David Deakins

Entrepreneurial learning and the growth process in SMEs

This paper draws on case and interview material, from research with entrepreneurs in small and medium‐sized enterprises (SMEs) to examine the process of entrepreneurship and entrepreneurial learning in SMEs. The cases have been drawn from different sectors including services, manufacturing and technology‐based sectors such as hydraulics, and software development. This paper reviews the contribution of organisational learning theories, which, it is argued, have been developed for large firms rather than SMEs. More appropriate theories are examined from fields that accepted the impact of uncertainty and dynamics in decision making, such as Schumpeterian dynamic approaches to learning and development. Case study evidence is presented on the nature of entrepreneurial learning in growth SMEs and compared with theories in the literature.

New venture support: an analysis of mentoring support for new and early stage entrepreneurs

There has been little research on the processes of providing support to new firm entrepreneurs, and little evaluation of the provision of support to existing small firm entrepreneurs through advice, counselling or consultancy. Despite this lack of research, support for new firm entrepreneurs has been largely withdrawn in England and Wales with the focus of support, through Personal Business Advisers (PBAs), targeted at existing small firm entrepreneurs who employ more than 20 people and have the potential for growth. There are theoretical arguments that suggest support for new start entrepreneurs should be provided on a mentoring basis. If this is provided selectively, then this should have an impact on the management ability and confidence of such new firm starts. This paper reports the results of interviews with new firm entrepreneurs engaged in such a mentoring relationship. The research, undertaken in Scotland, suggests that such a relationship is beneficial. Given the high failure rates of new firm formation, such support could have wider application and benefits. It is suggested that, for certain regions, provision of new firm support can yield positive and worthwhile returns to public sector investment, particularly in a region such as the West of Scotland, characterised by a need to diversify its economy and raise the formation rate of new start small firms and entrepreneurs.

Risk Assessment with Asymmetric Information

The risk analysis of small business propositions is characterized by uncertainty and asymmetric information, producing problems of moral hazard and adverse selection for the banks and liquidity constraints for entrepreneurs. Decision making is based on information supplied and the application of different criteria. Concerns the relative importance of different criteria and whether the right criteria are being used to assess small firm ventures by banking institutions, and reports the results of research carried out into the importance of different criteria used in risk assessment by bank officers. Finds a high degree of variability in the approach by different bank officers and a bias towards financial information. The findings have marketing implications. Risk assessment cannot be divorced from the nature of the relationship with the small business customer. Investment in improving techniques of risk assessment increases profitability for the bank and improves marketing opportunities through the developm...

Developing success strategies for ethnic minorities in business: Evidence from Scotland

Abstract This article draws upon qualitative research with ethnic minority entrepreneurs in Strathclyde, involving 43 interviews with ethnic minority small firm owners and entrepreneurs from the Strathclyde region in Scotland and three more detailed case studies. We argue that, in Scotland, ethnic minority entrepreneurship has faced different issues from those that have been identified in the literature, success has been achieved through innovative developments, necessary partly due to special environmental factors in Scotland, which include a low rate of new firm formation and the peripheral nature of the market. The relevance of such development, however, provides examples and ‘cases’ of successful entrepreneurship that has relevant application to other areas of the UK and Europe. We use analysis of the recorded interviews and case studies to demonstrate that the keys to successful diversification and development rely upon the development of effective networks and marketing strategies and the use of con...

Market‐based learning, entrepreneurship and the high technology small firm

Discusses case study and interview evidence to examine the evolution and development of entrepreneurial strategies in the high technology small firm (HTSF). Evidence from case study material suggests that a period of non high technology development can be an advantage for the entrepreneur to gain essential contacts, networks and learn to develop strategy, as well as time to acquire income and funding to permit the development of the technology‐based firm. The paper discusses evidence from four rich case studies. Each of these involved a non‐high tech start‐up, yet this was still crucial to the entrepreneurship process and learning of the entrepreneur. Material from case evidence is also combined with interview evidence to discuss the critical factors in the learning process and the development of entrepreneurial strategies from a programme of interviews with HTSFs. It is argued that the evolution of a marketing strategy is part of the learning process involved in entrepreneurial development, we need to understand the diversity of this process if intervention is to be better informed by practitioners and by policy makers. In this paper we stress the diversity of entrepreneurial development, within HTSFs, discuss the importance of learning in entrepreneurial development for developing marketing strategies and develop policy implications for intervention.

