Date of Award

2012

Document Type

Thesis

Publisher

Edith Cowan University

Degree Name

Master of Business

School

School of Management

Faculty

Faculty of Business and Law

First Supervisor

Professor Alan Brown

Abstract

Small business has often been referred to as the “engine driving the economy”. This description highlights the significance of small business to the economy of most countries. But what about the smallest of these organisations; those businesses with fewer than five employees? These businesses, termed micro businesses, form a large part of our economy and are sometimes the starting point for larger business and sometimes provide a long term, alternate business structure. This type of business has special needs and characteristics and is often neglected in the management literature. The nature and diversity of these businesses prompted an interest in discovering how they operate, but more specifically how they are managed and how the management capabilities are developed in these businesses. Micro businesses are formed for a variety of reasons. They are often an opportunity for a professional or tradesperson to pursue their work without the perceived constraints of working in a larger organisation. Sometimes they result from an opportunity to create and test a new idea in the marketplace, or the chance to be ones’ own boss, or as a start up for a bigger organisation in the future. The wide variety of entry points means that the level of managerial capability tends to be quite diverse. The emphasis on ‘doing the business’ may mean that these micro business owners are skilled in their ability to produce, but not necessarily in their ability to manage the business and the staff. The aim of this study was to explore how these business owners developed their managerial capabilities. The study was based around a model proposed by Devins, Gold, Johnson and Holden (2005) that suggested that there are three main groups that micro business managers tend to seek out to support their development. These groups are close and important others, who may have an interest in the business but may or may not be involved in the business. This would include people like family members, business partners, suppliers etc. The second group includes professional advisers, such as accountant, lawyers and bank managers. The third group covers training providers. Micro business includes such a diverse variety of businesses that it makes sense that the level of managerial capability and the sources used to improve this would vary greatly. It is this variety that prompted the study and also the methodology chosen. As this was exploratory in nature and the aim was not to develop a definitive answer nor a representative answer to this question of management development, but to gain insight into this sector, a qualitative case study approach was taken. Twelve very different micro businesses were chosen to examine. The case study was based on semi structured interviews with the business owner. The aim was to identify how they perceived their managerial capabilities and where they sought support in making decisions and developing their managerial capacity. The series of interviews allowed respondents to share freely their views and a rich source of information was produced. Traditionally, governments and private providers have poured significant funds into providing training programs for micro and small business to enhance their management capacity, but contrary to these traditional practices, the micro business owners interviewed were not active users of any of these training mechanisms. The analysis confirmed what many intuitively know, and that is that the close important others are the most trusted and most often turned to source of support by micro business. The study also indicated that professional advisers, such as accountants and bank managers were often viewed as worthwhile support agents. This is an important area to understand as it indicates that the provision of traditional training programs for micro business and small business may not be the most effective method for developing management capabilities in these businesses. This suggests that continuing to do the same thing, may be ineffective. It indicates that the role of professional advisers may need to be broadened to align better with the provision of training and support, and importantly that alternate types of support may be needed such as strong mentoring programs.

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