Academic journal article Journal of Small Business Management

Mission Statements in Small and Medium-Sized Businesses

Academic journal article Journal of Small Business Management

Mission Statements in Small and Medium-Sized Businesses

Article excerpt

All growth businesses experience difficulties during organizational transitions (Kazanjian 1988; Churchill and Lewis 1983; Scott 1970). The transition from a small entrepreneurial organization to a "mature" business organization is characterized by a number of important internal and external changes (Hambrick and Crozier 1985; Churchill and Lewis 1983). The small business often finds that success attracts the attention of others; new small start-ups and/or large competitors may enter the market (Porter 1980). Increases in growth may necessitate expansion into overseas markets. Internal changes include the introduction of professional management to manage the increasingly complex organization; the introduction of outside equity to finance growth (Welsh and White 1981); and the introduction of organizational systems and procedures.

Internal changes such as increases in sales volume, in employees, and in organizational formality and complexity require small business operators to change their role within a changing organization (Hambrick and Crozier 1985). The pursuit of growth often requires the owner/manager to learn new skills and change from a "doer" to a "manager" (Churchill and Lewis 1983). Many small businesses fail to grow because the manager fails to make this transition (Willard, Krueger, and Feeser 1992).

During the growth process, the small business manager becomes increasingly removed and distant from employees (Hambrick and Crozier 1985; Churchill and Lewis 1983), and discovers that his or her strong entrepreneurial vision is no longer shared by new staff, new professional managers, and new investors. One coping strategy is to introduce financial and strategic planning and control systems into the organization (Gable and Topol 1987; Bracket and Pearson 1985). Essential to these planning and strategic management systems in large organizations is the introduction of a mission statement. In their much referenced work, Pearce and David (1987) argue that the mission statements of higher performing large companies are more comprehensive than those of less successful firms. The purpose of this article is to explore whether high growth small and medium-sized enterprises (SMEs) in Ireland are characterized by more comprehensive mission statements.

Review of the Literature

The literature on mission statements is both descriptive (Pearce and Robinson 1994; Ackoff 1987; Peters 1988; Campbell, Devine, and Young 1990; Falsey 1989) and prescriptive (Pearce 1982, Pearce and David 1987; Want 1986). There is an overwhelming consensus in the literature that the development and management of business missions is fundamental for the survival and growth of any business (Levitt 1960; Drucker 1973; Peters and Waterman 1982). Mission statements have been described as the cultural "glue" which enables an organization to function as a collective unity (Fahrnam 1993).

The Benefits of Mission Statements

The prevalence of missions statements in large organizations suggests that there are benefits to developing public mission statements. Benefits cited in the literature include the following:

* developing of a unity of purpose within the organization (Campbell, Devine, and Young 1990);

* providing a guide to behaviors and decisions (Ledford, Wendenhof, and Strahley 1995; Falsey 1989);

* motivating staff (Collins and Porras 1991);

* communicating the corporate image (Gray and Smelzer 1985);

* reducing culpability when charged with "unethical" behavior (Fahrnam 1993);

* enhancing performance (for example, Pearce and David 1987).

However, there is a remarkable lack of empirical evidence for the acclaimed and assumed positive effects of mission statements (Piercy and Morgan 1994). A few studies have lent limited empirical support to the idea that mission statements are valuable and contribute to higher profits (Rarick and Vitton 1995; Klemm, Sanderson, and Luffman 1991; Germain and Cooper 1990; Falsey 1989; Pearce and David 1987). …

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