Towards the Underlying Theories of Small Firm Growth: A Literature Review

2021 ◽  
pp. 231971452110496
Author(s):  
Nusrat Hafiz ◽  
Ahmad Shaharudin Abdul Latiff ◽  
Md Asadul Islam ◽  
Abu Naser Mohammad Saif ◽  
Sazali Abd Wahab
Keyword(s):  
Literature Review ◽  
Small Firm ◽  
Small Businesses ◽  
Small Firms ◽  
Firm Growth ◽  
Dynamic Capabilities ◽  
Empirical Studies ◽  
Theoretical Perspectives ◽  
Management Perspective ◽  
Small Business Growth

As a pre-condition for the economic growth of a country, the concept of firm growth has emerged as a critical strategic issue for small businesses from the strategic management perspective. While some literature reviews have been conducted on small firm growth, a comprehensive review of theories emphasizing the association of intangible resources with the growth of small firms has not been conducted. This study aims to provide a literature review of extant theoretical perspectives of small businesses literature. For the review, materials are collected and extracted from various online databases, and results are analysed using classifier variables. Five theories of firm growth, namely, the resource-based theory, knowledge-based theory, dynamic capabilities theory, upper echelon theory and resource-dependency theory, are selected to review, associating the present research aim. The theories are compared using key attributes and outcomes. A clear direction towards an optimum theory to underpin the small firms’ growth has been provided from a resource-management perspective. By validating various theoretical perspectives to explain small business growth, the present study provides first-hand insights for managers to formulate strategies and creates a cornerstone for future empirical studies.

Small Business Growth Characteristics

1981 ◽  
Vol 5 (3) ◽  
pp. 33-43 ◽  
Author(s):  
Calvin M. Boardman ◽  
Jon W. Bartley ◽  
Richard L. Ratliff
Keyword(s):  
Small Business ◽  
Small Firm ◽  
Small Firms ◽  
Inflation Rate ◽  
Growth Characteristics ◽  
Business Growth ◽  
Is Success ◽  
Small Business Growth ◽  
Financial Characteristics ◽  
Is Failure

Financial characteristics are presented for small firms whose sales increased at a rate greater than the inflation rate over the period 1974–1979. It is noted that these characteristics differ somewhat depending on whether they were a retailer, manufacturer or wholesaler. A growing small firm is generally characterized as one which increases its leverage, decreases its liquidity and incurs a heavy investment in operational assets. Interestingly, it is also shown that these same characteristics, if taken to extremes, are typical of the failed companies in the sample. The reward of growth is success; the risk of growth is failure.

The Informational Needs of the Small Firm Engaged in International Dealings

1983 ◽  
Vol 7 (3) ◽  
pp. 24-29 ◽  
Author(s):  
Richard L. Seely ◽  
Harvey J. Iglarsh
Keyword(s):  
Data Acquisition ◽  
Federal Government ◽  
Small Firm ◽  
Small Businesses ◽  
Information Needs ◽  
Small Firms ◽  
International Market ◽  
Informational Needs ◽  
Foreign Markets ◽  
Trade Associations

The small firm considering international operations must devote substantial time and resources to collecting information about potential foreign markets. This article identifies the information needs of small businesses, examines sources of this information, including the Federal government, trade associations, and trading companies, and proposes strategies by which small firms can approach the problem of international market data acquisition.

Adopting ICT in the Mompreneurs Business

2011 ◽  
pp. 17-34
Author(s):  
Yvonne Costin
Keyword(s):  
Small Business ◽  
Small Firm ◽  
Small Firms ◽  
Firm Growth ◽  
Business Transactions ◽  
Effectiveness And Efficiency ◽  
Effective Use ◽  
Stakeholder Requirements

It is advocated that the role of technology is instrumental in determining the effectiveness and efficiency of where, when and how business transactions are undertaken to meet stakeholder requirements in a competitive manner. However, research by the Small Business Forum (2006) suggest the use and application of ICT in small firms overall is poor where entrepreneurs do not capitalise sufficiently on the benefits of ICT. To succeed and grow, mompreneurs’ businesses should be using ICT as a backbone for the business in an integrated manner. The objective of this chapter is to examine the adoption and application of ICT in the mompreneurs business and challenges encountered in its effective use. A specific emphasis is placed on the issue of ICT and its use by the mompreneur in undertaking business transactions and as a means of facilitating small firm growth.

