Academic journal article Journal of Small Business Management

Advantageous Competence of Owner/Managers to Grow the Firm in Poland: Empirical Evidence

Academic journal article Journal of Small Business Management

Advantageous Competence of Owner/Managers to Grow the Firm in Poland: Empirical Evidence

Article excerpt

Small businesses in Poland can be divided into two groups. One group includes small firms which had operated in the environment of a centrally planned economy before 1990. The other group includes firms created by people seeking to improve their living standards by establishing their own firms during the transition period in the Polish economy. The owners in both groups were brought up in a non-market context. The new economic environment necessitated a change in their ways of thinking and, for the older owners, it also necessitated a change in their ways of conducting business. In the beginning of the transformation, with almost unlimited demand and without strong competition, the customer was easy to attract. Presently, after some years of the transformation process, firms face a more difficult situation: the competition between Polish firms and well-established foreign firms entering the Polish market is increasing. However, even in these difficult market circumstances, some owners do manage to expand the ir businesses, while others stay at the same level. It is widely accepted that an owner's competence plays a significant role in developing a business. The question remains whether the crucial set of competencies is a universal one, or whether it differs among different economies. The aim of this research was to define the competencies of Polish owner/managers and to determine which competence components influence the growth perspectives of their firms.

Literature Review

Research on the competencies of owner/managers first appeared in the early 1960s. At first it focused on identification of personal traits. However, this approach was criticized for lacking clearly agreed-upon definitions of each trait as well as difficulties in identifying the actual behavior of owner/managers. More recent studies have stressed the necessity of researching competence from a broader perspective. It is believed that entrepreneurial success requires not only a certain personality profile but also appropriate managerial competence.

Mole and collaborators (Mole et al. 1983) developed a three-approach model of competence research designed to study competence through: (1) owner inputs (including skills, knowledge, and personal traits); (2) processes started by the owner; and (3) the owner's performance. Skills and knowledge can be defined by education and experience. Processes are analyzed using key domains of owner/manager activity. Huck and McEwen (1991) characterized twelve such domains, the most important being planning, budgeting, and management marketing/selling. Adam and Chell (1993) proposed four strategy domains: business, marketing, financial, and human resource management.

Numerous studies on firm growth use the ceteris paribus (other things being equal) rule: factors influencing growth are studied one by one. The result is that, although growth of the small firm is a well known topic in theoretical research, there is no single multidimensional theory which would embrace all these one-factor approaches. Gibb and Davies (1990) classified the various approaches into four groups: (1) personality dominated approaches; (2) organizational development approaches [1]; (3) business management approaches; and (4) sector and broader market approaches. Storey (1995) tried to combine some of these approaches into a uniform theory of growth. He argued that the characteristics of the entrepreneur, the firm, and the strategies used need to be appropriately combined in order to achieve the growth of the firm. While it is difficult to determine just how these three components should be combined, the important conclusion to be drawn here is that the owner/managers and their level of competence a re very important factors in the growth process.

The absence of complete and accepted growth models is not the only problem in research into growth. Growth itself is difficult to measure. To begin with, growth can be measured either objectively or subjectively (Delmar 1996). …

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