IntroductionEntrepreneurs are commonly correlated as visionary. Theypossessed high degree of independence, view the world through different eyes,risk-taking propensity, seek opportunities, view competitors as an opportunityto learn rather than a threat and aren’t afraid to hit rock bottom (Alan L.Carsrud, 2009).
Even when they are successful, entrepreneurs will keep lookingfor methods on how to improve and directions for them to grow. Entrepreneurshiphappens when entrepreneurs take measures to seek business opportunities (Gielnik, 2015). The role of entrepreneurs is not limited tocontributing to the economies or providing employability but also to selffulfilment. “A person cannot win agame that they do not play”, thesentence indicates that success depends on the willingness to become anentrepreneur (Light, 2008). Driven more by mission and values, they have becomethe central of today’s economy and are considered as a national asset. Academics and policy creatorsare interested in facilitating the growth of entrepreneurs because theyinitiate the contribution to economic growth and generating employment (Wyer,2012). In 1970-1980s, there is sufficient evidence proving economic activitymoves from large corporations to small firms (Wennekers and Thurik,1999).Carlsson (1992) explains the two key explanations; Firstly, the change in theworld economy leads to the escalation of global competition, the growth inmarket fragments and the rise in the degree of uncertainty.
Second deals withthe change in technological progress. Automation has resulted in an extensivechange in the global economy, causing a structural shift affectingindustrialized countries as an outcome. Entrepreneur vs small businessesThere is a thin line between entrepreneurial venture andsmall business as both of them requires hard work and dedication at the verybeginning. Many research strive at identifying factors at how businesses areable to contribute to economic development (Stephanie L. Wagener, 2008).Differentiating business owners when observing their success is important,because different people may have contrasting concept about success, thuseyeing for different goals. A dimension in research done by Smith (1967) is to categorizeentrepreneurs into ‘craftsmen’ and ‘opportunistic’.
‘Craftsmen’ have the desireto prove their superiority, organizations led by them are usually morepaternalistic (Jones-Evans, 2012), personal basis relationships with people,low social awareness and involvement (Miner, 1983), mainly maintaining thestatus quo. In contrast, ‘Opportunistic’ have well rounded education, set ofskills ready before getting involved in his own business (Knight, 1983),professional relationships, are growth-oriented and seize long termplanning (Stephanie L. Wagener, 2008). Based on the model, a firm run bycraftsmen would usually be rigid which differs from opportunistic where firmare able to adapt and change accordingly.
Small Businesses usually intend forlimited growth whereas entrepreneurs target rapid growth and they will never besatisfied with the status quo (Mark, 2012). They view their businesses asassets which they can develop, grow, and introduce them to the market toenhance lifestyle. Business owners are sentimental, no thoughts on selling thebusiness and favors daily decision making (Spring, 2014). In addition, another difference is Entrepreneurs preferpassion of profit. The have strong will to change the world, leading them to domore, for less. Meanwhile, business owners don’t necessarily love their jobs,it is more of an obligation.
Subsequent to the research, we can relate thedifferences to entrepreneurs and small business owners to the model above. Factors influencing growth inentrepreneurialIn this era ofglobalization, entrepreneurial venture is pivotal to economic growth andprosperity. Component drawn from resource variables and entrepreneur arecrucial factors to measure business growth. There are immense number of factorsinfluencing growth such as: quality of the firm, customer relations and otherforces.
Although these factors do not cause major difference, but each variablemakes a contribution (Altinay, 2008). Awareness of upcoming challenge couldlead to growth if issues are properly addressed. In addition, (Storey, 1994)established a framework consist of three influences on growth. Characteristicsof the EntrepreneurEntrepreneurwho runs the firm have a major impact on growth orientation. Casson (1991) mentionsfactors such as strategies to overcome barrier and personal qualities of anentrepreneur; for instance: foresight, analytical ability, innovative,practical and communication skills, would lead to entrepreneurial success. Personal goals ofan entrepreneur might influence why a business is established (Wyer, 2012). Commitment to expand business in factdifferentiate high-growth firms from others. However, researchers are unable tofind a reliable source stating personality trait that distinguishesentrepreneurs from non-entrepreneurs.
