KINGSTON
UNIVERSITY
                  
     MSC
INTERNATIONAL
FINANCE
                  
    ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9                                            
Abstract
Most of sma...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9DeclarationI declare that this dissertation is all my own work an...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9AcknowledgementsI would like to thank, first of all, my parents, ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Table of contents1
 INTRODUCTION
                                ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/95
 CONCLUSIONS
                                                  ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/91 Introduction
1.1 Background
to
the
study
“There are some reason...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9SMEs have been a source of inspiration for many studies in the pa...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9SME sector in the UK. Finally, the study will investigate how SME...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/92 Literature
Review
2.1 The
recession
2008/09
The current economi...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9current recession through streamlining and adjusting the way they...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9enterprises have been severely affected by the credit crunch. A r...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though the named above reports are recent, they were conducted by...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to define where a company needs to focus on its product range and...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9firmly based on the needs of the market and should be balanced wi...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though there are many more numerous arguments in favour of adopti...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/92.5 Successful
strategies
for
SMEs
There is some evidence to sugg...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9The authors also outline that there is some consensus over the ar...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9economic situation in the UK and its impact on the SME sector. Ho...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93 Methodology
3.1 Introduction
This chapter will provide a discus...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9and context are not clearly evident”. The present research invest...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.4 Data
Collection
Method
Interviews with business owners have b...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Since this research is designed under an interpretivist paradigm,...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to put the participation in the research in their agenda, as most...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9because of the poor economic conditions in his country in Eastern...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9             Legal       Position of                             ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.6 Interview
questions
As Kvale and Binksmann (2009) recommend t...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9After the interviews have been transcribed, May (2002) recommends...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9verbal behaviours are very important during interviews, as they m...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.8.2 Reliability
Reliability “refers to the absence of differenc...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9material rewards for the participants were avoided. Otherwise as ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/94 Findings
and
analysis
4.1 Introduction
My research findings as ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Profits of Mr F Biotech’s business have not been affected by the ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9To sum up the business owners have named such major problems, as ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to keep them at the same level, all the businesses have tried som...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9“I would not say that people are now buying less our products tha...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9“Six months ago we had to reduce the number of our permanent empl...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though all other SME owners have particular plans for their expan...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9least to keep them at the same level, all the businesses have tri...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/95 Conclusions
5.1 Discussion
and
Summary
This study set out to pr...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9expand their businesses in the nearest future. They acknowledged ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9                      Existing product                         Ne...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9area of London). Burns (2006) states that the lowest risk option ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9allocated for the whole study within the Master’s Programme. Only...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9understanding of the impact of the recession on the SME sector in...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9                  Word count – 12,067.
                          ...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/96 References
Ansoff, I. (1987) Corporate Strategy, London: Pengui...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Federation of Small Business, FSB News Release (2009), April, [On...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Nohria, N. and Hoyce, W. (2003) What really works, Harvard Busine...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Yin, R. (2009) Case study research: design and methods, 4th editi...
EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/97 Appendices
7.1 Case
study
protocol
      •   Overview of the Ca...
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
Kingston University Master's Dissertation of Natalia Kalitenko
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Kingston University Master's Dissertation of Natalia Kalitenko

  1. 1. 
 
 KINGSTON
UNIVERSITY
 
 MSC
INTERNATIONAL
FINANCE
 
 NATALIA
KALITENKO
 
 KU
number:
0813053
 
 
 DISSERTATION
TOPIC:
 EXPERIENCES
OF
SMES
IN
THE
UK
 DURING
THE
RECESSION
2008/9.
 

 
 


 
 2009
  2. 2. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9 
Abstract
Most of small and medium sized enterprises (SMEs) in the UK have been severelyaffected by the recession 2008/9. Different businesses were using differenttechniques in order to survive. Therefore the purpose of the research was to identifythe impact of the recession on the activities of SMEs in the UK and, in particular, toresearch their strategies in the last 12 months.Under the interpretivist paradigm this study investigated the issue of SMEs in theUK, their importance to the national economy, and what strategies the SMEs appliedduring the 12 month prior to the research. Also it was investigated how the SMEscoped with the hurdles of the economic situation and how they adapted theirstrategies to the rapidly changing external environment. Using semi-structuredinterviews, rich qualitative data were obtained regarding the business experience ofthe six SME owners. These data were broad, and this facilitated an in-depth analysisof the situation.The key fact that was found during the research is that the more difficult the externalenvironment of SMEs is, the more creative they become. What is more, the morechallenging the external environment becomes, the quicker the businesses respond toit and adapt to the needs of the market. Finally, five out of six studied businesseswere classified as growing SMEs. Using Ansoff’s (1987) classification of growingfirms, it was concluded that three studied firms chose Product development strategy,whereas two other firms had Market development strategy.
 I

  3. 3. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9DeclarationI declare that this dissertation is all my own work and the sources of information andmaterial I have used (including the Internet) have been fully identified and properlyacknowledged as required.
 II

  4. 4. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9AcknowledgementsI would like to thank, first of all, my parents, who are always supporting me andbelieve in me.I am very grateful to my supervisor, Jill Collis, who has been not only a great mentorand teacher, but also a great source of inspiration for me during my research.
 III

  5. 5. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Table of contents1
 INTRODUCTION
 1
1.1
 BACKGROUND
TO
THE
STUDY
 1
1.2
 STUDY
AIMS
 2
1.3
 STRUCTURE
OF
THE
RESEARCH
 3
2
 LITERATURE
REVIEW
 4
2.1
 THE
RECESSION
2008/09
 4
2.2
 PROBLEMS
FOR
SMES
DURING
THE
RECESSION
 4
2.3
 STRATEGY
 7
2.4
 STRATEGY
FOR
SMES
 9
2.5
 SUCCESSFUL
STRATEGIES
FOR
SMES
 11
2.6
 CONCLUSIONS
 12
3
 METHODOLOGY
 14
3.1
 INTRODUCTION
 14
3.2
 PARADIGM
 14
3.3
 RESEARCH
STRATEGY
 14
3.4
 DATA
COLLECTION
METHOD
 16
3.5
 SAMPLE
SELECTION
 17
3.6
 INTERVIEW
QUESTIONS
 21
3.7
 DATA
ANALYSIS
METHOD
 21
3.8
 DEALING
WITH
CONCEPTUAL
ISSUES
 22
3.8.1
 VALIDITY
 22
3.8.2
 RELIABILITY
 24
3.8.3
 ETHICAL
ISSUES
 24
3.9
 CONCLUSIONS
 25
4
 FINDINGS
AND
ANALYSIS
 26
4.1
 INTRODUCTION
 26
4.2
 PROFITS,
NUMBER
OF
CUSTOMERS
AND
WORKING
CAPITAL
OF
SMES
 26
4.3
 CUSTOMER
BASE
 28
4.4
 EMPLOYEES
 30
4.5
 PLANS
FOR
THE
FUTURE
 31
4.6
 CONCLUSIONS
 32

 IV

  6. 6. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/95
 CONCLUSIONS
 34
5.1
 DISCUSSION
AND
SUMMARY
 34
5.2
 RESEARCH
LIMITATIONS
 37
5.3
 RECOMMENDATIONS
FOR
FUTURE
RESEARCH
 38
6
 REFERENCES
 41
7
 APPENDICES
 45
7.1
 CASE
STUDY
PROTOCOL
 45
7.2
 INTERVIEW
TRANSCRIPTS
 48
7.2.1
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
A
 48
7.2.2
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
C
 51
7.2.3
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
D
 54
7.2.4
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
E
 58
7.2.5
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
F
 62
7.2.6
 TRANSCRIPT
OF
THE
INTERVIEW
WITH
INTERVIEWEE
G
 66

 V

  7. 7. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/91 Introduction
1.1 Background
to
the
study
“There are some reasons for concern that this credit crunch may be worse than ourbig last credit crunch in 1990-92, especially as it relates to small and mid-sizedcompanies” (Udell, 2009, p. 117). This quotation relates to the current recession,which has had a huge impact on the world economy. Small and medium enterprises(SMEs) have a big contribution to the UK economy. They contribute around 50 percent of turnover and employ more than 60 per cent of the working population in2008 (Federation of Small Businesses, 2008).A wide variety of definitions of an SME exists in different countries. For instance,the European Commission has a set of definitions of SMEs that distinguish betweenmicro, small and medium-sized enterprises based on headcount, turnover andbalance-sheet value (Official Journal of the European Union, 2003). Thesequantitative thresholds are important because they are used throughout the EuropeanUnion for policy purposes (Stokes and Wilson, 2006). However, the UK governmenthas another approach to the SME definition. In the UK, sections 382 and 465 of theCompanies Act 2006 define an SME for the purpose of accounting requirements.According to this an SME is one that has a turnover of not more than £6.5 million, abalance sheet total of not more than £3.26 million and not more than 50 employees.A medium-sized company has a turnover of not more than £25.9 million, a balancesheet total of not more than £12.9 million and not more than 250 employees.However even within the UK this definition is not universal. Thus, the BritishBankers Association (BBA) provides another definition of an SME in the BusinessBanking Code (2008). Here it is defined as sole traders, partnerships, limited liabilitypartnerships and limited companies with an annual turnover of under £1 million, aswell as associations, charities and clubs with an annual income of under £1 million.Though there is no single definition for a SME either nationally or internationally, inthis research an SME will be considered as a business with less than 250 employees.
 1

