Journal of Small Business and Enterprise Development, Volume 6, Number 4
Factors in the growth of micro-enterprises
(Part 1): Developing a framework
Lew Perren
Small Business Research Unit, Brighton Business School, University of Brighton, Mithras House, Lewes Road,
Brighton BN2 4AT
Tel: 01273 642979; Fax: 01273 642980; E-mail: L.Perren@brighton.ac.uk
Received: 5th January, 1999; Revised: 3rd June, 1999; Accepted: 6th July, 1999
ABSTRACT
This research examines micro-enterprises pursuing
gradual growth. While very little research has been
targeted speci®cally at the growth of micro-enter-
prises, there are a host of possible in¯uencing factors
suggested by the rather broader small business litera-
ture. Less research has attempted to integrate the fac-
tors that in¯uence growth of small ®rms into some
form of model. Those models that were found had a
number of shortfalls when it came to understanding
the development of micro-enterprises. A framework
has been developed through this research that
addresses these shortfalls. First, it has targeted speci-
®cally gradual growth micro-enterprises; secondly,
it is rigorously under-pinned through empirical
research; thirdly, it attempts to comprehensively
cover the range of factors that in¯uence develop-
ment; fourthly, it focuses on the complex interac-
tion of factors that may in¯uence development.
The research ®ndings and implications are pre-
sented in two parts. Part 1 develops an empiri-
cally veri®ed framework that explains how
growth is in¯uenced by a myriad of interacting
factors. This leads to a discussion of the policy
implications of the framework. Part 2 is presented
in the next edition of the Journal of Small
Business and Enterprise Development
(JSBED) and will explore the managerial impli-
cations of the framework. This will provide a
diagnostic toolkit to help micro-enterprise owner-
managers and advisers pursue growth. The paper
is derived from research conducted initially for the
submission of a PhD thesis at the University of
Brighton (Perren, 1996).
# 1999 Henry Stewart Publications, ISSN 1462±6004, 366±385
MANAGERIAL AND POLICY IMPLICATIONS
. Four interim growth drivers in¯uence
micro-enterprise development: owner's
growth motivation, expertise in managing
growth, resource access and demand.
. The interim growth drivers are in turn in¯u-
enced by a myriad of independent factors.
. Growth beyond the micro-enterprise phase
requires the combined in¯uence of the
independent factors to be positive on all
four interim growth drivers.
. There is the possibility of compensation,
the phenomenon where a de®cit in one fac-
tor's in¯uence against an interim growth
driver can be counterbalanced by another.
. The framework provides micro-enterprise
owner-managers and their advisers with a
checklist of potential compensating factors
for each of the interim growth drivers.
This should provide an agenda for stimulat-
ing growth beyond the micro-enterprise
phase. This theme is developed further in
the next edition of the JSBED.
. Micro-enterprise development has been
shown to be a process of slow incremental
iterative adaptation to emerging situations,
rather than a sequence of radical clear steps
or decision points.
. Micro-enterprises need timely and tailored
support, rather than any form of standard
supply-side policies which will be wasteful
and not address real needs. What is needed
is support that is owner-manager centred,
rather than adviser-centred.

. While the framework provides a useful
mechanism for sensitising advisers to
growth issues, it would be premature to
recommend its use as a way of `picking
winners'.
KEY WORDS
Micro-enterprises, growth, factors, development,
start-up
INTRODUCTION
This research examines micro-enterprises pursuing
gradual growth.1 The research ®ndings and impli-
cations are presented in two parts. Part 1 develops
an empirically veri®ed framework that explains
how growth is in¯uenced by a myriad of interact-
ing factors. This leads to a discussion of the policy
implications of the framework. Part 2 will be pre-
sented in the next edition of the JSBED and will
explore the managerial implications of the frame-
work. This will provide a diagnostic toolkit to
help micro-enterprise owner-managers and advi-
sers pursue growth.
While little research has been targeted speci®-
cally at the growth of micro-enterprises, there are
a host of possible in¯uencing factors suggested by
the rather broader small business literature. Less
research has attempted to integrate the factors that
in¯uence the growth of small ®rms into some
form of model. Indeed a review of the literature
only revealed seven models:
Ð Durham University Business School's (DUBS)
model (Gibb and Scott, 1985);
Ð Keats and Bracker's (1988) theory of small ®rm
performance;
Ð Bygrave's (1989) entrepreneurial process
model, adapted from Moore (1986);
Ð Covin and Slevin's (1991) entrepreneurship
model;
Ð Davidsson's (1991) entrepreneurial growth
model;
Ð Na€ziger et al.'s (1994) model of entrepreneur-
ial motivation;
Ð Jennings and Beaver's (1997) management per-
spective of performance.
This list only includes papers which have made a
real attempt to synthesise in¯uencing factors into
some form of meaningful integrative model rather
than simply itemising factors (for example Cragg
and King, 1988; Box et al., 1993) or concentrating
Journal of Small Business and Enterprise Development
Perren
on a speci®c aspect of growth (for example Merz
et al., 1994). Jennings and Beaver (1997) brought
together a range of factors to suggest how they
might in¯uence a small ®rm's performance mea-
sured in terms of principal stakeholder's aspira-
tions. Their paper is included here as the principal
stakeholders may well measure performance in
terms of growth.
The framework derived through the research
from which this paper is drawn makes a useful
contribution to our understanding of the develop-
ment of micro-enterprises as it addresses gaps in
the existing integrative models. This paper high-
lights four signi®cant silences. First, with the
exception of Davidsson (1991), the other models
were not aimed at understanding the development
of these very small ®rms: Durham University
Business School's (DUBS) model was originally
aimed at ®rms with under 50 employees that were
about to pursue the next stage of growth (Gibb
and Scott, 1985); Bygrave's (1989) entrepreneurial
process model was aimed at entrepreneurial devel-
opment which is driven by innovation, and while
no speci®c size of ®rm is provided, the impression
is given of fairly rapid growth to more substantial
size; Covin and Slevin's (1991) entrepreneurship
model was aimed at `larger established ®rms';
Na€ziger et al. (1994) and Jennings and Beaver
(1997) were not speci®c about the size of ®rm
they are addressing; Keats and Bracker's (1988)
theory of small ®rm performance was aimed at
the US Small Business Administration's rather
vague de®nition of a small ®rm, `independently
owned and operated and which is not dominant in
its ®eld of operation', but certainly they leant
towards larger scale small ®rms.
Secondly, there was lack of empirical under-
pinning within the existing models. The Keats and
Bracker (1988), Bygrave (1989), Covin and Slevin
(1991), Na€ziger et al. (1994) and Jennings and
Beaver (1997) models have all relied on existing
literature and deductive logic without any empiri-
cal underpinning. Indeed Keats and Bracker
(1988), Bygrave (1989) and Covin and Slevin
(1991) all explained that their model would be
very dicult to test. The Davidsson (1991) model
was based on a study of 322 Swedish ®rms, but it
only explained 25 per cent of the variation in
actual growth. Davidsson (1991) commented that
the large share of unexplained variation may be
because his model represents average e€ects and
does not look at the idiosyncrasies of individual
cases. The DUBS model was originally based on
367
Factors in the growth of micro-enterprises (Part 1): Developing a framework
16 ®rms who were seeking to develop new pro-
ducts and/or markets (Gibb and Scott, 1985). Sub-
sequently, DUBS reported having helped over
300 ®rms using the model for consultancy (Gibb
and Davies, 1992). The interventionary nature of
the model's derivation calls into question how
representative it is of other ®rms that are not aided
by DUBS researchers/consultants.
Thirdly, only the DUBS (Gibb and Scott,
1985), Bygrave (1989) and Jennings and Beaver
(1997) papers attempted to address the full range of
factors in¯uencing a ®rm's development. The
Keats and Bracker (1988), Covin and Slevin (1991),
Davidsson (1991), and Na€ziger et al. (1994)
models concentrated much more on the interaction
of in¯uences on the entrepreneurial process and
behaviour. The subsequent exchange of ideas
between Covin and Slevin (1993) and Zahra (1993)
did little to alter their original model.
Fourthly, Gibb and Davies's (1992) criticisms of
their own model are also germane to the other
models. None of the models say much about how
the various factors identi®ed actually interact
together to in¯uence the development of the ®rm.
The factors were identi®ed and some form of
causality suggested, but the models do not con-
sider how, at the level of individual cases, the fac-
tors blend together or the process of their
interaction.
As will be shown the framework presented
herein addresses these criticisms of the existing
integrative models. First, it has targeted speci®cally
gradual growth micro-enterprises; secondly, it is
rigorously under-pinned through empirical
research; thirdly, it attempts to comprehensively
cover the range of factors which might in¯uence
the development of a micro-enterprise; and
fourthly, it goes someway towards addressing
Gibb and Davies's (1992) criticisms by considering
how factors may blend together to in¯uence
development, thus setting an agenda for future
research into the complex process of interaction.
DERIVATION OF A SPECULATIVE
FRAMEWORK2
The discussion above has highlighted signi®cant
gaps in our understanding of the development of
micro-enterprises. Nevertheless, the host of possi-
ble growth factors suggested by the small business
literature can provide a speculative framework to
guide the investigation. Figure 1 provides an
overview of the literature to identify 16 indepen-
dent factors, each of which may interact with
368
four intervening growth drivers3 (Sekaran, 1992)
to cause a small business to grow. It is only possi-
ble to speculate from the existing literature about
the importance of these factors and the nature of
the interaction between the independent factors
and interim growth drivers. The aim of this
research is to move beyond speculation to pro-
duce an empirically veri®ed framework that
explains how the multitude of independent factors
identi®ed actually interact to in¯uence the gradual
growth of micro-enterprises. The speculative fra-
mework is employed in a ¯exible manner to
ensure that it does not restrict the free-¯ow of
ideas or evidence.
METHODOLOGY
Sixteen case studies were selected in the following
way. A list of businesses was compiled from the
clients of local ®rms o€ering accountancy services
who were known and respected by the
researcher.4 The resulting list was sifted so as to
remove businesses that were not started by the
existing owner-manager, had grown through the
micro-enterprise phase in under four years, were
not local, no longer had the original owner-man-
ager involved in day-to-day management and
were not really trading (eg the business provided a
convenient front for taxation).
The reduced list was strati®ed to allow com-
parison between ®rms that achieved di€erent
levels of growth and between di€erent sectors.
Growth enterprises were those that had increased
employee numbers beyond nine employees and
turnover beyond £600,000. Attempted growth enter-
prises, while exhibiting early growth, went on to
show marked decline in terms of employee num-
bers and turnover. They never expanded beyond
the micro-enterprise level and eventually declined
to lower levels. No-growth enterprises only managed
to exhibit ¯at turnover and employee ®gures.
Research (such as Bolton, 1971; Curran and Bur-
rows, 1993) suggested that some factors in¯uen-
cing small ®rms might be sector-speci®c. Table 1
shows that there are liable to be some general
similarities in the operations of businesses in the
four broad sectors of retailing, manufacturing,
wholesaling and service. For example, retailers
tend to have a large number of customers and an
informal selling process, whereas manufacturers
tend to have less customers and a more formal sell-
ing process. Therefore the list was further strati®ed
into retailers, manufacturers, wholesalers and ser-
vice providers to re¯ect potential di€erences in the
Journal of Small Business and Enterprise Development
 Independent
Factors

