Journal of Enterprising Culture

While researches along the lines of Austrian, Buchanan, and Coase’s teachings are thriving recently, they are not united. We show that conceptions of entrepreneurship and transaction costs are generally ambiguous regarding important exchange relationships because they are limited to the consideration of one-sided individual choices only. It is argued in the paper that the completion of an exchange necessarily involves at least two individuals acting in the role of the entrepreneur. In addition, transaction costs are subjective and cannot be treated as production or transportation costs. The paper distinguishes the concept of production cost from that of transaction cost, which is necessarily associated with alternative exchange or organizational opportunities, and therefore expands Buchanan’s subjectivist conception of individual cost to that of interactive transaction cost. A new definition of transaction cost and its implications to a testable theory of the determination of institutions are presented in the paper. Thus, in contrast to the general impression that entrepreneurship cannot be taught and studied, we show how it can be possible under our synthesis of entrepreneurship, transaction costs, and subjectivist economics. An example is also given to demonstrate how entrepreneurship can be taught and learned under our proposed framework.

This paper deals with dynamic small enterprises which grow to achieve stock market quotation and comprises three main sections: a review of theoretical arguments concerning the effects of growth on small enterprises’ financial characteristics; a consideration of the predictability of small enterprise failure and success; and an assessment of development of predictive models. Results of empirical work in the UK and Australia are reported.

The first section of the paper deals with the development of a prior arguments concerning the effects of growth on financial characteristics. This links financial characteristics in the form of profitability, liquidity and leverage with stage of development of enterprises including that of growth. This includes consideration of the ‘finance gap’ and the effect of stock market flotation on small enterprises’ financial characteristics. The purpose of this theorising is to make explicit what might be expected in terms of the effects of growth on the financial characteristics of small enterprises. The section concludes with an explanation of the methodology for the empiricial studies carried out at the University of New England on this topic.

The second section of the paper deals with the predictability of small enterprise success and failure. This includes: consideration of the financial characteristics of dynamic small enterprises as they approach and go past stock market flotation; a review of previous work on predictive models in general and those for small enterprises in particular; and discussion of the issue of the problem of distinguishing between success and failure.

The third section deals with the issues involved in the development of predictive models. These include: statistical and theoretical issues; the reliability of financial statement data; and the incorporation of non-financial variables.

The conclusions consider the implications for relationships with providers of finance, particularly banks, and for owner-managers of the dynamic small enterprise. The finding that dynamic small enterprises have financial characteristics in common with bankrupt enterprises raises questions as to the effectiveness of credit scoring techniques which make use of accounting data. This in turn raises the prospect of small enterprises being denied finance and the creation of a new ‘finance gap’. Finally, consideration given to the implications of the findings for financial institutions, small enterprise owner-managers and for future research.

Tan (1987) and Dandridge and Flynn (1988) argue that both internal and external environments favour entrepreneurship development in China. Nevertheless, research studies about Chinese entrepreneurs only select Geteihu —one-man businesses (Tuan et al. 1986), private merchants (Wank, 1990), Xiangzhen Qiye—rural enterprises (Nolan and Dong, 1989), and corporate entrepreneurs (Siu, 1992) as sampling units. Siying Qiyejia, private entrepreneurs or owner-managers, especially those in manufacturing industries and services sectors are neglected. According to the classification of the Chinese government, private enterprises are businesses owned by individuals with 8 or more employees (Young, 1991). (For those below 8, they are classified as one-man business.) They mainly participate in the manufacturing and services sectors (Guo, 1992). This paper attempts to address the imbalance and also adds new insights to the body of knowledge by investigating private entrepreneurs in China.

70 owner-managers in Guangzhou, the business centre in South China, were selected for sampling. In-depth personal interviews with 14 private entrepreneurs were successfully arranged.

The problems encountered by private entrepreneurs in China in ranking order are taxation, credit, human resource and growth. They indicate that the major cause for those problems lies in the Chinese government changing policies and regulations in relation to private enterprises too frequently. Most private entrepreneurs use the ‘let-it-be’ approach to handle those problems. However, a small portion of them get around them by establishing joint ventures with overseas investors. Under the joint venture umbrella, they no longer suffer from stringent controls imposed by government officials, but rather, be able to enjoy better investment incentives.

Workforce 2000 predicts fundamental changes in the demographics of the American workforce. Big business has responded by treating workforce diversity as a major issue. In the first study of small businesses in a major metropolitan community (Greater Cincinnati), the response has been minimal. There is a need for a significant educational effort to assist small businesses in America in preparing for Workforce 2000.

Much popular and scholarly work on entrepreneurship does not distinguish clearly small businesses from new businesses. Size and age represent independent dimensions on which a population of businesses may be described. These two dimensions may be used together to form an Entrepreneurial Grid which describes a population of businesses. The combination of age and size into the Grid facilitates analysis of the structure and dynamics of a population of businesses, and of public policies relating to small and new businesses. The Grid constitutes a framework that should prove useful as a guide to research into populations of businesses, to increase understanding of those populations and to improve our ability to formulate appropriate public policies.

Strategic planning literature is extensive but how small and medium sized firms (SMEs) behave in response to environmental changes and how they incorporate such changes in their medium to long term plan has been insufficiently studied, in the writers’ view, especially in Singapore/Malaysia context. This research is dedicated towards finding a framework for such analysis and testing such framework in 15 local/regional companies.

After an extensive literature review from sources which are both international and local, a fairly lengthy questionnaire was developed. As stated, 15 companies’ chief executives (or in their absence, someone equivalent) were interviewed and at the end of each interview a set of structured questions were asked to be filled in. The whole interview process itself took more than a month. The results have been analysed and highlighted. One main finding is that SMEs continue to be family-centred in a local/regional context especially. Among other findings were the process of information gathering which was chiefly informal, the dominance of CEO-centred management, opportunity-seeking and risk-taking in identifying strategies and finally, the role of the spouse-support.

This research is multi-faced and deserves to be further explored. Herein lies its limitation as well as its promise. A research of this nature cannot claim to be fully conclusive and hence its natural incompleteness indicates further research continuation.

How can small businesses succeed in this age of large corporations, global competition, and the need for large investments in Information Technology? According to conventional wisdom, it should be pretty hard, if not impossible. Companies with visionary and ENTREPRENEURIAL leaders can do it by committing to provide the best possible services to the customers consistently. And do you do that without investing in IT in this information age?

This case illustrates the success story of YCH since its inception in 1955 as a relatively unknown transport company to one of the most prominent companies in the ASEAN region today. YCH has accomplished this feat by innovatively using its resources and talents. One of these is the use of an innovative IT architecture for its various business operations. The case of YCH Logistics company demonstrates that small businesses can not only invest in IT, but they can use IT for competitive advantage. Furthermore, they can achieve this by not buying a single mainframe or a mini computer. YCH company was one of the three proud winners of the prestigious IT awards by the National Computer Board of Singapore in 1992. This case provides a brief history of the company including the major turning points; and describes its business segments and the evolving role of IT to support and augment the business operations. It also describes the innovative and modular IT architecture adopted by its small, young and ambitious IT team.