  8. 8. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9SMEs have been a source of inspiration for many studies in the past century andcontinue to be a topic for recent researches. The Bolton Committee was set up in thelate 1960s to determine the role SMEs play in the UK economy. According to Stokesand Wilson (2006), SMEs have a big advantage compared to large companies: theycan be set up both in a growing economy and during a recession. When there is aneconomic boom, the demand for goods and services goes up, innovations are needed,and many innovators are small or medium firms. On the other hand, during arecession, the rate of unemployment increases; therefore many unemployed peoplemay decide to launch their own business.Significant evidence in the literature exists that supports the great importance ofgrowing businesses to the economy. According to Stokes and Wilson (2006), at bothmicro and macro level it is essential to encourage new ventures to grow, as this, first,optimises the chances of success for individual firms, and, second, helps to build astrong economy in the future. Burns (2006) similarly outlines the importance ofhigh-growth businesses to national economies, as they create new jobs andquantitatively benefit to the economy.Management of an SME differs from management of a large corporation. All theprocesses within an SME are usually individually tailored. Thus not everythingdescribed or recommended in the literature, can be applied to an SME. Similarly,formal strategic planning, which is generally an integral part of managing a largecompany, is not necessarily common in the SME sector. There is a debate in theliterature whether formal strategic planning is beneficial for SMEs, as there are a lotof arguments to support both opinions in this debate. However there is still no finalanswer to this question.1.2 Study
aims
The purpose of this research is to identify the impact of the recession on the activitiesof SMEs in the UK. To obtain this purpose, the study will, firstly, research theimportance of a strategy for small and medium sized enterprises in the UK.Secondly, this study will attempt to evaluate the impact of the recent recession on the
 2

  9. 9. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9SME sector in the UK. Finally, the study will investigate how SMEs cope with thehurdles of the economic situation and how they adapt their strategies to it.1.3 Structure
of
the
research
Chapter 2 provides an overview of the recent recession and its impact on the worldeconomy as well as on the SME sector in particular. This chapter will then presentdifferent strategies suitable for large corporations and for small firms. Finally, thechapter presents a number of strategies that are believed to help SMEs succeed. Thechapter concludes with a summary of current knowledge and presents the study’sresearch questions.Chapter 3 describes the methodology and presents reasons behind the choice ofrationale for the project, appraising the research design and justifying the choicesmade regarding its paradigm, data analysis and interview techniques. Additionally,the concepts of validity, reliability and ethics are discussed. In general, this chapterwill present the case for how the research project collected, analysed and interpreteddata in a methodical and systematic manner in order to answer the research questionsset out in the previous chapter.Chapter 4 presents the picture that emerged after the collected data were analysedand also presents answers to the stated questions. By bringing together the findingsfrom each of the six SME owners, the chapter provides a broad picture of the currentsituation within small firms in the UK. Findings are categorized by theme andanalysed after each topic is presented. This chapter concludes with a summary of theresearch findings.Chapter 5 begins with a discussion of the findings given in the previous chapter,presenting the contribution to knowledge this study has made and demonstrating howthe study has answered the research questions. The limitations of the study arediscussed and the chapter concludes with recommendations for future research.
 3

  10. 10. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/92 Literature
Review
2.1 The
recession
2008/09
The current economic crisis has arisen as a result of the US sub-prime mortgagecrisis which began to emerge in 2007. Mortgage lenders’ over-confidence in amarket where house prices seemed destined to rise in perpetuity, pumped excessivesums of mortgage debt into the market (BBC, 2007). Inevitably, the bubble burst,leading to plunging property prices, a slowdown in the US economy and billions inlosses by banks (BBC, 2007). This led to markets losing the key ingredients thatmaintain their vibrancy and liquidity; confidence and trust. As a result, banks werereluctant to lend to one another; instead they sought to repair their finances bylimiting credit to their customers. Borrowing became harder and more expensive toarrange: the definition of a credit crunch (Elliot, 2008).The economic downturn has affected a number of industries, particularly the buildingindustry with £15bn lost in share value in the year to June 2008 (BBC, 2007) and theretail industry has had high profile causalities including Woolworths, as latest figuresfrom ONS (2008) show that three-monthly trends in retail sales volume shows nogrowth.Closely linked to these factors is unemployment which has risen from 0.4% to 6.0%in the last quarter (HRM, 2008). One effect unemployment has on the economy isdiminishing consumer spending; when consumers spend less on goods and services,demand decrease further leading to a diminishing GDP growth (HRM, 2008).2.2 Problems
for
SMEs
during
the
recession
Small businesses are traditionally vulnerable to financial downturns (Griffin, 2008).The recession 2008-2009 is not an exception. As Udell (2009) states, that this creditcrunch may be considered to be worse than the last big credit crunch in 90s,especially as it relates to small and medium sized companies. According to the FSBNews Release (Federation of Small Businesses, 2009), the recent economicdownturn has significantly affected small and medium-sized businesses throughoutthe UK. There are 1.26 million small-to-medium enterprises (SME) fighting the
 4

  11. 11. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9current recession through streamlining and adjusting the way they trade (Marketingweek, 2009). The survey of UK small businesses, published by the UK200 Group inAugust 2008, reveals that 88 per cent of respondents admit their business levels havebeen hit by the present recession, whereas 72 per cent were forced to reduce theirmargins as a result. Though only half of the surveyed business owners areexperiencing greater difficulty in obtaining credit, more than 70 per cent facedelayed or late payment, which is one of the biggest threats to small firms (EveningChronicle, 2008). Hawkes (2009) names the problems most commonly cited by UKSMEs, as the increased cost of raw material or fuel, decline in sales, and staffredundancies. Rising costs, falling consumer confidence, and limited credit facilitiesall add to the difficulties SMEs are facing (Skinner, 2008). In turn, Marketing Week(2009) publishes that according to The British Culture Index research the currentclimate is a good time for suppliers to target small businesses as they look foralternative providers. What is more, the UK200 Group survey also found out that 98per cent expect the credit crisis to adversely affect their business in the future. Thisfact can explain why small and medium-sized enterprises in the UK must prepare forpossible financial difficulties if they either have already experienced difficulties ormay face them in the immediate future. Though the studies discussed above arerelatively recent and present some particular facts about SMEs in the recession, thefigures cannot be considered reliable, as private firms conducted them. What is more,the surveys are not representative of all sectors, as they are primarily intended toexplore service, manufacturing and production sectors.BIS SME Business Barometer is another source that provides rich data collectedfrom telephone interviews conducted in the UK quarterly. According to the latestversion of BIS report (2009), published in June this year, the current state of theeconomy is named by SMEs as the main obstacle to their success. The report alsoproduces a good statistical picture of the SME sector, outlining changes inbusinesses’ turnover, growth level, staff levels, which have predominantly negativetrend over the last 12 months. Though this report is considered to be one of the keyreports reviewing the state of the UK SME sector, this source tends to haveovergeneralization as it has lack of details on particular business cases.Numerous sources around the UK tend to conclude that small and medium-sized
 5

  12. 12. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9enterprises have been severely affected by the credit crunch. A recent example is theannouncement from the FSB, stating that more than 120 small businesses are closingon a daily basis across the UK due to the economic downturn. As it can be seen,these assumptions are supported by figures from respective surveys andquestionnaires.However, alternative opinions in the literature and periodical press can be found aswell. According to Yorkshire Press (2009), one in four small firms said they have feltno noticeable effect from the recession, according to new research. A report fromIntuit, provider of QuickBooks financial management software, also said that 35 percent of small businesses felt the downturn had had a negligible impact. One in 20businesses, however, feel their survival may be at risk. What is more, a report fromIntuit, provider of QuickBooks financial management software, states that only 23per cent felt it had been easy to access outside help and many took the initiativethemselves.According to Small Business, free online advisor for UK SMEs, 78 per centrespondents stated that media coverage was responsible for worsening their outlook.In turn, Marketing Week (2009), states that much of the doom and gloom has beenthe result of heavy coverage of the recession in the mainstream media. The sourcerecommends SMEs be more careful than usual, but to look closely at what brings inresults and then focus on that.Apart from the sources, commenting on the UK SMEs performance changes, there isanother one, which may represent some interest for this study. O2 companyconducted a research among its small business customers, who successfully steeredtheir businesses through the early 1990s recession. The aim of the research was tofind out what they did to get them through it. The top tip from O2 customers thatsurvived the early 90s recession was to get the basics right. In other words thesurveyed SMEs were having accurate financial reporting and stringent accountmanagement processes that were crucial to secure business loans. Secondly, thesurveyed SMEs named cutting their costs in order to survive in tough times. Thencareful cash flow management and increased spending on marketing followed in themost popular answers (Small Business News, 2009).
 6