(F1) Desire to 'be one’s own boss'. Many researchers have suggested that
successful owner-managers have a high 'internal locus of control', believing
they have command over their destiny (e.g. Brockhaus and Horwitz, 1986;
Caird, 1990; Chell et al., 1991),10

(F2) Desire to succeed. (eg McCelland, 1961; Chell et al., 1991),

Interim
(F3) Active risk taker. (eg McCelland, 1961; Timmons et al., 1985; Chell Growth
et al., 1991), Drivers
(F4) Innovation. (eg Schumpeter, 1934; Rothwell and Zegveld, 1982; Chell et
al., 1991),
(G1) Owner's growth motivation is vital in such small firms where their
(F5) Transferable personal capital. (eg Bolton, 1971; Mason and Harrison,
influence is so great (eg Scase and Goffee, 1980; Stanworth and Curran,
1994),
1986; Hakim, 1989),
(F6) Transferable primary skills. (eg Stanworth and Gray (1991) report that Dependent
(G2) Expertise in managing growth is important, without such expertise the
many founders start up in types of business for which they have previously Factor
? firm may become uncontrolled and lose direction (eg Penrose, 1959; ?
worked,
Williamson, 1967; Bosworth and Jacobs, 1989),
(F7) Transferable support skills. (eg Hofer and Charan, 1984; Bosworth and Growth of
(G3) Resource access of a financial, physical and human nature are crucial to
Jacobs, 1989), Firm
growth (eg Bolton, 1971; SBRT, 1984-1996; Mason and Harrison, 1994),

Journal of Small Business and Enterprise Development

(F8) Transferable network of contacts. (eg Johannisson, 1986; Blackburn et al.,
(G4) Demand for products or services, whether pro-actively created or just
1990),
innately present, is crucial to successful growth (eg Hassid, 1977; Birley
and Westhead,1990).
(F9) Family, 'investing' friends etc. (eg Scase and Goffee, 1980; Gill, 1985),

(F10) Key employees, partner. (eg Bosworth and Jacobs, 1989; Goss, 1991),

(F11) Active professional advisers. (eg Robertson, 1987),

(F12) Debtors and creditors. (eg Ray and Hutchinson, 1983; Slatter, 1992),

(F13) Societal and other outer factors. (eg Andrews, 1980; Fahey and
Narayanan, 1986),

(F14) The State of the Economy and the Government's management of the
Economy. (eg Keeble et al., 1993; Lean and Chaston, 1995),

(F15) Product sector and market segments. (eg Porter, 1980; Joyce et al.,
1990),

(F16) Competitive dynamics. (eg Porter, 1980; Cambridge Small Business

Research Centre, 1992).

Figure 1: Speculative framework derived from the literature

Perren

369
Factors in the growth of micro-enterprises (Part 1): Developing a framework

development of businesses from these broad sec-
tors.
Initially the resource limitations suggested that
only one case should be selected from each growth
category per sector, making a total of 12 cases
(three growth types multiplied by four sector
types). Nonetheless, it was felt that more insights
could be achieved from the growth enterprises so
this group was doubled giving a total of 16; four
attempted growth cases (one from each sector);
four non-growth cases (one from each sector);
eight growth cases (two from each sector). This
allowed sucient comparison across a number of
®rms for some generalisations to be made with a
degree of conviction, while retaining adequate
quality in the detailed analysis of each ®rm to
allow the intricate con®guration of factors to be
understood. Table 2 shows the ®rms that were
randomly selected from each strati®ed list. There
was no statistical relevance to the randomness of
the selection, it was simply stating that the selec-
tion was arbitrary after the strati®ed list had been
compiled.5
Multiple sources of evidence were gathered, as
suggested by Yin (1993); these included taped, oral
accounts of each owner-manager's life (conducted
between three to six months into the ®eld work),
`observation' of the owner-managers and their
employees (conducted between six to 30 months
into the ®eldwork), and focused semi-structured
interviews (conducted 30 to 36 months into the
®eld work).6 In addition, secondary sources were
consulted to obtain background information on
the ®rm and its industry sector.
DEVELOPMENT OF AN EMPIRICALLY
VERIFIED FRAMEWORK
A systematic approach to data capture and analysis
was taken to ensure a clear `audit trail' between
the data and the conclusions that were distilled
(Eisenhardt, 1989; Miles and Huberman, 1994)7.

Table 1: General features of various broad industry sectors (This table was compiled from a number of
sources including: Curran and Burrows, 1993; Kurilo€ et al., 1993; Steinho€ and Burgess, 1993; Dibb et al.,
1994.)

