Guest editorial: Managerial practices supporting the growth of small business

Citation

Valeri, M. (2023), "Guest editorial: Managerial practices supporting the growth of small business", European Business Review, Vol. 35 No. 5, pp. 565-572. https://doi.org/10.1108/EBR-09-2023-326

Introduction

The evolution of the economic and, more importantly, technical framework has created new and relevant issues for organizations, first and foremost assuring a flexible reaction to change, which could be viewed as an opportunity rather than an impediment. This new organizational characteristic demonstrates even more the inadequacies of the system founded on scientific and rational foundations, which proved to be overly rigid, particularly due to the hierarchical structure that differentiated it.

The organization thus becomes a complex system, in relation to which a scientific and rational approach proves to be unsuitable, as this system is naturally subjected to external influences of instability and uncertainty. The more the surrounding environment proves to be unstable, the more the organization will have to adopt a flexible, decentralized structure with a high level of propensity for change and innovation.

In this changed context, it is well realized how the interest in the new variables of organizational intervention has pursued the parallel need to equip the organization with subjects and roles specifically competent in ensuring the system cohesion and coherence. Conceiving the company as an open system, subject to external change, creates the need to ensure a high level of unity and integration, so that the company acts as a single system against uncertainties. The newfound interest in the human aspect, at the heart of the Human Relations school, demonstrates how organization unity cannot be assured without interventions that are truly motivating and encouraging stimuli for the subjects that comprise it.

The relevance and importance of the management role begin to emerge from these premises and from this changed theoretical and cultural context, creating a harmonious environment in which members of the organization feel motivated to contribute the most to the achievement of common objectives. The company’s managerial unit assumes critical importance because it is responsible for guaranteeing coordination and fruitful interaction among the numerous units that comprise the system. Management is thus responsible for the coordination and administration of the company’s resources, including human, financial and material resources. This collaboration is required to attain common and predetermined goals.

What must be typical of management is, first and foremost, a high level of authority and related responsibility, which allows for swift intervention on the members of the company. Management must also be able to ensure order and discipline among the members, encouraging, at the same time, the creation of a sort of team spirit that involves the individual and makes him feel part of something bigger.

In order that the organization could operate effectively and efficiently, it is necessary for the management to structure analytically the different tasks deriving from the labor division and at the same time to ensure unity of command, direction and control.

As far as the latter aspect, it becomes essential for management to proceed with a planning activity properly structured and conceived. Planning means dividing an activity into several formalized procedures that will lead to a predetermined result, by structuring the process as an integrated system of decisions. If the planning activity is carried out effectively, this guarantees an organization the ability to better control its activities.

As a result, management is responsible for the planning, coordination and organization of operations, which are the structural and predefined foundation capable of ensuring the company’s successful and efficient operation. These management competence sectors, when considered in their importance, demonstrate how the effectiveness of a correct planning activity can only be achieved through a management unit that is equipped with human and personal skills suitable for motivating and inspiring the members of the organization, who will thus be urged to create innovation, encourage change and, in general, provide their maximum contribution to the company’s functioning.

Presentation of the special issue

The special issue contains 14 full papers written by 40 authors affiliated with 24 different universities and located in 13 different countries. The Special Issue explores the evolution of managerial practices supporting the growth of small business and how these are used and associated with trust in leadership to develop the business performances.

In the first paper titled “Trends in knowledge management research in small businesses,” Shekhar from University of Delhi (India) and Marco Valeri from Niccolò Cusano University (Italy) explore the knowledge management research in small businesses and suggest future actions to strengthen managerial practices. Knowledge management practices foster the growth of small businesses. They allow innovation to grow within the institutions, enhance customer satisfaction and reduce employee absenteeism and attrition. The study adopts a bibliometric protocol to retrieve the 686 articles published in the Web of Science (WoS) database. The WoS database is selected to ensure only quality and peer-reviewed publications are analyzed in the study. It then identifies the top contributions, and existing thematic areas, and suggests future research and policy actions for boosting economic growth through small business. The study uses VOSviewer, Science of Science (Sci2) and Gephi to conduct the bibliometric and network analysis. The results from keyword co-occurrence and co-citation analysis helps in identifying thematic areas. The findings highlight that there exist five major themes in knowledge management research for small businesses. The dynamic co-citation analysis helps in tracing the evolution of these clusters and suggests future themes, research directions and methodological advances in the theme. PageRank analysis helps in identifying the top articles published on high-impact journals in the theme. The study helps researchers by summarizing existing literature and identifying key thematic areas. It also assists policymakers by recommending actions to improve knowledge management practices in small businesses to gain a competitive advantage.