  13. 13. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though the named above reports are recent, they were conducted by privatecompanies, which have had non-academic purposes for the research. It is not clearfrom the surveys whether they were conducted in the UK or only in some regions.Also there are no details about the size of the surveyed firms, though this study aimsto investigate experiences of small and medium firms in the UK. Therefore, theinformation obtained from these surveys cannot be considered as fully relevant forthis research and this study intends to investigate the information that the literaturelacks.2.3 Strategy
Management of an SME differs from management of a large corporation. However, astrategy and planning are integral parts of managing any business. What is morethese elements are core as well when managing a company in a crucial situation.However, it is vital to differentiate strategy techniques for large corporations and forSMEs. Therefore, a general explanation of a strategy and understanding of a strategyby an SME is provided below.The concept of strategy has different meanings in different contexts. Johnson et al.(2008: 3) define strategy as “the direction and scope of an organization over the longterm, which achieves advantage in a changing environment through its configurationof resources and competences”, whereas for Hofer (1975) strategy was about twoquestions: “What businesses should we be in?” and “How do we compete in a givenbusiness?”Porter (1985) has worked out the three generic strategies that are believed to lead tosuccess. They are cost leadership, differentiation or focus. Hamel and Prahalad(1994) suggest to a firm to focus on its core competences. As was proved in theirresearch, businesses should develop a common vision about the future, align staffbehaviour with a common purpose and delegate and decentralize decision-making.All these actions help organizations succeed as they can create new products andmarkets where they dominate. Ansoff (1987) suggests another approach toclassifying strategies for growing businesses. Ansoff’s product-market matrix aims
 7

  14. 14. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to define where a company needs to focus on its product range and the market itoperates in. The matrix is shown below. Existing product New product Market penetration Product development • Consolidation • Use existing • Penetration (Increase market competencesExisting share; Increase product usage; • Develop new market Increase frequency of use; competence Increase quantity used; New application) • Restructuring Market development Diversification New • Geographic expansion • Related diversification market • Target new market segments • Unrelated diversification • New uses Source: Based on Ansoff (1987)Market penetration is a least risky strategy, which involves staying with the sameservice or products, but selling them more to the same customers. It can also involvefinding new customers in the existing market. This option allows a firm to focus onwhat it is doing and to do it better. In a growth market this strategy can benefit to abusiness, whereas in a static or declining market it is much more difficult to pursuethis option (Burns, 2006).Product development is associated with introducing new products or services into theexisting market. They might be completely new products or extension of existingproduct portfolio. The justification for following this strategy is that a firm shouldhave a customer focus and good reputation. However, according to Burns (2006),developing new products can risky and expensive. Thus the development must be
 8

  15. 15. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9firmly based on the needs of the market and should be balanced with other productsin the product portfolio.Market development is the natural extension of market penetration. Any growingfirm needs to find new customers. And here market development offers geographicexpansion of a business. As Burns (2006) puts it, the lowest risk option in seekingnew overseas markets is to seek out the segments similar to those the firm alreadysells to.Diversification is the final growth option. It involves selling new products into newmarkets, and thus can be considered a high-risk option. Therefore adoption of thisstrategy requires careful justification.Though all these suggested strategies look appealing, Burns (2006) concludes thatthe common issue in these theories is that a strategy should emphasize somethingthat makes the firm as unique as possible and delivers as much value to the customeras possible today and tomorrow.2.4 Strategy
for
SMEs
Existing strategy frameworks are designed for bigger firms with plentiful resources.They should not be liberally borrowed and advanced as solutions for SMEs, whoface resource constraint. This very lack of resources impacts the competitivestrategies that are feasible to SMEs (Sheang et al., 2002). SME owners do notusually formally articulate the business strategy or engage in any formal planning(Carter and Jones-Evans, 2006). However, the lack of formal planning does notimply the absence of strategic thinking.Dryburgh (2009) gives some good reasons why SMEs need strategy as well as largecorporations. First of all, having a strategy saves management time. Secondly, SMEswill avoid being railroaded by big customers. Thirdly, SMEs will know their sweetspots. And finally, strategy in an SME is easier to do, as managing a small businessis simpler itself.
 9

  16. 16. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though there are many more numerous arguments in favour of adopting a formalplanning system for a small firm (Kinsella et al., 1993; Hay et al., 1993; Timmons,1999), the reality of strategy making and planning in the small firm context is that itis likely to be opportunistic and informal rather than formal (Burns, 2006).There is a strong relationship between an SME owner and the strategy pursued by thesmall firm. The strategy chosen by the owner-manager is likely to reflect thepersonal priorities and goals of the owner-manager (Stokes and Wilson, 2006). Thusthis informal planning in a small firm can be perceived as an emergent strategy,which, according to Stokes and Wilson (2006: 207) is “not conceived in advance butemerge as a consistent pattern during the course of events”. Chittenden et al. (1993)also state that small firms tend to have short-term business thinking, which can becaused by poorly developed business skills and partly by their lack of power in themarkets for products, capital, labour and other resources. Stokes and Wilson (2006)outline three types of emergent strategies that are very typical for SME sector. Thesestrategies are primarily in marketing approaches which are often on a reactive basisuntil a pattern emerges; management strategies often emerge as an unplannedreaction to previously unknown factors; and money strategies are sometimes difficultto plan, except in the short to medium term.Though there are many advantages of formal planning for SMEs, there has been adebate that the act of planning itself cannot necessarily be correlated with the successof a business venture (Robinson and Pearce, 1984). The contribution of planning tosmall businesses cannot possibly be measured quantitatively. Similarly, the absenceof planning cannot be used as the sole explanation of business failure (Carter andJones-Evans, 2006).To sum up, although there is a lot of proof to characterize the strategic managementprocess in a small firm as being more about adapting to the uncertainties of theenvironment, rather than proactively predicting, planning and controlling it, theresearch evidence to back this up remains unclear (Stokes and Wilson, 2006).
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  17. 17. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/92.5 Successful
strategies
for
SMEs
There is some evidence to suggest that some strategies are positively associated withsuccess in small businesses. However there is a big variety of opinions in theliterature on what is a success for a small firm.According to Carter and Jones-Evans (2006), success of a small firm is typicallymeasured in terms of existing competitive position and the change in this positionover time, whereas Stokes and Wilson (2006) and Burns (2006) state that success ofan SME is inextricably linked to its growth. On the other hand, a number of studies,conducted by Department of Employment (1990) and Open University (1991)concluded that growth is not the main objective for business owners and that evenone third of owners wanted their small firms to stay at their present size. However,this evidence is almost 20 year old and cannot be fully applied to the contemporaryconditions. As Stokes and Wilson (2006) conclude, growth may not be the keyobjective of every small firm, but what is the common motive for SME owners is thesurvival of the business itself, for a sufficiently long period to deliver the objectivessought.A determination of a successful strategy for a small firm has been also a concern inthe existing body of literature, where numerous authors suggest their own recipes forsuccess. For example, Sheang et al. (2002) recommend SMEs not to adopt theniching strategy of supplying differentiated products, unless they can effectivelydeter entries by bigger rivals. The current literature in SME strategy fails to take intoconsideration potential competitive reactions from market incumbents in prescribingcompetitive strategies for SMEs. By ignoring competitive reactions, the literaturetherefore has no answers to questions about how bigger incumbent firms willrespond when the market niches served by SMEs grow to a substantial size orbecome very lucrative. Nor does the current literature provide any strategicprescriptions for SMEs as to how they could compete successfully against biggerrivals who possess superior resources (Sheang et al., 2002).On the other hand, Stokes and Wilson (2006) argue that survival of an SME dependnot a strategy at all, but rather on how nimbly and skillfully it can adjust to changesin the business environment and particularly to conditions within its market sector.
 11

