Index and Abstracts

Volume 10, Number 3
December 2005

Refereed Articles

Poverty Among Self-Employed Businesspeople in a Rich Country: A Misunderstood and Distinct Reality Johan Lambrecht and Ellen Beens

Critical Problems of Rural Small Businesses: A Comparison of African-American and White-Owned Formation and Early Growth Firms
Michael L. Harris, W.Lee Grubb III and Frederic J. Hebert

Turnaround Strategies for Declining Small Business: The Effects of Performance and Resources
Howard S. Rasheed

Venture Capital Investments in Emerging Economies: An Empirical Analysis
Medhi Salehizadeh

Personal Traits of CEOs, Inter-firm Networking and Entrepreurship in Their Firms: Investigating Strategic SME Network Participants
Joakim Wincent and Mats Westerberg

Poverty Among Self-Employed Businesspeople in a Rich Country: A Misunderstood and Distinct Reality

The article studies poverty among self-employed businesspeople in a rich country, Belgium Existing research on self-employment income, compared with income of employees, has made clear that self-employed have a higher probability of falling in the lowest income groups and that there is a distinct self-employment effect. Our findings for Belgium show that approximately one quarter of those who are self-employed in their main occupation are living below the poverty line. We also confirm findings reported in the literature that income distribution among self-employed people is very unequal. It appears from our qualitative findings that poverty among self-employed businesspeople is something distinct from other forms of poverty. Several factors can cause self-employed businesspeople to end up in poverty. As a result, poverty is a multifaceted problem. Policy recommendations are formulated to prevent and combat poverty among self-employed businesspeople.

Critical Problems of Rural Small Businesses: A Comparison of African-American and White-Owned Formation and Early Growth Firms

 Michael L. Harris, W.Lee Grubb III and Frederic J. Hebert

This study investigated the critical problems encountered by African American and White-owned formation and early growth firms in rural businesses. Analyses were conducted to determine the most critical types of problems encountered by these businesses and the relationship between the types of problems reported and the owner’s race and firm’s developmental stage.  Strategic problems were the most critical problems by business owners in the sample, regardless of race or developmental stage, followed by administrative and operations.  Although no significant relationship was found between the type of problems and the owner’s race, a significant relationship was found between problem type and the firm’s developmental stage, such that businesses in the formation stage are more likely to encounter strategic problems and early growth firms more often experience administrative problems.

Turnaround Strategies for Declining Small Business: The Effects of Performance and Resources

 Howard S. Rasheed

This study explores the choice between growth and retrenchment as turnaround strategies for small business owners experiencing decline in performance.    Current theory related to organizational failure describes deterministic and voluntaristic perspectives of strategic choice, but they have not been applied to small business decline.  Using the voluntaristic perspective the proposed model suggests  choice is contingent on the effects the owner/manager’s perceptions of performance and resource availability during a period of decline.  Survey data from small government contractors in the U.S. Small Business Administration database are used to test the model.  The results indicate these contractors choose growth strategy when their perceptions of resource availability and past financial performance are both high and when both are low, indicating small business owner/managers remain aggressive when faced with adverse conditions.

Venture Capital Investments in Emerging Economies: An Empirical Analysis

Medhi Salehizadeh

In the international arena an increasing number of entrepreneurs and venture capitalists have succeeded, yielding both micro-level financial rewards and macro-level prosperity and improved economic conditions for many industrialized countries. The next logical “group,” with a potential to reap such benefits, is expected to be the emerging economies. This study tabulates and analyzes an emerging market VC-investment dataset, and then identifying and testing a number of independent economic and financial factors that explain such investments for a selected group of emerging countries. Based on 1990-2003 data covering 19 nations, the regression results show four of the five proposed variables, namely GDP per capita, long-term capital inflows, stock market listings, and a measure of stock market correlations, to be significant in explaining VC investments.

Personal Traits of CEOs, Inter-firm Networking and Entrepreurship in Their Firms: Investigating Strategic SME Network Participants

 Joakim Wincent and Mats Westerberg

This research tests a model including direct and indirect effects of CEO’s personal traits (i.e. tolerance for ambiguity and self-efficacy) on entrepreneurial behavior for firms in a specific context, namely strategic SME networks. Findings indicate no direct relationship between personal traits and entrepreneurial behavior on the firm level but reports positive relationship between CEO’s traits and levels of inter-firm networking with other strategic SME network participants. Inter-firm networking, in turn, is positively related to entrepreneurial behavior on the firm level. Our results thus indicate that personal traits of the CEO can be important to study in order to understand small firm behavior and performance. The absence of direct links may hide interesting indirect and mediating influences. Based on this, we argue that it is important for future research in the entrepreneurship domain to consider inclusion of context-specific action-based factors that may link CEO traits to entrepreneurship.