The second paper titled “Employee perceptions of corporate social responsibility activities: the case of family firms” is written by Andreas Kallmuenzer from Excelia Business School, La Rochelle (France), Bernhard Bichler and Tanja Petry from University of Innsbruck (Austria) and Marco Valeri from Niccolò Cusano University (Italy). This study aims to address human components of business operations, as it aims to understand how employees perceive CSR activities and determine their role for employees’ identification and commitment in family firms. This study uses a mixed-method design combining samples of employees of family firms in a quantitative (N = 168) and qualitative phase (N = 18). In summary, the findings show that employee-directed CSR is most effective to influence employees’ identification and commitment. Detailed mediation analyses further support the path from community-oriented CSR toward identification-commitment and performance. Findings from employee interviews show that identification is particularly pronounced in CSR perceptions and that mechanisms of identification occur across three interfaces: the firm, the firm in the region and the firm in a globalized world impacting commitment and performance. Family firms engage in various CSR activities. The authors show that existing efforts can be empirically supported but that there is room for improving the strategic selection and engagement of activities. In a nutshell, the findings emphasize the importance of human components for businesses. In this context, understanding how CSR activities build identification and affect organizational commitment has important implications for family firms boosting CSR activities. In particular, the contribution emphasizes family firms’ need to stay engaged in community-directed CSR while increasing awareness for environment-related activities and diversifying employee-related activities to enable identification.

The third paper titled “Mediating effect of emotional intelligence on the relationship between employee job satisfaction and firm performance of small business” is written by Santus Kumar Deb from University of Dhaka (Bangladesh), Shohel Md. Nafi from Noakhali Science and Technology University (Bangladesh), Nandita Mallik from Notre Dame University Bangladesh (Bangladesh) and Marco Valeri from Niccolò Cusano University (Italy). The aim of this study is to measure the mediating effect of emotional intelligence on job satisfaction and firm performance of small business and to identify the critical success constructs and significant path of emotional intelligence in relation to job satisfaction and firm performance. This study provides an analysis of the relevant literature that has been published on the renowned journal of small business. This study’s theoretical framework and constructs were developed based on prior research of emotional intelligence in small business. Along with, data were gathered from 355 respondents, with a valid response rate of 73.95%. This study used the SEM-PLS to measure the validity of the theoretical framework and test the hypothesis. This study revealed that infrastructure, leadership and management, salary, working hours, working environment and emotional intelligence are very crucial for job satisfaction and firm performance. Emotional intelligence mediated the relationship between five job satisfaction factors (working hours, organizational infrastructure, leadership and management, working environment, salary and other benefits) and firm performance. Thus, this study can contribute to enhancing firm performance and developing a new dimension of small business. The result of this study will assist the researchers and service providers in understanding the mediating effect of emotional intelligence on job satisfaction and firm performance of small businesses. Thereby, policy formulation in the era of training of employees, leadership and technology-based services orientation will assist to in enhancing opportunities for small businesses and upholding sustainable business. To the best of the authors’ knowledge, this study is the first to analyze the link of the mediating effect of emotional intelligence on job satisfaction and firm performance of small business.

The fourth paper titled “The determinants of profitability in non-financial UK SME” is written by Iman S. Youssef from Newgiza University (Egypt), Charbel Salloum from EM Normandie Business School (France) and Maher Al Sayah from USEK Business School (Lebanon). The paper aims to examine determinants of profitability of nonfinancial firms listed small and medium-sized enterprises (SMEs) in the UK from 2012 till 2020. Despite the important role that SMEs play in developed economies like the UK, academic research into SMEs profitability determinants in developed countries is not extensive. The methodologies used include dynamic panel data estimation techniques. Relationship of nine independent variables with profitability was examined. Two models are created using return on assets (ROA) and return on equity (ROE) as dependent variables. Size, age, efficiency, working capital, liquidity, leverage and volatility of the firm represent firm-specific independent variables. Two macroeconomic variables, namely, gross domestic product and inflation, are also used as independent variables. Data obtained from Thomson Reuters Data Stream for 93 listed SMEs companies in the UK from 2012 to 2020. Fixed effects, random effects and generalized method of moments were used in data analysis. All variables showed significant influence on profitability, except liquidity reflecting insignificant impact on profitability in two regression models conducted for 93 firms under study. Efficiency, liquidity and leverage are the only three independent variables with similar impact on both ROA and ROE. Identifying determinants of profitability will help stakeholders and corporate executive make sound decisions to ensure sustainability and stability at the firm level. This is particularly important given the key role played by SMEs in economic development and growth. The findings of this study would help direct financial management practices to ensure a favorable sustainable organizational performance.

