Small Business Management and Control of the Uncertain External Environment

Small businesses are ubiquitous across the globe and they form a large part of the enterprise population in most economies. Understanding of the sector remains sketchy, despite there being concerted efforts since the 1970s to conduct research to give insight into the behaviour of small businesses.

All businesses have to cope with their external environments, but the resource poverty of small businesses means that they may suffer disproportionately, and they certainly do not have access to the resources, financing and knowhow that large firms have to inform them about the most effective way to manage their resources, minimise threats and optimise opportunities in the environment. This chapter provides a holistic framework to enable deeper understanding of subsequent chapters.

The purpose of this chapter is to examine what small business strategic management and long-term planning involves as practised by successful growth-oriented small businesses. The aim is to provide insight into the strategic learning, control and development processes, including indicative detail of the underpinning day-to-day practices and actions that make up those processes. Key focus is the overall strategic control activity of more progressive owner managers and their use of an idiosyncratic mentally held ‘strategic planning and thinking framework’ that guides and informs strategic decision-making, strategic adjustment to existing markets, products and processes activities and long-term strategic direction.

The research approach is underpinned and informed by personal construct theory which gives emphasis to the highly complex nature of the task of small business strategic control and highlights the need for a creative and innovative research methodology to facilitate close and detailed investigation of the phenomenon. To this end, a multidisciplinary case study research methodology was developed by the authors to underpin examination of strategic development and planning within micro-, small- and medium-sized businesses.

The chapter enhances understanding of small business strategic management practice in growth-achieving micro and small enterprises. The findings of this research, whilst demonstrating the key role of entrepreneurial learning in small firm strategic control of the uncertain external environment, also provides a multidimensional lens through which to dissect and better understand the small firm strategy development process – drawing upon and integrating grains of truth from the differing schools of management thought embedded in the literature.

The findings of this study also facilitate the addressing of the ‘black box’ of hazy insight within the literature which fails to reveal micro-level fine detail understanding of the managerial and organisational actions and activities that make up strategy process. The authors commence provision of such black box insight within this chapter – this as lead-through to the follow-on chapter which affords specific attention to enhancing understanding of the micro-level fine detail minutia of managerial, organisational and work activities that make up strategy process within small businesses.

The research is of a comparative dimension focussing on small business development within the developed economy context of the UK, the emerging economy contexts of Malaysia and Ghana and the transitional economy contexts of Russia. Thus, time and resource limitations bound the studies.

The purpose of this chapter is to further flesh out the small business strategy insight presented in the previous chapter through focus on the finer micro detail of what is actually done and by who in small business strategic management practice. The authors build forward their previous chapter response to deficiencies of understanding within the strategy and small business literatures, through provision of rich, thick description of best small business strategic management process and practice. And shine a brighter light into what has to date been a ‘black box’ of haze with regard to the fine detail and minutia of managerial, organisational and work activities that make up strategy process and content.

As in the previous chapter, the research approach is underpinned and informed by personal construct theory which gives emphasis to the highly complex nature of the task of small business strategic control and highlights the need for a creative and innovative research methodology to facilitate close and detailed investigation of the phenomenon.

This chapter is of significant practical relevance: offering guiding lenses and informing frameworks with regard to best small business strategic management process – and making explicit the micro-level actions, activities and behaviours which make up that process. These guiding frames are already being used to support growth-seeking owner managers in the UK and Africa. The knowledge base embraces original, valuing-adding work which addresses a major void in the current strategic management and small business literatures and is currently being utilised to help address unemployment and facilitate poverty reduction in Africa and underpin entrepreneurship development worldwide.

Start-up owners have emerged in recent years as thought leaders in a variety of encouraging ways throughout the business world, changing the game that organisations function worldwide in fascinating ways. They have transformed office culture by embracing flex-time, innovative work spaces, informal networks and work structures among many things. Building a great organisational culture at the early stages of forming a business as in a start-up is about creating an identity. The World Economic Forum community observes that start-ups are social systems which are very attractive for their enhancing of personal creativity and social inclusion. Thus, members of creative start-ups seem to exhibit strong group affiliation and passion for their profession. Based on the assumptions above, the study of start-up workplaces as unique social systems with distinct characteristics is proposed. Drawing on social identity theory as a collective construct was derived by Henri Tajfel and John Turner (Tajfel, 1972; Tajfel & Turner, 1979; Turner, 1982).

