small business management

1. MORRISON, BREEN, AND ALI 417
Introduction
Small businesses are well recognized
and acknowledged worldwide as vital
and significant contributors to economic
development, job creation, and the
general health and welfare of economies,
both nationally and internationally
(Morris and Brennan 2000). The small
business sector represents a statistically
significant proportion of the world
economy. For example, small businesses
represent 99.7 percent of all employers
in the United States (Small Business
Administration 2000) and 96 percent of
all businesses in the nonagricultural
industries in Australia (Australian Bureau
of Statistics 1999), and in the European
Union, only one percent of businesses
have more than 50 employees (Depart-
ment of Trade and Industry 2000).
Indeed, Mazzarol (2000) observes that
“at the commencement of the new mil-
lennium small businesses are being her-
alded as the engine of economic growth,
the incubator of innovation, and the solu-
tion to decades of persistent unemploy-
ment. The fulfillment of the enormous
potential of the sector has been a con-
sistent theme since the commencement
of the industrial revolution” (1). There
appears to be little doubt that small busi-
nesses do make a large net contribution
to the creation of new jobs compared
with large businesses (Birch 1979). Con-
sequently, most sides of the political
spectrum seem to view small businesses
as somewhat of a panacea to heal and to
rejuvenate economies and societies
(Gray 2000).
The policy interest in the small busi-
ness sector arises out of its capacity to
generate and to increase employment at
local levels. After almost two decades of
employment generating programs and
initiatives, policymakers increasingly are
becoming aware of the economic and
social limitations of initiatives that rely
too heavily on the small business sector
as a whole (Gray 2000). Indeed, it now
is accepted widely that most new jobs
come from a relatively few small busi-
nesses (Stanworth and Curran 1976;
Burns and Dewhurst 1996; Glancey
1998).
Consequently, in recent times there
has been a substantial shift in interest
and emphasis in the field of small busi-
ness toward a focus on those with a pro-
growth orientation. This shift has been
evident in policymaking, the application
of small business support, and related
research commentaries (Bridge, O’Neill,
and Cromie 1998). The argument pro-
posed is that if small business support
resources are limited, as is frequently
the case, then the way to maximize
results is to apply those finite resources
only to businesses that meet criteria such
as the demonstration of growth and
employment generation potential. There-
fore, there is currently considerable
interest in understanding what factors
contribute to small business growth and
how these businesses can be reached
Journal of Small Business Management 2003 41(4), pp. 417–425
GLOBAL PERSPECTIVE
Small Business Growth: Intention,
Ability, and Opportunity
by Alison Morrison, John Breen, and Shameem Ali

2. and then to support resources targeted
accordingly.
This paper reviews the literature asso-
ciated with small business growth, inten-
tions, abilities, and opportunities with a
view to identifying a schema or frame-
work that would assist with the identifi-
cation of pro-growth small businesses. In
addition, it reports the findings of a study
that researched businesses located in the
municipality of Maribyrnong situated in
the west of the Melbourne City region,
Australia. The key focus of the study
was to obtain a more comprehensive
understanding of factors and charac-
teristics that contribute to a pro-growth
small business orientation. The paper
concludes with discussion relative to
the challenges confronting the range
of stakeholders involved in the small
business sector and considers policy
ramifications.
Small Business
and Growth
Growth in relation to small businesses
represents a complex matter and is
multidimensional in scope and character
(Scase and Goffee 1989). It embraces a
convergence of owner–manager ambi-
tions, intentions, and competencies;
internal organizational factors; region-
specific resources and infrastructure;
and external relationships and network
configurations (Storey 1994; Glancey
1998; Mitra and Matlay 2000; Shaw and
Conway 2000). These in turn undoubt-
edly will impact an individual small
business’s orientation to growth. Further-
more, Beaver, Lashley, and Stewart (1998)
emphasize that “competitive advantage
in small businesses is an elusive concept.
They are fashioned by the actions and
abilities of the principal role players
and owe much to their personal percep-
tion of satisfactory performance and
business direction” (160). Despite this
seemingly daunting endeavour, attempts
have been made to profile characteristics
that generally are accepted as asso-
ciated with growth in small businesses
(Burns and Dewhurst 1996; Haslam
MacKenzie and Ryan 2000). It would
appear that there is a common, dominant
thread woven through these characteris-
tics, that is, the human factor of the
owner–manager.
It has been proposed that small busi-
ness growth does not represent a self-
evident phenomenon nor is it a matter of
chance, but it is a result of clear, posi-
tively motivated business intentions and
actions on the part of the owner–
manager, driven by the belief that
the owner–manager can produce the
desired outcomes (Gray 2000; Maki and
Pukkinen 2000). Furthermore, they tend
to be personality driven and opportunis-
tic or instinctive in approach (Burke and
Jarrat 2000). Maki and Pukkinen (2000)
consider that it is important to differen-
tiate among the intention, ability, and
opportunity to grow. Pro-growth factors
are summarized in Table 1, suggesting
that the owner–manager’s judgment rel-
ative to growth becomes a matter of how
closely their intentions, abilities, and
opportunities are aligned to their objec-
tive possibilities and competence to
act upon that information. This may
represent a distinguishing feature of
pro-growth small businesses and there-
fore provides a framework that could
be utilized to guide the identification of
such businesses. For contrast, a range of
inhibitors to small business growth have
been identified (Table 1).
Together the profiles presented re-
present the “heads and tails” of small
business growth. The pro-growth factors
represent owner–managers driven by the
positives of a need, desire, and confi-
dence to achieve, overcoming challenges
presented in order to realize opportuni-
ties. The inhibiting factors represent a
lack of desire to confront and/or to
change factors at work at personal, busi-
ness, and external environment levels.
418 JOURNAL OF SMALL BUSINESS MANAGEMENT

