The document discusses scanning the environment by small business owners. It defines scanning as acquiring knowledge about external events, trends, and relationships to adapt to threats and opportunities. Dynamic environments create unstable markets and uncertainty. Small business owners must adjust not only their market perceptions but also their self-efficacy beliefs about their ability to adapt. The conclusion is that planning can help reduce the effects of dynamic environments on businesses and owners' ability to deal with major changes. Future research proposed includes studying scanning practices and self-efficacy effects before and after a dynamic market event.

1. Small business owner scanning
within a dynamic environment
SEAANZ 2009
Wellington New Zealand
Blake Escudier Ph.D.
Capella University
Sept 2, 2009

2. Small business owner scanning within
a dynamic environment
Small business is the
commercial fabric of
every community. And
to remain successful,
the Small Business
Owner must adapt to
changes in their market
environment.
Dynamic Environments
are chaotic in nature
and affects may cause
drastic changes to small
business markets.

3. • What is Scanning the Environment?
• What is a Dynamic Environment?
• What are the key dimensions small business owners
work within?
• Processes in Analyzing the environment
• Chaotic Environments
• Self-efficacy and the small business owner
• Environment effects on small business owner
scanning
• Conclusion
• Future Research

4. What is Scanning?
Scanning the environment is a process used by
organizations to acquire knowledge of events,
trends, and relationships of systems external to the
organization. By observing changes in the market,
Small Business owners have the option to adapt their
resources to prevent threats or pursue opportunities.

5. Dynamic Environments
create changes while
trying to reach a new
market equilibrium
Question: Does the
business owner have
the tacit knowledge to
handle major market
changes?
Question: What can a
small business owner
do to better prepare for
the potential of a
dynamic environment?
Small business owner
Self-Efficacy is the
belief in themselves
and their ability to find
a solution when faced
with a situation and the
ability to do what it
takes to change.

6. Key dimensions small business owners live within
• Businesses exist within an open system in constant relationship
between organizational systems and numerous environments.
• Business owners view elements of the environment in relation to
affect on present operations and future expectations.
• Business owner decision-contingency relies on the owners ability to
monitor the external environment and integrate changes with
internal organizational resources.
• Personal agency is a system of making causal contributions to their
own personal action. The most pervasive personal agency is the
individual system of belief in control over actions and environment.

7. What is the most limiting factor small business
owners face?
The most influential dimension affecting business
owners is a temporal perspective. Due to limited
resources, business owners rely on their own
knowledge and the knowledge assets they may
acquire – time is a resource that small businesses are
relatively unable to increase as compared to larger
organizations.

8. Key factors affecting the temporal dimension of small
business owners
Small business planning is subject to the viewpoint of the owner. The link
between a business and the environment is envisioned by the owner.
Situational factors create antecedent states of momentary moods such as
anxiety, hostility or excitability, and momentary conditions such as cash
resources, fatigue, and illness – these are distinguished from chronic
individual traits.
These antecedent states exist when scanning the environment and create
momentary states owners then bring to the situation – from states
resulting from the previous situation. These are called situational
influencers and are based on the owners perception of the situation.
Premise here is that the owner’s perception of the situation has more
affect on behavior than the inherent features of the situation

9. Processes in analyzing the environment
Undirected viewing: Small business owners perceive the
environment is not analyzable. The process for gathering
market information is haphazard and limited. Small business
owners may be able to keep their operations going – if the
market remains relatively stable. – Learning is derived through a
status-quo operation.
Conditioned viewing: Business owners believe the environment is
analyzable – yet are passive in efforts to gather information.
Monitoring the competition and industry standards provides the
owner with a level of tacit knowledge based on stability.
The differences: Conditioned viewing has procedures for
scanning yet following standardization may not allow for
emerging changes and developments through new sources.

10. Chaotic Environments
• Traditional economic
models represent
systems in relatively
stable equilibrium.
• The reality is that
environments exist
within a chaotic
system, are in
constant flow, and are
time-dependent.
• Within relatively stable
equilibrium environments –
change takes place through
entrepreneurial activity in
which individuals search for
self-satisfaction.
• Changes in competition,
access to resources, and
technological advances may
create uncertainty within the
environment. Owners with
limited resources may
perceive the environment as a
threat to their own operations.
The level of threat is based on
the complexity of the situation
and the rate of change.

11. Self-Efficacy and the small
business owner
• The small business owner’s
level of self-efficacy relates
to their belief in the extent
to which they have control
over their environment.
• Due to limited scanning –
many business owners have
a false illusion of control.
They overemphasize the
extent to which they are
able to handle situations
within a dynamic
environment.
• Business owners will be
confident in their ability
based on previous control
during relatively stable
environments.
• Many psychologists have
presented that emotional
behavior is the cause of
feelings.
• Empirical implication: if the
environment is inducing
people to act emotionally –
people will state they feel
those emotions.

12. Environment effects on small business owner
behavior
• A person’s consciousness is epistemologically linked
to the person but ontologically outside the person. Thus, emotional feeling is a fact about the situational
environment rather than a fact of the individual
themselves.
• The condition of the environment and the cognitive
self-efficacy of the individual to deal with evolving
situations determine the resulting behavior and,
thus, future business activity.

13. Conclusion
Dynamic environments present problems for small business owners
as the level of changes within the market become more drastic and
may overwhelm the self-efficacy of the owner since most of their
tacit knowledge is based on short term scanning programs, tending
to be limited in scope and scale.
Within dynamic environments, unstable markets cause uncertainty
of resources, competition and system relationships. While a new
equilibrium is certain, small business owners are required to adjust
if they are to survive. Owners must not only adjust their
perceptions of the market but also perceptions in their own ability
to make adjustments.
The fact that a dynamic environment affects business owner’s
perception, as well as the markets in which they operate, suggests
that planning for dynamic environments may help reduce the
potential effects on both the business and the owner’s ability to
deal with drastic market changes

14. Future Research
• To evaluate small business
growth and survivability,
quantified research should be
conducted on small business
scanning practices within a
select group of businesses
within a similar industry. This
longitudinal study would
compare scanning practices
and resulting changes in
business success indicators.
• To evaluate owner self-efficacy
effects on planning within a
dynamic environment, a post
dynamic event study should
be conducted. Through survey
of small business owners the
study would search for
indication whether the preevent level of market scanning
might have created a lower
owner self-efficacy concerning
their ability to manage change
during the post event dynamic
environment.