Exploring the factors influencing the success of UK service sector SMEs: an owner/manager perspective
Small and Medium-sized Enterprises (SMEs) are an important part of any economy consistently contributing over 90% of businesses, 60% of employment and over 50% of GDP. They are regarded as a key source of innovation and business growth, and so governments globally attempt to support SMEs. Given the SME sector is very diverse, covering almost all industrial sectors, the focus of this research is on the service sector. Whilst there has been considerable research on ‘success’, this has been driven by external views, while in this research the focus will be on how SMEs view success. The research explores SMEs’ definitions of success from the SMEs’ viewpoint using qualitative research methods based on interviews and a survey. Using SMEs’ opinions, this research determines the attributes that SMEs believe create success. This approach takes a broad perspective and includes the ecological context in which SMEs exist. Firms define themselves as SMEs in relation to their own industrial sector. They view themselves as successful if they are financially sustainable and often attach importance to achieving non-financial goals. They widely interact with their environment to acquire knowledge, skills, employees and customers. Start-ups in particular attempt to gain visibility. Their interaction with others includes competitors when there is mutual benefit, primarily through referrals. The contribution of the thesis is an enhanced understanding of SMEs’ views of success and how they see themselves as achieving success. This is based on their stage of development and their self-identification within the market place. At an early stage of development, they seek visibility and market penetration through personality. In later stages, they either develop their business further or maintain a stable position. This research makes some theoretical contributions in terms of developing the perception of SMEs, giving definition to success, modifying the 5 stages of development model, enriching the factors influencing SMEs in achieving success, and extending the scope of competitive advantages. This research also develops an adaptive framework by combining the discussion of SMEs’ stage development, dynamic capability and adaptive capability in terms of resource-based theory and competitive advantage theory. The methodological contribution is that, rather than previewing SME within the 5 stage development model, the findings suggest that potentially SMEs form into two groups: young and mature. The practical contribution is that it offers insight into SMEs’ views of success and how to achieve it.