The fifth paper titled “The role of corporate venture capitalists in supporting the growth of their backed start-ups” is written by Ramzi Benkraiem from Audencia Business School (France), Duarte Goncalves from Catolica Lisbon Research Unit in Business and Economics (Portugal) and Fatima Shuwaikh from Léonard de Vinci Pôle Universitaire Research Center (France). The paper aims to study the impact of the value added by corporate venture capitalists (CVCs) on their funded companies by comparing its IPO valuation with its independent venture capitalists (IVCs) peers. This study uses a sample of 3,719 VC-backed ventures, between the years 1998 and 2020. The empirical analysis focuses on the propensity score matching approach, pairing ventures based on their probability of being funded by CVCs, and consequently, interprets the results derived from the valuation multiple ratios between the “nearest neighbors.” This study finds that companies funded by CVCs can achieve higher valuations at their IPO compared to IVC-backed companies. Moreover, CVC-backed companies outperformance is mainly driven by startups which hold a technological fit with their CVC investor, with higher technological overlaps being translated into more significant valuations. This study presents systematic evidence to the subject concerning ventures’ type of investors and its effect on the startups’ IPO valuations. This paper contributes to the enrichment of the industry’s literacy while also easing entrepreneurs’ decisions when choosing a funding partner. CVCs offer a variety of services and support that fits the specific needs of their funded companies. To the best of the authors’ knowledge, this study is among the first to examine the role of CVCs as a tool to help venture growth.

The sixth paper titled “Prioritizing factors for effective strategy implementation in small and medium-size organizations” is written by Jose F. Lopez-Torres, Jacqueline Y. Sanchez-Garcia, Juan E. Nunez-Rios and Carlos Lopez-Hernandez from Universidad Panamericana (Mexico). This study aims to present a model for prioritizing factors to promote effective strategy implementation in small and medium-sized companies. The authors adopted a systemic approach to articulate two instruments: social network analysis to identify the components that could affect strategy implementation, designing a conceptual model with this information, and analytical hierarchy process to validate the resulting construct. The factors for effectively implementing strategies relate to the need for reinforcement, commitment, organizational culture, managerial skills, clear communication and involvement to reduce inconsistencies between the expected and current organizational state without neglecting coordination and management mechanisms. This work is limited to organizational matters. This study was conducted in collaboration with medium-sized Mexican companies with the participation of 94 managers with 10 years of experience. Although the results are mathematically rigorous, increasing the number of participants could enhance the approach to the problem. This study could encourage academics and practitioners to target resources more accurately and improve organizational relationships to bridge the gap between strategic planning and practical implementation. This study contrasts with previous research in proposing a systemic perspective that integrates participants’ experiences, developing a construct to determine and prioritize the factors to be addressed in strategy implementation. Therefore, this work invites the adoption of the proposed method as a complementary path to enrich academic and professional exchange.

In the seventh paper titled “How blockchain technology generates a trust-based competitive advantage in the wine industry: a resource based view perspective” Raffaele Silvestri, Nino Adamashvili, Mariantonietta Fiore from University of Foggia (Italy) and Antonino Galati from University of Palermo (Italy) explore whether the blockchain technology (BCT), as a unique and distinctive resource, affects the development of unique capabilities and the integration and reconfiguration of internal physical and human resources necessary to gain a trusted competitive advantage. A case study approach has been used to identify the internal resources and capabilities that affect the decision to implement BCT and to determine whether this new technology can become a strategic internal resource in the wine industry. Results show the role of two strategic resources: human resources, such as IT specialists and software developers for BCT applications, and skills of companies’ management to grant sensitive and confidential data to IT specialists and the ability to read the analytics from the BCT application, becoming a distinctive enabling asset. The main limitation of this study is related to the analysis of a single case, which, on the one hand, does not allow generalization of the empirical findings but, on the other hand, is the most appropriate method for the explorative nature of this research. Our findings have useful practical implications for wineries and agri-food companies in overall because they can support managers and entrepreneurs in effectively implementing these innovative digital technologies in their value creation process. The study of this underexplored topic gives interesting insights into the resources needed for the successful adoption of this emerging technology, which can support wineries in improving the value-creating process. Compared to the previous studies, this research analyses the adoption process under the resource-based theory lens.