This chapter aims to investigate the idiosyncratic bundle of resources, capabilities and personal attributes resulting from the system interactions in the unique organisational context of start-ups (Habbershon, Williams, & McMillan, 2003, p. 452). This chapter considers the need for nurturing of start-up business owners/managers’ entrepreneurial learning capabilities, and highlights the fact that entrepreneurial learning and behaviour is different from other forms of learning and behaving.

Although multiple factors influence how people work, social identity theory could possible serve as a unifying theory of organisational behaviour elements, because it views the organisation as a social system where individual behaviours and attitudes are to a large degree influenced by psychological, behavioural, economic and sociological processes of group formation and membership. Social identity perspectives can shed light on

what and how people think in the early, but very critical stages of organisation formation.

Research in entrepreneurship points out that a heightened sense of self-realisation in individual starting/participating in new ventures is a strong motivator (Triandis, 1989). Engaged and inspired employees perceive their entrepreneurial identity to be central to their self-concept and experience greater levels of passion at their work (Murnieks, Mosakowski, & Cardon, 2014). The result is that the staff is committed to their organisation’s goals and values, motivated to contribute to organisational success, with an enhanced sense of their own well-being. For start-up culture is the reflection of everyone’s actions and values in the office – the interactions of everyone in the start-up with suppliers, customers and other stakeholders set the tone for the company’s relations with its external environment and its culture.

Developing a business with like-minded individuals to advance a collective business vision is at the heart of entrepreneurial activity of small and emerging enterprises. Small but highly flexible work groups provide a united voice and a common sense of purpose for individual members (Alpkan & All, 2007). They have the ability to take action to reconfigure or move entrepreneurial resources and activities in company routines quickly and effectively. This is particularly important in times of high uncertainty and volatility as the one we are currently going through in the midst of the Covid-19 pandemic.

The field of higher education is constantly evolving, particularly in the era of globalisation. With the expansion and influence of Western paradigms, the influence of transnational education (TNE) in the developing world has been gaining significant traction and impact. This chapter attempts to formulate conclusions about the key determining factors behind the penetration and entrenchment of primarily the Anglo-Saxon style of University Education. Within that spectrum, the discussion will also cover how this manifests, looking specifically at various models of TNE and collaborative provision, exploring the possible connotations for small businesses. The final section will attempt to crystallise the main findings and propose directions for further research.

This chapter draws on a number of literary sources, both academic and practitioner, to enable reconciling different discipline areas. Empirical studies will also be explored to provide additional substantiation to the theoretical mantle. This chapter forms conclusions on how the various models of TNE have evolved across the world, the impact of this expansion has created for the local population in terms of skills development and accessibility to education, but also in terms of implications for the local economy and small businesses in particular. A novel approach is taken in trying to bring together disparate thematic areas, which although topical have rarely been explored in conjunction. This chapter will be of interest to a wide audience, including academics and researchers but also policy-makers and professionals in the small business field.

In this chapter, we will be exploring the role of leadership within small businesses. Leadership is an essential element in the management of any organisation and is even more crucial when it comes to small businesses. In particular, both the structure and the specific stage of development of small businesses determines the need for an evolving style of leadership. Unlike their counterparts at larger organisations, small business leaders usually have a higher level of hands-on involvement across multiple areas of responsibility, including strategic decision-making and financial management, as well as team leadership and motivation.

Some key leadership skills, such as having a clear vision, communicating successfully across all business levels, leading by example and keeping the team engaged, are shared by all enterprises, regardless of size and nature. It is critical for small business leaders to understand that each stage of an organisation’s lifecycle brings with it different opportunities and challenges that should be dealt with by adopting different leadership techniques. A ‘one-size-fits-all’ approach will not work, and could even become detrimental in the long term.

During an organisation’s early days, a leader’s main role is to inspire the individuals they work with by sharing their vision and purpose without the need for formal management processes. In this chapter, we will be exploring the above issues in relation to the role of leadership within small businesses in greater depth.

This chapter offers critical insight into the issue of strategic change in today’s fast-paced global competitive environment. It focusses on contemporary drivers of change and considers their implications for small businesses. The small business challenge relating to capacity to identify, react or respond to unfolding changes is of central concern in this chapter. Market reaction to key change forces is also examined. Attention is afforded to the significance and nature of long-term planning for small businesses in their plight to remain competitive in today’s highly competitive environment – both at a small business planning and government planning level. We give focus to how both the unfolding Covid-19 era and other parallel emerging external change forces pose major challenges for small businesses.