For example: Some business owners whohave achieved a satisfactory level might be demotivated to expand theirbusiness especially as they grow older (Wyer,2012). ThefirmResearchhave proven that very mature firms are more likely to grow strong compared togrowth in small firms, where it is infrequently sustainable. Furthermore,Churchill and Lewis (1983) introduce a ‘growth’ model which provides evaluationof each development stages in terms of form, nature and management factors(Table 1). It shows that every product has a limited lifespan. Consumersare now less interested in long-established products and are leaning towardsmodern goods which demands for it increases rapidly. To keep up thedemand, the firm have to come up with new strategies that would keep consumersatisfy.
Yet, it has been strongly argued by many researches for itssimplification compared to reality. For example, A research done by SmallResearch Business Centre of Kingston University in 2008 clarify that the modeldescribes how they ought to behave rather than explaining (Sefiani, 2013). Furthermore, the model assumes a linear graph whereas in reality, firms experienced uneven period of development (St-Jean, 2008). Management Strategies Management actions made by the firm’s department may possibly affect the development path. Storey (1994), discovers that innovation, product development, production technology, planning, training is included in the actions taken. Storey also deducted that growth can be achieved by sharing equity with external individuals. Growth relies on the managerial resources that can aid them in future planning and to maintain operations (Dobbs, 2007). Finally, a leader who are willing to delegate and facilitates decision making was known to become a crucial factor of growth in this context (Wyer, 2012).
However, most these factors are based on assumptions that companies who make sensible decisions are able to identify future development opportunities. Start-up entrepreneurs would use less of ‘strategic planning’ and ‘control’ compared to well-developed firm. This is mainly because large firms tend to hire professionals to run their managements. Those are the three core factors that influence internal growth within. Arguably, external environmental also plays a big role in growth (Hoogstra and van Dijk,2004).
The impact they create is unpredictable, changes time to time, and affect the pace of business growth greatly (Wyer, 2012). Especially in small businesses, they face struggle when dealing with changes due to inexperience and lack of understanding. Although large firms deal with external changes better, it is also not easy for them. For example: change in government regulations.
Another characteristic that can affect the prospect of growth is location. If the demand for the product is high at that area, it can be an opportunity to grow. On the supply side, availability of resources, information and services can also be a factor (Wyer, 2012). Barriers constraint There have been vast research regarding growth but very little exploring about problems encountered by entrepreneurs (Paul, 2008).
This approach assumes that businesses who are willing to grow, but the external factors impedes their ability to potentially grow (Krasniqi, 2007). Changes such as increase in globalization linked to technologies, productions, communications and the emerge of well-educated consumers (Wyer,2012). Change, however, is a very broad concept and often unknown and unpredictable (Stacey,2016). Another barrier is competition. Industry competition in this context can be broken down into five forces (Porter,2004). New entries, bargaining power of supplier, bargaining power of buyers, better substitution for product & services and intensity between existing firms.
Firms have to tackle these problems by understanding the forces in order to find out their strength and weakness. Furthermore, the main issue for larger firms are likely to be labor and market structure. Whereas small firms have to deal with demands, working capital, technology and management issues (Coad, 2011). At the same time, even when firms have identified their critical strength, future events can confound where impacts cannot be measured. Findings have specifically shown that operational challenges are the core to entrepreneurial growth (Babalola, 2016). Lacking resources such as technologies, reliable information, locations (Adams, 2012; Ngassam, 2009). The inability to handle inventory and also decision making (Busuttil, 2007), all of which limits growth.
In addition, establishing a firm effectively at an early stage, working in groups are common. For business to grow, managers have to recognize a way to transition ‘group to team’ (Wyer, 2012). Difficulties associated with team building might prevent growth as internal conflict tends to withdraw progress. Experiencing Growth and the Growth Model Very often people understood that all businessman is profit-derived and the understanding of ‘growth’ is obtained from perspective whether or not it is beneficial to the society. While this may be true in the context of macroeconomics, it is also argued that high-growth is not always the aim of entrepreneurs. Entrepreneurs may view growth in terms of how they have helped the society, financially, size of the company, the company’s expansion and also, the ability to learn and respond to change in environment is crucial to a firm’s growth (Sefiani, 2013).
