The Goals and Behaviour of Small Firms and Their Impact - Research Proposal Example

Project Proposal The goals and behaviour of small firms and their impact on socio-economic life and human communities Table of contents Research Question 2. Research objectives 3. Background 4. Literature Review 4.1 Goals of small firms 4.2 Main operational aspects/ characteristics of small firms 4.3 Behaviour of small firms – effects on human communities 4.4 Small firms and social life 4.5 The role of small firms in the development of economy in local communities 5. Research Methods 6. Project management plan References 1. Research Question The goals and behaviour of small firms and their impact on socio-economic life and human communities. 2. Research objectives Challenges faced by small firms in modern market Main operational strengths/ weaknesses of small firms Goals of small firms in regional and operational terms Presentation of main aspects of small firms’ behaviour Role of small firms in the development of social life of people in a particular region How small firms can influence the economy of a local community Factors that influence the relationship between small firms and local communities 3. Background The development of business activities worldwide has been differentiated in terms of the goals set and the tools used; in most cases, the financial performance of these activities is the criterion for the realization of a series of business plans. In any case, the impact of these plans on a firm’s internal and external environment is thoroughly examined; if the goals set are too difficult to be achieved then alternative plans are chosen – those that are considered to be more feasible in terms of the resources and the time required. It should be noticed that the decision of developing specific business initiatives can be influenced by a series of factors; the size of firm involved is of critical importance – firms of smaller size usually face more difficulties when having to enter or survive within a specific market while multinational corporations are related with higher risks regarding the achievement of a balance between profits and expenses in all the firms’ branches around the world. In small firms the risk related with the achievement of specific level of profits is usually limited – the level of investment made on the firms’ various operational activities is low compared to the multinational corporations as a result the effects of potential failures on the firms’ internal and external environment are minimized. Still, small firms are considered to have an important role in the development of various aspects of social and financial life of people in a particular region; the influence on local communities can have many dimensions as it is proved through the literature review but also through the findings of the empirical research. In accordance with the issues presented above, the operational activities of small firms are supported only partially – if compared to the support offered to large and multinational corporations. However, small firms can have a crucial role in the development of social and financial life of people living in a specific region – referring to the region where the centre of activities of small firms is cited but also to the region in which a small firm’s branch is established. In the first case, the small firms can influence the local communities within the context that follows: a) the operation of small firms results to the creation of a specific number of jobs for people in local community, b) the firm’s products/ services are likely to attract the interest of consumers and c) suppliers – in small firms local suppliers are preferred – operating locally will have a specific profit through cooperating with a specific small firm. All the above facts are related with the effects of small firms on a community’s economy. On the other hand, the socialization of people within a specific region is promoted – interested buyers will have to visit the firm’s branch in order to buy specific services/ products communicating with staff – the chances for communication with other interested buyers are many – especially in case where the firm’s branch is used as a ‘meeting point’ or else as a incentive for people to communicate – the social aspect of ‘shopping’ in all countries worldwide. In this context, the development of this study is expected to offer significant support towards the identification of the role of small firms in modern societies – especially regarding the financial performance of communities but also the social life of people living in a specific region. Moreover, the role of small firms in the development of financial/ social life of people within a specific community can be differentiated – as it is proved through the literature review and the empirical research conducted for this study; under these terms, this study would help to identify the criteria under which the effects of small firms on human communities are developed. 4. Literature Review 4.1 Goals of small firms In order to understand the role of small firms in the development of social/ financial life and human communities, it would be necessary to refer primarily to the goals of these firms – in a general context, as they can be observed in the modern market. Small firms can be regarded as being more flexible – at least based on their size (number of employees, number of branches within a specific market and so on). Under these terms, the achievement of the targets set by their owners would be expected to be an easy task; however, the feasibility of the goals of small firms can be depended on certain factors, like the ability of owners to foresee the development to firm in the near future but also the changes in the customers’ needs/ demands within a specific market. The specific issue is also supported by Deleryd et al. (1999) who noticed that ‘in order to stay competitive most small and medium-sized enterprises (SMEs) need to make decisions and improve their processes in a more efficient way’ (Deleryd et al., 1999, 341). On the other hand, the goals of the small firms can be used in order to understand the potential role of these firms in the development of the local community (including the social life and the economy). In small firms, the goals are set by the owners; in this way, these goals reflect the views/ demands of owners (personal perceptions) as individuals but also as members of a specific community. For this reason, the particular goals can be expected to support the development of local communities – both in terms of their economy and in terms of their social culture/ ethics. 