Academic journal article Journal of Small Business Management

Managing Family Businesses in Small Communities [*]

Academic journal article Journal of Small Business Management

Managing Family Businesses in Small Communities [*]

Article excerpt

Small businesses located in communities with populations of less than 10,000 were identified in a national sample of family businesses and examined for differences in their management strategies (n = 384). These businesses were first clustered by level and type of management strategy and then analyzed to ascertain differences and similarities in both personal and business firm characteristics among the family business manager groupings. Problems associated with small business management and sources of assistance were also identified. Findings suggest that managers of small family businesses located in small U.S. communities who practiced strategies focusing on extensive planning and controlling perceived their businesses to be successful; however, these managers noted that their greatest problem involved development of sound marketing strategies.

Successful businesses can enhance rural and small community development through activities such as manufacturing, finance, transportation, construction, as well as the distribution of both agriculture and consumer related goods and services. When small community businesses successfully meet consumers' needs, local spending increases the community's tax base, which in turn is used to provide a better quality of life for rural residents. Ultimately, positive community development attracts new businesses and residents. Sadly in many small communities in the U.S., established small businesses are failing at a rapid rate. Strange (1996) reported that in seven Midwestern states, between the years of 1960 and 1990, the proportion of retail businesses in small communities decreased from 60 percent to approximately 33 percent of all local businesses.

Gaskill, Van Auken, and Kim's (1994) research on small business success has suggested that the development of management strategies contributed to firm continuance and growth. Because key components of strategic management as applied to the family business remain difficult to identify the purpose of this investigation was to further examine management strategies used by small family businesses located in small communities across the U.S.

Although family owned and operated businesses often survive in the small community because of the family substructure, little is known about the personal and economic dynamics of the family business (Glueck and Meson 1980). Prior findings from a national study of business owners found that owners coming from a small business family environment were generally more successful than those without a family business background (Bates 1990). A recent study of family-managed businesses suggested that managers of smaller businesses brought work home to complete in the family environment significantly more often than did managers of larger family businesses (Miller et al. 2000). The same study also compared the adoption of adjustment strategies by small family businesses operating in communities of less than 10,000 in population with those operating in communities with populations of greater than 10,000. The only significant difference found was that managers of family businesses operating in the smaller communities w ere more likely to bring work home during hectic business periods than were managers in the medium- and larger-sized communities.

Though the Small Business Administration (1994) defines a small business as one that employs fewer than 500 people, there are often great differences in resource availability and managerial structure between businesses employing fewer than 100 workers and those toward the upward end of the size definition. This investigation examined managerial strategies employed by very small (100 employees or fewer) family businesses operating in small communities across the United States. Community size was limited to fewer than 10,000 in total population, which is a benchmark frequently used for defining rural communities (Bastow-Shoop et al. 1995; Besser 1999; Miller 1998). …

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