Small businesses are the backbone of local communities and a vibrant source of innovation and competition and an essential source of employment. Building and maintaining trust and a transparent work environment between business partners and the public will become critical. On the other hand, compliance with governance and sustainability standards will be a major objective.

Thus, in an effort to understand how to most effectively manage and support small enterprises, this chapter draws upon and integrates key dimensions of small business development understanding and complementary literature-based insight to explore key dimensions of the changing external change environment within which small businesses must strive to operate.

The fourth industrial revolution and its disruptive technological advances are leading to continuous significant changes in the labour markets, which affect employees and employers of all sizes.

Currently, organisations are experiencing considerable skill shortages and talent mismatches: the skills that organisations are looking for do not align with those available in the labour market. This means that matching available candidates on the market with job vacancies is unlikely. In addition, the increasing wage pressure in occupations linked with the most in-demand skills and in high-skills industries has become a reality.

The immaterial assets of a business, such as the competences and skills of its workforce and leaders, are the most significant elements in providing a competitive advantage is a fact no one in the present era would argue against.

While big corporations dispose more resources and capabilities to deal with these challenges, small businesses – considered the foundation of many healthy communities – have limited assets to face such global and complex dynamics.

This chapter acknowledges the significance of small businesses in the global landscape and their key role as ‘job generators’ in enabling an inclusive economic growth in developed as well as in emerging countries. And in this context gives focus to the crucial issue how of small businesses can overcome the skill and the talent gap, and which strategic shifts they can put in place in order to withstand these environmental constraints.

To this end, this chapter provides a broad investigation of international reports discussing the role played by external factors – such as governments and their policy frameworks – and the concept of knowledge sharing.

Moreover, it examines the influence of internal factors. Specifically explored is the key role of the human resources function in attracting skilled graduates, upskilling its workforce, establishing a total reward and talent development strategy and engaging in job design.

This chapter is of particular relevance to owner managers, general and HR managers of small businesses, but also public officials and private institutions. It identifies and offers practical solutions for small businesses that aim to transform themselves to successfully cope with skills shortages and the war for talent in the age of digitalisation.

The exploration of small businesses has risen in prominence over the last years in the UK context, particularly given the impact they carry in terms of their contribution to national productivity and overall economic and financial performance. The exit of the UK from the European Union has created new conditions and issues that organisations are called to face. This chapter attempts to draw on pertinent literature to sketch out and map the challenge that Brexit poses for small business owners and managers. This chapter will elicit information primarily through an extensive scan and analysis of the available literature to crystallise the main arguments and frameworks that can help understand and interpret the more nuanced aspects. Ensuing, building on the findings from the literature, there will be an attempt to present a range of potential recommendations to assist small business with their planning to address the issues that might emerge both during the transition phase, but equally in the medium- and long-term future. The topic is of interest to both academics and practitioners as it explores the interplay between two very important and contemporary themes, the specific characteristics of small business and the unfolding exit from the EU, exploring how management and organisations can adapt to tackle this new landscape.

Employee engagement is a workplace approach resulting in the right conditions for all members of an organisation to give their best each day. The result is that the staff is committed to their organisation’s goals and values, motivated to contribute to organisational success, with an enhanced sense of their own well-being. Although employee engagement as a practice is evidenced as bringing improved productivity to small businesses, and while 87% of the UK small enterprises claim that they are taking active steps to improve employee engagement, only 12% of such businesses list it as a business priority.

In a smaller organisation, it is easier for leaders to be involved in driving forward and measuring planned actions to improve employee engagement. According to the consulting firm Aon Hewitt (2015), there are six major categories for drivers of employee engagement: (1) The work people do; (2) The people they work with; (3) Opportunities; (4) Total rewards; (5) Company practices; and (6) Quality of life.

The focus of this chapter is to recommend how small businesses can drive employee engagement using the six drivers of engagement recommended by Aon Hewitt, and improve levels of productivity in the firm.