Feature Retail Manufacture Wholesale Service

Customers Final Consumer Normally other Normally other Can be other ®rms
®rms ®rms or consumer
Number of Tends to be large Tends to be fewer Tends to be fewer Depends on service
Customers
Selling Process Tends to be Tends to be more Tends to be more Depends on service
informal/simple formal/complex formal/complex
Credit o€ered to Normally no credit Normally credit Normally credit Depends on service
customers
Value creating Through trading Through Through trading Through provision
process convenience of manufacture of convenience of of intangible
tangible products tangible products tangible products functions
Stock holding Trading stock Raw material and Trading stock Tends to be no or
®nished goods stock very low stock
Trading cycle Stock bought, held Raw material Stock bought, held Customer requests
and sold to bought, and sold to another service, service
consumer manufactured and ®rm performed
sold to another ®rm
Location Tends to be high Tends to be Tends to be out of Varies depending on
street industrial estates and town centre, close type of service
`zoned' areas to customers or
good transport
facilities

370 Journal of Small Business and Enterprise Development

 Perren

Table 2: Description of each case

Case Broad Description Maximum Maximum Number of Number of Number of Number of

letter sector number of turnover employees employees employees employees
employees (adjusted to in Year 311 in Year 6 in Year 9 in Year 12
1992)

Non-growth
A Retail Jewellery 1 £24,000 1 1
B Wholesale Consumables 3 £187,000 2 3 3 3
C Manufacture Metal 1 £84,000 1 1
Workshop
D Service Assessing cars 3 £139,000 2 3 3 2

Attempted Growth
E Retail Curtains 5 £194,000 4 5 3 1
F Wholesale Motor spares 7 £336,000 7 3 2
G Manufacture Electro- 7 £121,000 4 4
plating
H Service Recruitment 8 £580,000 4 8 5

Growth
I Retail Telephone 12 £656,000 4 7 12
sales
J Retail Jewellery 26 £1,068,000 4 8 12 16
K Wholesale Horse 16 £621,000 8 13 16
products
L Wholesale Model trains 26 £1,300,000 3 5 9 15
M Manufacture Sun glasses 42 £2,290,000 8 26
N Manufacture Building 40 £2,900,000 8 15 40
frames
O Service Insurance 70 £2,000,000 5 22
P Service Golf School 29 £800,000 3 5 29

The autobiographic and semi-structured interviews
were fully transcribed, with punctuation added
carefully to maintain the respondent's original
meaning (Blackburn et al., 1992) and the second-
ary data were carefully catalogued. Cross-referen-
cing systems were developed to allow data to be
easily located while retaining its original context;
for example, the autobiographic interviews8 were
line-numbered. Anonymity has been protected by
pseudonyms being used for all people and places
mentioned in quotes by owner-managers. Each
®rm was examined as an entity in its own right,
before any cross analysis was undertaken. It was
important to understand the idiosyncratic interac-
tion of factors in individual cases (Bell, 1987)
before looking for patterns across cases.
The oral account of each manager's life and the
semi-structured interviews turned out to be the
most valuable for this study. They provided the
owner-managers' longitudinal perspective of their
®rm's history and the factors that had in¯uenced
development. The richness of this type of data
allowed the analysis to move beyond simple corre-
lation to develop an empirically veri®ed frame-
work for explaining the growth of micro-
enterprises.9 This is not suggesting that case studies
can provide de®nitive cause±e€ect relationships,
that is even dicult in tightly controlled labora-
tory experiments (Sekaran, 1992). Case studies,
however, do allow probable cause±e€ect relation-
ships to be interpreted based on evidence (Yin,
1993) and these can be made with greater convic-
tion when multiple cases suggest similar patterns
(Eisenhardt, 1989, 1991). A largely inductive
approach was taken to the transcription analysis.
The speculative framework of factors (see Figure
1) provided general guidance, but the analysis was
driven by the data and as will be shown the specu-
lative framework was shown to need amendment.
The systematic approach to data cataloguing

Journal of Small Business and Enterprise Development 371

Factors in the growth of micro-enterprises (Part 1): Developing a framework
allowed a ¯exible approach to data analysis and
categorisation so that issues could be iteratively
grouped together until patterns emerged (Riley,
1990). Care was taken to keep the interpretation as
close to the data as possible and triangulation from
more than one data source was achieved for the
majority of the cause±e€ect relationships (East-
erby-Smith et al., 1991).
The space constraints of this paper make it
impossible to show the evidence for the 278
cause±e€ect relationships explained by the
research, so a summarised example from case G
(the electro-plating company) is provided to indi-
cate the nature of interpretation. This example
looks at the data that led to the interpretation of a
negative cause±e€ect relationship between the
independent factor transferable primary skills (F6)
and interim growth driver demand (G4). As the
number and scale of processes grew the owner-
manager and his employees lacked the primary
skills (F6) of electro-plating to be able to satisfy
demand (G4):
[Discussion of trial and error approach to
mixing chemicals] `Yes. Because we worked in
other companies, the back up we got as regards
chemical analysis and all the rest of it; we didn't
have so we had to learn . . . You learn by error,
by mistakes . . .' (Owner-manager G's response
to the semi-structured question, `As the business
developed did you feel the need to develop new
skills?')
[Discussion of dropping processes] `We were
doing about nine processes and we found that to
try and do nine processes, we were running
around working all hours and we couldn't
really give the customers what they wanted . . .'
(Owner-manager G's oral history)
[Discussion of processes that had to be dropped]
`In the beginning we did Nickel and Chrome
but then we disposed of those because we had
problems with the Water Authority . . .'
(Owner-manager G's oral history)
It is also germane to explain that the work envir-
onment had become horrendous. There was an
acrid stench from the chemical vats and the oce/
sta€ room facilities were housed in a seemingly
unventilated cubicle at the back of the unit.
The data from each of the cases were analysed
in this way to produce 277 similar explanations of
372
cause±e€ect relationships within the 16 cases.
Table 3 summarises this information, giving the
frequency across the 16 cases that an independent
factor either positively or negatively in¯uenced an
interim growth driver to e€ect growth. This helps
to see general patterns in the data, but it still has
its origin in the detailed analysis that was con-
ducted for each case.
The speculative framework can now be
amended to take account of the empirical evidence
(see Figure 2). The independent factors have been
ranked to indicate the likelihood of them in¯uen-
cing a particular interim growth driver. While this
provides a useful overview of an independent fac-
tor's general importance, a low ranked factor may
still prove to be very signi®cant for a particular
®rm.
It is now appropriate to examine more deeply
how the independent factors actually in¯uence the
interim growth drivers. Each interim growth
driver will be considered in turn, a table summar-
ising the nature of factor in¯uences constructed
and illustrative case examples given.
Investigating owner's growth motivation (G1)
Table 4 synthesises the empirical evidence to show
how owner's growth motivation (G1) is poten-
tially in¯uenced by ®ve factors: desire to succeed
(F2); desire to be `one's own boss' (F1); active risk
taker (F3); family and `investing' friends etc (F9)
and competitive dynamics (F16).
The owner-manager's desire to succeed (F2) is
by far the most prominent, featuring in all the
cases as an in¯uence of some sort on the owner's
growth motivation (G1) and in 13 of the cases as
the only in¯uence. In cases A, B and D the
owner-managers' modest desire to succeed (F2)
and wish to only achieve a certain level of income
appears to have constrained the growth of their
®rms. The quote below from the owner-manager
in case B illustrates this point:
'. . . Money motivated. De®nitely because the
more I make, the less I want to do in there. I'm
motivated by money because what I want,
money will make it easier for me so that I can
do a 2 or 3-day week. . . ' (Owner-manager B)
In cases E, F, G, H, I, J, K, L, M, N, O and P
the owner-managers had a strong desire to succeed
(F2) that was directed at growing the business
(G1). This is depicted well by the quote below
from owner-manager N:
Journal of Small Business and Enterprise Development
 Perren

Table 3: Frequency of an independent factor in¯uencing a particular interim growth driver

Owner's growth Freq Expertise in Freq Resource access Freq Demand (G4) Freq
motivation (G1) managing growth (G3)
(G2)

(F2) Desire to 19 (F7) Transferable 16 (F12) Debtors & 18 (F14) State of 22

succeed support skills creditors economy
(F1) Desire to 'be 1 (F10) Key 7 (F3) Active risk 16 (F15) Product 21
one's own boss' employees, taker sector
partners
(F3) Active risk 1 (F9) Family 5 (F5) Transferable 13 (F16) Competitive 21
taker `investing' friends personal capital dynamics
(F9) Family, 1 (F11) Active 2 (F10) Key 13 (F6) Transferable 17
`investing' friends professional employees, primary skill
advisers partners
(F16) Competitive 1 (F8) Transferable 1 (F9) Family, 10 (F4) Innovator 15
dynamics network `investing' friends
(F8) Transferable 9 (F3) Active risk 14
network taker
(F14) State of the 1 (F13) Societal and 11
economy `outer' factors
(F10) Key 10
employees
(F8) Transferable 10
network
(F2) Desire to 2
succeed
(F9) Family, 1
`investing' friends

`There's an in-built thing in me now, I won't
stop growing until I have wiped-out all those
that trod on me in the sixth months period
when I was down. It is an out-and-out
challenge to me now. The money is of no great
interest . . .' (Owner-manager N)
To be a positive in¯uence an owner-manager's
desire to succeed (F2) needs not only to be strong
but also to be directed towards the growth of the
®rm (G1). McCelland (1961) originally proposed
`need for achievement' as an important component
of entrepreneurship (Chell et al., 1991),10 subse-
quently most psychologists seem to have accepted
this view although no de®nitive research exists
(Johnson, 1990). The current research can throw
some light on the diculties that psychologists are
having in establishing a link. Desire to succeed
(F2) and the owner's growth motivation (G1) are
separated on the framework ie some owner-man-
agers appeared to have a high desire to achieve but
it was not always directed towards the growth of
the ®rm. Some owner-managers, for example,
pursued a particular perception of product and ser-
vice excellence that was, unfortunately, contrary
to their ®rm's growth potential (G2). Owner-
manager C describes the diculty he has with cli-
ents due to being `a little bit of a perfectionist':
`I possibly am a little bit of a perfectionist
anyway. In fact, a lot of my customers have
looked up and said, ``that's too good a job''
(Owner-manager C)
`That led to other problems because my buyers
knew exactly what they were talking about.