  18. 18. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9The authors also outline that there is some consensus over the areas critical to a smallenterprise’s chances of survival. The quality of management and marketing, thequantity of money and the motives of the business owners are the key influences onthe ability of an SME to meet its objectives, which in turn can be a measure of thebusiness’s success. Nohria and Joyce (2003) obtained similar results in their study,where they conclude that it does not matter which strategies SME owners apply but itmatters that they execute them flawlessly.Drucker (1985) in turn argues that to obtain a successful development an SMEshould meet the four requirements: focus on the market; have financial planning;build a top management team before it is required; and finally define the founder’srole in the enterprise.On the other hand, Burns (2006) argues that SMEs should have a strategy. Accordingto his study, the entrepreneurial character, the business culture, company strengths,business strategies and luck are the ingredients of success for an SME. Thus theauthor asserts that a well-formulated strategy for a small firm is vital, as having nobusiness strategies can be just as disastrous as having bad strategies.Finally, Karami (2007) concludes that much has been written in recent years aboutthe importance of strategic management within an SME. However much of itremains conceptual in approach.Though there is some skepticism in the literature for SME strategy research, thisstudy does attempt to outline features of strategic thinking within SMEs during therecession and characterize them with a theoretical approach. Ansoff’s matrix (1975)will be used to classify strategies of the surveyed growing SMEs. According toDoole and Lowe (2008), this framework helps to identify core competences of anSME and use its limited resources in one of the four directions, which will then helpgrow the business.2.6 Conclusions
There have been numerous studies published that attempted to assess the prevailing
 12

  19. 19. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9economic situation in the UK and its impact on the SME sector. However, the mainliterature sources fail to give a broad picture for the recession impact on the SMEsector in the UK and have no final answer to the question about how SMEs currentlyapproach strategic management process. Moreover, they tend to describe theoreticalframeworks and models that are more applicable for large corporations rather thanfor SMEs.Regarding recent academic studies, it can be concluded that they are primarilyconducted under positivist paradigm. Thus they aim to give generalizations andpresent assumptions about the whole SME sector, which possess lack of insightsdescribing particular businesses.Finally, the periodical press has little relevant information for academic purposesdescribing the current situation with SME sector. What is more, it has lack oftheoretical justification of the information provided.Thus this research intends to investigate the impact of the recession on SMEs in theUK. Secondly, current approach to strategic management within a small firm will beevaluated.This dissertation proposes to research these particular aspects of SMEs planning andmanagement, since these areas have not been well researched during the currentrecession.In-depth interviews with business owners intend to provide valuable data whichcould be analysed to provide a detailed picture of SME sector during the recentrecession and make contribution to knowledge.The key research questions to be addressed: - What strategies do the SMEs in the South of England follow? - What were the opportunities and threats for the SMEs in the South of England? - How did they solve emerging problems during the recession?
 13

  20. 20. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93 Methodology
3.1 Introduction
This chapter will provide a discussion of the chosen research design in order toanswer the research questions of this study. Conducting the research under theinterpretivist paradigm, I gained an in depth understanding of the experiences ofSME owners through case study interviews. The description of seven SME owners,participated in the research, is provided in this chapter. Furthermore, the evaluationof cross-case synthesis method, the method for data analysis in this research, isgiven. Finally, the appraisal of conceptual issues such as validity, reliability andethics is presented is this end of this chapter.3.2 Paradigm
This research will be designed under the interpretivist paradigm, which is, accordingto Collis and Hussey (2009), concerned with providing qualitative interpretation ofsocial phenomena within a particular context. This will contribute to the existingbody of knowledge, which is mainly based on survey data. It is important toacknowledge that this research has two major constraints: the relatively short periodof time and the relatively short length of the dissertation. However it is necessary tocollect rich qualitative data to investigate the experiences of SME owners, which isthe core issue in this study. Thus the choice of the interpretivist paradigm for thisresearch is clear. As Kent (2007) puts it, the aim of this paradigm is to look at thephenomena in a fresh way, which means providing researcher’s assumptionsregarding the phenomena being studied. The research will involve an inductiveprocess, where understanding of business’ current situation and possible problemswill be analyzed within the context of the present recession in the UK economy.3.3 Research
strategy
Case study methodology will be used for this research. This is one of the mainmethodologies associated with the interpretive paradigm. Yin (2009: 18) defines casestudy as “an empirical inquiry that investigates a contemporary phenomenon in depthand within its real-life context, especially when the boundaries between phenomenon
 14

  21. 21. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9and context are not clearly evident”. The present research investigates experiences ofSMEs in the UK during the last 12 months and most of the questions are ‘how’ and‘why’ open questions. Thus case study is a logical choice for methodology. Thoughthe research under this methodology is very time-consuming (Collis and Hussey,2009), has lack of rigor (Yin, 2009), the analyzed data, collected from the casestudies, will allow to obtain an in-depth knowledge in the area of management andplanning of UK SMEs during the recent recession.Taking a case study approach, my research will investigate and interpret theexperiences of six business owners within the context of the above literature. Thevast majority of the literature surrounding the position of UK SMEs in the currentrecession has been conducted in the form of surveys. According to Saunders et al.(2009), though surveys have high reliability and generalisability compared to a casestudy approach, this technique has lack of validity. As soon as the validity of theresearch is brought into question, there can be a danger of misinterpretation of thestudies phenomena in the positivist studies (Collis and Hussey, 2009). Therefore, acase study approach has been chosen for this research.When designing this research it was determined that it will be cross-sectional ratherthan longitudinal. A cross-sectional research is “a study of a particular phenomenon(or phenomena) at a particular time” (Saunders et al., 2009, p. 148). In other wordsthe research will have a “snapshot” time horizon. Thus the present research willemploy a number of case studies investigating a particular period of 2008-2009.The identification of a specific unit of analysis will enable to state the purpose of thestudy clearly and succinctly (Collis and Hussey, 2009) and facilitate the feasibility ofthe research (Yin, 2009). Kervin (1992) recommends selecting the unit of analysis atas low a level as possible and at the level where decisions are made. The unit ofanalysis in this research is the SME owners. This is explained by the main purpose ofthe research, which puts business owners’ experiences as the focus of this research.
 15

  22. 22. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.4 Data
Collection
Method
Interviews with business owners have been chosen as the method for collecting theprimary data for the research. Kvale and Brinkmann (2009) state that a qualitativeinterview can provide well-founded knowledge about the conversational reality.Thus research interviewing is a knowledge-producing activity.According to Collis and Hussey (2009), the potential problems during interviewsmay be, first, that the interviewees have multiple roles. Therefore, it is important todifferentiate their personal opinions and professional announcements. What is more,due to possible certain expectations of the interviewees, their answers to thequestions may be unreliable. Gillham (2000) points out that the main drawback ofinterviews is the time-cost factor. However, the interview method allows askingcomplex and follow-up questions for clarification, taking into account non-verbalcommunications (Collis and Hussey, 2009). In contrast, postal questionnaires havevery low response rate according to Collis and Hussey (2009), which is usually lessthan 10%. This introduces the problem of sample bias, as the obtained responses maybe unrepresentative of the whole population. Though focus groups are often used byinterpretivists and positivists (Saunders et al, 2009), this method has not beenconsidered for this research. The reason for this is that all interviewees are based indifferent parts of the country and it is unrealistic to gather them altogether so that thetime and the place of the meeting could fit all their busy timetables. Secondly, focusgroups may put confidentiality and anonymity of the participants at risk, and thusmake the interviewees feel reluctant to speak about particular issues. Therefore,interviews have been chosen as a method for collecting primary data for the research,as they enable to obtain rich and vivid material for the research, ask complexquestions and, finally, have a good chance to fit in the participants’ timetables.In this research face-to-face interviews are an appropriate method for collectingprimary data, as according to Gillham (2000) interviews are suitable when smallnumbers of people involved, and most of the questions are ‘open’ and require anextended response with prompts and probes. According to Saunders et al. (2009) theuse of interviews can also help the researcher gather valid and reliable data that arerelevant to his/her research questions and objectives.
 16

  23. 23. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Since this research is designed under an interpretivist paradigm, semi-structuredinterviews will be conducted for this research. Kvale and Brinkmann (2009) give avivid explanation of a semi-structured interview. They state that the interviewerintroduces an issue, an area to be charted, or a problem complex to be uncovered,then follows up on the subject’s answers and seeks new information about and newangels on the topic. The semi-structured interviews for this research will involve anumber of open and follow-up questions that will be prepared in advanced, as well asother questions that may arise during interviews. According to Saunders et al.(2009), semi-structured interviews are useful when it is needed to gather data, whichare normally analyzed qualitatively. In this research this will be done as part of acase study strategy. The data collected in semi-structured interviews will enable theresearcher to explore the reasons for the decisions that research participants havetaken, as well as to understand the reasons for their attitudes and opinions. Thus tocollect a rich and detailed set of data, and obtain answers to complex and open-endedquestions, qualitative interviews will be conducted.3.5 Sample
selection
The aim of this interpretivist research is to collect rich and detailed insights of thecomplexity of the surveyed phenomena, rather than to draw some conclusions aboutan entire population, which happens in a positivist research. Thus, according toCollis and Hussey (2009), a non-random sample is used for this research. I havechosen my sample of seven owners on the basis of ease and availability. Thebusiness owners, that agreed to be interviewed for the study, were found with thehelp of researcher’s networks and contacts. Therefore, it can be classified assnowball sampling or networking. According to Collis and Hussey (2009: 212), it is“associated with interpretivist studies where it is essential to include people withexperience of the phenomenon being studied in the sample”. Furthermore, whenusing snowball sampling, the researcher can extend the sample of participants bypursuing new contacts that may arise during the research.Five out of seven interviewees for this research were initially contacted in spring2009, whereas the interviews were planned to be conducted in July 2009. This wasdone in order to form the sample in advance and to allow the interviewees some time
 17