The relationship between the manager and growth in small firms

2009 ◽  
Vol 16 (4) ◽  
pp. 586-598 ◽  
Author(s):  
Svante Andersson ◽  
Joakim Tell
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Firm Growth ◽  
Policy Implications ◽  
Special Focus ◽  
Managerial Behavior ◽  
Content Type ◽  
Top Manager ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper is to improve the understanding of the relationship between the manager and growth in small firms, through a review of earlier research.Design/methodology/approachA review of articles published during the last 25 years is carried out in order to answer the question: How does the top manager influence growth in small firms?FindingsThree key relationships are identified: between growth and, respectively, managerial traits and characteristics, managerial intentions, and managerial behavior or roles. The diverse findings in the literature are contradictory and give a paradoxical picture of the impact of the manager. A deeper analysis of the results from the review, supplemented with leadership theory, yields a better understanding of small‐firm growth with a special focus on the behavior of the manager.Research limitations/implicationsThis paper problematizes the complexity in managing small‐firm growth, and can be further empirically validated by using multiple methods including qualitative ones such as observational studies.Practical ImplicationsThe findings have a bearing on education and policy implications. If a behavior can be identified that promotes small firms' growth, education and policy implications can be developed in line with these results.Originality/valueIn small firms there seems to be a general consensus that managers do influence the performance of small firms, but so far there has not been a systematic review of earlier empirical research, that is done in this paper. From this review, a more complete picture of how managers influence growth in small firms is presented.

scholarly journals Growing a small firm; experiences and managing difficult processes

2020 ◽  
Vol 16 (4) ◽  
pp. 1445-1463 ◽  
Author(s):  
Maria Tunberg ◽  
Alistair R. Anderson
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Growth Process ◽  
Firm Growth ◽  
Social Phenomenon ◽  
Internal Development ◽  
The Moment ◽  
Narrative Forms ◽  
Output Indicators

Abstract Contrary to a simple model of small firm growth where increased inputs produce greater outputs, we consider growth is a complex and difficult process. Accordingly, the paper is concerned with how small firms grow, especially how they make sense of the growth process. We collected narratives of the experiences of small firm growth in an extended case study to draw out how growth is understood and managed. We saw how owners became entangled in the process of growing, especially where a change in one aspect led to problems in other dimensions of growth. Their narratives were about trying to make sense, and give some sense to the complexity of growth and some direction to what they should manage. We identified a repertoire of narrative forms: Growth is understood through output indicators, growth is treated as the internal development of the firm and finally, growth is taken to be inevitable - a necessity to which the firm has to conform. These illustrate how growth can be understood as processes of growing, bound up in the context, created in space and time, and contingent on how growth is understood and experienced. Far from a smooth trajectory, enacting growth reflects the experience of the moment, it is shaped by reactions rather than strategy and it is messy rather than ordered. This study contributes to the literature by complementing the functionalist and output oriented view by understanding firm growth as a social phenomenon constructed and reconstructed in the interactions between people and experiences of context.

Industrial Restructuring and the Future of the Small Firm: The Case of Canadian Microbreweries

1993 ◽  
Vol 25 (6) ◽  
pp. 847-861 ◽  
Author(s):  
S Milne ◽  
S Tufts
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Firm Growth ◽  
Industrial Restructuring ◽  
Small Scale ◽  
Niche Markets ◽  
Success Story ◽  
High Profit ◽  
The Future ◽  
The Face

The dramatic flourishing of small-scale enterprise in recent years has stimulated a great deal of academic interest. Indeed many researchers have given the small firm pride of place in theories designed to explain the growth of a new, more ‘flexible’, economic environment. Recently, however, commentators have questioned whether these analyses are perhaps not overly optimistic in the role they ascribe to small firms. We add to the debate through a study of small Canadian brewers (microbrewers). Whereas Canada's major brewers have been forced to restructure and rationalise their operations in the face of new competitive pressures, including trade liberalisation and changing consumer demand, microbreweries have found themselves catering to a growing niche market and have expanded rapidly in number. Although much of the microbrewery ‘success story’ appears to support theories of small-firm growth, we argue that a cautionary note must be added for the future. Improved efficiency and flexibility is making it easier for large brewers to break into the high-profit-margin niche markets that were once the preserve of their smaller counterparts. As a result, the next decade may not witness the same levels of small-firm growth that characterised this sector in the 1980s.

Influence of Dimensions of Strategic Orientation on the Growth of Small Firms and Resources as Moderating Variables

2014 ◽  
Vol 39 (4) ◽  
pp. 461-476 ◽  
Author(s):  
Rakesh Gupta ◽  
Sriparna Basu
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Firm Growth ◽  
Strategic Orientation ◽  
Firm Resources ◽  
Resource Based View ◽  
Moderating Variables ◽  
Six Dimensions ◽  
The Relationship

The strategy–firm growth relationship has remained an important issue for researchers, and in spite of the growing volume of work in this area, little consensus has emerged on this issue. One of the reasons behind this lack of consensus is the question—how to conceptualize strategy? and in this, a lesser examined way has been to use the strategic orientation (SO) construct. As conceptualized by Venkatraman (1989), the SO construct comprises six dimensions, that of analysis, pro-activeness, riskiness, aggressiveness, futurity and defensiveness. The need to integrate SO and resource-based view (RBV) has seen increasing emphasis by researchers since the choice of resources constitutes an important precondition for firm growth and even more so in the case of small firms. This study empirically examines strategy–firm growth relationship through the lens of SO by studying the influence of individual SO dimensions on firm growth. In this study, we attempt to empirically examine and validate the nature of SO construct and how its individual dimensions influence small firm growth, how the dimensions interact with firm resources and what is the moderating influence of resources on the relationship between individual SO dimensions and small firm growth.