Journal of Small Business and Enterprise Development 373

Factors in the growth of micro-enterprises (Part 1): Developing a framework

Planning

F1. Desire to ‘be ones own boss’

Attributes
Personality
F2. Desire to succeed

F3. Active risk take r

F7 G1 Owner’s
F4. Innovator F10 Growth
F9
Motivation
F11
Owner F8

F5. Transferable personal capital F2 G2. Expertise in

Experiences
Transferable

F1 Managing
F6. Transferable primary skills F9
Growth
F16 Formalisation
F7. Transferable support skills

F8. Transferable network of contacts

Growth of Change to
Organisation
Micro-enterprise

F9. Family, ‘investing’ frie nds

F3 G3. Resource
Patronage
Stakeholder

F10. Key employees, partners Access Delegation

F11. Active prof essional advisers F12

F5
F10
F12. Debtors and creditors F9
F8
F14

F14 G4 Demand
F15
F16
F13. Societal and other ‘outer’ factors F6
F4
Influences
External

F14. State of economy F3

F13
F10
F15. Product sector and market segments F8
F2
F16. Competitive dynamics F9

Independent Factors Interim Growth Drivers

Figure 2: Diagrammatic summary of the empirically veri®ed framework

They knew where to shop around and where to
get the cheapest for their company. They
wouldn't come to me because of all the gear I
had. They knew they could go down the road
and the guy ain't got that equipment and get it
done cheaper.' (Owner-manager C)
The other factors in Table 4 may have less
frequently in¯uenced the owner's growth
motivation (G1) than desire to succeed (F2),
but they were nevertheless important for the
particular cases a€ected. In case L the factors
desire to be `one's own boss' (F1) and active risk

374 Journal of Small Business and Enterprise Development

 Perren

Table 4: Independent factors in¯uencing the interim growth driver owner's growth motivation (G1)

Owner's growth motivation (G1)

Independent factors Nature of in¯uence Case references

(F2) Desire to succeed
(F1) Desire to be 'one's own
boss' and (F3) Active risk
taker.
(F9) Family, 'investing' friends
etc,
(F16) Competitive dynamics
* The owner-manager having a strong desire and E,F,G,H,I,J,K,L,M,N,O,P
will to succeed and equating success with growth of
the ®rm can be a positive in¯uence.
* The owner-manager having modest expectations A,B,C,D,F,G
for the growth of the ®rm can be a negative
in¯uence.
* The owner-manager having a strong desire and C,E
will to succeed but in directions that are contrary to
the growth of the ®rm can be a negative in¯uence.
* The owner-manager's desire for independence can L
even sometimes combine with risk aversion to be a
positive in¯uence.
* Diculties in the owner-manager's family life P
a€ecting his/her motivation can be a negative
in¯uence, eg the owner-manager going through
marriage diculties.
* Increasing competition may reduce margins and B
spur the owner-manager to increase volume so he/
she can retain the same level of pro®ts.

taker (F3) combined to stimulate the owner's
growth motivation. He felt a `large' business
would provide the independence he sought
without being exposed to the risks he feared. In
case B, as discussed above, the owner-manager
appeared to be motivated to achieve a certain
level of income, rather than to grow the
business. Ironically, increased competition (F16)
partly compensated for his low desire to succeed
(F2) and increased his growth motivation (G1),
although admittedly not enough to stimulate a
real attempt at growth beyond the micro-enter-
prise phase.
`I put Paul out on the road to get more business
and put someone else on the lorry, I had to
screw my suppliers if I was being screwed, I
screwed my suppliers, got better deals, certain
better deals, to be able to compete. We're
getting more volume so I'm getting a better
margin now, so it's knock for knock . . .'
(Owner-manager B)
Investigating expertise in managing growth (G2)
Table 5 synthesises the empirical evidence to pro-
vide a summary of how ®ve factors potentially
in¯uence expertise in managing growth (G2):
transferable support skills (F7); key employees
(F10); family, `investing' friends etc (F9); active
professional advisers (F11) and transferable net-
work of contacts (F8).
The owner-managers in cases A, B, F, G, J, L,
M, N, O and P all appear to have had transfer-
able support skills (F7) which helped provide
expertise in managing growth. For example, the
owner-manager in case M had a methodical
approach to administration because of his previous
training at a large manufacturer of sunglasses.
Cases D, J, K, M, N and P all seem to have had
highly supportive employees (F10) who o€ered
useful assistance in achieving growth for the ®rm.
The quote from owner-manager K illustrates this
point well:
`There's one which is people here in the oce
and Amanda, who is now a director of the
company, the company wouldn't be where it
was without Amanda. There is absolutely no
doubt about that. She has an aptitude for
business and is astute and has all the criteria
which I personally think are needed in tha t. . .'
(Owner-manager K)

Journal of Small Business and Enterprise Development 375

Factors in the growth of micro-enterprises (Part 1): Developing a framework

Table 5: Independent factors in¯uencing the interim growth driver expertise in managing growth (G2)

Expertise in managing growth (G2)

Independent factors Nature of in¯uence Case references

(F7) Transferable support skills
(F10) Key employees, partners etc
(F9) Family, partner etc
(F11) Active professional advisers
(F8) Transferable network of
contacts
* The owner-manager having management skills A,B,F,G,J,L,M,N,O,P
developed in previous employment which can help
set-up the infrastructure for growth can be a positive
in¯uence.
* The owner-manager not having management C,D,E,H,I,K
skills developed in previous employment can be a
negative in¯uence.
* The ®rm employing or having access to D,J,K,M,N,P
individuals who can o€er the owner-manager
support with the management of growth can be a
positive in¯uence.
* The ®rm employing unsuitable individuals to help H
with the management of growth can be a negative
in¯uence.
* The owner-manager's family o€ering the owner- B,C,H,I,N
manager support with the management of growth
can be a positive in¯uence.
* The owner-manager having access to a E,K
professional adviser who o€ers help with the
management of growth can be a positive in¯uence.
* The owner-manager having access to an adviser H
who has set up a similar type of ®rm can be a
positive in¯uence.

Cases B, C, E, H, I, K and N all had family,
`investing' friends (F9), active professional advisers
(F11) or transferable network of contacts (F8) who
o€ered needed expertise in managing growth
(G2). For example, the spouses of owner-managers
H and I helped with the administration:
`My husband is prepared to do accounts on the
kitchen table after a full-time job. You have to
have support at home otherwise it's impossible.'
(Owner-manager H)
`My wife, she was looking after a lot of the
admin and day-to-day paper-work, which was
quite extensive and she was doing that . . .'
(Owner-manager I)
Investigating resource access (G3)
Table 6 synthesises the empirical evidence to
show how resource access (G3) is potentially
in¯uenced by seven factors: active risk taker
(F3); debtors and creditors (F12); transferable
personal capital (F5); key employees (F10);
family, `investing friends' (F9); transferable net-
work of contacts (F8) and the state of the econ-
omy (F14).
In all the cases the level of active risk taking
(F3) was a key factor that conditioned if the
owner-manager was willing to tap the sources of
physical, material, ®nancial and intangible
resources necessary for starting and developing the
®rm. The interaction of factors within an indivi-
dual case can be quite complex. For example,
owner-manager L relied on multiple sources. He
originally raised £10,000 through the sale of his
model train collection (F5) and his father-in-law's
redundancy money (F9); later development was
funded by pro®ts, extended credit from suppliers
(F12) and a small overdraft facility (F12). The
involvement of the owner-manager's father-in-law
was a vital resource in the early stages of develop-
ment as the owner-manager was unwilling to risk
giving up the security of his job (F9, F3). In other
cases resource access was in¯uenced by key