The purpose of this chapter is to analyse the theoretical work conducted in the fields of management of small businesses in the UK and control measures taken by them to cope with challenges that emerged due to complexities of the present uncertain environment. Brexit is one such event which brought in drastic changes in the undertaking of business and the management of small enterprises. The study upon which this chapter is based identifies knowledge in terms of economics, political events and human resource management (HRM), considering the impact and consequences of Brexit on small businesses. Much of the content developed will help establish a strong link as to what happened after the withdrawal of the UK from the European Union.

A structured work was applied to synthesise the theoretical understanding. A search of the existing literature was done to select the databases and keywords of the primary search. Then, a backward search was implemented to examine the references of the selected papers, and finally, a forward search examined the citations of the selected papers. The selected papers were then classified according to their content. A thorough search of the existing literature was done in Scopus, and Google Scholar using a combination of keywords such as Brexit, UK and EU, consequences and drawbacks of Brexit, and small businesses in the UK.

The findings of this study show that small businesses started opting for newer and innovative technologies to facilitate the generation of more revenues. Aspects of E-commerce, however, turned out to be the foundation of developing industrial organisations, bringing more adequate capabilities to effectively facilitate activities such as strategic planning. Whilst governments frequently fund non-profit organisations, increased concerted support for more able and growth-capable small businesses which make significant economic and social contribution would seem appropriate in the current Brexit change climate.

The small businesses sector will need to undertake a cohesive input to government decision-making since a key pre-requisite will be the maintaining of balance between survival, maintenance of existing business, as well as the availability of semi-skilled and unskilled workers and other vital underpinning resources. Moreover, this underlying study has limitations in terms of practice orientation since it is theoretical and sectional in approach, providing a static picture of the Brexit event and its impacts on small businesses in the UK.

Thus, this chapter offers researchers a broader and more comprehensive view of the impact and consequences of Brexit on UK small businesses. Educators, researchers and practitioners will benefit. Scholars in years to come will retrospectively address whether independence from the EU has nudged or nurtured small business development of appropriate entrepreneurial skills and new technology to enable adaptation to and co-creation of the change which Brexit has triggered.

The purpose of this chapter is to critically evaluate contemporary Japanese human resource management (HRM) practices in order to identify if Japanese small enterprises are employing the same or different practices that have been used in the past.

An interpretative qualitative approach is applied through the use of semi-structured interviews. Three small business owners with 30–50 years’ experience in the construction industry have been interviewed in Japanese with their subsequent responses translated, transcribed and coded.

It has been discovered that traditional HRM practices remain popular although their influence has slightly dissipated. This finding indicates an influence by western HR practices, at least to an extent. Findings include the presence of lifetime employment, seniority systems, Kaizen (quality management), the growing international workforce, unionisation, ‘nomunication’, recruitment practices, group decision-making and the lack of gender equality.

Research was only carried out with three small business owners which may reduce the transferability and generalisability of the findings. Only the construction industry was analysed. Moreover, the interviews took place on Skype rather than in a face-to-face environment which may have reduced the ability to effectively understand facial signals.

Although a native Japanese speaker carried out the translations, there may have been issues regarding selecting the most appropriate words to be used.

This study provides an original viewpoint on contemporary HR practices in Japan. It is argued that this chapter will provide a fresh understanding on HRM practices used by Japanese small business and will be useful for scholars, employees and employers alike.

The purpose of this chapter is to analyse the theoretical work conducted in the fields of e-business adoption by small businesses in the UK. This chapter aims to explore the benefits and drawbacks that influence small businesses in adopting Internet-based e-business. We are thus responding to a need to recognise and measure the perceived importance of driving forces and barriers in the adoption of e-business solutions among small businesses. Currently, adoption of e-business is rapidly growing among business organisations throughout the world. Crucially, it is often seen as an essential strategic tool that attracts many companies in turning their traditional business strategy to e-business and as a more complex concept of interfirm cooperation.

A structured work was applied to synthesise a theoretical model. A meticulous search of available literature was conducted, focussing on key terms such as e-business adoption, benefits, drawbacks and small businesses in the UK. We identify that e-business adoption within small businesses is affected by perceived relative advantage, perceived compatibility, CEO’s innovativeness, information intensity, buyer/supplier pressure, support from technology vendors and competition. Furthermore, the value of such adoption depends on how, in the face of rapid growth, small businesses can effectively expand IT resources, strategic planning and business partnerships to develop e-business capability and business process competence. These are the key areas of activity which help adopting companies to achieve outstanding business performance. The findings of this study to date are presented within the limiting parameters of methodology based upon use of self-report scales to measure the constructs of the theoretical model. The main orientation of the work of this study is theoretical and sectional which provides a static picture of e-business adoption by small businesses – offering guiding practical insight and providing foundations for subsequent empirical study.

