The condition of smallness: how what it means to be small deters firms from getting bigger

Abstract

Purpose

The purpose of this paper is to examine and explain why most small firms remain small. A new conceptual framework – the condition of smallness – is proposed.

Design/methodology/approach

A critical examination of the literature about the nature of being a small firm is first conducted. Employing an inductive analysis of responses from a survey of 2,521 small business owners about employment regulation, the nature and effects of smallness is examined.

Findings

It was found that owners' choice making combines with perceptions about their resources to produce a condition of smallness. The condition of smallness is conceptualised as the circularity perceptions, attitudes and consequent practices that reflect lack of knowledge, time and capability. It is argued that this condition of smallness inhibits growth to create a wicked problem that explains why most small firms don't grow.

Research limitations/implications

This work is largely conceptual, albeit the argument is grounded in, and illustrated by, empirical data. The findings may not be generalisable beyond this paper's data sets, but may be generalisable conceptually.

Originality/value

The focus of much scholarly work has been on growth firms. Yet the typical small firm is excluded so that the issues of smallness are often overlooked. This paper, therefore contributes to understanding why small firms don't grow.

Citation

R. Anderson, A. and Ullah, F. (2014), "The condition of smallness: how what it means to be small deters firms from getting bigger", Management Decision, Vol. 52 No. 2, pp. 326-349. https://doi.org/10.1108/MD-10-2012-0734