Paul Robson

SME Growth: The Relationship with Business Advice and External Collaboration

The paper presents multivariate analysis of the relationship of SME growth with the acquisition of external business advice, whilst controlling for the influence of SME characteristics of age, manufacturing/services, high technology, innovator, level of skill of the workforce, exporter and number of competitors. The relationship of external business advice with SME performance is statistically significant for only a small number of sources and fields. Obtaining external advice in fields such as business strategy and staff recruitment is associated with positive firm performance. The main positive relationships of advice and performance are dominated by private sector sources such as lawyers, suppliers, customers and business friends/relatives. Collaborative arrangements with suppliers nationally/internationally have a strong positive relationship with employment and turnover growth; collaboration with local suppliers has a strong positive relationship with growth in profitability. There is little evidence of statistically significant relationships between government-backed providers of business advice such as Business Link and firm performance.

The use of external business advice by SMEs in Britain

This paper reports new survey results on the extent, sourcing and impact of external business advice to SMEs in Britain. The survey, covering 2547 respondents, is the largest and most definitive assessment to date. Its results demonstrate the very wide extent of external advice: used by 95% of respondent SMEs, an increase from 85.8% in a similar survey in 1991. The analysis of the survey assesses sources of advice in terms of the level of trust that exists between the supplier and the SME client. The market appears to be strongly segmented and dominated by high trust specialist sources (accountants, lawyers), customers, suppliers and business friends. Business associations and government-backed sources play an important but lesser role. The recent government initiative of Business Link has, however, established an important market, used by 27% of respondents. Impact assessments confirm the significance of high trust private sector suppliers for the most crucial supplies of advice. Variations in use occur ...

Small Firm innovation, growth and performance: Evidence from Scotland and Northern England

This article uses Ordinary Least Squares (OLS) estimation techniques of a large-scale survey to examine the effect of firms’ innovation activities on their growth performance. The survey, covering 1347 respondents, is the largest and most definitive assessment of enterprise in Scotland and Northern England. In this article we employ four measures of growth: growth in employment; growth in turnover; growth in productivity; change in the profit margin. These measures of growth are analysed separately for manufacturing and service firms. The models are re-estimated with the current sales and profit levels adjusted for the number of employees. The most emphatic findings highlight a positive relationship between novel product innovation and employment growth and, for manufacturing firms, at least in the short term, a negative relationship between product innovation (both incremental and novel) and growth in sales or productivity. By contrast, growing sales and productivity appear positively associated with incremental process introductions in service firms.

Sensemaking and the Distortion of Critical Upward Communication in Organizations

Most research into feedback has focused on communication from managers to non-managerial staff. To a lesser extent, it has more recently addressed upward and 360 degree appraisal systems. In contrast, the role of informal upward communication continues to be largely neglected, especially when it concerns the transmission of opinions critical of managerial orthodoxy. There has been little examination of the sensemaking heuristics employed by both managers and non-managerial staff that stimulates the former to disregard much of the already muted critical upward communication they receive, and the latter to suppress its transmission in the first place. We therefore suggest that managers often over commit to particular courses of action, irrespective of whether they bode ill or well for the organization concerned. In so doing, they frequently demonize those who belong to stigmatized outgroups or who hold contrary value systems. We argue that the consequent elimination of critical upward communication (CUC) leads to iatrogenic phenomena - i.e. organizational problems that are derived from the treatment regime that has been prescribed, rather than from a pre-existing condition. Implications for practice and further research are considered. Copyright Blackwell Publishing Ltd 2006.

Intensity of interaction in supply of business advice and client impact: a comparison of consultancy, business associations and government support initiatives for SMEs

This paper assesses the supply of business advice using new empirical evidence from a large scale survey of SMEs. The chief focus of the paper is on a comparison of suppliers that operate in different environments of regulation, contract and reputation. The paper argues that interaction intensity varies with the level of information asymmetry of these different environments, between different types of service supplier and their clients. Interaction intensity between suppliers also varies as a result of the level of trust they enjoy: for example, the low trust enjoyed by consultants appears to encourage higher intensity of interaction which improves the tailoring of the service to the clients needs and enhances impact. The paper assesses interaction intensity using the existence of site visits and/or a written brief/contract as indicators. Although these measures have limitations, the paper demonstrates clear and significant differences between suppliers in terms of interaction intensity, use of contracts and impact in three broad categories: private sector consultancy (low trust, high intensity, high impact), business associations (high trust, low intensity, moderate impact) and government support agencies (moderate trust, moderate to high intensity, moderate or low impact). Multivariate estimation methods demonstrate that significant differences in interaction intensity, use of contracts and impact by client type are much less important than differences in supplier type. This indicates that suppliers generally develop more into niche service fields or groups of services rather than niches related to types of firm.