3. Thus, it is clear that the intentions of
the owner–manager and the way in
which they interpret their economic and
social worlds play a pivotal role in the
growth orientation of small businesses
(Gray 2000). This then impacts the col-
lective abilities of the business and
the positive or negative translation of
opportunities. Consequently, it is argued
(Morrison 2000; Mitra and Matlay 2000)
that enhanced understanding of what
constitutes, and contributes to, small
business growth needs to be firmly
contextualized, taking account of the
owner–manager characteristics, actual
and perceived inhibitors, and the range
of interacting variables. The findings
from the foregoing literature are
applied to structure the findings of this
study.
MORRISON, BREEN, AND ALI 419
Table 1
Small Business Pro-Growth and Inhibiting Growth Factors
Pro-Growth Factors Inhibiting Factors
Intention Demographic variables Lack of ambition and vision
Personal characteristics Anti-business “hobbyist” approach
Values and beliefs Quality of lifestyle protectionism
Mature position in life-cycle
Ability Educational level Constrained managerial
Knowledge of different fields competencies
of business Narrow skills base
Perception/actual of owner– Physical expansion/production
managers competence limitations
Growth potential products, Organisational structure results in
assets and premises lack of time and resources
Legal format of business
Proactive learning through
social, informal networks
Opportunity Market conditions Weak power position within the
Access to finance industry sector and markets
Public sector regulation High dependency on externalities
Labor market Adverse financial and economic
conditions
Unhelpful local government
approach to business
development
Constraining government
regulation and communication
Sources: Burke and Jarrat 2000; Maki and Pukkinen 2000; Gray 2000; Bridge, O’Neill,
and Cromie 1998; Morrison, Rimmington, and Williams 1999; Heffernan and Flood
2000; Sherwood et al. 2000.

