Academic journal article Journal of Small Business Management

Environmental Scanning Practices in Small Business

Academic journal article Journal of Small Business Management

Environmental Scanning Practices in Small Business

Article excerpt

ABSTRACT: PRATIQUES D'ETUDE DE L'ENVIRONNEMENT DANS LA

PETITE ENTREPRISE

Cet article analyse les pratiques d'Atude de l'environnement des proprietaires/managers qui dirigent a la fois sur le plan operationnel et strategique la planification de firmes de moins de 30 employes. 88 sujets representatifs de ce groupe ont ete soumis a une interview semi-structuriee. Les resultats revelent que ces managers conduisent des enquetes de facon periodique ou continue. Ils accordent plus d'interdt aux sources d'information personnelles (famine, amis, clients), qu'aux sources impersonnelles (revues et journaux). Les variables etudities sont par ordre d'importance, le march@ et les conditions deonomiques.

During the last several years extensive attention has been given to strategic planning. Until the early 1980s, most of this attention focused on planning in larger firms. Several recent studies have contributed to the knowledge of strategic planning in small firms.' Practitioners and academicians continue to debate the merits of strategic planning, but some research suggests a clear link between strategic planning and the success of small businesses. These recent studies have shed some light on environmental scanning as a part of the planning process in small firms. Dollinger found that scanning is positively correlated with the firm's financial performance, and Specht found that personal sources were used more than impersonal ones by the management at small banks.' Johnson and Kuehn report that owner/managers of small businesses focus largely on their marketing channels to acquire external information. Note, however, that some of the organizations investigated in these three studies had specialized planning departmentsunusual among small firms.

The purpose of the present study was to investigate the environmental scanning practices and information sources of owner/managers of small firms which do not have planning departments. Five questions were addressed:

1. What is the most prevalent small

firm scanning pattern- irregular, periodic, or continuous?

2. Do owner/managers of small

firms believe personal or impersonal sources of information to be more important?

3. What are the most prevalent

personal sources of information, and are formal or informal personal sources used more frequently?

4. What are the most prevalent

impersonal sources of information, and are written or oral impersonal sources used more frequently?

5. Do the answers to question I

through 4 vary as a function of the perceived stability of the environment or the environmental unit under analysis?

BACKGROUND

Environmental Scanning

As an integral component of planning, environmental scanning is defined as gathering and interpreting pertinent information and introducing the results into the organizational decision process. An owner/manager scans the environment to detect external changes or events which may affect the firm.

The notion of environmental scanning developed as a part of the open systems concept. According to open systems theory, organizational survival and growth depend on an organization's ability to adapt to its environment. Thus, it is critical that an organization be aware of the nature of the environment that it currently faces or anticipates facing .

To achieve environmental awareness, many large firms employ specialized environmental scanners. A key function of these scanners is to analyze the environment and provide a data base for planning. It has been suggested that executives should create a specialized administrative component for systematic environmental scanning. Most researchers agree that environmental analysis should be an independent staff function in the top levels of an organization's hierarchy.

Much of the research on environmental scanning in large firms has attempted to classify environmental scanning practices. …

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