Drawing Boundaries for Growth of the Small Firm: narrative analysis

The bulk of the research on growth of SMEs is based on purely economic approach to entrepreneurship where the entrepreneur is depicted as the heroic homo economicus aiming at profit maximization through his abilities of risk-taking, need for achievement, dominance, aggressiveness and independence. The rational is in the form of formal rationality, cost-benefit calculation that relies on financial accounting. The growth of a company is the self-evidently desirable outcome that will deterministically follow from a proper set of characteristics and conditions for the business. What is missing is the understanding that the causal relations regarding any phenomena related to the social sphere are not deterministic but probabilistic due to the existence of the voluntary component in action. For this reason I suggest that it is a futile attempt to investigate the growth of small firms without understanding the owner-managers and their theories with regard to growth. First, there is a variety of small businesses and small business owners with differing values, attitudes and behaviours. Second, small firms are often personality-driven. Furthermore, for the small businessperson the business, work, and personal are overlapping and decisions are taken in the context of overlap. This is not to argue, however, that small businesspersons are totally emotional or irrational in their decision-making but rather that the fusion of the rational and emotional thinking exists in a way where the other cannot be without the other. The 'objective' financial performance characteristics (turnover , growth figures) may be in mismatch with the personal expectations, skills and aspirations of the individual entrepreneur. If the entrepreneur does not want to grow the enterprise, the growth of the company could be even considered as a failure. From this perspective the growth of the SME needs to be reflected against the entrepreneurial goals, capabilities and resources. There is a need for a sociologically oriented approach that focuses also on the non-rational side of action and motivation. In this paper I will present the results of a discursive analysis of the eight entrepreneurs' personal theories regarding growth of their companies in order to produce a better understanding how entrepreneurs understand growth in the realm of their lives and business, how they construct the accepted levels of growth and mark the boundaries for the growth and how they legitimise their disinterest or interest towards growth. This view enables us to understand better the resistance towards growth often found in small businesses. Introduction …