4.2 Main operational aspects/ characteristics of small firms The characteristics of small firms as parts of the modern market can be identified only using specific criteria. Most commonly, the operational aspects/ needs of small firms are described using the position of these firms within a specific social context. More specifically, small firms are expected to be treated differently in countries around the world. In less developed countries small firms are less supported by the state – corporations/ multinational enterprises are strongly promoted by the state. However, the importance of small firms for the development of local (also the national) economy cannot be ignored. The study of Curran (1990) which focus on ‘the continuing importance of small scale economic activities in industrial societies’ (Curran, 1990, 125) concludes that small firms have potentially more needs than other commercial ‘entities’ (like the self-employment framework); however, still, these firms need the support of the state in order to survive in current market – which is extremely competitive. As already noticed above, one of the main characteristics of small firms is their strong dependency on their owner’s personal perceptions. On the other hand, the fact that the various aspects of these firms are controlled only by the owner/ or an appointed manager leads to a significant advantage of these firms compared to medium and large firms. The specific issue is highlighted in the study of Beaver et al. (1998) where it is noticed that ‘these firms, owned and managed by individuals should enjoy considerable competitive advantage over larger organizations, that perhaps as a consequence of their organizational formality, have more remote and less personal relationships with customers’ (Beaver et al., 1998, 145). The above study refers to the small firms of the hospitality sector; however, it could be used in order to explain the structure/ effectiveness of small firms in all industrial sectors. The views presented in this section can lead to the assumption that flexibility is one of the main advantages of small firms towards the medium and the large firms. At a next level, because of their size, small firms are likely to follow specific patterns of internal structure (usually only one manager, employees report directly to the general manager, friendly workplace, support of employees’ personal needs and so on). 4.3 Behaviour of small firms – effects on human communities The behaviour of small firms is expected to be influenced by their size and their needs. The evaluation of this behaviour has to be based on specific criteria. In this context, the response of a small firm to particular market trends can lead to the formulation of valuable assumptions on the culture of the specific firm. The specific issue is highlighted in the study of Coviello et al. (2006) where it is noticed that ‘success requires an emphasis on both transaction marketing and interaction-based relationship marketing to acquire customers and achieve sales growth; it is success with customer acquisition rather than customer retention that leads to profitability for these firms’ (Coviello et al., 2006, 38). The above study, in which 242 small firms participated, can lead to the assumption that small firms are expected to use different methods for the development of their various activities – if compared to medium/ large enterprises. At this point, the behaviour of small firms can be considered as strongly influenced by their culture but also the market trends. The behaviour of small firms is also likely to be influenced by their structure. In the small firms where a first line manager exists, his relationship with the owner manager is of critical importance for the development of the firm’s various projects. Indeed, in the study of Chell et al. (2005) where ‘relationships between Owner Managers and First Line Managers (supervisors) in small firms’ (Chell et al., 2005, 577) are explored it is revealed that ‘style and vision were found to be contingent, varying according to the dynamic of the relationship’ (Chell et al., 2005, 577). In other words, where managers (apart from the owner managers who control all activities of small firms) are used in small firms in order to monitor the progress of various business projects, it can be expected that the performance of the small firms involved is adversely affected – at least temporary – especially if the cooperation/ communication between the owner manager and the managers of lower levels is not effective. At a next level, the negative performance of a specific small firm will influence the local economy either through the potential job losses or through the limitation of the investment made by the firm on the local community. 4.4 Small firms and social life In order to understand the interaction between small firms and social life it is necessary to refer primarily to the general characteristics of small firms - as developed above. As it was already noticed previously, small firms are mainly based on the initiatives and the efforts of a specific person while the number of its employees is usually limited. In this context, it is supported in the literature that ‘small firms are saturated with the ideology of the family, a notion that is related – for some – with harmony and flexibility’ (Ram et al., 1993, 629). From another point of view, it is supported that ‘firms are best thought of as cultures, as social distributions of modes of thought and forms of externalization’ (Weeks et al., 2003, 1309). The above assumptions are applied on firms of all sizes – including the small firms. Small firms represent the personal perceptions/ culture of their owner. At the level that their owner is part of a specific community, the culture/ ethics of a small ethics are expected to be strongly influenced by the rules/ ethics of this community. In this context also, small firms are closely related with social life. On the other hand, the ethics of a small firm are likely to influence the norms of a specific community – where the small firm is based – through different paths. The specific issue is highlighted in the study of Atkinson (2008) where the employment policies of small firms are used as an example to prove that ‘while small firms may differ in nature to large firms, there is a range of forces in so heterogeneous a sector that go to create employment relationships and a narrow framework …’ (Atkinson, 2008, 447). In other words, the powers influencing the structure/ culture of small firms may not be clearly identifiable; it seems that these firms – despite their size – can present particular characteristics that can strongly influence the social ethics and culture within a specific community. 