Academic journal article Academy of Entrepreneurship Journal

An Examination of the Relationship among Organizational Values, Strategies, Key Success Factors, Skills, Culture and Performance of Micro-Businesses

Academic journal article Academy of Entrepreneurship Journal

An Examination of the Relationship among Organizational Values, Strategies, Key Success Factors, Skills, Culture and Performance of Micro-Businesses

Article excerpt

ABSTRACT

In the United States, the level of economic dependence (revenues and job creation) on micro enterprises (fewer than 10 employees) has grown in recent years as the result of increased rightsizing and early retirements in middle to large-sized firms. As such, the government is placing increased emphasis on enterprise assistance programs and policies; particularly in the area of micro-businesses. This study examines relationships or linkages between the micro-business owner/manager's personal values and expertise, the strategies they adopt, the cultures they develop, and the financial and strategic performance within the retail craft industry. The findings suggest that owner/manager's personal values are highly correlated with the business strategy. Further, strategies that focused on the industry's key success factors (KSFs) had greater success than those that didn't. Also, an owner/manager's expertise was highly correlated with achieving financial and strategic objectives. However, the findings suggest that the current method of classifying business culture is not appropriate for micro-firms. Recommendations are offered for government assistance programs along with a strategic management model for future research.

INTRODUCTION

In the United States, the level of economic dependence (revenues and job creation) on micro enterprises (fewer than 10 employees) has grown in recent years as the result of increased rightsizing and early retirements in middle to large-sized firms (Chrisman & McMullan, 2002). Further, the government is trying to increase its emphasis on entrepreneurial opportunities for baby boomers as a method to reduce pressure on the social security system. As such, the government is placing increased emphasis on enterprise assistance programs and policies; particularly in the area of micro-businesses (Hoover, 2001). However, the effectiveness of these policies and programs are dependent on a thorough understanding of owner/managers and how they operate. While a plethora of research has been conducted on small businesses, very little has been conducted on micro-businesses. This study examines relationships or linkages between the micro-business owner/managers' personal values and expertise, the industry's key success factors and the strategies, the cultures they develop, and their financial and strategic performance.

The literature in this area suggests that owner/managers' personalities, in particular their values and goals, are indistinguishable from the goals of their business (Bamberger, 1983; O'Farrell and Hitchins, 1988). It is also suggested that owner/manager's personal values and resources (expertise) influence the strategies and in turn, the cultures they adopt in operating their businesses and, ultimately, the performance of their businesses (Thompson & Strickland, 1986). However, these propositions lack empirical support. Existing research tends to be based on qualitative case studies of small to mid-size businesses, i.e. no micro-businesses.

The aim of this research is to empirically test the relationships between the personal values and expertise of micro-business owner/managers (OMs), the industry's key success factors, the strategies they adopt, the cultures they develop, and their performance outcomes. A research model was adapted from the research of Kotsey and Meredith (1997) to explore the relationships among these five variables. In particular, the model suggests that certain dimensions of personal values are associated with specific strategy dimensions, cultures and certain performance outcomes. To address these areas of research, a study was carried out using data from retail craft micro-businesses in the southeastern United States.

PERSONAL VALUES AND ORGANIZATIONAL CULTURE

Organizational culture is generally defined as the values, beliefs, traditions, rituals, heroes and norms of the employees (Petrock, 1990; Schwartz & Davis, 1981). …

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