376 Journal of Small Business and Enterprise Development


Table 6: Independent factors in¯uencing the interim growth driver resource access (G3)
Resource access (G3)
Independent factors
(F3) Active risk taker
(F12) Debtors and creditors
(F5) Transferable personal
capital
(F10) Key employees,
partners etc
(F9) Family, `investing'
friends etc
(F8) Transferable network
of contacts
(F14) The state of the
economy and its
management by
government,
Journal of Small Business and Enterprise Development
Perren
Nature of in¯uence Case references
The level of active risk taking by the owner-
manager determines how willing he/she is to tap the
various sources for obtaining resources necessary for
developing the ®rm.
* The owner-manager being willing to accept A,B,C,E,F,G,H,I,J,M,N,O,P
personal ®nancial risk to obtain resources can be a
positive in¯uence.
* The owner-manager not being willing to accept D,K,L
personal ®nancial risk can be a negative in¯uence.
* A supplier o€ering special terms of business can be A,E,F,G,I,J,L,M,N
a positive in¯uence.
* A supportive bank can be a positive in¯uence. B,E,F,G,H,J,K,M ,P
* Especially quick paying customers and good C,D,G,K,N
debtor management can be positive in¯uence.
* Poor debtor control can be a negative in¯uence. F
* Cash based business with low stocks can be a I,O
positive in¯uence.
* A major bad debt can be a negative in¯uence. N
* The owner-manager possessing and being willing A,B,C,E,F,G,H,I,L,N,P
to use his/her own personal capital to support the
growth of the ®rm can be a positive in¯uence.
* The owner-manager being unwilling to use his/her D,K
own personal capital to support the ®rm can be a
negative in¯uence.
* Employees providing lower cost or more D,E,G,H,I,J,K,M,N,P
¯exibility than is normally available in the labour
market can be a positive in¯uence.
* Problems with `key' employees can be a negative E,H
in¯uence.
* Founding partner providing start-up ®nance K
* The owner-manager's family supplying ®nancial A,H,L,N,P
support can be a positive in¯uence.
* The owner-manager's family supplying ¯exible B,C,E,G,H,I,L,N,P
labour can be a positive in¯uence.
* The owner-manager's personal contact with a A,E,F,G,J,M,N,P
supplier providing the bases of special terms of
business can be a positive in¯uence (in combination
with factor 12).
* The owner-manager's personal contacts providing F,J,M
access to some form of risk capital can be a positive
in¯uence.
* Speci®c legislation can have a negative in¯uence G
on how ¯exibly the ®rm can use its resources.
377
Factors in the growth of micro-enterprises (Part 1): Developing a framework
employees, partners etc (F10), transferable network
of contacts (F8) and the state of the economy
(F14). For example, owner-manager G had
employees who worked without wages for an
extended period and even loaned money to help
the business survive (F9). He also had supplier con-
tacts who o€ered him chemicals and other essential
materials on very ¯exible terms with extended
credit (F8, F12).
Investigating demand (G4)
Table 7 synthesises the empirical evidence to show
that demand (G4) is potentially in¯uenced by 11
factors: the state of the economy (F14); product
sector and market segments (F15); competitive
dynamics (F16); transferable primary skills (F6);
innovation (F4); active risk taker (F3); societal and
other `outer' factors (F13); key employees, partners
etc (F10); transferable network of contacts (F8);
desire to succeed (F2) and family, `investing'
friends (F9).
Demand (G4), more than any of the other
interim growth drivers, is in¯uenced by external
factors which are largely outside the owner-
manager's control: the state of the economy
(F14), product sector and market segments (F15),
competitive dynamics (F16) and societal and
other `outer' factors (F13). While the cases show
that owner-managers can attempt to position
their ®rm as well as possible within the prevailing
conditions, there is also evidence to show that
there is an element of chance in how favourable
the conditions are for the business during its
development. Other demand (G4) in¯uencing
factors are much more determined by, or within
the control of, the owner-manager: transferable
primary skills (F6), innovation (F4), active risk
taker (F3), key employees, partners etc (F10),
transferable network of contacts (F8), desire to
succeed (F2) and family, `investing' friends etc
(F9).
Case N illustrates how the complex interaction
of external factors and those factors more in the
control of the owner-manager combine to in¯u-
ence demand (G4). From the outset the ®rm
bene®ted from a period of expansion of the
economy (F14) and the market being based on a
single tender system (F16). Demand was also
encouraged by the owner-manager taking a risk
on potentially low-price contracts (F3), his techni-
cal and negotiating experience (F6) and his per-
sonal network of contacts from his previous
employer's customer base (F8, F16).
378
CONCLUSIONS AND IMPLICATIONS
The framework has provided a ¯exible structure
that contributes a clear agenda for analysing a
micro-enterprise's growth, while allowing speci®c
issues to be investigated within their environmen-
tal context. It has enabled the host of factors that
might a€ect the growth of micro-enterprises to be
investigated.
Growth through a blend of factors
The cases reveal a clear pattern within the growth
categories. It appears that for a ®rm to achieve
growth beyond the micro-enterprise phase the
combined in¯uence of factors on all four of the
interim growth drivers must be positive. In the
attempted growth cases it appears the initial in¯u-
ence of the independent factors on all four interim
growth drivers may well have been positive, but
as the ®rm grew some of these switched to being
negative.
All of the attempted growth cases experienced
some problems with demand (G4), whereas
resource access (G3) and owner's growth motiva-
tion (G1) seemed far less problematic. Admittedly,
as ®rms experienced development problems, the
owner's growth motivation (G1) undertook a less
important role.
The non-growth ®rms all share negative own-
er's growth motivation (G1), which is consistent
with the case selection criteria. Interestingly, cases
B and D seem to enjoy a sucient demand (G4)
to warrant an attempt at growth and it appears to
be mainly the owner-manager's lack of growth
motivation (G1) which is restricting growth.
The non-growth ®rms A and C are in a di€er-
ent situation. Not only does the owner-manager
lack growth motivation (G1), but there also
appears to be insucient demand (G4) to support
growth.
The cases reveal that an interim growth driver
can be in¯uenced by a number of di€erent factors.
This introduces the possibility of `compensation',
the phenomenon where a de®cit in one factor's
in¯uence against an interim growth driver may be
counterbalanced by another factor's in¯uence. The
framework reveals possible ways that factors could
be con®gured to compensate for a de®ciency in
the micro-enterprise's development needs.
The second part of this article (in the next edi-
tion of JSBED) develops the managerial implica-
tions of these ®ndings. It provides a checklist of
in¯uences for each of the interim growth drivers,
highlights ways of `compensating' de®cits in parti-
Journal of Small Business and Enterprise Development
 Perren

Table 7: Independent factors in¯uencing the interim growth driver demand (G4)

Demand (G4)
Independent factors Nature of in¯uence Case references

(F14) The state of the * The growth of the economy can be a positive A,B,D,E,F,G,H,I,J,K,N,O,P
economy and its in¯uence.
management by * The decline of the economy is likely to be a negative A,C,F,G,H,M,O,P
government in¯uence.
* The decline of the economy may in very special cases L
be a positive in¯uence.
* Speci®c deregulation can be a positive in¯uence. I
(F15) Product sector * The growth of the sector can be a positive in¯uence A,D,E,F,G,H,I,J,K,M,N,P
and market segments and the decline of the sector can be a negative in¯uence.
* Increasing concentration in the market can be a A,C,F,G,H,M
negative in¯uence.
* Protection by a large customer can be a positive B,M
in¯uence.
* Low opportunities for targeting speci®c niches can be a D,E,G
negative in¯uence.
* Good opportunities for targeting speci®c niches can be L
a positive in¯uence.
(F16) Competitive * The ®rm opening in an area with low competition can H,I,J
dynamics be a positive in¯uence.
* Appropriate targeting can be a positive in¯uence. E,K,L,P
* Inappropriate targeting or targeting too small a market A,E,F,G
can be a negative in¯uence.
* Expansion or start-up requiring entry into geographic A,H,J
areas where larger ®rms are already established can be a
negative in¯uence.
* The ®rm being `protected' by `close' contacts with B,F,I,K,M,N,O
clients or suppliers can be a positive in¯uence.
* The competition in a local area increasing can be a B,C
negative in¯uence.
(F6) Transferable * The owner-manager's knowledge of the technical B,C,D,E,F,G,K,L,N,P
primary skills aspects of the ®rm's core tasks developed prior to starting
the ®rm can be a positive in¯uence.
* The owner-manager's skill at negotiating developed A,F,H,I,J,K,M,N,O,P
prior to starting the ®rm can be a positive in¯uence.
* The owner-manager's lack of knowledge of the G
technical aspects of the ®rm's core tasks can be a negative
in¯uence.
(F4) Innovation * The owner-manager actively searching for and able to B,G,K,M,O,P
spot market opportunities for the ®rm can be a positive
in¯uence.
* The owner-manager's lack of ability to search and spot A,C,D,E,F,H,I,J,L
market opportunities for the ®rm can be a negative
in¯uence.
(F3) Active risk taker * The owner-manager being willing to accept the risk of B,E,F,G,H,I,J,M,N,O,P
challenging orders or opportunities can be a positive
in¯uence.
* The owner-manager being unwilling to accept risk of D,K,L
challenging orders or opportunities can be a negative
in¯uence.

