This paper discusses how to use financial tools to support the national strategy public entrepreneurship and innovation. To implement the strategy public entrepreneurship and and reach the overall goal of building an innovative country, it's needed to conceive of the top-level design of the financial support system for innovation and entrepreneurship, make full use of financial strength, carry out the ideas of innovation and entrepreneurship thoroughly,promote the national strategy by financial guidance. In practice, it's needed to use the decentralization in governing to build a highly-efficient financial market environment for innovation and entrepreneurship, make full use of the function of banking institutions to support innovation and entrepreneurship, actively improve the multi-level capital markets to service innovation and entrepreneurship, strengthen international cooperation to improve the level of financial support to service innovation and entrepreneurship.
Purpose – Due to the great distinctions for the legal environments, institutions and taxations, the restrictive external financing and costly financing cost, and great influence of macroeconomy or regulations on single industry, firms may change or adjust their organization structure to adapt to rapidly changing environment. Flat structure can decentralize the powers to subsidiary managers and can internalize the managerial market to promote competition among subsidiary managers and create an internal capital market within firms to alleviate external financing constrains, and it is matched with the diversification strategy to lower the operation risk and regulation risk for firms in changing environment. The paper aims to discuss these issues. Design/methodology/approach – The data of 6,065 listed corporations in China securities market since 2001-2006 are used to empirically test the hypotheses. Findings – The paper examines the efficiency of flat structure within the firm, investigating its influence on capital allocation and corporate performance. It shows that flat structure is better in emerging market since it is efficient in capital allocation, reducing the inefficient investment by reducing the overinvestment and alleviating the underinvestment, thus beneficial for corporate performance, both short-term and long-term accounting returns. Practical implications – From the results of this study, the paper can derive the important managerial implications that top managers should strengthen flexibility through flat structure so that their firms can grasp opportunities and obtain advantages through efficient improvement of mobility, adaptability, and combination in an uncertain environment. Moreover, flat structure can decentralize the powers to subordinate managers and create an internal managerial market and internal capital market within firms. Originality/value – By using the previous and change of multi-unit structure, the change of corporate performance, diverse and concentrated firms, the paper shows that results are not due to the endogenous problem. The study finds that in less-developed capital market under the current situation, flat structure is better, which suggests that flat structure can properly implement the strategies in emerging market and beneficial for corporate performance.
This paper testified the privilege of SME cluster financing through an empirical study on the issues of financing situation of SME clusters.The empirical results show that the clustering is an innovation in SME's financing,which lays financing foundation for SME to solve the natural constraints.As a result,we must consider the risk sharing mechanism of symbiotic relationship,increasing the system utility and decentralizing systematic credit risk.An opinion has been put forward that the expanding the boundary of symbiotic relationship is an innovative mechanism of industrial clusters'financing.
ABSTRACT Young firms grow faster through franchising than via the traditional organization. However, research shows that as much as three fourths of new franchise systems die within ten years of establishment. Although recent franchising system survival research has recognized industry as a potentially important variable, a theory for its influence has not been available. This paper develops propositions linking industry variations to the survival of franchising systems. Specifically, it suggests that franchising system survival is negatively related to the degree of decentralization of critical decision tasks, brand-space proliferation, and knowledge intensity, but positively related to labor intensity, cost of the material factor, specific investments and revenue variability. Implications of this theory for both prospective franchisors and franchisees are discussed. INTRODUCTION The study of firm growth and survival has been a central concern in entrepreneurship research. Increasing support is emerging for the view that contractual, hybrid forms of organizations such as franchising, strategic alliances, and licensing are viable alternatives to the traditional, hierarchical form of organization (e.g., Larson, 1992). In particular, franchising is seen as a means of faster growth relative to the traditional form of organization for young firms (Caves & Murphy, 1976). Franchising creates opportunities for thousands of budding entrepreneurs every year (Combs & Ketchen, 2003, p. 443), and over 200 new franchisors appear in dozens of industries (Michael, 1998, p. 162). However, Shane (1996) showed that as much as three fourths of new franchise systems die within ten years of establishment. Likewise, Bates (1998, p. 122) found that franchises are dramatically less profitable and their survival prospects are worse than those of independent business start-ups. The low rates of survival of both franchising systems as well as individual outlets seem puzzling given the popularity of franchising among new entrepreneurs. Perhaps budding entrepreneurs lack an understanding of realistic prospects of franchising. In order to prevent wastage of entrepreneurs' costly efforts, identification of variables that might influence the survival of new franchising systems is important. Although recent franchising system survival research appears to have recognized industry as a potentially influential variable (e.g., Bates, 1998; Michael, 1996; Shane, 1996), its role has been limited to a control variable. Perhaps what is needed is a theory explaining why differences in industry may be crucial to franchising system survival. This paper attempts to fill this important theoretical void. The paper begins with a brief review of franchising and its two dominant viewpoints: the resource-scarcity thesis and the administrative-efficiency thesis. In light of these theses, a theoretical framework is developed involving several factors that might lead to important industry differences influencing franchising system survival. The industry variables are: the allocation of decision tasks, brand-space proliferation, labor intensity, the cost of the material factor, specific investment, revenue variability, and knowledge intensity. Propositions are presented suggesting the effect of each variable. Finally, important implications of this framework for franchising research and practice are discussed. BACKGROUND OF FRANCHISING Franchising involves granting exclusive rights for the local sale of a service or trademarked product and receiving in return a fee and/or royalty and conformance to quality standards, price controls, and other practices (Mathewson & Winter, 1985). A franchisor thus enjoys the benefits of revenue and control without having to make the investments required for ownership. The franchisee receives many services including training, advertising and, frequently, financing or assistance in obtaining finance (Bumstien, 1968-69; Woll, 1968-69). …
This paper gives an interpretation of the recent diffusion of the processes of productive outsourcing founded on two explanatory points. The first is that such processes replace a hierarchical paradigm of information diffusion with a decentralized paradigm in which independent subcontracting firms autonomously collect and process part or all of the prominent information. The second is constituted by the change of the modality of production innovation, becoming the result of autonomously developed inputs that are successively made complementary by the work of the network through an encapsulation process of the information. This is made possible by the fact that after an initial phase in which a new input is jointly projected by the contractor and the subcontractor and in which the information comes shared, a phase follows in which the prominent information for the specification of the characteristics of the product and for the solution of the local and unforeseen problems is collected and processed in a sequential manner and then encapsulated in the input by autonomous production units. In comparison with the vertical integration (make) or the market (buy), this form of governance (subcontract) allows for the organization in more efficient manner of the processing of the information, for the reduction of the informative costs and for the minimization of the risk of spillover.