  24. 24. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to put the participation in the research in their agenda, as most of them have verybusy timetable. However, it was also considered that some new participants mightappear during the research. When the five interviews were conducted in summer, itturned out that one of them is irrelevant (Case study B) as the business was closeddown in December 2008, and this study is investigating the businesses that wereoperating in the last 12 months. However, Interviewee B gave me the contacts of twomore business owners that meet all the requirements for this research and may agreeto participate in the research. Thus Mr E and Mr G were found with the help ofMr B.For an interpretivist study Kvale and Brinkmann (2009) recommend to interview asmany subjects as necessary to find out what is needed for the researcher to know. Asthe authors state, in common interview studies, the number of interviews tends to bearound 5-25, which is due to a combination of the time and resources for theinvestigation. Kent (2007) similarly recommends to choose a small sample of around10. Therefore, it can be assumed that a sample of seven interviewees for this researchis the number that allows obtaining the answers to the research question within theset limit of time for this study.A brief description of business owners, participated in the research, and theiractivities is presented below.Mr A has been living in the UK for more than 16 years. He currently owns a privatelimited company in Cambridge that provides business and accounting consultingservices around the UK. Mr A has been managing this business since 2002 and in2009 employs five people.Mr C in Milton Keynes is a partner of an import and sales business with 50 per centownership in the business. Mr C has been managing the business for over five years.The business has six employees in 2009.Mr D has a private limited company in Ipswich providing agency cargo servicesbetween the UK, Ireland and continental Europe. Mr D came to England in 2001
 18

  25. 25. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9because of the poor economic conditions in his country in Eastern Europe. In 2009Mr D has five employees.Mr E already had over 15 years of experience in catering business when he decidedto set up his own company in 2005. He found a partner and they launched theirmutual business in the area of event-making and outside catering. The business has15 employees in 2009.Mr F is the director of a biotechnology company in London. In 1993 his Americanpartners came to the UK to set up the first European branch of the company. Thus hehas been managing the business for more than 15 years. Now Mr F is managing theoffice in London together with new-opened branches in Germany and France. In2009 the combined number of employees of the business is 27.Mr G is a managing director of a pizzeria chain in London. He has been working forthe company since 1998 when the business was set up by shareholders from Israeland Russia. The business has slightly over 100 employees in 2009.The general definition of an SME by the UK government is used in this research. Itstates that an SME is one with under 250 employees. Therefore, these sixinterviewed businesses can be classified as SMEs in the UK, as their numbers ofemployees are less than 250.
 19

  26. 26. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9 Legal Position of Number Case Name of the status of the Activity ofstudy interviewee the firm interviewee employees 1 Ltd Owner Mr A Business 5 Consulting consulting and accounting 2 Partnership Partner Mr C Importing and 6 Importing selling timber doors and windows 3 Ltd Owner Mr D Agent cargo 5 Transporting 4 Partnership Partner Mr E Event-making, 15 Catering outside catering and patisserie 5 Ltd Director Mr F Biotechnologies 27 Biotech 6 Ltd Managing Mr G Pizzeria chain 100 director PizzeriaThough the size of the surveyed businesses differs, they have several similarities.Firstly, all businesses are located in South England and, secondly, they are in theservice sector. Presence of the common features makes it reasonable to compare thebusinesses. This will be done in Findings and Analysis chapter of the research.
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  27. 27. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.6 Interview
questions
As Kvale and Binksmann (2009) recommend to prepare an interview schedule with aguide, which for semi-structured interviews includes an outline of topics to becovered. In this study the research questions were used to determine a set of issues tobe discussed during the interviews. Then a draft with the interview questions, whichsound in a simple language, was worked out.There is a lot more to interviewing than asking questions. Opening the interview,listening, testing and summarizing understanding, recognizing and dealing withdifficult participants, recording data – all these areas are listed by Saunders et al.(2009) as other parts of an interview apart from questioning. Getting these elements,including essentially how to manage an interview and make it work, under control isof utmost importance before the real interviews (Gillham, 2000). According to Kvaleand Brinkman (2009), interview skills are learned by practising interviewing.Therefore a pilot study is widely advised before the real interviews are conducted(Saunders et al., 2009; Collis and Hussey, 2009; Gillham, 2000).Due to time constraints, a full pilot case study has not been conducted in this study.However, another supervisee and I tested our skills and questions through a role-playwith our supervisor. This method helped me polish my approach for opening theinterview, determine my approach to recording the data, and develop some probingquestions that might be helpful when asking interviewees complex questions. Mysupervisor has written a feedback to me after the role-play, which in turn served tohelp develop and improve my interview questions and put them in a moreappropriate order.3.7 Data
Analysis
Method
The essential point of any empirical research is clear understanding of how the datawill be analysed before the researcher collects them (Gillham, 2000). The primarydata for this study, collected in the seven interviews with SME owners, will beanalyzed with cross-case synthesis. As Yin (2009) suggests, this technique isrelevant if there are at least two case studies and where each individual case studycan be perceived as a separate study.
 21

  28. 28. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9After the interviews have been transcribed, May (2002) recommends to readcarefully all the transcripts in order to determine a set of categories for organizinganalysis. The transcripts of the interviews are shown in Appendix 2. Word tables willbe created then in order to display the relevant data. The word tables will reflectconcepts and categories in the first column and the names of business owners in thefirst row. Then the comments on different aspects will be assigned to businessesrespectively. As Yin (2009) suggests, the examination of these word tables will relystrongly on argumentative interpretation, but not numeric tallies. The authorhighlights that the most challenging thing for the researcher there will be the abilityto develop strong, plausible, and fair arguments that are supported by the surveyeddata. The designed word table will enable the study to simply see some similaritiesand differences between the surveyed businesses within the aspects of interest. Thisobservation can further lead to making cross-case assumptions within the posedquestions and clearly supported by the data from the table. Then it will be possible todraw a number of theoretical conclusions, which primarily aim to answer theresearch questions of this study.3.8 Dealing
with
Conceptual
Issues
There are a number of issues that are concerned with accuracy and credibility ofresearch findings. The issues described below are validity, reliability and ethicalconsiderations. A number of tactics has been used in order to improve these issues,and, therefore, to increase the quality of the whole research.3.8.1 Validity
According to Collis and Hussey (2009: 64), validity is “the extent to which theresearch findings accurately reflect the phenomena under study”. As the authorsstate, high validity is reached in studies under the interpretivist paradigm. This is dueto the fact that the aim of interpretivism is to obtain access to the knowledge andmeaning of those involved in the phenomenon.According to Saunders et al. (2009) there is a number of biases that can occur duringthe research when semi-structured interview method is used. Both verbal and non-
 22

  29. 29. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9verbal behaviours are very important during interviews, as they may result inimplications on the data interpretation. It is also important to build up crediblecommunications with interviewees. Otherwise, the value of the provided informationby interviewees may also be limited. Specifically to this research project, there weresome measures taken to reduce the risk of the interviewer bias. First of all, SMEowners, participated in the interviews, were found via friends or relatives in the UK.They were contacted in advance and were told all the details of the research. Also theaims of the research were explained to them. I also tried to explain to them why it isimportant for me to interview particularly them. Participation in my research wasabsolutely voluntary. I have been in touch with all the participants for a certainperiod of time before interviews, informing them about the progress of my research,and thus developing the trust of the interviewees. Finally, after interviews with SMEowners I sent them interview transcripts. Business owners were offered to correctand comment on the transcripts if needed, which is, according to Daymon andHolloway (2002), considered to help to check internal validity of a research. I havereceived positive feedbacks from all the interviewees, which proved their satisfactionwith the transcribed information shared with me during the interviews. Theirfeedbacks helped me reduce the risk of misinterpretation, and thus minimize the biasof the interviewer.As Saunders et al. (2009) state, another type of bias that may occur during semi-structured interviews is non-response bias. This is concerned with sensitivity of thediscussed information during interviews, though the participants agreed to beinterviewed. The presence of this bias may lead to the situation when some areas arenot covered during interviews, though they represent valuable information for theresearch. Regarding to this research, there has been an attempt to reduce the threat ofnon-response bias. All the SME owners were sent the key questions in advance.Then they were contacted and asked whether all the questions in the interviewschedule sent to them can be answered. Also the business owners were assured that Iwould not be asking them for sensitive or confidential financial information. Thusthe interviews of this research were conducted with the people who confirmed thatthey are able to share the information that I need for my research. This measure wastaken to minimize the risk of non-response bias occurrence during the semi-structured interviews in this study.
 23