Growth has been the measure of success and over the years, many growth models have been introduced. Classic models tend to be the linear and predictable. Greiner (1972) model (Table 2) shows a staged progression, a linear model but punctuated by ‘crisis’ (Lee, et al., 2016), which is similar to Table 1. Recent findings have found out that firm doesn’t experience a series of events according to the growth stages, but, short unpredictable growth. Mason (2015) conduct a research and found out that over half of Scottish Firms were over ten years old when they experienced growth.
On the other hand, Growth can also happen due to external opportunities compared to following the life cycle stage, and this term is named ‘growth triggers’ (Brown and Mawson, 2013) for example: New products and new market entry (Table 3). This perspective is adopted from Greiner classic model which proves that growth is not always smooth but a rather disruptive process. In other words, growth can happen anytime during the lifespan of the firm.
This model has effects on the governance. It goes against the priority given to new ventures or startups whom are predicted to experience expeditious growth. As stated above, growth can happen to any firm, supporting only new ventures for economic growth is not possible. Secondly, it is interfering the assistance flexibility for firms growing rapidly.
Meaning, assistance from the government is much more needed after experiencing growth to sustain it (Lee, et al., 2016). Psychology and behaviors of Entrepreneur Venture growth leads to economic growth and development, job creation and social capital generation (Aldrich,1999). However, to answer the age-old question whether entrepreneurs born or made, no research have proven the effect of genetics in the entrepreneurial context. They play a role in influencing the tendency of becoming an entrepreneur, but is all just based on current research (Nicolaou,2008). Personality traits, behaviour, and environment factors have been studied by researcher due to the upward trend of venture success (Baum & Locke, 2004). In fact, characteristics of entrepreneurs are more common as a research topic compared to others (Churchill and Lewis 1986). An example made by Anderson (1977), shows coping behaviour of business owners when their businesses have been destroyed in a flood.
This study has proven that personality traits can predict ‘potential entrepreneurs’ in terms of extreme emotion. The unexpected circumstances may drive a person to become entrepreneurs through determination (Herron & Richard B. Robinson, 1993).
Entrepreneurs are comprehended to be present decision makers in the venture creation process (Delmar & Witte, 2012). These are the traits that link entrepreneurial behavior and performance. Desire for independence, risk taker, need for achievement, self-confidence, innovative and creativity and locus of control (Delmar & Witte, 2012). The desire to manage their own firm is a central feature and driving potential for entrepreneurs. According to Stevenson and Jarillo (1990), entrepreneurship is a function where growth can be achieved. Economist view them as a risk taker within the economy system (book).
Risk factors depends on the perception regarding the situation and how they situate themselves in the decision-making process (Smith, Mitchell and Mitchell, 2009). However, it is not clear whether or not entrepreneurs have better judgement compared to managers or management peers. The research results are varied, it is identified that perceptions do affect one’s evaluation of the risk and determines the entrepreneurship risk taking skills (Keh, Foo and Lim,2002). Similarly, self-confidence is also related to high expectations. Studies have shown that when asked, entrepreneurs were optimistic when asked about their chances of surviving as new venture. Johnson (1990) concluded that need for achievement is the most important as a trait predictor for success, however; this is a dead-end research as less than 7% of this variance is explained. Reviewing this literature, we can deduce that all the characteristics above are the wrong traits to prove growth in entrepreneurship (Carsrud and Krueger, 1995).
Nevertheless, it is believed that for entrepreneurs to grow, they have to genuinely love their work and be strong about pursuing target regardless of the obstacle they face (Baum & Locke, 2004). Supporting the statement, passion for work has been the core success of many entrepreneurs such as; Bill Gates, Michael Bloomberg, and many more (Locke, 2000). Many leadership researchers have concluded that passion is the characteristics of successful leaders and it pushes entrepreneurs to face their fear and uncertainty (Timmons, 2000). Thus, we conclude that passion and persistence are subsequent to venture growth. Perspective on growth from a Social Enterprise Social enterprise involves identifying, assessing and exploiting business opportunities which resulted in creating a social value (Certo & Miller, 2008).
