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does not destroy its market niche or ineffective management reduce its competitive abilities.

Holmes & Zimmer (1994) amongst others have also highlighted the possibility of capped growth in SMEs. A detailed justification for SME owner-managers seriously considering this strategic option at some point is provided in a prescriptive article by McKenna & Oritt (1981).

Note that the term ‘capped growth’ is not specifically employed by Hanks et al. (1993) in depicting their taxonomic life-cycle model. However, based on their description of SMEs in this disengagement/arrested development circumstance, its use appears entirely appropriate. Note also that the Hanks et al. (1993) model does not include a decline stage as in some other models such as those of Smith et al. (1985), Adizes (1979, 1989) and Kazanjian (1988). Hanks et al. (1993, pp. 9-10) comment on this as follows:

Exclusion of decline stages in the majority of models can most likely be attributed to two characteristics of organization decline. First, the impact of decline on organization structure and systems is far less predictable than changes associated with growth. Second, the onset of organization decline may actually occur at any stage of the organization life cycle (Hanks, 1990b; Miller & Friesen, 1984a).

On the compatibility of their taxonomic life-cycle model with the ten prior models reviewed by them, Hanks et al. (1993, p. 9) observe:

All of the models include one or more stages related to organization birth or start-up, expansion, and maturity. All but three . . . include one or more diversification . . . stages.

4. Critique of Stage Models of SME Growth

The main limitations of the SME growth model developed by Hanks et al. (1993) are acknowledged by the researchers as deriving from their use of an exploratory method and cross-sectional data, and due to potential sample specificity. On the possibility the model only has some validity for smaller high-technology concerns in the industries studied by Hanks et al. (1993), a point made by Kazanjian & Drazin (1989, p. 1499) regarding their stage-of-growth study of technology-based new ventures (TBNVs) may be relevant:

. . . even though the model presented . . . is theorized only to hold for TBNVs, the underlying structure of the theory has enough in common with general stage of growth models to lend some plausibility to a stage of growth progression occurring in a variety of growth situations.

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