Managing internal communication: an organizational case study

Purpose – The primary objective of this article is to explore what senior managers think they should be doing to improve communication in their organization, what they actually do in communication terms, and the high work load which senior managers undertake.Design/methodology/approach – This understanding is advanced by using the results of a communication audit which was conducted in a major European health‐care organization (HCO) undergoing significant internal re‐organization. A communication audit can be defined as: “a comprehensive and thorough study of communication philosophy, concepts, structure, flow and practice within an organisation”. It assists managers by “providing an objective picture of what is happening compared with what senior executives think (or have been told) is happening”.Findings – First, senior managers who over‐work are even less likely to have the time for reflection, followed by behaviour change. Second, the absence of adequate upward communication may blind managers to the ...

The role of boards of directors in small and medium‐sized firms

The size, characteristics and structure of boards of directors have been claimed to be an important influence on the performance of large firms, but have been less examined in small firms. For larger firms the role of boards acts more as a substitute for the development of internal staff and management skills, indicating that for large firms directors chiefly support the control role of CEOs. The importance of seeing boards, external consultants and internal management skills as substitutes is demonstrated, and is shown to have a non‐linear relation with firm size. However, a key finding of the paper is that there is little evidence of a strong association of board size, board qualifications, or board structure with firm performance, measured by profitability, employment growth or propensity to innovate.

Government advice networks for SMEs: an assessment of the influence of local context on Business Link use, impact and satisfaction

Business Link in Britain is one of the main recent government initiatives to support SMEs in the EU. The paper uses a 1997 survey of SMEs to determine how Business Link use, impact and satisfaction are influenced by firm characteristics, local partnership characteristics, local geographical context, service intensity and other explanatory variables. The paper presents econometric estimates based on logit and ordered logit models. A key finding of the paper is to demonstrate that local context is not very significant to service use, impact or satisfaction, but local Business Link management and adviser performance are important influences on the impact and satisfaction. Major differences in the way SMEs use government-backed services are also found. There are high volumes of use of ‘gateway’ information services producing only low impact, and low volumes but high impacts and satisfaction with intensive advice services governed by contracts between the clients and the adviser. Implications for the Small Business Service, launched in April 2000, are drawn.

Determinants of long-distance investing by business angels in the UK

The business angel market is usually identified as a local market, and the proximity of an investment has been shown to be key in the angels investment preferences and an important filter at the screening stage of the investment decision. This is generally explained by the personal and localized networks used to identify potential investments, the hands-on involvement of the investor and the desire to minimize risk. However, a significant minority of investments are long distance. This paper is based on data from 373 investments made by 109 UK business angels. We classify the location of investments into three groups: local investments (those made within the same county or in adjacent counties); intermediate investments (those made in counties adjacent to the ‘local’ counties); and long-distance investments (those made beyond this range). Using ordered logit analysis the paper develops and tests a number of hypotheses that relate long-distance investment to investment characteristics and investor characteristics. The paper concludes by drawing out the implications for entrepreneurs seeking business angel finance in investment-deficient regions, business angel networks seeking to match investors to entrepreneurs and firms (which are normally their primary clients), and for policy-makers responsible for local and regional economic development.

The influence of location on the use by SMEs of external advice and collaboration

This paper provides an analysis of the influence of location on the extent of use and impact of external advice and collaboration on small and medium-sized enterprises (SMEs) in Britain. The analysis indicates that for private-sector advisers (accountants, consultants, etc.) and collaboration with suppliers and customers, the intensity of use does not vary significantly with location in most cases. Only the input of business friends and relatives is strongly locationally constrained, indicating the importance of personal trust processes operating in a different way from other influences. EU Structural Fund status of an area also has few major effects on use of private-sector advice. However, the impact of external advice and the extent of local collaboration between similar firms are influenced by location, with impact generally increasing with the size of business concentration, density and closeness to a business centre; i.e. there are positive effects of urban location and agglomeration economies. For public-sector support agencies (such as the Small Business Service Business Link, TECs/LECs, enterprise agencies and also chambers of commerce) the reverse is generally true. Levels of use are locationally influenced, but impact is not. Use tends to increase in EU-assisted areas, and in areas with lower levels of business concentration. This applies to most local agents, but for regional development agencies there is an additionally strong effect of highest focus of use and impact in the most rural and peripheral areas. Thus public agents appear generally to be most used and have greatest relevance to SMEs in more peripheral areas where they fill gaps in the market created by agglomeration effects.