Howard Van Auken

Barriers to Innovation among Spanish Manufacturing SMEs

Innovation is widely recognized as a key factor in the competitiveness of nations and firms. Small firms that do not embrace innovation within their core business strategy run the risk of becoming uncompetitive because of obsolete products and processes. Innovative firms are a perquisite for a dynamic and competitive economy. This paper reports on the results of a study that examined barriers to firm innovation among a sample of 294 managers of small and medium‐sized enterprises (SMEs) in Spain. The study examined the relation between (1) product, process, and management innovation and (2) 15 obstacles to innovation, which can limit a firms ability to remain competitive and profitable. Findings of the study show that barriers have a differential impact on the various types of innovation; product, process, and management innovation are affected differently by the different barriers. The most significant barriers are associated with costs, whereas the least significant are associated with manager/employee resistance. Additionally, the results demonstrate that the costs associated with innovation have proportionately greater impact on small than on larger firms. The findings can be used in the development of public policy aimed at supporting and encouraging the innovation among SMEs in Spain. Government policies that encourage and support innovation among all firms, especially small firms, can help countries remain competitive in a global market. Public policy that encourages innovation can enable firms to remain competitive and survive, both of which have direct implications for employment and a countrys economic viability. The results may also be insightful for managers who are attempting to encourage innovation. Understanding barriers can assist managers in fostering an innovative culture by supporting new ideas or by avoiding an attitude that creates resistance to new ideas.

Small Firm Bankruptcy

From the results of a survey we compare the demographics and potential problem situations of 57 bankrupt firms to 55 nonbankrupt firms in an attempt to identify root causes of bankruptcy. Results indicate that the most serious problems of bankrupt firms can be condensed into three categories: lack of knowledge, inaccessibility to debt, and economic climate. Bankrupt firms also appear to be older, more likely to be in the retail industry, and organized as proprietorship or partnership than nonbankrupt firms. They are also less likely to use the Internet in their business operations than the nonbankrupt firms. One surprising finding is that while both subsamples found knowledge important, the nonbankrupt sample found it significantly more important than the bankrupt firms. This evidence provides insights for governments and academic institutions in their efforts to provide resources that may help reduce the incidence of bankruptcy, especially during times of declining economic health.

THE INFLUENCE OF ROLE MODELS ON ENTREPRENEURIAL INTENTIONS

This study examines the impact of role model activities on potential entrepreneurs desire to own a business. A group of students, whose role model owned a business, were asked to rank the influence on career intentions of twenty specific activities in which role models and potential entrepreneurs might engage. The study looks at the relationship between these activities and the desire to own a business. Role model activities related to involving the respondent in professional activities, employment in the business, and discussions about the business were found to be significantly related with interest in starting a business. The results can be useful to those involved in teaching entrepreneurship courses, owners of businesses who are interested in encouraging entrepreneurship, and providers of assistance who council owners of firms.

Bootstrap financing and owners’ perceptions of their business constraints and opportunities

In this paper we present the results of a regional survey of small business entrepreneurs that asked about the use of and motivation for bootstrap financing – employing resources other than traditional financing to fund operations. Extending the work of Winborg and Landstrom (2000) our results indicate that perceived risk is highly associated with owners’ assessment of the importance of bootstrap financing techniques. We also find that owners who see themselves as having limited ability are more likely to use private owner financing techniques that tend to squeeze all available funds from the owner and those close to him/her. Alternatively, bootstrap financing techniques involving the delay of payments are preferred when risk levels appear highest, while owners in business environments with the most opportunity are more likely to try to minimize accounts receivable. The results of this research can be used by consultants and agencies that assist small firms by acquainting owners with the myriad techniques for funding their companies as well as understanding the factors that often motivate the use of particular techniques. Owners should recognize that they should explore various funding alternatives rather than simply using what they are familiar with or what is readily available.

Differences in the Usage of Bootstrap Financing among Technology-Based versus Nontechnology-Based Firms

This study compares owners’ assessment of the importance of 28 bootstrap financing methods between a sample of 44 technology‐based and 44 nontechnology‐based firms. The results indicated that owners’ of technology‐based firms believed that 6 of the 28 bootstrap financing methods were more important as compared to owners’methods of nontechnology‐based firms. The bootstrap financing methods also were grouped using Winborg and Landstrom (2001) factors. Owners of technology‐based firms believed that bootstrap financing methods that improved cash inflows were more important and that bootstrap financing methods that slowed disbursements were less important compared to owners of nontechnology‐based firms. The results can be used by owners of small firms, consultants and by support agencies that provide assistance with financial planning and capital acquisition. Understanding the use and availability of all sources of capital can help owners of small firms to develop comprehensive financial strategies. This information also could be incorporated into training programs for owners and managers of small firms.