4.5 The role of small firms in the development of economy in local communities The fact that small firms influence the social norms of a particular society cannot lead to the assumption that these firms cannot affect the performance of economy. In other words, the relationship of these firms with the social ethics cannot lead to the rejection of their close relationship with the economy. Indeed, it is noticed in the literature that ‘actors in the business world tend to separate social from material concerns despite the entanglement of these two dimensions’ (Ettlinger, 2008, 45). At a next level, it has been proved in the empirical research that small firms can participate actively in financial activities of major importance, like the ones related with the energy sector. The specific issue is highlighted in the study of Brown et al. (2007) who tried to explain ‘the potential for small firms to play a significant role as creators of `technology specific advocacy coalitions and promoters of a new technology in multiple experimental situations’ (Brown et al., 2007, 603). In other words, small firms are not only valuable for the promotion of specific commercial culture (role of family in the success of specific commercial projects) but also for the realization of important entrepreneurial projects (as indicatively presented in the study of Brown et al., 2007). The above assumption is also verified by the view of Sum et al. (2004, 221) who noticed that ‘small and medium enterprises (SMEs) are recognized as playing a pivotal role in the economic growth and technological progress of many countries’. It is not made clear whether the political/ financial structure of a country could have a role in the success of small firms’ projects; however, it could be expected that the performance of small firms is higher in countries where the specific type of commercial activities is strongly supported by the state. 5. Research Methods Current project will be based on the secondary research. A wide range of texts, including books, academic journals and scientific reports/ archives will be used for the completion of the project. The identification of the material (which will be completed within the first week as described in Table 1 below) will be based on specific criteria: a) only material directly related with the issue under examination will be used in current project, b) material that only indirectly refers to the specific issue will be also used but only under the terms that the specific choice is adequately justified, c) statistics published from governmental and non-governmental organizations will be used in the study only if the methods of research/ gathering of data are clearly explained in the relevant studies. The use of additional sources of knowledge (like interviews) is also possible only if the particular sources are considered as valuable towards the justification of current study’s findings. On the other hand, recently published studies (i.e. within the last 5 years) will be preferred; studies that were published earlier from the above period are possible to be used but only if the information provided is quite important and if other criteria are also met (i.e. there are no recent studies referring to the specific issue, recent studies that explain the specific issue are not adequate in terms with the study’s needs and so on). 6. Project management plan The development of the project – in all its parts – is expected to take up to 4 weeks. The time required for each part of the project is represented in the table below. A preparation period has been included during which the material available is identified and evaluated. During this period, the project proposal is submitted. Apart from the preparation period – which ends with the submission of this proposal – the completion of the paper will be taking place gradually. Each part will be submitted in the tutor for review – suggestions will be used afterwards in order to make the necessary improvements in the text of the project but also its presentation. Development of the project Preparation period – submission of proposal Development of project’s structure – gathering of material – submission of first draft Review of first draft – development of next part of the project – gathering of additional material (if required) – submission of next draft Review of second draft – corrections – completion of third part – submission of third draft – further research (if needed) Corrections using the third draft – completion of the project – process/ improvement of project’s presentation, submission of project 1st week 2nd week 3rd week 4th week Bibliography Athreye, S., Keeble, D. (2002) Specialized Markets and the Behavior of Firms: Evidence from the United Kingdom’s Regional Economies. International Regional Science Review, Vol. 25, No. 1, 38-62 Atkinson, C. (2008) An exploration of small firm psychological contracts. Work, Employment & Society, Vol. 22, No. 3, 447-465 Beaver, G., Lashle, C. (1998) Competitive advantage and management development in small hospitality firms: The need for an imaginative approach. Journal of Vacation Marketing, Vol. 4, No. 2, 145-160 Brown, J., Hendry, C., Harborne, P. (2007) Developing Radical Technology for Sustainable Energy Markets - The Role of New Small Firms. International Small Business Journal, Vol. 25, No. 6, 603-629 Chell, E., Tracey, P. (2005) Relationship building in small firms: The development of a model. Human Relations, Vol. 58, No. 5, 577-616 Coviello, N., Winklhofer, H. (2006) Marketing Practices and Performance of Small Service Firms - An Examination in the Tourism Accommodation Sector. Journal of Service Research, Vol. 9, No. 1, 38-58 Curran, J. (1990) Rethinking Economic Structure: Exploring the Role of the Small Firm and Self-Employment in the British Economy. Work, Employment & Society, Vol. 4, No. 5, 125-146 Deleryd, M., Garvare, R., Klefsio, B. (1999) Experiences of implementing statistical methods in small enterprises. The TQM Magazine, Vol. 11, No. 5, 341-351 Ettlinger, N. (2008) The predicament of firms in the new and old economies: a critical inquiry into traditional binaries in the study of the space-economy. Progress in Human Geography, Vol. 32, No. 1, 45-69 Ram, M., Holliday, R. (1993) Relative Merits: Family Culture and Kinship in Small Firms. Sociology, Vol. 27, No. 4, 629-648 Sum, C., Kow, L., Chen, C. (2004) A taxonomy of operations strategies of high performing small and medium enterprises in Singapore. International Journal of Operations & Production Management, Vol. 24, No. 3, 321-345 Tsai, C., Sengupta, S. (2007) When and why is small beautiful? The experience of work in the small firm. Human Relations, Vol. 60, No. 12, 1779-1807 Weeks, J., Galunic, C. (2003) A Theory of the Cultural Evolution of the Firm: The Intra-Organizational Ecology of Memes. Organization Studies, Vol. 24, No. 8, 1309-1352 Read More