Journal of Small Business and Enterprise Development 379

Factors in the growth of micro-enterprises (Part 1): Developing a framework

Table 7: Continued

Demand (G4)
Independent factors Nature of in¯uence Case references

(F13) Societal and * Speci®c changes can have micro-level implications B,D,E,I,J,K,L,P
other `outer' factors which have a positive in¯uence eg increase in local
policing of health laws can increase demand for related
products (B13).
* Speci®c changes can have micro-level implications D
which have a negative in¯uence eg increase in awareness
of drink driving can decrease demand for car accident
related services (D13).
* Speci®c demographic changes can have a positive J
in¯uence, eg large increase in local population of town
where founding branch is located (J13).
* Speci®c demographic changes can have a negative A
in¯uence, eg decline in area where branch is located
(A13).
* Technological developments by suppliers of core I,M
products can have a positive in¯uence.
(F10) Key employees, * Employees/partners with sales ability can be a positive E,H,J,K,M
partners etc in¯uence.
* Problems with key sales employees can have a negative H
in¯uence.
* Employees supplying core technical knowledge can be I
a positive in¯uence.
* Employees leaving the ®rm and setting up in E
competition can be a negative in¯uence.
* Employees bringing contacts or expertise can be a L,P
positive in¯uence.
(F8) Transferable * The owner-manager's personal customer contacts B,C,D,F,G,K,M,N,O,P
network of contacts previously established can be a positive in¯uence (links to
factor 16).
(F2) Desire to succeed * The owner-manager having a strong desire for the C,E
®rm to operate in a market that is contrary to market
needs can be a negative in¯uence.
(F9) Family, `investing' * Member of family with sales ability can be a positive B
friends etc in¯uence.

cular factors and suggests methods to help owner-
managers (and advisers) to think creatively about
development opportunities.
The framework starts to address Gibb and
Davies's (1992) criticisms (that they do not con-
sider how factors interact together) by showing
how independent factors blend together through
interim growth drivers to in¯uence a ®rm's devel-
opment. The patterns which exist in the growth
drivers are encouraging, but should be viewed in
the context of the individual cases. Other research-
ers have suggested that the processes of growth are
so complex that they can appear almost accidental
(eg Go€ee and Scase, 1995; Ram, 1997). The
framework provides a useful mechanism for
synthesising the data, but must be seen in the con-
text of the complexity that occurs at the level of
each case. Indeed, each case has an individual
blend of factors in¯uencing its development. For
example, a comparison of the factors that in¯u-
enced the resource access of cases M and N (see
Table 6), both manufacturers who achieved
growth, reveals a distinctive combination of ele-
ments. Owner-manager M obtained ®nancial

380 Journal of Small Business and Enterprise Development


support from a business contact (F8) and a suppor-
tive bank (F12), whereas, owner-manager N relied
on his personal capital (F5) and a £10,000 loan
from his sister (F9).
The need to organise the complexity of evi-
dence without losing its richness led to the variable
focus approach. At times, a broad view is taken
when examining across cases, at other times a
spotlight is thrown onto speci®c issues within a
case but it is important to maintain a holistic per-
spective, so that even when the attention is on the
speci®c it is seen within the context of the more
general. Equally, when the focus is on the more
general it needs to be remembered that its deriva-
tion was from the speci®c. Some methodologists
speak of `data reduction' (Miles and Huberman,
1994), and to an extent this captures the notion
being described, but misses the vital issue of levels.
It suggests data loss, almost as if this is a require-
ment to be able to understand. What is proposed
here is not data loss but a holistic view uniting the
speci®c with the general, with a clear audit trail of
how one is connected to the other.
Further research of this type is needed. A mul-
tiple case approach allows the idiosyncrasy of indi-
vidual cases to be explored while allowing the
total data to be analysed into some form of mean-
ingful pattern (Chetty, 1996, provides a useful
explanation of the application of case study
method in a small ®rm context).
Growth through an evolution of factors
The existing integrative models (with the excep-
tion of Davidsson, 1991 and Jennings and Beaver,
1997) impose rather simplistic stages on the process
of development. For example, Bygrave (1989)
suggests a sequence of innovation, followed by a
triggering event, which leads to implementation
and ®nally growth. Gibb and Davies (1992) pro-
pose a three-step process including assessing the
base performance, examining the base potential
and ®nally planning growth in a `conventional
business plan format'. Kimberely et al. (1980) have
pointed out there is no inevitable sequence of
stages in organisational life. This criticism is well
supported by evidence from this research that sug-
gests that development is often much more a pro-
cess of slow incremental iterative adaptation to
emerging situations, than it is a sequence of radical
clear steps or decision points.
By de®nition the non-growth and attempted-
growth cases do not ®t with the pre-determined
growth stages, but even when the ®rms that
Journal of Small Business and Enterprise Development
Perren
developed beyond the micro-enterprise phase are
examined such models are found lacking. Indeed,
many of the cases started pursuing a particular
manner of development that failed and adaptations
were made. For example, case I had a number of
development directions that were aborted, but it
still went on to develop beyond the micro-enter-
prise phase:
`We've had a couple of dismal failures. One was
that we were persuaded by other people that we
should open up a cubicle oce in Linkton
[name of distant town] and put somebody in
down there. That was a dismal failure because
Linkton and Cranston [name of town where
main branch is] are 90 miles apart and I was
going down there twice a week, trying to hold
the thing together and get it going, and
couldn't do so . . . One of the things that I
wanted to do about two years ago was to take
some of the workload from me on the admin
side . . . so we were approached by a local guy
who had a few bob and the arrangement was
that he would look after the total admin and do
the whole thing. It never worked . . .' (Owner-
manager I's chronicle)
Models based on stages can be persuasive, as
Stanworth and Curran (1976) pointed out; at a
super®cial level they `contain a considerable ele-
ment of truth', they ®t with anecdotal real-life
examples and provide a simple framework for
conceptualisation. As the current research shows,
however, when the detailed history of a ®rm is
investigated and compared with the simplicity of
these frameworks, they are often found wanting.
Davidsson (1991), Jennings and Beaver (1997),
and the framework developed from this research
are less open to criticism as they do not impose
simplistic stages onto a complex reality but they
do not fully address Gibb and Davies's (1992) criti-
cism of existing models, including their own, that
they miss the complex temporal process of factor
interaction. The cases from this research support
the importance of this temporal view, showing
that even when cases are in¯uenced by a similar
factor this may occur at very di€erent times in the
history of development. For example, cases B and
M both bene®ted from the protection of a large
customer (F15) (see Table 7), but in case B this
occurred at start-up, whereas, in case M it was
later in the development of the ®rm. The cases
here suggest that further research should focus on
381
Factors in the growth of micro-enterprises (Part 1): Developing a framework
the timing of factor events, perhaps employing the
framework with some form of time-ordered
matrix will reveal `underlying processes or ¯ows'
(Miles and Huberman, 1994).
Growth through tailored and timely support
This research has revealed complex patterns in the
interaction between the independent factors and
the interim growth drivers. This con®rms the
need for tailored and timely support to be o€ered
to micro-enterprises, rather than any form of stan-
dard supply-side policies which will be wasteful
and not address real needs. It would be inappropri-
ate if the framework was used in an overly pre-
scriptive way, with the owner-manager being
instructed as to how the business should be run.
There is a risk of such directive approaches result-
ing in alienation of the owner-manager and inap-
propriate formalistic techniques being applied
without sucient adaptation to the ®rm's speci®c
context. Perhaps more importantly, such
approaches do not empower or develop the
owner-manager, but simply address a speci®c pro-
blem. This may leave the owner feeling less con®-
dent and in a dependent relationship with the
external adviser. What is needed is support that is
owner-manager centred, rather than adviser-
centred. Some form of participatory action
(Reason, 1994) may be appropriate, where a coun-
sellor uses the framework with the owner-man-
ager to try and understand the ®rm's current
situation and to develop growth strategies for the
future.
The agenda provides a useful mechanism for
sensitising owner-managers and advisers to issues,
but it would be premature to recommend its use
as any form of predictive tool for `picking win-
ners' without further research; especially with the
risk of temporal distortion identi®ed above. `Pick-
ing winners' has important policy implications,
but it has eluded small ®rm researchers and policy
advisers for decades (Hakim, 1989; Storey, 1993).
The framework would be better employed at this
stage as an agenda to support micro-enterprises,
rather than a mechanism to exclude some ®rms
from support.
ACKNOWLEDGEMENTS
The author is grateful to Professor Aidan Berry,
Professor John Bessant, Professor Robert Black-
burn, Professor Tom Bourner, Peter Hovell,
Barry Le Scherer, Dr. David Paskins, Professor
Monder Ram, Professor Adrian Woods and the
382
anonymous reviewers for their helpful feedback
on this research.
NOTES
(1) European Commission has de®ned micro-
enterprises as ®rms with fewer than ten
employees (Stanworth and Gray, 1991). The
term is now accepted by the small business
research community; for example, Robertson
(1994) and Storey (1994) have both referred
to micro-enterprises. For this research gra-
dual growth is de®ned as taking four years
or more to grow beyond the micro-enter-
prise phase.
(2) Some of the discussions of methodology and
data analysis have the bene®t of hindsight
and have been stimulated by the reviewers'
helpful comments.
(3) An intervening factor emerges as a function
of an independent factor(s) acting in a given
situation, `and helps to conceptualise and
explain the in¯uence of the independent' fac-
tor(s) on the dependent factor (Sekaran,
1992, p. 70).
(4) The initial list is essentially a convenience
sample that was then re®ned through a form
of theoretical or dimensional sampling
(Eisenhardt, 1989; Cohen and Manion, 1994).
While the list is a convenience sample and
there is no intended statistical signi®cance, it
is with hindsight perhaps worth noting for
completeness that one of the ®rms o€ering
accountancy services included some prospec-
tive clients, others only provided a partial list
of their clients. However, there were also
four pilot cases.
(5) The `random' selection of the cases was felt to
be important in the original research design,
but with hindsight it is not that important as
the theoretical sample (Eisenhardt, 1989) was
after all based on a non-probability conveni-
ence sample of ®rms (Cohen and Manion,
1994). Convenience samples of this type have
the advantage of giving access, but there can
be issues of researcher re¯exivity, researcher
bias and protecting anonymity. To reduce
these e€ects the paradigmatic lens of an `out-
side observer's account' (Cohen and Manion,
1994, p. 228) is adopted. This focuses on the
`formally' collected data, with sampling, data
collection and data interpretation presented as
transparently as the constraints of protecting
anonymity will allow (Miles and Huberman,
Journal of Small Business and Enterprise Development