  30. 30. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/93.8.2 Reliability
Reliability “refers to the absence of differences in the results if the research wererepeated” (Collis and Hussey, 2009, p. 64). In relation to qualitative research,reliability is primarily concerned with whether alternative researchers would revealsimilar information (Easterby-Smith et al., 2002; Healey and Rawlinson, 1994).According to Yin (2009), the goal of reliability is to minimize the errors and biasesin a study. As soon as this research is undertaken under the interpretivist paradigm,reliability of the study will be relatively low. Below the justification of this fact isgiven.The low level of reliability during interviewing, transcribing, and analyzing is due tothe lack of standardization in semi-structured interviews conducted for this survey(Saunders et al., 2009) and human subjectivity when interpreting results (Kvale andBrinkmann, 2009), as it was proved by the authors that two different researcherseven transcribe the same interview in two different ways.Though the reliability of this research is relatively low, a number of steps has beendone in order to improve it. As Yin (2009) and Daymon and Holloway (2002)suggest, a case study protocol was used, which is considered to be a major way ofincreasing reliability of a research. The protocol allows to deal with thedocumentation problem in detail and it is essential to have it when doing a multiple-case study. The content of the case study protocol for this research can be found inthe Appendix 2.3.8.3 Ethical
Issues
Due to the fact that the present research is conducted with the use of face-to-faceinterviews with business owners, it is important to assume some ethical issues thathave been taken into consideration.In order to ensure that my study is ethical, all the participants were aware of the factthat they will be subject of my research in terms of my university programme. Notany interviewee was forced to take part in the research. Also any financial and
 24

  31. 31. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9material rewards for the participants were avoided. Otherwise as Collis and Hussey(2009) explain, this may lead to biased results.All the participants were contacted before the interview and provided with thedetailed information on the forthcoming meeting together with the interviewquestions. Also the interviewees were informed about the approximate length of themeeting and explanation of the purpose of the interview.All the interviewees were assured of anonymity and confidentiality when conductinginterviews with them. As Collis and Hussey (2009) advise, this may encouragegreater freedom of expression and more open responses during discussions. Toensure this, the SME owners’ names were changed into Mr A, Mr B and so on. Allthe participants gave a permission to record them during the interview and wereassured that the recordings will be used only for study aims of the researcher.Recordings were securely stored during the research and destroyed when they are nolonger of use. Any sensitive information is not disclosed within this dissertation.Finally, SME owners and their businesses are not identifiable by the informationpresented within the research.3.9 Conclusions
This chapter has discussed the relative merits of an interpretivist paradigm versuspositivism. It has been concluded that it is feasible to conduct the research under theinterpretivist paradigm, as rich qualitative data is needed. Further, it has beendecided to adopt a case study methodology that enables to obtain detailed data foranswering open and complex questions during semi-structured interviews for thisresearch. Though face-to-face interviews, which have been chosen for this research,are very time consuming, they enable to obtain very rich and vivid illustration for thestudy. It was justified that cross case synthesis method will be employed for dataanalysis due to the presence of multiple cases in this study. Finally, it was stated thata number of techniques has been adopted to improve validity, reliability and ethics ofthis research. Though interpretivist studies are characterized by low reliability, a casestudy protocol has been done for this research in order to increase it, and, therefore,to increase quality of the entire study.
 25

  32. 32. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/94 Findings
and
analysis
4.1 Introduction
My research findings as stated below are ordered thematically by different issuessuch as companies’ profits, number of customers and working capital; customer baseand company staff. This chapter will conclude with the companies’ plans for growthin future covered.4.2 Profits,
Number
of
Customers
and
Working
capital
of
SMEs
Throughout the case studies, each owner described trends of profits, working capitaland number of customer of the business since the business was launched till the dayof the interview in July 2009. Also the SME owners were asked to name the periodwith the maximum level of profits and number of customers.Mr A Consulting states that company’s profits have slightly gone down sincesummer 2008. Though the number of the customers has stayed at the same levelduring the last 12 months, the volume of work has negligibly declined due to the lessnumber of orders. This caused a decline in profits of the business during the lastyear.Mr C Importing, Mr D Transporting and Mr G Pizzeria experience a similar situationand say that the number of customers has not significantly changed since 2008.However, the number of orders has slightly decreased, which caused a negligibledecline in profits.Mr E Catering outlines different trends in profits of his two businesses: profits of theevent-making and outside catering business have tripled in the last 12 months,whereas profits for the patisserie declined more than by 50 per cent. This can beexplained by the fact that the number of customers of the outside catering and event-making business was not badly affected and continued to grow in the credit crunch.However, the number of customers of the patisserie went down as, according toMr E Catering, “people in the recession cut back on eating outside and take-awayfood”.
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  33. 33. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Profits of Mr F Biotech’s business have not been affected by the economic downturn.However the business is experiencing another problem – translation risk.“As I already said, our growth of profits has not been affected by the credit crunch.However, because of the currency fluctuations, the figures in our accounts did godown. We consolidate the accounts of our German and French offices for financialreporting purposes in the UK. Thus when we converted the profits of our Europeanoperations in 2009 from the Euros into the British pounds, they were less than in2008, though all the European and UK operations have constant growth”(Mr F Biotech).In summary, the majority of the studied firms have seen their profits reduced in thelast year. Thus ignoring the businesses’ seasonal variations, Mr A Consulting, Mr CImporting, Mr D Transporting, Mr E Catering (only for his patisserie business, notfor event-making and outside catering) and Mr F Pizzeria have confessed that theirprofits were negatively affected by the credit crunch during the last 12 months.Furthermore, regarding major problems in the last 12 months, business owners havenamed various threats to their businesses.“Liquidity is our major problem now. We even have to delay our rent payments, aswe are currently run out of cash. Also the number of customers has decreased. Ourprofits depend a lot on constructions, which are now frozen” (Mr C Importing).This is how Mr A Consulting explains the major problem to his point of view.“Not exactly my business has been affected. It is more about my clients. They have tosave on their expenses. Thus I have to be careful as well and should not overchargethem now” (Mr A Consulting).
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  34. 34. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9To sum up the business owners have named such major problems, as the problemwith generating profits, retaining existing customers and keeping working capital at asafe level, which proves that these issues deserve most of their attention these days.According to Carter and Jones-Evans (2006), financial data, such as sales turnoverand profits, can not be considered reliable in the small firms, as in the UK allunincorporated firms are exempt from annual financial reporting requirements. Thusprofits are not the key criteria of a small firm growth.As demonstrated by the above examples, it is difficult to track changes in number ofcustomers for the small firms. However, five out of six SME owners haveacknowledged that the volume of work has declined, as the number of orders wentdown in the last 12 months. Follow-up questions about attracting and keepingcustomers are discussed further.4.3 Customer
Base
The SME owners have been asked about their traditional ways of attracting newcustomers and keeping existing customers. They were also asked whether they haveadopted new strategies during the last 12 months.All surveyed SME owners are very concerned with the high quality of services orgoods sold they produce or sold. When the business owners started their businesses,they used little advertising, which helped them to form an initial client base. Now themost important way of keeping existing customers is the word of mouth. Thus all thesurveyed businesses are reputation-conscious.“To be honest, out firm is known for excellent customer service and consistency withethics. Consequently, it strengthens our reputation and popularity both with existingand new customers” (Mr F Biotech).In general, all of the surveyed businessmen have experienced some negative changesregarding the number of customers in the last 12 months. To increase sales or at least
 28

