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Stochastic models of firm growth, developed mainly in the field of economics, which, in summary, suggest that ‘many factors affect growth and, therefore, there is no dominant theory’ (O’Farrell & Hitchens, 1988, p. 1370). In this context, it is important to be aware of Gibrat’s (1931) law of proportionate effect which proposes that business growth rates are independent of enterprise size. O’Farrell & Hitchens (1988) cite empirical evidence which upholds Gibrat’s law for manufacturing SMEs; and they also allude to empirical support for the proposition that the variability of growth rate decreases with increasing enterprise size.

What are referred to as strategic management perspectives on SME growth which, according to O’Farrell & Hitchens (1988, p. 1373), have:

. . . focused attention upon the strategic dimension of achieving sustained growth and the way in which the owner-manager responds to business and personal environmental indicators. Hence, they concentrate upon the identification of the owner-manager’s policies and strategies for the conduct and development of the business and their subsequent translation into managerial action that will lead to sustained business development. These business strategies are thought to be determined by perceptions of what the owner-manager wishes to, or thinks he can, achieve through his business, in the light of the opportunities and constraints he sees. In turn, these aspirations and perceptions will be partly determined by personal characteristics.

An important message emanating from the strategic management literature is that not all SME owner-managers have the desire, or indeed the capability in terms of resources and expertise, to grow their business (Stanworth & Curran, 1976; Perry, 1982; Perry et al., 1986; Stanworth & Curran, 1986; O’Farrell & Hitchens (1988); Perry et al., 1988; Storey et al., 1988; Davidsson, 1989; Birley & Westhead, 1990; Frank et al., 1991; Turok, 1991; Hanks & Chandler, 1992; Hay & Kamshad, 1994). Marginal to comfortable survival at the present enterprise size, rather than growth, is most often the overriding strategic objective. The reasons for this are myriad, ranging from personal wishes regarding life-style to a disinclination to surrender control and/or be accountable to others within and without the business in order that it may grow (McKenna & Oritt, 1981; O’Farrell & Hitchens (1988); Davidsson, 1989; Osteryoung et al., 1992; Hay & Kamshad, 1994; Holmes & Zimmer, 1994; McMahon & Stanger, 1995; LeCornu et al., 1996). Of course, the prerogative to make such personal choices and have them dictate business goals and activities is, for many, what is most attractive about SME owner-managership as an occupation (Bolton, 1971; Stanworth & Curran, 1976; Carland et al., 1984; Gibb & Dyson,

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