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Since Jensen and Meckling [1976] first introduced the concept of an agency cost of debt, most research on the agency cost of debt has centered on who bears these costs. Jensen and Meckling's original contention was that if bondholders have rational expectations, then the owner‐manager should bear the agency costs of debt. The alternative to this explanation was first offered by Barnea, Haugen and Senbet [1981] who claimed that because of the effects of agency costs on the supply of debt, these costs would be borne by the bondholders. Roberts and Viscione [1984] extend the analysis of Barnea, Haugen, and Senbet by including costly tax avoidance on personal and corporate levels to show that the agency costs of debt are shared by bondholders and owner‐managers.

This research examines micro‐enterprises pursuing gradual growth. While very little research has been targeted specifically at the growth of micro‐enterprises, there are a host of possible influencing factors suggested by the rather broader small business literature. Less research has attempted to integrate the factors that influence growth of small firms into some form of model. Those models that were found had a number of shortfalls when it came to understanding the development of micro‐enterprises. A framework has been developed through this research that addresses these shortfalls. First, it has targeted specifically gradual growth micro‐enterprises; secondly, it is rigorously under‐pinned through empirical research; thirdly, it attempts to comprehensively cover the range of factors that influence development; fourthly, it focuses on the complex interaction of factors that may influence development. The research findings and implications are presented in two parts. Part 1 develops an empirically verified framework that explains how growth is influenced by a myriad of interacting factors. This leads to a discussion of the policy implications of the framework. Part 2 is presented in the next edition of the Journal of Small Business and Enterprise Development (JSBED) and will explore the managerial implications of the framework. This will provide a diagnostic toolkit to help micro‐enterprise owner‐managers and advisers pursue growth. The paper is derived from research conducted initially for the submission of a PhD thesis at the University of Brighton (Perren, 1996).

This article draws on a three‐year comparative study of employee relations in small, medium‐sized and large organisations in Britain. It sets out to identify, record and analyse the nature and extent of employee relations in micro‐businesses. The preliminary results that emerged from the study illustrate that owner/managers of micro‐businesses tend to exhibit highly personalised and mostly informal management styles. Employee relations strategies in this type of firm appear to follow similar patterns and can be as diverse as the characteristics, personalities and preferences of the owner/managers themselves.

Contends that micro‐business owner‐managers invariably have objectives, although they do not always make them explicit. These objectives tend to relate to personal rather than business criteria. In addition, the vast majority of micro‐business owner‐managers indicate little inclination to maximise profit or pursue growth. The supposed non‐existence and ambiguity of objectives amongst owner‐managers probably arise because they often subconsciously set objectives, rather than make them explicit as part of a written business plan. In practice, micro‐businesses generally pursue a number of economic and non‐economic objectives relating to factors such as income levels, job satisfaction, working hours, control and flexibility. These objectives were derived from the influence of the micro‐business owner‐manager’s individual, social and economic contexts. Moreover, the behaviour of owner‐managers is most appropriately characterised in terms of satisficing behaviour. The impact of this is very important, because it means that there is often no drive to improve the business in terms of growth, sales and profitability. Furthermore, the willingness of owner‐managers to alter their aspiration levels, if objectives were not being easily achieved, often means that they do not initiate changes in the way they run their business when perhaps they should.

The purpose of this research is to show that while mainstream finance for small businesses has been researched, hard to reach segments of the UK owner/manager population have eluded empirically rigorous investigation. The authors investigate the financing preferences of owner/managers in small ethnic minority businesses in the UK and examine their access to both formal and informal finance as well as the use of personal funding networks. The emergent results are compared with the findings from a matched “control sample” of white small business owner/managers.

Identical, in‐depth, face‐to‐face interviews were used with a sample of ethnic minority small business owner/managers and a matched control sample of white respondents in the West Midlands region of the UK.

Family and close associate networks were very important for the support of both ethnic minority and white owner/managers. All the respondents required loans from banks and other financial institutions, both at the start‐up stage and in subsequent years. For the ethnic minority owner/managers, the initial importance of financial institutions declined over the years. In contrast, in the control sample, institutional borrowing needs increased considerably. Ethnic minority owner/managers showed a preference for less intrusive and more “user friendly” financing options that allow them to remain in full control of their businesses.

Caution is advised in the use and generalisation of results emerging from qualitative research that involves small samples of respondents chosen from a restricted area of the UK.

The research shows the importance of “user‐friendly” financing options for owner/managers.

The purpose of this research is to outline the preliminary results of an empirical investigation into access to finance and related issues, as experienced by SME owner/managers in the UK and in China.

The authors employed a telephone survey involving a sample of SME owner/managers operating in the UK and in China. A detailed, semi‐structured questionnaire was administered to a selected sample of 32 matched SMEs. The survey requested quantitative and qualitative information on sources of finance, both preferred and actually used by owner/managers, during three stages in their firm's business cycle: at start up, after two years and over the next five years.

Evidence suggests that there are similarities as well as differences between SME financing in the UK and in China. In terms of initial (start‐up) funding, a large proportion of respondents relied exclusively on financial support from their immediate family. After two years in business, respondents exhibited a higher reliance on own savings and the financial support of bank and other financial institutions. At the end of five years of uninterrupted economic activity, most of the owner/managers in the UK sample relied for their borrowing needs primarily on financial institutions and to a lesser extent upon their own savings. In contrast, owner/managers in China depended mainly upon financial support from their immediate family and to a lesser extent on financial institutions.

The sample for this research study is both small and selective. It is not meant to represent a random or statistically significant selection of either the UK or Chinese SME sectors.