The 1990s has been labeled as the decade of the small in Canada (Candalino and Knowlton 1994). While large Canadian firms are trying to be more competitive through downsizing, re-engineering, and decentralization, small firms are forging ahead (Candalino and Knowlton 1994; Morgan 1994). This is particularly true for small Canadian firms that are developing innovations with a clear competitive advantage and are leaders in sunshine industries such as high technology (Candalino and Knowlton 1994). Many of the firms are also picking up products and services dropped by large firms in their downsizing efforts. As a result, small Canadian firms are making major inroads in global markets (Morgan 1994). Small firms play a significant role in the Canadian economy. They contribute nearly 40 percent of Canada's Gross Domestic Product (GDP) and employ about half the labor force (Labbe 1994). Also, small businesses create nearly 60 percent of the new jobs in Canada. Hence their success is critical for the Canadian economy (Morgan 1994). Recognizing the importance of small firms in the stability of the economy, the Canadian government has set up programs like the Program for Export Market Development and Promotional Projects Programs to encourage their start-up and growth. Canadian provinces have also enacted legislation to encourage small business. For example, in Ontario, the Small Business Development Corporation Act provides tax breaks for individuals investing in small firms. However, regardless of this support, the success of small firms in the global market depends on their ability to manage human assets (Deshpande and Golhar 1995). Today's global market expects reasonably priced, high quality products delivered on time. Hence, small firms need a highly motivated, skilled, and satisfied workforce that can produce quality goods at low cost (Holt 1993). It is therefore important that small firms implement an appropriate human resource management strategy to develop such a work force. It is not surprising that, next to general management, small firms rank personnel management as their most important management activity (Hess 1987). Unfortunately, recruiting, motivating, and retaining employees are some of the biggest problems faced by small firms (Hornsby and Kuratko 1990; Mathis and Jackson 1991). However, in practice, other functional areas such as finance, production, and marketing usually get more attention than does personnel management (McEvoy 1984). For example, one study suggested that training in personnel management is not as critical as training in finance or marketing in small firms (Curran 1988). Even textbooks on small business management pay scant attention to personnel management issues (Deshpande and Golhar 1995; Hess 1987). Other research, however, suggests that inadequate and inefficient management of human resources has often resulted in low productivity, high dissatisfaction, and turnover among the employees (Mathis and Jackson 1991). Previous research has found lack of progressive HRM practices to be the leading cause of failures of small firms (McEvoy 1984). Thus there is little consensus among researchers regarding the role of HRM in the success of small firms. The empirical research in this study tries to resolve this issue by presenting a comparative study of small and large Canadian firms. Literature Review The purpose of a good HRM program is to recruit, select, motivate, and retain employees with such required characteristics as concern for the firm's success, ability to work in groups, and quantitative skills (Deshpande and Golhar 1994). Most of the published research in the U.S. and Canada investigating HRM issues in small businesses is conceptual and has concentrated on various HRM topics like selection, training and development, compensation, and industrial relations. For example, Gatewood and Field (1987) propose a model selection program for small business, while Curran (1988) suggests several training strategies for a small business. …
Peter H. Grinyer, Peter McKiernan, Masoud Yasai‐Ardekani
Abstract Hypotheses relating to market, organizational and managerial determinants of profitability and growth are developed and tested using data collected by structured interviews in 45 randomly selected companies in the electrical engineering industry. Multiple regression analysis suggests that market share and barriers to entry are the principal determinants of profit margins, but that tightness of control of working capital and aggressive management style also have an important influence. Centralization of decision‐taking among smaller companies, too, was associated with greater profitability, whilst more extensive budgetary control and planning of acquisitions or diversification were both negatively correlated with the latter. Profitability was the single most important predictor of the rate of company growth of sales but constraints from organized labor, from sources of finance, and conservative management styles, the rate of product change, R&D intensity, and decentralization all entered significantly.