The managerial dimension of small business failure

Jennings, Peter L. and Beaver, Graham (1995) The managerial dimension of small business failure. Journal of Strategic Change, 4 (4), 185-200. (doi:10.1002/jsc.4240040402).

Record type: Article

Abstract

The majority of existing studies of small business failure tend to focus upon either the symptoms arising from problems within the firm or upon the reasons cited for failure. Comparatively little analysis of the root cause has been undertaken. Failure and success are usually defined in rational terms which ignore stakeholder aspirations. Many owner-managers pursue personal objectives which inhibit the probability of success if measured using these rational criteria. The root cause of small business failure is almost invariably a lack of management attention to strategic issues. Notwithstanding the fact that common skills and abilities are required, the management process in small firms is unique and cannot be considered to be the same as professional management in larger firms practised on a reduced scale. The multiplicity of roles expected of the owner-manager often causes dissonance which enhances the probability of poor decision making and inappropriate action. Successful small firms practise strategic management either consciously and visibly or unconsciously and invisibly.

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