Is Small Beautiful The Management Styles of Small Firms - Essay Example

Download file to see previous pages Whatever the reason, small businesses have become a prevalent part of the United Kingdom economy, and consequently, it is important to understand their nature and the way in which they operate.
Small firms are more than simply scaled down versions of their larger counterparts, they operate differently, make different decisions and are driven by many factors that do not affect larger firms (Atkinson, 2008). It is often perceived that small businesses have an ideal management structure, which is harmonious, where management and employees work together towards a similar goal. This essay examines what type of management styles are present in small businesses, whether this perception of ‘small is beautiful’ is real, and what influences management of small firms.


Not just size alone
Many theories and approaches to examining management of small firms assume that there is harmony across the industry. However, small firms are not homogenous with one another; instead they are subject to a range of different factors that influence the way that they operate, their management styles and their success. For example, ownership structures differ between small firms, with the owner being either, self-employed, owner-director, owner controller or a small employer. Because of these variations between small businesses, any consideration of the management styles and methods of control must also consider other factors about the firm, such as structure and agency (Barrett and Rainnie, 2002).
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Even when sections of the industry are taken into account there is still substantial variation in the way that businesses operate and what factors drive them (Ram and Edwards, 2003). For example, some firms focus primarily on profit, while others desire a family business and are not willing to put this in jeopardy even if this would mean increased profits. Likewise, some small firms compete directly with larger ones by producing similar products, while others produce a unique and distinct products do not directly compete with larger firms. Therefore, it is not possible to provide an overall model of the small business industry, or to predict what management styles will be present under different sets of circumstances. A more effective approach is to examine the different management styles that are present in small firms and how these differ from those common in larger firms. It has been argued that the definition of a small firm needs significant work, as the current perception focuses mainly on number of employees and the precise number differs between publications. The problem with this method of defining small firms is that it does not take into account the complexities and variation that is present within the small industry sector. Some authors or publications make use of key business characteristics to determine whether the company is a small business, or a combination of industry and size. An example of this is the suggestion that in the manufacturing industry, a small business is one that has less than 200 employees. One suggestion has been to modify the definition of a small company so that it uses a qualitative ...Download file to see next pagesRead More