Family Dynamic and Family Business Financial Performance: Spousal Commitment

This article views the survival of a family business as partially dependent on spousal commitment. The decision to launch a business should depend not only on analysis of the opportunity, but also on the degree to which ones spouse shares a common vision about the goals, risks, and rewards of the business. Models and testable hypotheses are developed to guide empirical research on the antecedents and consequences of spousal commitment to a family business. The models can benefit individuals considering the launch of a business, couples that currently own a business, business consultants, and university instructors teaching entrepreneurship courses.

Venture Capital in Spain by Stage of Development

This paper examines the investment decisions of 51 Spanish venture capital firms by stage of development. The results showed that venture capitalists ranked evaluation criteria related to the characteristics of the entrepreneurs, manager background, and management team experience as more important than market and product characteristics. Factors affecting the required rate of return were more important for the early‐stage firms than for late‐stage firms. Discounted cash flow analysis is the most frequently used valuation method. Private venture capital firms invest more during late development stages, while public venture capital firms invest more during the early stages. The results can be used by firms seeking venture capital, venture capital firms, consultants, and support agencies that provide capital‐acquisition assistance. By gaining insight into decision criteria and processes, firms can develop better and more targeted materials to attract capital. Venture capital firms can use the information from this study to better understand their decision processes, individually and relative to competitors. Consultants and support agencies can use the information to provide better advice to both firms and venture capital firms. Information is this study could easily be built into training programs for both new and existing businesses. Finally, the results can also be incorporated directly into university courses that include material related to venture capital.

Innovation and performance in Spanish manufacturing SMEs

Innovation facilitates how SMEs respond to market changes and maintain their competitive advantage. This paper analyses the relationship between the degree of innovation (measured as innovation in products, processes and administration systems) and performance among 1,091 Spanish manufacturing SMEs. The results show that innovation positively impacts SMEs performance in low and high technology industries. Innovation was more important to achieving a competitive advantage to high technology firms than low technology firms. These results support innovation as being important to a firms sustainable competitive advantage.

DIFFERENCES BETWEEN FEMALE AND MALE ENTREPRENEURS' USE OF BOOTSTRAP FINANCING

Women-owned businesses are increasingly important to the U.S. economy in terms of numbers of firms owned, revenues and employment. Despite the growing role of female-owned business, the ownership, growth and size of female-owned firms is lower than that of male-owned firms. Differences in access to capital have been one reason attributed as an obstacle to women launching and growing small firms. This paper presents the results of an empirical study that examines differences of the use of bootstrap financing between female- and male-owned small firms. Research on the use of bootstrap financing among small firms is limited. The findings show that bootstrap finance methods were similar among female- and male-owned small firms; however, differences were found relative to age, education, sales and overdraft privileges. The results have implications for female entrepreneurs, support persons or agencies and government agencies providing assistance. Female owners should become more informed about financing options available beyond the traditional sources of capital. During periods of declining sales, especially during recessionary periods, female owners may rely on bootstrap sources to supplement capital needs, as well as proactively developing contingency plans for accessing bootstrap capital. These policies could be incorporated into training programs for female business owners. Educators and consultants could help female owners better understand financing alternatives and the importance if developing contingency plans. Government policy may be able to alleviate capital shortages through programs that better inform female entrepreneurs about the capital acquisition process.

Security analysis and portfolio management: A survey and analysis

T his research has two objectives. The first is to present the findings of a survey of investment managers concerning their current practices in the areas of securities analysis and portfolio management. The second is to identify changes in these practices that may have occurred as a result of the October 1987 stock market crash. In the first case, we use our findings to identify relationships between the use of particular investment techniques and the size of the investment firm. Veit and Reiff [1983] argue that larger banks enjoy economies of scale in the area of trading operations and can afford greater specialization of investment personnel. If this analysis is generalizable, it suggests that larger investment firms are more likely to employ a wider variety of investment techniques and strategies. There are a limited number of surveys of investment professionals. Bing [1971] surveyed 34 investment firms and found that analysts use a number of techniques in appraising equity, with price/earnings analysis the most popular. More recently, in a Block and Gallagher [1988] survey of 230 bank trust departments (BTDs), only 6% of the respondents were found to use stock index futures and options. A related study (Block and Gallagher [1990]) found that 41% of non-trust money managers use index futures and options strategies. Anecdotal evidence appears to indicate that the crash has made individual investors apprehensive about the stock market and altered their security preferences (Siconolfi [1988]). Moreover, there is evidence to suggest that institutional investors have remained cautious, allocating a larger portion of their portfolios to liquid assets (Alcorn [1988] and Dorfman [1988]). While these observations are interesting, a more formal assessment of changes in investmentrelated behavior is necessary in order to evaluate the total impact of the crash. Block and Gallagher [1988], for example, find that the reluctance of BTD money managers to use derivative strategies has increased since the crash.