ICT‐enabled collectivity as a positive rural business strategy

This paper examines the development of Internet‐based, virtual business forums and their potential for overcoming some of the difficulties faced by business owners in rural areas. Rural environments provide challenges for business owners due to limited local markets and limited access to resources. The paper examines the success of collective action by business owners in rural environments in Scotland to establish Internet‐based business forums that seek to meet such challenges. Using case study methodology, the paper finds variable experiences and proposes a model of the process of collective action.

Executive Learning in Entrepreneurial Firms and the Role of External Directors

Provides an analysis of the role of “external” or non‐executive directors and their relationship with executive entrepreneurs in small but entrepreneurial (growing) companies, focusing on their influence on executive learning. We provide qualitative analysis of research based on 45 face‐to‐face interviews. Despite the importance given to individual executive and organisational learning in large companies, comparatively little literature exists on executive entrepreneurial learning in small companies. The factors that can affect such learning are discussed with emphasis on the role played by external directors who, it is argued, are likely to be appointed in such companies due to the need for additional expertise and knowledge in a rapidly changing environment.

Evolution, financial management and learning in the small firm

There is an assumption that inadequate financial management practices are contributors to turbulence in the small firm sector; yet there have been few investigations into the factors that influence an owner‐manager’s approach and the processes involved in the evolution of strategy and associated learning in this area. Previous studies have adopted a comparative static approach that is survey‐based; we argue that these studies can only give limited insights. We adopt a comparative case study methodology to develop an evolutionary process view of financial management in small firms. Despite the increased attention paid to owner‐managers in the small firms sector, we know comparatively little about the process of financial management and how small firms learn and adjust strategy and decision‐making in this area. In this paper, we attempt to shed some light on the process issues within small firms from qualitative evidence collected as part of a programme of case study research with entrepreneurs and owner‐managers. We discuss case evidence and focus on how owner‐managers reach financial management decisions, how they learn and adjust behaviour within the entrepreneurship process.

The measurement of social capital in the entrepreneurial context

Purpose - Whilst all models of the entrepreneurial process identify the role of networking as important at both the start-up and developmental stage of a business latterly these models have expanded the notion of networking and embraced the concept of social capital. However, much of the literature on measuring social capital has focussed on the quantity of social capital within a given geographical space. This paper seeks to expand this research by examining the depth and richness of social capital for new venture creation and thereby identifying the impact of social capital in new venture creation. Design/methodology/approach - Current research has tended to be quantitative, for example the World Values Survey. However, 2001 there is a need to explore the value of social capital in the entrepreneurial process. This paper presents a critical review of the existing literature on measuring social capital in the entrepreneurial process. It is anticipated that the research will reveal rich, contextual information which will identify the need to investigate social capital from a qualitative perspective. Findings - The papers examination of the social capital literature thus far, although not exhaustive, has noted the emergence of several common themes that associate the issues of measurement with lack of empirical consensus on an accepted definition of social capital. Practical implications - Policy makers charged with developing an entrepreneurial culture and the establishment of new ventures, might wish to look at encouraging both nascent and existing entrepreneurs to exploit their formal and informal network relationships, seeking the development of organisations and institutions that will assist in building social capital. Originality/value - This paper contributes to the existing literature in emphasising the necessity of understanding the “measurement” of intangible factors in understanding social capital in the entrepreneurial process.

Addressing the business support needs of ethnic minority firms in the United Kingdom

The authors examine the provision of enterprise support to ethnic minority businesses (EMBs) in five cities in the United Kingdom. The central focus is on the nature of support provision, including relationship with the commercial banks. It is well established that EMBs are underrepresented as clients of mainstream providers of enterprise support, such as Business Links in England, or Local Enterprise Companies in Scotland, and that participation and practice, even with specialist ethnic agencies, is highly variable. The authors discuss evidence from research undertaken through a programme of thirty-three face-to-face interviews with respondents from a cross-section of support agencies in five city locations in which EMBs are concentrated, namely, London, Leicester, Birmingham, Glasgow, and Edinburgh. They discuss evidence from the face-to-face interviews in the light of previous research findings, developing implications for future support policy for EMBs. They highlight good practice, identify gaps in provision, and suggest policies which can improve the access of EMBs to support and finance.