Some Suggestions on the Balance of SMEs Growth and Entrepreneur Growth

Some Suggestions on the Balance of SMEs Growth and
Entrepreneur Growth
JIAO Xiao-min
School of Economics, Huazhong University of Science and Technology, Wuhan, Hubei, 430074
Abstract: How to actuate effectively the entrepreneur unceasing growth to maintain the balance of the
entrepreneur growth and the SMES growth is a topic with more practice significance. The former
literatures are less study the growth of the SMES from the balance development of the entrepreneur
growth and the SMES. This article discusses the countermeasure to maintain the equilibrium of the
entrepreneur growth and the SMES growth from three aspects as follows: correctitude the entrepreneur's
growth manner, structure multiple entrepreneur team, maintain entrepreneur growth accompany the
SMES growth unceasingly.
Keywords: the SMES; entrepreneur; balanced growth
Maintain the balance of the entrepreneur growth and the SMES growth has vital significance to the
growth and development of the SMES (Sun Xuemin,2004,2006,2007). How to actuate effectively the
entrepreneur unceasing growth to maintain the balance of the entrepreneur growth and the SMES
growth is a topic with more practice significance. There are some literatures discussing the entrepreneur
growth in the former literatures, but most study from the macroscopic environment and the drive
mechanism of the entrepreneur growth; There are also some literatures discussing the SMES growth, but
less literatures studying from the balance development of the entrepreneur growth and the SMES. This
article proposes countermeasure to maintain the balance of entrepreneur growth and the SMES growth
from three aspects.
1 Correctitude entrepreneur's growth manner, guarantee balance growth of the
SMES
Entrepreneur's negative attitude is the important reason for the imbalance of the SMES growth.
Guarantee the balance growth of the SMES, needs to correctitude the entrepreneur positive growth
manner. Compared with big enterprise, we discover that many factors influence on the entrepreneur’s
growth manner of the SMES, presents the multiple characteristic. In the mainstream economic
literatures, pursuing profit maximization is a basic hypothesis. But in the SMES, we may see, besides
pursuing profit maximization, there are many various reasons for setting up the enterprise. Demand to
the achievement, the risk spirit, the interest hobby, the outside influence, each kind of accidental factor
all possibly urge the entrepreneur to start an undertaking. These non-economic factors have strong
randomness, but we can not recognize they all are non- rational. Wiklund and other scholars’
demonstration research discovered that, the importance of the economic factor’s influence on the
entrepreneur growth manner was inferior to the people imagination. What is opposite to the economic
theory, the non- economic factors have tremendous influence on the growth manner.1 The influence of
these non-economic factors is not intense sometimes, but extremely universal, also is subtle and
complex to the entrepreneur growth manner.
Some part of the reason why the entrepreneur has the negative worry to scale expansion of the
enterprise, come from the rational consideration about problems come forth in the growth process of the
SMES, this is undisputable, moreover also is helpful to the question solution. But quite a part worries
come from the thought limitation of the entrepreneur and the information understanding insufficiently.
1
，
，
，
Johan Wiklund Per Davidsson Frédéric Delmar “What Do They Think and Feel about Growth? An
Expectancy-Value Approach to Small Business Managers’ Attitudes Toward Growth”, Entrepreneurship: theory
and practice, spring, 2003.
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Thus breaking through" the brain obstacle ", understanding growth comprehensively, correctitude the
growth manner, becomes a duty which the entrepreneur face.
The entrepreneur thought limitation of the SMES includes:
1. Low goal to create wealth, satisfied little wealth limits the enterprise development. The
entrepreneur gain certain income from starts an undertaking, their living standard had a bigger
improvement, but they satisfied present situation, did not try hard for the enterprise scale expansion.
This is a very important reason for many SMES can not grow big.
2. Busy in the daily management business, lack strategic thought, affects the growth and
development of the enterprise. As a result of the human resources deficiency, the flat management
construction of the SMES, its principle leader (entrepreneur of starts an undertaking) often have to
directly handle massive daily administration, besides the minority entrepreneur can maintain the good
strategic consideration, most enterprises appear the strategic losing, cause the enterprise losing the
advantageous development opportunity.
3. The mind of be afraid of “do in a big way”, affects the step of the enterprise to become big and
strong. Most entrepreneurs of the SMES lack the experience to manage the big enterprise, has strange
feeling to the big enterprise's complex management system and the management question, then give
birth to sense of afraid. This constituted one kind of contradictory psychology of the entrepreneurs of
the SMES, both longed for “do in a big way”, and is afraid of“do in a big way”, when faces the
opportunity to do big, they display excessively many hesitations, loses the good development
opportunity.