  35. 35. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9to keep them at the same level, all the businesses have tried something new to attractnew customers and to keep their existing customers. Also the businesses haveexperienced the need for traditional advertising and promotion, which was mainlyused by the businesses at the start-up stage.Mr E indicated that in the last 12 months they started sending some e-mails asreminders of their services. Also the partners used an absolutely new way of rescuingthe patisserie business.“And also in winter 2009 we published a small article in the local newspaper,Stamford Mercury, that a lot of businesses are closing down now and the same canpossibly happen to us. Luckily our business went better in spring 2009 and wepublished another article in the newspaper saying thank you to our customers whosupported us” (Mr E Catering).Mr C Importing bought a database with all current constructions, as they contributethe biggest proportion of their business revenue. However, this measure did not helpthe firm, as most constructions are frozen now due to the lack of finance.According to Carter and Jones-Evans (2006), a major challenge facing the growth-oriented small business is to sustain the level of service provision to an existingclientele while at the same time seeking to broaden its customer base.In general, most of the surveyed business owners have expressed their worries aboutthe declining number of customers. In a recession purchasing power of thepopulation is decreasing putting down consumption as well. Some businessindustries are affected more than others. Thus, Mr C Importing’s key customersbelong to the manufacturing industry, which is usually affected most of all in theUK. This fact explains the very low number of orders currently together with thedeclining profits of the business. On the other hand, Mr F Biotech’s firm operates inthe government health sector, which is one of the least affected according to thedirector’s words.
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  36. 36. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9“I would not say that people are now buying less our products than usually. The onlythink is that the people are purchasing products now in a different way - morecautiously” (Mr F Biotech).This demonstrates that it is important, first, in which industry a business is operating,and, second, what promotional activities a firm is doing to attract new and to keepexisting customers. Mr G Pizzeria states similar point of view.“Yeah, that was a difficult year. Even the number of loyal customers went slightlydown. Since autumn 2008 we have been regularly sending them leaflets with specialoffers and I think it works” (Mr G Pizzeria).4.4 Employees
Regarding the company staff, the business owners have been asked to describe thetrend of changes in the number of employees since the beginning of the business,highlighting the maximum and the minimum levels.Five out of six SME owners have stated that the staff have not been affected by therecession as the number of employees is at the maximum level now. All the businessowners say that the minimum level of employees was when they were starting theirbusinesses, when they themselves were the only company staff.Mr A Consulting and Mr G Pizzeria have had a similar position indicating that thenumber of employees in their businesses has not changed, though the number ofworking hours has been slightly reduced due to the declined work volume.“We had to reduce the number of working hours for some of our employees asbasically there is sometimes no work. Then some employees left us as their reducedworking hours included reduced salaries as well” (Mr G Pizzeria).However, Mr E Catering has had to reduce the number of permanent staff himself.
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  37. 37. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9“Six months ago we had to reduce the number of our permanent employees and thenumber of working hours in order to get some money for further expansion and…basically now we need less people on permanent basis for our patisserie business.For our outside catering and event-making business we prefer to hire occasionalstaff” (Mr E Catering).This picture is not consistent with the latest edition of BIS SME Business Barometer(2009), which stated that over the 12 months prior to the April 2009 survey, 31 percent of SME employers have reduced staff levels, with 13 per cent now employingmore. According to BIS (2009), 36 per cent of SME employers have recruited anynew staff in the past 12 months, whereas in this study five out six owners haveemployed new people during the last year.It has been demonstrated in the number of studies that there is close correlationbetween employment growth and sales growth in small firms over a long period oftime (Storey et al., 1987; Smallbone et al., 1995). This can be considered as a rule ina stable economic situation. However, during a recession employment growth canonly help maintain sales at a regular level without significant growth.4.5 Plans
for
the
Future
When being asked about plans for the future, all the SME owners stated that theywould like to expand sometime. None of the surveyed businesses acquired orgenerated any new assets in the last 12 months. However, five out of six SMEowners have expressed a desire to expand their business in the next one-two years oras soon as they have enough finance for the expansion, as self-funded expansion isconsidered. Mr A Consulting is currently satisfied with the size of the business.Interviewer: Would you like to expand your business in the future?Mr A Consulting: I think I would, but not now.
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  38. 38. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Though all other SME owners have particular plans for their expansions, only two ofthem (Case studies D Transporting and E Catering) were expanding their businessesduring the last 12 months and other three businesses (Case studies C Importing, FBiotech and G Pizzeria) are planning to expand in the next 12 months.“We are also opening a new pizzeria in London in the end of this year [2009].However, the opening may be delayed if we experience some financial problems”(Mr G Pizzeria).Mr E Catering, for example, mentioned that in January 2009 they opened a newrestaurant and in June 2009 they added a summer terrace for the restaurant.“As I already mentioned it is a new service which we launched a couple of monthsago… We now offer a new service of transportation special goods in refrigerators,which has a high current market demand” (Mr D Transporting).This illustrates that five out of six businesses can be categorized as growingbusinesses. This is consistent with publication in The Yorkshire Press (2009), whereit was stated that the second most popular step in the recession among the UK SMEswas to introduce new products or services.4.6 Conclusions
The above findings suggest that the majority of the studied firms have seen theirprofits reduced in the last year. The interviewed business owners have named suchmajor problems, as the problem with generating profits, retaining existing customersand keeping working capital at a safe level, which proves that these issues deservemost of their attention these days. Five out of six SME owners have acknowledgedthat the volume of work (number of customers) has declined, as the number of orderswent down in the last 12 months.Furthermore, all the surveyed businessmen have experienced some negative changesregarding number of their customers in the last 12 months. To increase sales or at
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  39. 39. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9least to keep them at the same level, all the businesses have tried something new toattract new customers and to keep their existing customers, which proves theirincreased creativity levels. Also the businesses have experienced the need fortraditional advertising and promotion, which was mainly used by the businesses atthe start-up stage.Additionally, five out of six SME owners have stated that their staff has not beenaffected by the recession as the number of employees was at the maximum levelduring the research.Finally, when being asked about plans for the future, all the SME owners stated thatthey would like to expand sometime. Though all other SME owners have particularplans for their expansions, only two of them were expanding their businesses duringthe last 12 months and three businesses are planning to expand in the next 12months. Thus five out of six businesses can be categorized as growing businesses.
 33

  40. 40. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/95 Conclusions
5.1 Discussion
and
Summary
This study set out to provide a detailed picture of SMEs’ experiences during therecession. This is illustrated by interviewed six SME owners operating in the servicesector in South England. The case study interviews were conducted in order toanswer the posed research questions. A brief summary of findings is provided below.During the research the interviewed business owners have outlined a number ofmajor problems they experienced during the last 12 months. Among them aredifficulties with generating profits, retaining existing customers and keeping workingcapital at a safe level. Moreover, the majority of SME owners have named a problemof declined number of customers. In order to attract new customers and to keep theirexisting customers, the SME owners have tried something new apart from the use oftraditional ways of advertising and promotion. It has been acknowledged by the SMEowners that their staff has not been affected by the recession. This is supported bythe fact that the number of their employees was at the maximum level during theresearch. Finally, the surveyed SME owners stated that they would like to expandsometime. Five out of six businesses can be categorized as growing businesses asthey were expanded during the last 12 months or will be expanded in the next 12months.Having analysed the interview transcripts, a number of conclusions has been drawn.First of all, the study has shown that there were a number of opportunities and threatsfor the SMEs in the South of England. The threats are primarily concerned withgeneration of profits, retention of existing customers and keeping working capital ata safe level, declined volume of work, and consequently decreased number ofcustomers. All the named difficulties have illustrated the key threat – profitreduction.Further, I have established that all the businesses have come back to some traditionalways of advertising and promotion in order to attract new customers and to keeptheir existing customers. This measure aims primarily to keep the business awayfrom the key threat, profit reduction. Moreover, all the SME owners would like to
 34

  41. 41. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9expand their businesses in the nearest future. They acknowledged that they want todo so to increase their profits and to meet the needs of the market, which, theyexpect, will be growing.In addition, my analysis has given evidence in support of the fact that the moredifficult the external environment of a business is, the more creative SMEs become.What is more, the more challenging it is, the quicker the businesses adapt to theneeds of the market and the quicker they respond to the changing environment.Additionally, the study has outlined the strategies, which are currently followed bythe SMEs. To do this Ansoff’s (1987) classification of growing firms was used. Thetheoretical description of the matrix was initially introduced in the literature reviewof this study. The justification of the assigned strategies is presented below.Strategies of the five businesses (Business case C Importing, Business case DTransporting, Business case E Catering, Business case F Biotech, Business case GPizzeria) are classified, as only these businesses are perceived as growing.
 35

  42. 42. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9 Existing product New product Market penetration Product development: • Consolidation C, D, E • Penetration (Increase market • Use existingExisting share; Increase product usage; competences market Increase frequency of use; • Develop new Increase quantity used; New competence application) • Restructuring Market development: Diversification F, G • Related diversification New • Geographic expansion • Unrelated diversification market • Target new market segments • New usesAs Burns (2006) puts it, Product development strategy involves adaptation of newproducts or extension of existing products. This is exactly what the owners ofBusiness C Importing (buying a van to deliver the goods), D Transporting (newservice of delivery in fridges), E Catering (opening a new restaurant and a summerterrace) have done. According to Burns (2006), this works when business’scustomers are loyal, the demand is growing, and the business has good reputationand goods with high quality. The advantage of this approach is that it is very cost-effective to increase the volume of business. However development of new productsfor existing customers can be expensive and risky. Thus the decision to stick to thisstrategy must be based on the real demand in the market.Market development strategy has been assigned to Business F Biotech (opening newoffices in Spain and Portugal) and G Pizzeria (opening a new restaurant in the new
 36