This chapter offers researchers a broader and more comprehensive view of the benefits and drawbacks that influence small businesses in adopting Internet-based e-business. Educators, researchers and practitioners will be all benefitted. In recent years, e-business has been adopted by many corporations to improve operational efficiency and profitability and to strengthen their competitive position and potential for survival in the new economic era (the information era).

The main purpose of this chapter is to shed more light into the challenging small business (SME) task of securing adequate and appropriate funding for continued viability. Access to finance is of fundamental importance to SME survival, invariably it involves working capital needs or long-term capital projects. This chapter will mainly focus on the Greek environment and the individual characteristics of the domestic market, in particular. As in most countries, SMEs form the backbone of Greece’s economic activity, accounting for almost 95% of the total. They are the very backbone of the country’s daily business and labour force. Crucially, the Greek banking system upon which many small enterprises rely has collapsed during the years of global financial crisis, with the domestic banks literally ending up completely drained of all available liquidity.

In a country that has gone through enormous financial turmoil, and with a damaged banking system that has undergone three recapitalisation processes, domestic companies had little, if any, support from the traditional banking sources. In the summer of 2015, things became critical, when the country almost left the European Union’s (EU) common currency zone and entered a capital control regime. As a result, enterprises sought other channels of financing to overcome the obstacle. Focus in this chapter will be on the role of the stock market, the national investment funds and the EU funding.

This chapter, in the main, builds insight from a research-informed case study: that of Greek SMEs and their access to finance (excluding the banking sector). The time span of the analysis covers the years of the domestic financial crisis, lasting considerably more than within the other European countries. Though varying in magnitude, the crisis in Greece started sometime in 2010 and concluded in 2018, leaving deep scars on the country’s productive body. During that period, the domestic banking system underwent catalytic changes, embracing three major recapitalisation schemes and an enormous merger phase that ended up with only four remaining systemic banks. Prior to that, the 2012 Private Sector Involvement (bailout program) led the country’s rating to a default status and made financing options extremely difficult.

This chapter will also offer comparisons to other European states, to enable drawing of conclusions about the different operating parameters of doing business in the greater region; and to facilitate search for common patterns between the countries that were hit by the credit crunch and also saw their banking systems weaken. The data will be drawn exclusively from secondary sources, including national and European public and private organisations dealing with financial and investment analyses. Once gathered, data is categorised and critically evaluated to look deeper into the nature of the behaviour of SMEs and the financing channels they have found during the study sample period.

Key findings will include the reporting and the evaluation of Greek firms’ access to finance with regard to non-banking sources, such as the stock market, EU funding, investment laws and venture funds. Comparison with prior years and with other European markets will show the main challenges and obstacles firms faced, and the solutions they found during the crisis.

Limitations can be split into two categories: first, the data reported at public and private sites include by default the official sector of the economy, thus, omitting the reporting of parallel or unofficial market activity. In an economy that includes approximately 20% of unofficial GDP, such sources most probably proved catalytic in the companies’ liquidity, without being officially reported. Second, the time span of the sample is quite large, making it difficult to analyse the specific characteristics of various companies at various time points in full detail. However, the chapter’s main purpose is to offer an all-inclusive picture of how things evolved during the years of the crisis and not to focus on specific points. Describing the big picture is the priority of this chapter, with a focus on capturing the financing trends during this period of abnormality. Perhaps a further study in the future could be inspired by this current one, to break-up the period into smaller pieces and dedicate detailed analysis to each chunk. Useful conclusions will be drawn in this chapter for policy-makers, including both fiscal and monetary directors, who will get a clearer picture of how the credit crunch influenced the market, and how SMEs worked their way through these challenging times to find ways to finance their operations, development and growth. The major contribution of this chapter is it being the first to cover SMEs exclusively during all years of the financial crisis in a country like Greece that has seen its banking sector collapse. Firms were left without their traditional source of funding, the next-door bank, and managed to find alternative routes to finance to survive and keep on going.