4. Study Methodology
The study involved two phases. First,
market data were gathered through a
survey of 3,570 businesses located in the
Maribyrnong municipality, sampled from
a combination of the Maribyrnong City
Council business database and that of the
Western Business Enterprise Centre. Of
the 3,570 questionnaires mailed, a total
of 409 valid responses were usable,
which resulted in an effective response
rate of 12.1 percent. In the context of the
increased burden on small business relat-
ing to the introduction in Australia in
2000 of the Goods and Services Tax, a
new taxation system which proved to
be time consuming for small business
(Bergin et al. 2001), this response rate
was not unexpected. Despite a relatively
low return and potential response bias,
analysis of the data indicated that those
who responded to the survey were
representative of businesses in the
Maribyrnong municipality.
The second phase of the study built
on the data gathered during phase one,
drawing a sample of pro-growth oriented
businesses. Selection was based on cri-
teria including growth in employment
numbers and in sales turnover rates
greater than 10 percent over the previ-
ous 12 months. A third criterion involved
businesses that declared a high level of
growth intention, either in terms of
number of employees or sales turnover.
Businesses removed from the sample
included those with fewer than five
employees since as micro businesses
their growth patterns might be more
erratic than larger businesses; those
dependent upon government programs
for their existence; and those with more
than 50 employees, many of whom were
part of a larger group with limited auton-
omy relative to local growth strategies.
The 35 businesses remaining in the
sample were invited to be interviewed
as part of the study, and 20 agreed. An
interview proforma was developed
encompassing growth characteristics and
inhibitors identified in literature and also
including more general questions about
the business and its future direction. Two
researchers visited each business. The
interview and data recording process
took approximately one hour, guided by
the interview proforma. Following the
interview, the transcript was translated
into a case study drawing on the infor-
mation and insights gained by both
researchers during the interview. Once
completed, the 20 case studies were ana-
lyzed by means of an analytical matrix.
The matrix considered a range of emer-
gent issues and recorded the frequency
with which a particular issue was raised
by respondents. Further analysis allowed
these issues to be coded and grouped
according to similar topics. Gradually,
clarity emerged regarding the common
characteristics among the factors con-
tributing to business growth.
Phase One Findings
In effect, phase one represented a
scoping exercise. Tables 2 and 3 provide
a summary of the profile of the busi-
nesses, owner–managers, and their busi-
ness growth objectives and orientation. It
can be observed that the retail, manu-
facturing, and health and community
services sectors dominate. The majority
of businesses can be termed as micro;
turnover is spread fairly equitably across
the bands; the preferred legal business
format is a private company; the major-
ity represent mature businesses; and
slightly less than half use a business plan
to any great extent. Owner–managers are
predominately male and Australian born,
with the majority being by far 40 years
of age or over.
Only the minority of businesses is
growing faster as compared to industry
sector norm, with the majority matched.
More than half are showing some mod-
erate growth in line with local economic
conditions and predict that that will
remain the same in the following year.
The majority have seen no growth in
420 JOURNAL OF SMALL BUSINESS MANAGEMENT

5. employment during the previous 12
months. There appears to be some posi-
tive relationship between the use of
business plans and the achievement of
growth exceeding industry norms. While
an overwhelming 89 percent of busi-
nesses express a desire to grow and
have high confidence relative to the
businesses’ internal ability to grow, the
degree to which this desire is translated
into action is questionable. The degree
of assistance accessed from external
MORRISON, BREEN, AND ALI 421
Table 2
Profile of Businesses and Owner–Managers in Phase
One Sample*
Sector Retail (21.8 percent)
Manufacturing (19.3 percent)
Health and Community Services (10.5 percent)
Property and Business Services (9 percent)
Wholesale (7.1 percent)
Other (12.3 percent)
Employee Numbers 5 (54.9 percent)
5–20 (27.1 percent)
20 (18 percent)
Turnover (AU$) 250,000 (35.3 percent)
250,000–1 m. (38.7 percent)
1 m (38.7 percent)
Business Format Public Company (9.5 percent)
Partnership (14.6 percent)
Sole Proprietor (20.6 percent)
Private Company (55.5 percent)
Business Age (Years) 5 (21 percent)
6–10 (15 percent)
10 (64 percent)
Use of Business Plan Not at All (31.2 percent)
Little Use (21.3 percent)
Extensive/Moderate (47.5 percent)
Gender Male (81.7 percent)
Female (18.3 percent)
Country of Birth Australia (66 percent)
Other (34 percent)
Owner–Manager Age (Years) 0–30 (4.6 percent)
31–40 (24.4 percent)
41–50 (34.3 percent)
50 (36.8 percent)
*N = 20 firms.

6. 422 JOURNAL OF SMALL BUSINESS MANAGEMENT
422 JOURNAL OF SMALL BUSINESS MANAGEMENT
Table 3
Business Growth Objectives and Orientation
Compared to Industry Sector Slower (24.5 percent)
Same (59.1 percent)
Faster (16.4 percent)
Growth Sales Turnover Previous Negative/Zero (27.2 percent)
12 Months 1–10 percent (54.2 percent)
11–25 percent (13.2 percent)
25 percent (5.4 percent)
Predicted Sales Turnover Next Negative to Zero (23.8 percent)
12 Months 1–10 percent (56.9 percent)
11–25 percent (13.2 percent)
25 percent (6 percent)
Employment Growth Previous Decreased (18.9 percent)
12 Months No Change (59.2 percent)
Increased (22 percent)
Growth Relationship to Use of Slower than Industry Sector (38 percent)
Business Plans Faster than Industry Sector (74 percent)
Desire for Growth None (4 percent)
Uncertain (7 percent)
Desire (89 percent)
Abilities for Growth Necessary Finance (72 percent)
Right Mix of Employees (76 percent)
Business Systems (76 percent)
Necessary Technology (79 percent)
Production Processes (79 percent)
Identifying New Markets (79 percent)
Developing New Products/Services
(80 percent)
Market Knowledge (83 percent)
Management Expertise (83 percent)
Assistance Accessed from External Austrade* (7 percent)
Agencies Business Networks (25 percent)
Industry Association (40 percent)
State/Local Government (50 percent)
Education/Training Provider (50 percent)
Consultant (50 percent)
Accountant (70 percent)
*Federal Government Export Agency.