scholarly journals The “Fairness Paradox” and “Small-Firm Growth Resistance Strategies”

2015 ◽  
Vol 11 (3) ◽  
pp. 154-175 ◽  
Author(s):  
Farid Ullah ◽  
Robert Smith
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Firm Growth ◽  
Peer Group ◽  
Small Business Owners ◽  
Employment Practices ◽  
Content Type ◽  
Business Context ◽  
The Family ◽  
Small Business Growth

Purpose – The purpose of this paper is to examine and explore why “Small-Businesses” resist employing outside the immediate family and investigate the employee as an outsider and entrepreneurial resource. Design/methodology/approach – The authors review the literature on barriers to small-business growth concentrating on key empirical and theoretical studies. The authors use empirical data from the Federation of Small Business in which informants commented on growth and employing outside the family. Findings – The findings suggest that small business owners adopt a polemical stance, arguing that a barrage of employment regulations deters them from employing outsiders because doing so brings trouble in terms of costs such as insurance, taxes, paperwork, leave (maternity and paternity) entitlement, etc. They argue that employing from inside the family or ones peer group is much cheaper, convenient and less hassle. This ignores the entrepreneurial employee as a potential ingredient of growth and points to a paradox whereby the very values and emotions characterized by fairness of which of “smallness” and “familialness” is composed compound the issues of discrimination central to the debate. Research limitations/implications – The paper offer important insights for growth issues among small businesses and challenge the contemporary equilibrium in terms of small “family-orientated” business philosophy relating to employment practices. Ideologically, the entrepreneur is an “outsider” fighting the establishment, yet paradoxically, in a small-business context s/he becomes the establishment by employing outsiders. This results in the fairness vs unfairness paradox. Originality/value – The paper contributes to the existing knowledge and understanding on growth issues among small businesses by illuminating a paradoxical insider vs outsider tension.

Strategic networking and small firm growth in an emerging economy

2019 ◽  
Vol 26 (1) ◽  
pp. 43-66 ◽  
Author(s):  
Bernard Acquah Obeng
Keyword(s):  
Social Capital ◽  
Human Capital ◽  
Small Firm ◽  
Structural Equation ◽  
Small Firms ◽  
Firm Growth ◽  
Firm Strategy ◽  
Emerging Economy ◽  
Content Type ◽  
Internal Resources

PurposeThe purpose of this paper is to explore the sources and use of social capital on small firm growth in an emerging economy. The study also examines the relationship between small firms’ human capital, internal resources and strategy on social capital sources used, and their impact on small firms’ growth in employment.Design/methodology/approachThe study uses logistics regression and structural equation modelling to analyse data gathered from 441 small firms located in six regions of Ghana where approximately 81 per cent of all businesses are found.FindingsAmong the 16 sources of social capital examined, customers were found to be the most used source and the only social capital source that showed significant statistical association with firm growth in employment. Also, the study revealed that human capital, firm resources and strategy variables such as educational level of the owner-manager, firm size, location, firm involvement in internalisation and innovation are statistically significant with social capital sources such as accountants, banks, solicitors, business associates and chamber of commerce.Research limitations/implicationsThe findings of the study have implications for policy and practice in situations where government and private sector institutions mandated to support enterprise development appear to be the least social capital sources used by small firms. The findings also provide a better understanding of the use and impact of social capital sources on small firm growth in an emerging economy in Africa.Originality/valueThis study appears to be the first known research on small firms’ social capital that has examined 16 different social capital sources and shown how human capital, internal resources and firm strategy have influenced the use of social capital sources by small firms in an emerging economy.

Strategic Entrepreneurial Orientation and Small Business Growth

2014 ◽  
pp. 180-203
Author(s):  
João J. Ferreira ◽  
Mário L. Raposo ◽  
Cristina I. Fernandes
Keyword(s):  
Life Cycle ◽  
Small Business ◽  
Entrepreneurial Orientation ◽  
Small Firms ◽  
Firm Growth ◽  
Small Companies ◽  
Business Growth ◽  
Strategic Factors ◽  
Competitive Aggressiveness ◽  
Small Business Growth

This chapter aims to define a coherent theoretical framework enabling a broader understanding of the strategic entrepreneurial orientation (SEO) and to evaluate their effects on small firm growth. A sample made up of 211 small Portuguese firms from various different sectors of activity was surveyed by questionnaire. The results demonstrate how the life-cycle of companies, their resources, capacities, motivations and surrounding environment all influence the SEO of small companies. The empirical evidence shows how SEO, and across four specific dimensions – proactiveness, innovativeness, risk taking and competitive aggressiveness, clearly impacts on the growth of these small firms. The study contributes both theoretically (through advancing knowledge on the field of strategic factors for small business growth) and practically (when designing support policies strategically orientated towards small firms).

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