Overcome the entrepreneur thought limitation of the SMES, correctitude its growth manner, many
methods and measures can be adopted.
1. Increase the opportunity for the SMES observe and emulate, study the successful big enterprise
and exchange with the successful big enterprise, stimulate the establishment of its new goal to create
wealth, overcome the mind of afraid of becoming big. Many successful big enterprises all developed
from the SMES, all experienced the process from infancy to maturity. The development beginnings of
these enterprises often is similar to the existing SMES; The growth question faced by the present SMES,
these successful big enterprise also meet once; These entrepreneurs of the successful big enterprise also
experience the same growth process with the entrepreneurs of existing SMES. The exchange
interaction between them, has enormous help to the entrepreneurs of the existing SMES strengthen their
confidence to make enterprise big, realize bigger goal, also has positive effect to the SMES finding the
solution to the existing growth difficult.
2. Guide the entrepreneurs of the SMES paying attention to the strategic question, study strategy
management knowledge. Most entrepreneurs of the SMES lack the knowledge and the experience of the
strategic management. Do research through the organization training class and the topic, make them
know the importance and the method of the strategic management, train them consider the enterprise
development question from the profession development and the market development, help them to
constitute strategic plan for the enterprise to make strong, is extremely important to the entrepreneurs of
the SMES. In recent years, the rapid expansion atmosphere of the EMBA and MBA between the
multitudinous entrepreneurs of the SMES, has reflected this kind of guidance necessity and the validity.
2 Structure multiple entrepreneur team, makes up limitation of the single
entrepreneur, promote the balance growth of the SMEs
In order to make up the limitation of single entrepreneur in the knowledge and background,
maintain the continuous innovation spirit of the entrepreneur, structure a close entrepreneur team is
extremely essential. A highly effective and supplementary entrepreneur team can become the important
balance strength in the fast growth process of the SMES, help the SMES to cope with the environment
change, resources limitation and kinds of contradiction in the growth process.
2.1 Entrepreneur team can promote the SMES fast growth, avoid growing stagnates
Many evidences indicate that structure entrepreneur team plays a vital role in maintaining the
SMES continuous growth. Brockaw (1993) obtained the conclusion after he inspected 1709 enterprises
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in American: In "super—velocity" growth enterprise, only 6% is founded by single entrepreneur, 54%
have two founders, 40% founded by entrepreneur team with three above people. Comparatively, 42% is
founded by the single person in the stagnant growth enterprise. Based on the above investigation,
Brockaw thought the joint effort of the entrepreneur team is the key factor to the enterprise’s fast
growth2. The entrepreneur team has the superiority in the growth. Timmons (1990, 1994), Kamm (1990)
and other investigators discovered that, Compared to the SMES founded and managed by single
entrepreneur, the SMES founded by the entrepreneur team has more superiority.3 These mainly display
in: (1) Life is longer. (2) Earning capacity is higher. (3) New product exploitation and
Commercialization speed is quicker. (4)Good at using the market capital. (5) Can adapt the turbulent
business environment.
2.2 Structure multiple entrepreneur team can effectively overcome the imbalance of the
entrepreneur growth with the SMES growth
In front of discourse, we can see that the limitation of the entrepreneur in individual aspect is the
important reason to create the imbalance of the entrepreneur growth with the SMES growth. The strong
suits of the single entrepreneur in former background, knowledge structure, management ability,
superiority skill often become the barrier to the SMES further growth. Construct a multiple entrepreneur
team can encourage the creativity; can provide different opinion and viewpoint; arise constructive
conflict; reduce the inclination of settle for the present situation and pursue the successful opportunity to
improve the SMES.
Wen QiMo sums up the multiplicity in three aspects the function multiplicity, the industry
multiplicity and the thinking mode multiplicity in a book Fast Growth , these three aspects can become
the standard for the growth SMES structuring multiple entrepreneur team. Function multiplicity is based
on work experience. The function multiplicity can come forth the constructive conflict. The
entrepreneur team with different function backgrounds when make the decision-making, is helpful to
provide a series of inspection, the confirmation and the balance method. Industry multiplicity is based
on industry experience. The multiplicity in the industry experience is helpful to the entrepreneur team
making a better decision. Because the team members worked in the specific profession, can provide
many viewpoint and view based on the rich experience; But the new members can provide "bystander's
view", these possibly because "too close to the problem" never refer to. Thinking mode multiplicity is
based on horizontal thought and vertical thought. The entrepreneur team is helpful to the balance
realization of horizontal thought and vertical thought, guarantees the rationality and the development
strategy execution successfully. (Figure 4 shows)
《
Horizontal thought
，
》
Vertical thought
Detail guidance
Follows the logic,
careful carries on
Follower role
Pays attention to the
slight progress
Settle for the
fixed restraint
Big prospect
guidanceto bring
possibility
divarication
Challenge role
New viewpoint
catalyst
The breakthrough
restraint imposed
2
Brockaw, L. (1993) `The Truth about Start-Ups', Inc.,15(3), 56±64.