Social value takes into account fulfilling the basic needs of the society and have very little to do with the profit. Social entrepreneurs represent a heterogeneous group who aims to create a social change through the initiation of enterprise (Germaine,2008). Based on the research done by Bornstein (2004), the establishment of social enterprise happened because entrepreneurs are uncomfortable with their status quo. It is difficult to define growth in terms of social enterprise because the concept is often based on the success, survival, achievement and size of the business which are not the aims of social enterprise. From an internal perspective, growth is difficult to define.
With the lack of financial resources, securities and incentives, it is challenging to retain employees. Even though most workers are volunteers, but this workforce doesn’t work in a long-term strategy (O’hara,2001). From an external viewpoint, social enterprise should do partnerships with potential sponsors or other social enterprise to help them generate revenues and new innovation.
Expanding networks for them are really crucial because they can help with funding, new opportunities and acquiring markets (Briga Hynes,2009). The understanding of growth has been aligned on how they can enhance the lives of their stakeholders according to their vision, mission, and beliefs. Findings suggest that growth is measured primarily by the external perspective. All of its feedback points to one core result; aim to obtain external fund to execute their main objectives (Briga Hynes,2009). For example: Enactus. Enactus is an international non-profit organization that is based on a collective group of students, academics and business leaders pledge to use their power of entrepreneurial action to help change lives and create a better sustainable living.
Its biggest investors are KPMG, Unilever, Walmart, Ford and etc. (Enactus, 2016). Changing lives is unlikely to happen without the funding and networks. Therefore, the perspective of growth for social enterprise is to seek potential partners and networks to help them improve the society livelihoods. In doing this, government and policy makers should play a more active role because social enterprise are dedicated to helping the society compared to their own personal interest.
Why business choose not to grow It is undisputable that small businesses are the engine of today’s economy (Doug & White, 2011). Growth might be the target of all businesses but sometimes, choosing not to grow is the best option a firm can have. There is saying ‘Big dreams comes with big responsibilities’, and it is mainly the reason not to grow. Firstly, the larger the firm is, the more demand for its product and service. But is it really a good thing? Some businessman is comfortable with their lifestyle.
They make a fair amount of income and have a wonderful personal life. There is no doubt that they can expand their business significantly but this will lead to higher risk, longer working hours and more decision-making process. Secondly, the company will lose its core focus on why they started (Gerber, 2014). With many demand and revenue channels, it is difficult to focus on one thing at a time.
Creating sustainable business and focusing on customer’s demand is much better than entering new market stream. Thirdly, avoid tax and regulations. It is unavoidable that larger companies have to pay higher taxes and follow more regulations.
As explained by (Doug & White, 2011), when a company hits 50 employees, they should apply for Family Medical Leave Act and this will cost a fortune to the company. Unlike Multi-national companies which generates millions of revenues, startups or small businesses doesn’t have this luxury. Ironically, Government are supporting startups and reduce unemployment, but with many regulations, they are actually cancelling out job creation.
Lastly, to keep things at personal level. Quoting John Bloise ‘I work for a small design firm, I actually get to design” (Marisigan, 2012). This proves that the bigger the firm is, the more things you have to divide your attention to and this unable you to manage your core focus better and deeper. The smaller the business is, the tighter the bond between employees.
When this happen, it increases the productivity and will have better results compared to growing the business. Also, whether or not it is the status quo, Businessman usually wants everything in their control and dislike the thoughts of having to delegate jobs. At the end of the day, entrepreneurs must be reasonable with themselves. Growing business is definitely a good idea. Realistically, it takes more effort, time and energy to maintain growth, calculating whether or not it is worth it to expand the firm. They have to consider the risk and sacrifices made in the future of their own firm.
Conclusion The definition of success and growth is a controversial issue. Some researches strictly use financial as indicators, others use non-financial features to determine success (Walker & Brown, 2004). This paper has address different point of views on growth. In my opinion, growth depends on what type of services a firm provides.
If they are a social enterprise, growth is a very different term for them. Similar to firms who decided not to expand. Their definition of growth might be expanding their customer based whilst others might measure according to their finance. How the entrepreneurs feel about themselves and their firm, achieving and meeting all the targets, and providing customer satisfaction, means they are growing, not only externally but also internally.
We cannot measure success according to the given factors as there is no baseline to it. Passion and love for their jobs will create self-growth to the firm.