the nature of the enquiry. The government of Ghana is constantly searching for more effective ways of assisting SME performance, through various strategic growth and development schemes. Despite the fact that much has been said in the literature, the IM concept remains elusive. Most SMEs are not aware of IM and demonstrate little understanding of the concept. And SMEs have problems with the implementation of IM. The manufacturing sector demonstrates more IM orientation than does the service sector. This paper unravels sociocultural factors that frustrate the practice of IM among Ghanaian SMEs and calls for a greater awareness of the concept by stakeholders. Suggestions include more general business support for SMEs to improve performance and subsequently grow. The paper finishes by drawing attention to management implications within the practice of IM.     

International social SMEs in emerging countries: Do governments support their international growth?

Through an empirical research developed based on a sample of five international social SMEs in a Chinese city, this study examines the internationalization of social enterprises. Its purpose is to evaluate the role played by governments in supporting international growth. This is done using behavioural theory dimensions of prevalence, relevance, urgency, accessibility, and radicalness. From our analysis, local government supports the launch of social SMEs but this is limited to their growth stage. Entrepreneurial skills and external networks, thus, become crucial factors in the development of a new international business development model, encouraging further scholarly investigation.     

The Relationship of Ethical Decision-Making to Business Ethics and Performance in Taiwan

This paper examines the relationship of ethical decision-making by individuals to corporate business ethics and organizational performance of three groups: (i) SMEs (small and medium enterprises), (ii) Outstanding SMEs (the Key Stone Award winners) and (iii) Large Enterprises, in order to provide a reference for Taiwanese entrepreneurs to practice better business ethics. The survey method involved random sampling of 132 enterprises within three groups. Some 524 out of 1320 questionnaires were valid. The survey results demonstrated that ethical decision-making by individuals, corporate business ethics and organizational performance are highly related. In summary, then, high levels of organizational performance were directly attributable to high levels of applied corporate and individual ethics. Furthermore, there is a demonstrable tendency for Outstanding SMEs to reject ethically unsound practices such as padded expense accounts, tax evasion and misleading advertising. The measurement criteria used to assess organizational performance, however, did not include an objective evaluation of financial performance.     

Values that create value: socially responsible business practices in SMEs – empirical evidence from German companies

Socially responsible business and ethical behaviour of companies have been of interest to academia and practice for decades. But the focus has almost exclusively been on large corporations while small- and medium-sized enterprises (SME) have not received as much attention. Thus, this paper focuses on socially responsible business practices of SME entrepreneurs or owner–managers in Germany. Based on the assumption that decision-makers in SMEs are the central point where all business activities start, members of a German entrepreneurs association were approached in the course of a qualitative and quantitative survey. They were asked to assess in what way their social responsibility is expressed in specific management practices towards selected stakeholder groups. These practices in turn were assumed to result in perceived positive reactions of the respective stakeholders and subsequently to positively influence the firm's financial performance, i.e. cost reductions and increase in profits. In the paper, a research model is presented that elaborates the relationship between an SME executive's social responsibility and the value creation of a firm, i.e. whether (personal) values create (economic) value. It was found that socially responsible management practices towards employees, customers and to a lesser extent society have a positive impact on the firm and its performance. As such, values can create additional value.     

Strategic Orientation, Management Characteristics, and Performance: A Study of Spanish SMEs

This paper analyzes from a resource-based view the management characteristics of Spanish small and medium enterprises (SMEs) according to their strategic orientation and the consequences in terms of firm performance and business efficiency. The typology of strategies formulated by Miles and Snow has important implications for management, because depending on the strategic orientation adopted—defender, prospector, or analyzer—the firm can emphasize to a great extent some aspects of management, such as technological position, innovation, organizational design, and human resource management. Moreover, these aspects of management can largely determine firm performance and business efficiency. A sample of 1,351 Spanish SMEs provided the data for an empirical test of these issues. The results confirm the expected relationships, revealing, on the one hand, significant differences between prospector and defender SMEs regarding the key factors on which they base their management characteristics and, on the other hand, the different influences that each strategic orientation has on firm performance.     

Brand Management in Small to Medium‐Sized Enterprises*

Although an impressive body of literature has emerged focusing on the critical activities involved in brand management for larger organizations with well‐established brands and substantial marketing budgets, no research has been undertaken to examine branding within small to medium‐sized enterprises (SMEs). The present study therefore seeks to assess the nature and scope of brand management within an SME context. Findings show significant differences between small and large organizations along 9 of the 10 brand management dimensions reported in Keller's brand report card. Moreover, different brand management practices are associated with business performance in SMEs. Implications of the study are highlighted, limitations noted, and directions for future research outlined.