The financing preferences of owner/managers in the sample have been influenced by their perception of the relative strength and weaknesses of domestic finance infrastructures. The results of this research study is indicative of SME owner/managers' financing needs, attitudes and perception. Future developments and the strengthening of the legal and financial infrastructure in China could significantly reduce the comparative gap between owner/manager preferences in these two countries.

The purpose of this paper is to provide small business and entrepreneurship researchers with insights to help them undertake life story interviewing, in order that this can subsequently advance understanding within the field.

The authors describe, and reflect upon, the use of a life story interview approach that formed part of the data collection process for a research study into dynamic capabilities in micro-organisations.

The life story interview approach the authors utilised can generate benefits for both the purposes of the research study and the interviewee. Nevertheless, “unexpected lack of time” and “owner-managerial control”, two common contextual factors within micro-organisations, are factors that may raise challenges for successfully undertaking life story interviewing in such organisations. Ultimately the interviewer needs to respond to such challenges by making “stick or twist” decisions with regard to the interview format being used.

The authors provide an example of an interview approach that researchers can use for future research within the field of small business and entrepreneurship. The authors also prepare interviewers for challenges they may experience within the field and the potential need for them to make “stick or twist” decisions.

The authors explicate a specific life story interview approach which is new to the field of small business and entrepreneurship. Furthermore, the authors highlight potential complexities in undertaking this interview approach within micro-organisations. Prior work within the field has tended to give little consideration to challenges of undertaking life story interviews.

Learning and knowledge in all its various forms have always played an important role in economic development. A major focus however, has been on the impact of the knowledge‐based economy on big, rather than small businesses. The purpose of this qualitative study was to determine whether a group of small business owner/managers participated in a range of learning activities, and if so, what those learning activities were. At the same time, the extent to which owner/managers of small businesses were aware of the knowledge‐based economy was also explored, as was the degree to which they participated in it. It was found that, participation in learning did occur, but that greater reliance was placed on informal rather than formal learning. It was also found that the understanding of the knowledge‐based economy varied considerably from those who had some knowledge of the concept, to those who had no understanding at all. While this study is regional in nature, it makes a valid contribution to the study of small business learning from a global perspective.

The purpose of this paper is to explore what the attitudes of small firm owner-managers are to developing the skills of their key resources and then examine how these and other factors affect owner-managers’ preferences for training these employees.

This study of training in small road transport firms in West Australia is cast in light of the literature on human resource management in small firms underpinned by insights drawn using the resource based view of the firm. Small firms (less than 20 people) dominate this industry, while the increasing freight task, and extreme distances between West Australian ports, towns and mines highlight this sectors’ importance. Survey results from 39 small road transport firms and interviews with nine owner-managers are analysed.

Legislative, regulatory and licensing requirements were shown to be a key determinant of skills development. Employers ensured that basic standards for employee certification and qualification were met, as the penalty for not doing so would be too high. Regulations drove the need for certain types of training – licenses, fatigue management, occupational health and safety, handling dangerous goods, the Maritime Security Identification Card card, forklift license, mine site inductions – while owner-managers knew where to get the training their staff needed. Although regulation appeared most visible in prescribing what happened in relation to training for drivers, the relevance of owner-managers’ attitudes could not be ignored, nor could conditions in the firms external environment as this shaped how these requirements were met.

The RBV is useful in showing how skill development enabled similarity in skills across firms, while the attitudes owner-managers and economic and social conditions meant what happened in firms around skill development varied. The importance of small firm owner-managers’ attitudes are clearly highlighted and shown to influence organizational decisions and choices around training, but these were not independent of the regulatory framework and the economic and social conditions within which the firm operated. The small firms in this study did engage workers in formal training when necessary but it was put in the context of the idiosyncratic approach of the owner-manager and the day-to-day needs of the firm. “Training” was essentially about ensuring certain types of skills were held by employees and then passing on knowledge to ensure the behavior of employees was consistent with the owner-manager’s vision for the firm in its current environment.

Ways industry and government can encourage training activity that goes beyond the day-to-day firm needs are suggested.

Drawing on the “ISO 26000: 2010 – Guidance on social responsibility” handbook, this paper aims to investigate the extent to which Bangladeshi small- and medium-sized manufacturing enterprises (SMEs) are incorporating social responsibility (SR)/sustainability into their regular business activities. It is also aimed at providing insights into how Bangladeshi SME owner-managers perceive the concept of SR, and exploring the key drivers of and barriers to socially responsible and sustainable business practices.

A mixed-method research was carried out in two sequential phases. During the first phase, 110 printed questionnaires (59 of which were eventually used) were distributed among the owner-managers of the selected SMEs. The second phase involved seven in-depth semi-structured interviews.

The findings reconfirm the existence of the so called “attitude-behaviour” gap. The barriers that hinder the sustainable engagement of SMEs include corruption, a weak regulatory environment, inefficient or ill-suited government and external support and a lack of awareness of the environmental aspects of SR. In addition, this research reveals that Bangladeshi manufacturing SMEs do, to a certain degree, implement SR; only those few issues that suit the owner-managers’ personal motives are addressed, while many others (e.g. environmental issues) are neglected. Finally, it has been found that the business type and size, and the owner-managers’ educational attainments have no significant influence on the degree of adoption of socially responsible business practices by Bangladeshi manufacturing SMEs.

This paper develops a tool suited to meaningfully assess the socially responsible and sustainable business activities of SMEs. By using the four key elements identified in ISO 26000, namely, labour practices, the environment, consumer issues and community involvement and development, and by using an innovative and effective technique, a sustainability score and implementation level were calculated quantitatively for the selected SMEs. The tool developed here can be used to study the sustainability related issues faced by SMEs based in other low-income developing countries.