Timmons, J. A. (1994) New Venture Creation: Entrepreneurship For The 21st Century (4th), Irwin, Homewood,
IL.
Kamm, J. B., Shuman, J. C., Seeger, J. A. and Nurick,. J. (1990) `Entrepreneurial teams in a new venture creation: a
research agenda', Entrepreneurship Theory and Practice, 14(4), 7±17.
3
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Figure4 entrepreneur team's thought multiplicity
Material origin: [American] Wen QiMo: " Fast Growth –How to obtain and maintain fast Growth",
page of 142, economical management publishing house, 2003.
3 Entrepreneur growth along with the SMES unceasing growth is the key to maintenance balance
3.1 The complication and the standardization of organization scale of the SMES requests the
entrepreneur role unceasing transformation
In the initial growth period, the entrepreneur individual decision-making is the main management
pattern of the SMES. At this time, because of small scale, flat hierachical organization, the entrepreneur
individual decision-making is more effective, flexible, can impel the enterprise fast growth. But after
some period development, the enterprise becomes big and has lots of assets, the contradiction and the
conflict as the owner and the superintendent dual role can be revealed. Churchill and Lewis described
the entrepreneur role unceasing transformation and different request to the management ability in the
SMES growth process. The organizational structure change is not only the department simple
duplication and expansion, but also is organization innovation adapting to the growth strategy of the
SMES. Therefore, the entrepreneur should adjust promptly according to strategy and the requests of the
organizational structure change, maintain the whole balance in the SMES growth process. (Figure 5
shows).
Stage
Stage III-D
III-S
Stage IV
Stage V
Stage I Starts
Stage II
Success Success - Launching
Mature
an
Survival
separation
growth
phase
stage
undertaking
stage
stage
stage
Organization
Structure
Entrepreneur role
I
m
p
o
rt
a
n
t
d
e
gr
e
e
Entrepreneur's
superiority skill
Direct operation ability
Authorized ability
Figure5 The SMES growth evolution requests the entrepreneur role and the superiority skill
corresponding transformation
Material origin Churchill, Lewis. “The Five Stages of Small Business Growth.” Harvard Business
Review. May-June. 1983.
3.2 The scale expansion of the SMES request the entrepreneur superiority skill also change
unceasingly
In the initial growth period of the SMES, entrepreneur individual is enterprise's center, directly is
engaged in kinds of operational work. Entrepreneur's superiority skill mainly concentrates on
sales/marketing, human affairs, finance and product innovation. In Inc.500, 82% entrepreneur individual
is most important sale strength of the enterprise. In the initial period, entrepreneur's these skills are the
most precious resources for the SMES growth. The investment in sales by the entrepreneur oneself not
only exploited the market, but also confirmed market value of the motive of the entrepreneur to start an
undertaking. The entrepreneur’s management and effective drive to personnel impelled the growth
culture formation of the SMES. But along with the scale expansion of the SMES, the matter which the
：
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entrepreneur needs to cope with are more and more complicated, its superiority skill can not only limit
in the operation stratification, but also learn to delegate power to the lower levels, not only as the
realism paying attention to actual effect but also as dreamer seeing the big prospect. Figure 5 had
indicated the different request to the entrepreneur’s management skill in the different growth stage of
the SMES. Along with scale expansion of the enterprise, organization's expansion, request to
entrepreneur direct operation ability is more and more low, but request to the entrepreneur authorized
ability is more and more high. This proposed a higher challenge to entrepreneur's management ability,
but also indicated the correct direction to the entrepreneur management style change.
Briefly, the entrepreneur is the essential strength to promote the SMES continues fast growth. The
entrepreneur similarly needs unceasingly to grow. In order to avoid the imbalance of the entrepreneur
growth with the SMES growth, the entrepreneur needs to maintain the good positive growth manner,
constructs a multiple highly effective team, unceasingly raises own management level and the
superiority skill, maintains the balance of entrepreneurs growth and the enterprise growth.
References
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[7] SUN Xue-min . Seven Useful Methods on SME Management. Economic Management,2001(7).
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The author can be contacted from e-mail : [email protected]
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