7. agencies was considered of low rele-
vance and utility. These findings indicate
that a high percentage of small busi-
nesses are disinclined to access external
assistance and advice relative to strategic
decision-making. This represents a
complex issue and may be due to a
variety of reasons. These reasons include
owner–manager attitudes and business
orientation, lack of awareness of possi-
ble benefits of such assistance, resource
scarcity that makes such services finan-
cially inaccessible, or perceived benefits
that do not justify the costs.
Phase Two Findings
Phase one resulted in the identifica-
tion of a sample of small businesses
that exhibited a pro-growth orientation.
Further research generated the following
findings relative to owner–managers’
intention, ability, and opportunity. Inten-
tion was shaped by demographics in
that the majority were primarily male,
Australian, and aged 31–50, exhibiting
entrepreneurial characteristics including
vision, energy, and opportunism. Their
abilities reflected continuous search for
innovation; industry experience and
understanding contributing to exploita-
tion of market opportunities and appli-
cation of sound business practices;
involvement in business networks; finan-
cial awareness; and valuing staff as an
asset of the business. Opportunity arose
from knowledge of and sensitivity to the
market place and from proactive rela-
tionship maintenance with customers.
Discussion and
Conclusions
A key distinguishing feature of a pro-
growth small business is a balanced
alignment of the owner–managers’ inten-
tion, the abilities of the business and the
opportunity environment. The intention
is formed, drawing from the owner–
manager’s personal and demographic
variables and internal value system. The
range of ability and opportunity vari-
ables confirms the literature findings pre-
sented in Table 1 as being associated
with pro-growth small businesses. Cru-
cially, each of the variable sets of inten-
tion, ability, and opportunity are linked
intrinsically, and business growth is
unlikely to be achieved should one be
missing or unduly weak. For example,
with no opportunity, the intention cannot
be applied; lacking the intent driven by
entrepreneurial vision and energy oppor-
tunities will not be translated into busi-
ness growth, and without the ability,
entrepreneurial intention and opportu-
nity are unlikely to be realized. In com-
bination, this powerful interrelationship
impacts on the pivotal behavior of the
owner–manager’s judgement relative to
scaling down, remaining in a steady
state, or growing the small business. It is
proposed that if small businesses are
to fulfill the potential as identified by
Mazzarol (2000), policy and resources
need to be realigned to maximize
the social and economic contributions of
pro-growth businesses. Furthermore,
given their fundamental importance, it
is essential to address barriers to growth
as a matter of priority (Carter et al. 2000).
In this respect, Maki and Pukkinen
(2000) advise that policy measures
should be concentrated on factors
that can be affected by small busi-
ness policy rather than on those that are
embedded in the psyche of the
owner–manager. Certainly, from the
study reported in this paper, it would
appear that policy measures could be
employed more effectively:
• targeting the minority of small
businesses that show tangible
evidence of growth in the form of
increased number of employees
and/or sales turnover, and at
those that express a desire for
growth;
• directed at improving the business
abilities and the opportunity envi-
ronment rather than attempting to
MORRISON, BREEN, AND ALI 423

8. tamper with the inner psyche of the
owner–manager;
• revising the content of growth pro-
grams and their developmental
approaches, ensuring that commu-
nication can be understood by all
stakeholders and accurately reflects
the human dimensions that are
embedded in the organizational
process; and
• recognizing the strong positive
influence and role of informally
sourced information and advice on
business planning and growth and
attempting to bridge a strong cul-
tural gap to overcome resistance to
external assistance intervention.
Quite simply, if a means to identify
what economic and social factor drive
small businesses to become growth
oriented can be achieved, then support
agencies have the potential to target and
to nurture these factors. In this way,
finite public sector resource can be
targeted toward the minority of small
businesses optimizing employment gen-
eration potential.
Alison Morrison
University of Strathclyde
Glasgow, Scotland
John Breen
Shameem Ali
Victoria University
Melbourne, Australia
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