Rick Newby

SME Survey Methodology: Response Rates, Data Quality, and Cost Effectiveness

Cost effective data collection is an important methodological issue for small and medium enterprise (SME) researchers. There is a generally held view that mail surveys are the most efficient means of collecting empirical data, despite the potential difficulties associated with low response rates. To enhance the usefulness of mail surveys, researchers have suggested a variety of strategies aimed at improving response rates. While previous studies have examined the effect on response rates of many of these strategies, their impact on data quality and on the cost effectiveness of data collection is less well understood. This study evaluates four response–inducing strategies (printing the survey instrument on colored paper, telephone pre–notification, payment of a monetary incentive, and a follow–up mailing) in terms of their effect on data quality, response rates, and cost effectiveness for a population of SMEs.

An Intimate Portrait of the Individual Investor

We examine a range of investment decisions, and ensuing portfolio performance, and established that they have statistically significant associations with personality traits captured by Costa and McRaes [1992] operationalization of Normans [1963] ‘Big Five’ (Negative Emotion, Extraversion, Openness to Experience, Agreeableness and Conscientiousness), Bems [1977] psychological gender traits (Masculinity and Femininity) and Jacksons [1976] personality traits of Preference for Innovation and Risk Taking Propensity.

Gender and the SME “finance gap”

Purpose – While some previous research supports the existence of a finance gap within the small and medium enterprise (SME) sector, particularly for female owned SMEs, the evidence is hardly unequivocal. Further, much of the prior research has focused on supply‐ rather than demand‐side issues. Hence, the purpose of this paper is to investigate both supply‐ and demand‐side issues for female and male SME owners.Design/methodology/approach – From the results of three focus groups and a review of the literature eight hypotheses were formulated for testing with a mail survey sent to 534 SME owners.Findings – Based on 123 responses, the findings provide no evidence to suggest that a supply‐side finance gap exists within the Australian SME sector. There is also no evidence that Australian SME owners (particularly female owners) are being discouraged from applying for loans from a financial institution because they believe their application will be rejected. The results suggest that other demand‐side issues (part...

Internal audit and audit fees: further evidence

Purpose - The paper aims to examine the direction of the relationship between a firms internal audit function and its external audit fees, extending a previous study by Goodwin-Stewart and Kent, which used data from 2000. Design/methodology/approach - The paper uses publicly available information to analyse the relationship between internal audit and audit fees. Findings - The findings support Goodwin-Stewart and Kents result that the existence of an internal audit function in a firm has a significantly positive relationship with audit fees. In fact, the strength of this relationship has increased since 2000. Research limitations/implications - The study focuses on the top 300 public companies from a market capitalisation perspective and, therefore, the results may not be generalisable to other smaller public companies or to private firms. Second, the dichotomous experimental variable used in the study (existence of internal audit) might not be an ideal measure of internal audit usage since it may not be sensitive enough to capture all the variation in external audit fees. The findings suggest that companies use internal audit and audit fees in a complementary way to strengthen their overall control/operating environment. Originality/value - Although the study extends and validates work already completed by Goodwin-Stewart and Kent, the true value of its result is that users can use publicly available information to determine that firms with an internal audit function are more likely to use it in a complementary way with audit fees, thereby potentially indicating a commitment by that firm to a stronger monitoring/control environment.

Overconfidence, overreaction and personality

Purpose - – The purpose of this paper is to systematically profile investors’ personality traits to examine if, and how, those traits are associated with phenomena observed in financial markets. In particular, the paper looks at overconfidence and overreaction in an experimental foreign exchange market. Design/methodology/approach - – The paper measures the personality of the subjects using the short form of the NEO-PIR instrument, the NEO-FFI developed by Costa and McRae (1992) which is based on Normans (1963) “Big Five” personality constructs of Findings - – The paper demonstrates that personality traits are associated with overconfidence and overreaction in financial markets. The paper presents meta-analysis which facilitates the development of a posteriori theories of how particular traits affect investment; there are important roles for Originality/value - – A typical behavioral finance paper might find an empirical regularity in prices and, on the basis of such patterns, infer the underlying psychology motivating the behavior of investors. The approach differs from this caricature of the “typical” behavioral finance paper. The paper does not infer the underlying psychology of investors from patterns in prices. Rather, the paper learns about investors by systematically profiling their personality traits. The paper then demonstrates how those traits are associated with the prices generated by the investors the authors study. In focussing on the role of individual personality, the paper refocusses behavioral finance on the individuals who set prices.

