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Certainly, the work of Hanks et al. (1993) is very well grounded in prior research and writing on stage models of development in SMEs of all types; and their findings appear to align reasonably well with those of earlier investigations. Furthermore, for one versed in SME theory and research, their model does have intuitive appeal as a more or less general conceptualisation.

O’Farrell & Hitchens (1988) present a comprehensive critique of stage models of SME development which acknowledges the following weaknesses of business growth conceptualisations of this type:

Some stage models seem little more than heuristic classification schemes, rather than true conceptualisations of the growth process. The models are inclined to address the symptoms of growth, rather than reveal the underlying processes of the phenomenon.

The body of literature underlying stage models is largely discursive and wisdom based. Furthermore, stage models and business life-cycle theory both tend to assume their own validity, rather than endeavouring to establish it in some rigorous manner.

Where attempts are made to empirically validate stage models, most often this is done with relatively small samples and cross-sectional data. A strong argument can be made that longitudinal data are inherently appropriate to conceptualising growth of businesses over time.

Stage models tend to assume all SMEs pass inexorably through each stage, or fail in attempting to do so. It is usually unclear whether passage through all stages is necessary; or whether, in some circumstances, one or more stages may be omitted, and if variations in sequencing can occur. Stage models should be able to account for the rarity of growth; and for phenomena such as life-style and capped growth businesses in which owner-manager psychology and personal wishes may override strict business considerations. The possibility of regression through some stages should also be contemplated.

Stage models typically fail to capture important early stages in the initiation of small enterprises, including prior to start-up. The focus of attention or emphasis is most often on those concerns well on the path to becoming medium-sized.

Stage models usually measure enterprise size in terms of sales revenues or number of employees, and they usually disregard other measures of attainment or performance such as product mix, value added and rate of innovation.

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