  43. 43. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9area of London). Burns (2006) states that the lowest risk option here is to seek outsegments similar to the ones the company already sells to.Therefore, to sum up, strategies of Businesses C Importing, D Transporting and ECatering have been classified as Product development, whereas Businesses F Biotechand G Pizzeria have opted for Market development.It is vital to acknowledge that there is a potential problem for the literature tomisrepresent the actual picture of small firms operating in the UK. Most of studiesdiscussed in the literature are conducted under the positivist paradigm and representdescriptive studies. As Collis and Hussey (2009) put it, in a positivist study a surveymethodology is concerned with collecting data from a sample in order to analysethem statistically and generalizing the results to a population. Thus these surveystend to provide generalizations and detailed pictures of a business are not available.Consequently, there might be a risk of misinterpretation about a particular businesscase in the literature, leading to incorrect assumptions.Since this research is conducted under the interpretivist paradigm, it makes a detailedinvestigation. Thus misrepresentation of views or experiences in this study isminimized when compared to a positivist study.This is the contribution to knowledge that my study has made. To conclude, I havesucceeded in assessing each investigated business case, compared the results with thepicture presented in the literature, and finally have answered my research questions.Finally I have coped with main aim – to structure all the details collected for studyand to make it very up to date, which enables to obtain a valid picture of the studiedphenomena.5.2 Research
Limitations
Though it is quite difficult to identify the scope of the designed interpretivist studydue to its explorative nature (Collis and Hussey, 2009), the limitations of theresearch are as follows. The main constraint of this research is a lack of time andfinancial support. Firstly, a small exploratory study is planned, as only 600 hours are
 37

  44. 44. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9allocated for the whole study within the Master’s Programme. Only a small numberof interviews can be conducted and a limited time provided for drawing theconclusions, which will have tentative features. And secondly, due to the absence offunds for the research, it is reasonable to make the research within a convenientdistance of where the researcher is based. According to Saunders et al. (2009),various problems associated with access can emerge during primary data collection.Interviewees may have different concerns about the sensitivity of information neededfor the research, as well as doubts about researcher’s credibility and competence.Therefore, access to the sources of primary data, interviewees in this research, is themain limitation of this study.Apart from the main limitation, this research has a number of other constraints.Though they have less problematic character, they should be nevertheless taken intoconsideration. Since the purpose of the study suggests investigation of businessexperiences in the UK, all the interviewed business owners and partners havebusinesses located in England. Secondly, due to the definition of an SME, whichmeans a business with less than 250 employees, the selected firms for primary datacollection will meet this requirement. Finally, the interviews will be conducted withexperienced business owners, not at the start-up stage, as the expertise of having asmall or medium business is needed for discovering in this research.5.3 Recommendations
for
Future
Research
Considering the vast impact that SMEs have on the UK economy, their performanceshould continue to be monitored on a regular basis. I have some recommendationsfor the future research. Due to the limitations of this research, it was possible toconduct only a small number of interviews. Thus I would recommend a futureextension to this study with a bigger scope of primary data collection. This may be afurther research with a case study approach, but with more business ownersinterviewed (e.g. over 100 interviewees). Furthermore, interviewees that represent allsizes and areas of business should be studied, as this research investigatedexperiences of the SMEs operating in the service sector only. I would alsorecommend to track changes in businesses’ operations of the interviewed firmsduring several years after this economic downturn in order to obtain profound
 38

  45. 45. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9understanding of the impact of the recession on the SME sector in the UK. Finally, itcan be of interest to track changes in strategic planning of the studied SMEs duringseveral years, and then analyse whether the opted strategies have brought success forthe businesses.
 39

  46. 46. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9 Word count – 12,067.
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  47. 47. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/96 References
Ansoff, I. (1987) Corporate Strategy, London: Penguin.BBC (2007) ‘The downturn in facts and figures’ BBC NEWS. 21 November [Online] Available at : http://news.bbc.co.uk/2/hi/business/7073131.stm (Accessed: 10 August 2009).Burns, P. (2006) Entrepreneurship and small business, 2nd edition, Basingstoke: Palgrave Macmillan.Carter, S. and Jones-Evans, D. (eds) (2006) Enterprise and small business: principles, practice and policy, 2nd edition, Harlow: Financial Times Prentice Hall.Chittenden, F., Robertson, M. and Watkins, D. (eds) (1993) Small firms: recession and recovery, London: Paul Chapman on behalf of the Institute for Small Business Affairs.Collis, J. and Hussey, R. (2009) Business research, 3rd edition, Basingstoke: Palgrave Macmillan.Daymon, C. and Holloway, I. (2002) Qualitative research methods in public relations and marketing communications, London: Routledge.Department of Employment (1990) A survey of owner-managed businesses, September.Doole, I. and Lowe, R. (2008) International marketing strategy, 5th edition, London: Cengage Learning EMEA.Drucker, P. (1985) Innovation and entrepreneurship: practice and principles, London: Heinemann.Easterby-Smith, M., Thorpe, R. and Lowe, A. (2002) Management research, 2nd edition, London: Sage.Elliot, L. (2008) Credit Crisis – How it all began, Guardian. 5 August [Online] Available at: http://www.guardian.co.uk/business/2008/aug/05/northernrock.banking (Accessed: 10 August 2009).Evening Chronicle, Small firms victims of crunch, 26 August 2008, p. 17, Newcastle- upon-Tyne.Federation of Small Business http://www.fsb.org.uk/ (Accessed: 13 August 2009).
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  48. 48. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Federation of Small Business, FSB News Release (2009), April, [Online] Available at: http://www.fsb.org.uk/ (Accessed: 13 July 2009).Gillham, B. (2000) The research interview, London: Continuum.Griffin, J. (2008) Finance fears for small companies; Credit crunch: SMEs set to seek extra cash the year ahead, Birmingham Mail, 10 October, p. 69.Hamel, G. and Prahalad, C. (1994) Competing for the future, Boston, Mass.: Harvard Business School.Hawkes, A., (2009) Half of SMEs expect 2009 turnover decrease. 16 March. [Online] Available at: http://www.cnplus.co.uk/intelligence/downturn/half-of- smes-expect-2009-turnover-decrease/1995256.article (Accessed: 13 August 2009).Hay, M., Verdin, P. and Williamson, P. (1993) Successful new ventures: lessons for entrepreneurs and innovators, Long Range Planning, 26 (5), p. 31-44.Healey, M. and Rawlinson, M. (1994) Interviewing techniques in business andmanagement research, Aldershot: Dartmouth Publishing Company.Hofer, C. (1975) Toward a contingency theory of business strategy, Academy of Management Journal, 18, p. 784-810.HRM (2008) ‘UK Unemployment’ HRM Guide. 17 December. [Online] Available at: http://www.hrmguide.co.uk/jobmarket/unemployment.htm (Accessed : 18 August 2009).Johnson, G., Scholes, K. and Whittington, R. (2008) Exploring corporate strategy, 8th edition, Harlow: Financial Times Prentice Hall.Karami, A. (2007) Strategy formulation in entrepreneurial firms, Aldershot: Ashgate Publishing Limited.Kent, R. (2007) Marketing research: approaches, methods and applications in Europe, London: Thomson Learning.Kervin, J. (1992) Methods for business research, New York: HarperCollins.Kinsella, R., Clarke, W., Coyne, D., Mulvenna, D. and Storey, D. (1993) Fast growth firms and selectivity, Dublin: Irish Management Institute.Kvale and Brinkmann (2009) InterViews: learning the craft of qualitative research interviewing, London: Sage.May, T. (2002) Qualitative research in action, London: Sage.Marketing Week (2009) Supplying SMEs: think small for the potential of bigrewards, 20 August, p. 18, London.
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  50. 50. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/9Yin, R. (2009) Case study research: design and methods, 4th edition, London: Sage.UK200 Group Survey [Online] Available at: http://www.uk200group.co.uk/(Accessed: 13 July 2009).
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  51. 51. EXPERIENCES OF SMES IN THE UK DURING THE RECESSION 2008/97 Appendices
7.1 Case
study
protocol
 • Overview of the Case Study ProjectThis research is done within the Master’s Programme and aims to identify the impactof the recession on the activities of SMEs in the UK. Due to the lack of informationon this topic in the existing body of literature it has been decided to investigate thisissue under the interpretivist paradigm. Interviews with SME owners are to beconducted in order to obtain rich and detailed information on the topic beinginvestigated. • Field proceduresThe surveyed businesses are located in South England. It is planned that theinterviews with their representatives are to be conducted within the period of 10 July2009 – 15 August 2009, so that the whole research is finished on time. Below aresome details of the interviews and the interviewees. Position of the Length of interviewee, Date of the Place of the Interviewee the business activity interview interview interview and legal status Mr A Owner of a business 13 July 2009 Cambridge 30 mins Consulting consulting and accounting firm, Ltd Mr B Owner of restaurant, 17 July 2009 London 50 mins Restaurant Ltd Mr C Partner of an 18 July 2009 London 25 mins Importing importing and selling firm, partnership
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