Comparing traditional focus groups with a Group Support Systems (GSS) approach for use in SME research

This study examined the use of Group Support Systems (GSS) technology as a tool for soliciting perceptions, or ideas, from a target audience. We compared this approach to a more traditional focus group methodology, and concluded that GSS technology has a number of advantages. First, the relative anonymity of responses encouraged participation from the more timid group members, ensuring vocal individuals did not dominate. Second, the GSS technology made the findings available to group members immediately, so that clarification, correction and some quantitative analysis of responses could take place during the session. Third, the GSS approach allowed ideas to be separated from the person, ensuring that any subsequent discussion was depersonalized. Fourth, the results were available immediately after the session. Finally, the GSS technology was more cost effective because the additional cost of using this approach was more than offset by the savings from not having to transcribe participants’ responses.

A comparison of the impact of franchising on return and risk for two Australian industries

Since the mid-1960s the ‘franchise phenomenon’ has had a significant impact on the Australian economy, generating a large proportion of its gross retail trade. However, little work has so far been conducted in measuring the relative effectiveness of franchising, especially in terms of the associated risk. Where risk has been measured, it has normally been expressed in terms of survival rates relative to non-franchised entities (for example, Williams 1991; Newby, Smith and Armstrong 1993). This paper argues that the use of firm survival as the measure expressing the success of franchising is short-sighted and inadequate, since it ignores the effect of franchising on surviving firms, and presents results from two industries, to determine whether franchises generate higher financial returns than non-franchises, and if there is any difference in the risk of those returns. The results indicate that franchising does have an impact on both risk and return, but not one which is consistent across all industries.

Developing an instrument to examine the goals of SME owner-operators

Abstract The aim of this study was to develop a parsimonious scale to measure the goals (objectives) of SME owner–operators. Our results, using a combination of both focus groups and surveys, indicate (as expected) that SME owner–operator goals cannot be satisfactorily proxied by economic factors alone but can be appropriately assessed using four multi-item factors (extrinsic rewards; time flexibility; family; and staff relations) and three single-item measures (customer relations; independence; and intrinsic rewards). Given the results of our tests of concurrent validity are generally as expected, we suggest that the parsimonious scale developed in this study can be used to appropriately assess the goals of SME owner–operators and, therefore, the performances of their firms.

Defining the Entrepreneur: How Useful is Establishment Status?

Abstract Despite the fact that founding a business was not a discriminating criterion in Garland et’s (1984) definition of the entrepreneur, establishment status (founder/non-founder) has often been used to class i6) business owners as either entrepreneurial or non-entrepreneurial. This observation led to the three principal objectives of this study, namely: to test the validity of each of the dimensions contained in the Garland et al. (1984) definition; to validate the appropriateness of using the single dimension of establishment status to define the entrepreneur; and to see whether any other single dimension in the Garland et al. (1984) definition provides a better proxy for defining the entrepreneur. Our findings suggest that establishment status is not particularly good at discriminating between entrepreneurs and non-entrepreneurs and that innovative orientation is likely to be a more useful single attribute for this purpose.

Nonprofit Vulnerability: An Exploratory Study

This mixed method study explores the symptoms and potential causes of nonprofit vulnerability within the Australian context. Following two focus groups with CEOs and Chairs of nonprofit organizations, an online survey was developed, pilot tested and distributed to nonprofit CEOs. Our findings suggest three symptoms that might be particularly useful in identifying nonprofit vulnerability: a substantial increase in unit costs/delivery hours; a substantial increase in the proportion of administration to program expenses; and a reduced ability to pursue the organization’s mission. The results also suggest various potential causes of nonprofit vulnerability, in particular: Board inadequacies; External environmental threats; Project management issues; and Funding constraints.