1994). In this way the reader is empowered to
challenge the researcher's interpretations.
There are still potential re¯exivity and bias
issues between the researcher and cases, but
the reliance on `formally' collected data and its
historic nature empowers the reader to act as a
mediator and to reduce such e€ects.
(6) A coherent and structured approach to data
collection and analysis was adopted for the
oral accounts of each owner-manager's life,
the semi-structured interviews and the analy-
sis of secondary sources. A less structured and
more passive approach was taken to the con-
tact and data collection for the intervening 6
to 30-month `observation' phase. The data
collection methods for the `observation'
phase varied between ®rms but might
include such measures as visits, telephone
interviews and face-to-face interviews with
other people associated with the business. In
the original research design it was argued
that a passive approach was needed during
this period to reduce the researcher's in¯u-
ence on the ®rms and to ensure the owner-
manager did not feel he/she was being cross-
checked. The less structured data obtained
during the `observation' phase has proved
less useful than the structured data. In hind-
sight, since these are essentially historic case
studies then the emphasis on a passive
approach was probably not needed and a
more structured approach in the interim
period would have been preferable.
(7) This method of analysis was felt to be most
appropriate for understanding the factors
in¯uencing growth, but other methods of
analysis have been employed on the same
data to expore other issues of interest.
(8) The autobiographic interview, after being
fully transcribed, was suitably summarised to
give a chronological account in the owner-
manager's own words. The summary's key
points had been agreed later in the autobio-
graphic interviews with the owner-manager.
(9) This is not suggesting that de®nitive causa-
tion can be established, rather the investiga-
tion has moved beyond simple correlation
spotting to explore the processes that are at
work and to suggest patterns of causation
based on evidence.
(10) Chell et al. (1991) provides a helpful review
of the literature on the psychology of entre-
preneurship.
Journal of Small Business and Enterprise Development
Perren
(11) For ease of presentation, in some cases the
number of employees has been approximated
or the reading given that was nearest to the
ages of the ®rm in the table.
REFERENCES
Andrews, K. R. (1980) The Concept of Corporate Strat-
egy, Irwin, Homewood, Illinois.
Bell, J. (1987) Doing Your Research Project, Open Uni-
versity Press, Milton Keynes.
Birley, S. and Westhead, P. (1990) Growth and perfor-
mance contrasts between types of small ®rms,
Strategic Management Journal, 11, 535±57.
Blackburn, R. A., Curran, J. and Jarvis, R. (1990)
`Small ®rms and local networks: some theoretical
and conceptual explorations', paper presented to
the 13th Small National Firms' Policy and
Research Conference.
Blackburn, R. A., Curran, J. and Woods, A. (1992)
`Exploring enterprise cultures: small service sector
enterprise owners and their views', in M. Robert-
son, E. Chell and C. Mason (eds) Towards the
Twenty-First Century: The Challenge for Small Busi-
ness, Nadamal Books, Maccles®eld.
Bolton, J. E. (1971) Small Firms Ð Report of the Com-
mittee of Inquiry on Small Firms, Cmnd. 4811,
HMSO, London.
Bosworth, D. and Jacobs, C. (1989) `Management atti-
tudes, behaviour, and abilities as barriers to
growth', in J. Barber, J.S. Metcalf and M. Porte-
ous (eds) Barriers to Growth In Small Firms, Rou-
tledge, London.
Box, T. M., White, M. A. and Barr, S. H. (1993) `A
contingency model of new manufacturing perfor-
mance', Entrepreneurship Theory and Practice, 18(2),
31±45.
Brockhaus, R. H. and Horwitz, P. S. (1986) `The psy-
chology of the entrepreneur', in D.L Sexton and
R.W. Smith (eds) The Art and Science of Entrepre-
neurship, Ballinger, Cambridge, Massachusetts.
Bygrave, W. D. (1989) `The entrepreneurship para-
digm (1): a philosophical look at its research
methodology', Entrepreneurship Theory and Practice,
14(1), 7±26.
Caird, S. (1990) `What does it mean to be enterpris-
ing', British Journal of Management, 1(3), pp. 137±
145.
Cambridge Small Business Research (1992) The State of
British Enterprise, Department of Applied Eco-
nomics, University of Cambridge, Cambridge.
Chell, E., Haworth, J. and Brearley, S. (1991) The
Entrepreneurial Personality, Routledge, London.
Chetty, S. (1996) `The case study method for research
in small and medium sized ®rms', International
Small Business Journal, 15(57), 73±85.
Cohen, L. and Manion, L. (1994) Research Methods in
Education, Routledge, London.
383
Factors in the growth of micro-enterprises (Part 1): Developing a framework
Covin, J. G. and Slevin, D. P. (1991) `A conceptual
model of entrepreneurship as ®rm behavior',
Entrepreneurship Theory and Practice, 16(1), 7±25.
Covin, J. G. and Slevin, D. P. (1993) `A response to
Zahra's critique and extension of the Covin±
Slevin entrepreneurial model', Entrepreneurship
Theory and Practice, 17(4), 23±28.
Cragg, P. B. and King, M. (1988) `Organizational char-
acteristics and small ®rms' performance revisited',
Entrepreneurship Theory and Practice, 13(2), 49±64.
Curran, J. and Burrows, R. (1993) `Shifting the focus:
problems and approaches in studying the small
enterprise in the service sector', in R. Atkin, E.
Chell and C. Mason (eds) New Directions in Small
Business Research, Avery, Aldershot.
Davidsson, P. (1991) `Continued entrepreneurship: abil-
ity, need, and opportunity as determinants of
small ®rm growth', Journal of Business Venturing,
6, 405±429.
Dibb, S., Simkin, L., Pride, W. M. and Ferrell, O. C.
(1994) Marketing: Concepts and Strategies,
Houghton Mi‚in, Boston, Massachusetts.
Easterby-Smith, M., Thorpe, R. and Lowe, A. (1991)
Management Research: An Introduction, Sage,
London.
Eisenhardt, K. M. (1989) `Building theories from case
study research', Academy of Management Review,
14(4), 532±150.
Eisenhardt, K. M. (1991) `Better stories and better Con-
structs: The case for rigour and comparative
logic', Academy of Management Review, 16(3),
620±627.
Fahey, L. and Narayanan, V. K. (1986) Macro-environ-
mental Analysis For Strategic Management, West, St
Paul, Minneapolis.
Gibb, A. A. and Davies, L. (1992) `Development of a
growth model', The Journal of Entrepreneurship,
1(1), 3±36.
Gibb, A. A. and Scott, M. G. (1985) `Strategic aware-
ness, personal commitment and the process of
planning in the small business', Journal of Manage-
ment Studies, 22(6), 597±632.
Gill, J. (1985) Factors A€ecting the Survival and Growth of
the Smaller Company, Gower, Aldershot.
Go€ee, R. and Scase, R. (1995) Corporate Realities: The
Dynamics of Large and Small Organisations, Routle-
dge, London.
Goss, D. (1991) Small Business and Society, Routledge,
London.
Hakim, C. (1989) `Identifying fast growth small ®rms',
Employment Gazette, January, 29±41.
Hassid, J. (1977) `Diversi®cation and the ®rm's rate of
growth', Manchester School, 45, 16±28, reported in
D. A. Hay and D. J. Morris (1991) Industrial Eco-
nomics and Organisation: Theory and Evidence,
Oxford University Press, Oxford.
Hofer, C. W. and Charan, R. (1984) `The transition to
384
professional management: mission impossible?',
American Journal of Small Business, IX(1), 1±11.
Jennings, P. and Beaver, G. (1997) `The performance
and competitive advantage of small ®rms: a man-
agement perspective', International Small Business
Journal, 15(2), 63±75.
Johannisson, B. (1986) `Network strategies: manage-
ment of technology for entrepreneurship and
change', International Small Business Journal, 5(1),
19±30.
Johnson, B. R. (1990) `Toward a multidimensional
model of entrepreneurship: the case for achieve-
ment motivation and the entrepreneur', Entrepre-
neurship Theory and Practice, 14(3), 39±54.
Joyce, P., Woods, A., McNulty, T. and Corrigan, P.
(1990) `Barriers to change in small businesses',
International Small Business Journal, 8(4), 49±58.
Keats, B. W. and Bracker, J. S. (1988) `Toward a
theory of small ®rm performance: a conceptual
model', American Journal of Small Business, 12(4),
41±58.
Keeble, D., Walker, S. and Robson, M. (1993) New
Firm Formation and Small Business Growth in the
United Kingdom: Spatial and Temporal Variations
and Determinants, Employment Department,
Research Series No. 15, University of Cambridge,
Cambridge.
Kimberely, J. R. and Miles Associates (1980) The Organ-
isational Life Cycle, Jossey-Bass, San Francisco.
Kurilo€, A. H., Hemphill, J. M. and Cloud, D. (1993)
Starting and Managing the Small Business, McGraw
Hill, New York.
Lean, J. and Chaston, I. (1995) `Critical in¯uences upon
the growth performance of post start-up micro
businesses: evidence from Devon and Cornwall',
paper presented to the Small Business and Enter-
prise Development Conference.
Mason, C. and Harrison, R. (1994) `Informal venture
capital in the UK', in A. Hughes and D. J. Storey
(eds) Finance and the Small Firm, Routledge,
London.
McCelland, D. C. (1961) The Achieving Society, Van
Nostrand, Princeton, New Jersey.
Merz, G. R., Weber, P. B. and Laetz, V. B. (1994)
`Linking small business management with entre-
preneurial growth', Journal of Small Business Man-
agement, 32(4), 48±60.
Miles, M. B. and Huberman, A. M. (1994) `Data man-
agement and analysis methods', in N. K. Denzin
and Y. S. Lincoln (eds) Handbook of Qualitative
Research, Sage, Thousand Oaks, California.
Moore, C. F. (1986) `Understanding entrepreneurial
behaviour', in J. A. Pearce II, and R. B. Robinson
(eds) Academy of Management Best Papers Proceed-
ings. 46th Annual Meeting of the Academy of Man-
agement, Chicago.
Na€ziger, D. W., Hornsby, J. S. and Kuratko, D. F.
Journal of Small Business and Enterprise Development

(1994) `A proposed research model of entrepre-
neurial motivation', Entrepreneurship Theory and
Practice, 18(3), 9±42.
Penrose, E. T. (1959) The Theory of the Growth of The
Firm, Oxford University Press, Oxford.
Perren L. (1996) The Development of Micro-enterprises,
unpublished PhD thesis, University of Brighton.
Porter, M. E. (1980) Competitive Strategy: Techniques for
Analyzing Industries and Competitors, Free Press,
New York.
Ram, M. (1997) `Professionals at work Ð transition in
a small service ®rm', paper presented at 20th
ISBA National Small Firms Policy and Research
Conference, Belfast.
Ray, G. H. and Hutchinson, P. J. (1983) The Financing
and Financial Control of Small Enterprise Develop-
ment, Gower, London.
Reason, P. (1994) `Three approaches to participative
inquiry', in N. K. Denzin and Y. S. Lincoln (eds)
Handbook of Qualitative Research, Sage, Thousand
Oaks, California.
Riley, J. (1990) Getting the Most From Your Data, Tech-
nical and Educational Services Ltd, Bristol.
Robertson, M. (1987) `The great mismatch', paper
presented to the 10th National Small Firms Con-
ference.
Robertson, M. (1994) `Strategic issues impacting on
small ®rms: their promise, their role, their pro-
blems and vulnerability, their future and the way
forward', paper presented to the 17th National
Small Firms' Policy and Research Conference.
Rothwell, R. and Zegveld, W. (1982) Innovation and
the Small and Medium-sized Firm, Frances Pinter,
London.
Scase, R. and Go€ee, R. (1980) The Real World of the
Small Business Owner, Croom Helm, London.
Schumpeter, J. (1934) The Theory of Economic Develop-
ment, Harvard University Press, reported in A. A.
Gibb and L. Davies (1992) Development of a
growth model, The Journal of Entrepreneurship,
1(1), 3±36.
Journal of Small Business and Enterprise Development
Perren
Sekaran, U. (1992) Research Methods for Business: A Skill
Building Approach, Wiley, Chichester.
Slatter, S. (1992) Gambling on Growth: How to Manage
the Small High-Tech Firm, Wiley, Chichester.
Small Business Research Trust (1984±1996) Small Busi-
ness Research Trust: Quarterly Survey of Small Firms
in Britain, Small Business Research Trust.
Stanworth, J. and Curran, J. (1976) `Growth and the
small ®rm Ð an alternative view', Journal of Man-
agement Studies, 13(2), 7 and 96±110.
Stanworth, J. and Curran, J. (1986) `Growth and the
small ®rm', in J. Curran, J. Stanworth and D.
Watkins (eds) The Survival of the Small Firm,
Volume 2, Gower, Aldershot.
Stanworth, J. and Gray, C. (eds) (1991) Bolton 20 years
On: The Small Firm in the 1990s, Paul Chapman
Publishing, London.
Steinho€, D. and Burgess, J. (1993) Small Business Man-
agement Fundamentals, McGraw Hill, New York.
Storey, D. J. (1993) `Should we abandon support to
start-up businesses?' in F. Chittenden, M. Robert-
son and D. Watkins (eds) Small Firms Recession
and Recovery, Paul Chapman Publishing, London.
Storey, D. J. (1994) Understanding the Small Firm Sector,
Routledge, London.
Timmons, J. A., Smollen, L. E. and Dingee, A. L. M.
(1985) New Venture Creation, Irwin, Homewood,
Illinois.
Williamson, O. E. (1967) `Hierarchical control and
optimum ®rm size', The Journal of Political Econ-
omy, 75(2), 123±138.
Yin, R. K. (1993) Applications of Case Study Research,
Sage, Newbury Park, California.
Zahra, S. A. (1993) `A conceptual model of entrepre-
neurship as ®rm behavior: a critique and exten-
sion', Entrepreneurship Theory and Practice, 17(4),
5±21.
Dr Lew Perren, Small Business Research Unit,
Brighton Business School, University of Brighton.
385