The eighth paper titled “Humorous leadership, upward voice and resistance to change in the hotel context: from affective events theory perspective” is written by Mennaalla Hassan Salem and Kareem M. Salem from Suez Canal University (Egypt), Rimsha Khalid and Mohsin Raza from Prince of Songkla University Phuket Campus (Thailand) and Marco Valeri from Niccolò Cusano University (Italy). The paper aims to explore the effect of affiliative-based humorous leadership on hotel employee outcomes (i.e. resistance to change and upward voice), underpinned by affective events theory. Furthermore, this paper investigates psychological capital as a mediation effect and emotional intelligence as a moderation effect. Using a structured questionnaire, 554 supervisors of 20 four- and five-star hotels in Sharm El-Sheikh responded based on a time-lagged approach. A Smart-partial least squares (Smart-PLS) v. 3.3.9 was used to analyze the data set. The findings revealed that affiliative-based humorous leadership has a positive effect on psychological capital, and psychological capital has a positive association with employee upward voice. Psychological capital partially mediated the linkage of humorous leadership with employees’ upward voices and resistance to change. According to the results, emotional intelligence strengthened the linkage of psychological capital with employee resistance to change and upward voice. The findings contribute to the body of knowledge on humor and the development of new ideas in the hospitality literature. This paper adds to the hospitality literature on humorous leadership in developing countries, specifically in Egypt. This paper also provides practitioners with new perspectives as they develop strategies and use humor-related wise leadership styles in the workplace.

The ninth paper titled “Women entrepreneurship in the internationalization of SMEs: a bibliometric analysis for future research directions” is written by Grisna Anggadwita from Telkom University (Indonesia) and Nurul Indarti from Universitas Gadjah Mada (Indonesia). The paper aims to systematically review papers on women’s entrepreneurship in the internationalization of SMEs by examining the research profile (i.e. publication trends, publishers, domain and quality of journals, methodologies and units of analysis and regional classifications), internationalization entry modes and the theories underpinning, key variables using AMO framework (i.e. antecedents, mediators, moderators and outcomes) and suggestions for potential future studies. This study used bibliometric analysis by selecting 62 relevant papers from 3,016 papers collected from the WoS, Scopus, Google Scholar and EBSCO databases. Content analysis was conducted to identify key research issues and gaps, which were then mapped on an AMO framework to address potential future research. This study found that the number of papers published during the period 1994–September 2022 fluctuated, indicating an increasing trend of women’s entrepreneurship research in the internationalization of SMEs being published in various reputable journals by well-known publishers. This study also found several alternatives of internationalization entry modes, although export is still the most widely used alternative. Various theories that underlie this research include internationalization theory, resource-based theory, feminist theory and international entrepreneurship.

In the tenth paper titled “How cultural leadership ideals shape entrepreneurship?” Miriam R. Aziz from USEK Business School (Lebanon) and Charbell Salloum from EM Normandie Business School (France) examine the influence of culturally endorsed implicit leadership theories (CLTs), specifically the cultural assumptions regarding ideal leadership, on individual entrepreneurship within the context of Lebanese culture. This paper investigates the relationship between culture and entrepreneurship by incorporating cultural values such as uncertainty avoidance and in-group collectivism, cultural practices and two types of CLTs: self-protective and charismatic. By exploring these factors, this study aims to gain a deeper understanding of the role of culture in shaping entrepreneurial behavior. As fundamental quantitative research, this study used a snowball sampling method to collect primary data from 118 Lebanese entrepreneurs, avoiding selection biases. Three models were used, relevant to nascent entrepreneurship, new entrepreneurship and old entrepreneurship, and the data was analyzed using logistic regression analysis and likelihood ratio tests. The findings indicate that there is a correlation between CLTs, cultural values and practices and individual entrepreneurship. However, this study did not find evidence of a causal relationship between cultural values and individual entrepreneurship through the mediating role of self-protective and charismatic CLTs. The research findings shed light on the beneficial synergy between cultural leadership ideals and individual entrepreneurship in the Lebanese context, providing a closer and more productive approach to studying entrepreneurship and leadership. From a managerial standpoint, these results have important implications for promoting entrepreneurship among various stakeholders, including educators, policymakers and support organizations. This study differs from previous research by examining a country that demonstrates high levels of entrepreneurial awareness and involvement despite its unstable political and economic conditions.

The eleventh paper titled “Innovation and organizational learning practices in tourism and hospitality sector: a gender-based perspective” is written by Rimsha Khalid, Mohsin Raza and Pornpisanu Promsivapallop from Prince of Songkla University Phuket Campus (Thailand), Abu Bakar Abdul Hamid from University Putra Malaysia (Malaysia) and Marco Valeri from Niccolò Cusano University (Italy). This study aims to investigate the consequences of organizational learning on firm innovation directly and indirectly with cultural and technological perspectives. The study carries out a quantitative approach, and data is collected from 398 women entrepreneurs from Thailand’s tourism and hospitality sectors. The statistical software Smart-PLS was used to analyze the data. The findings revealed that organizational learning (the learning orientation and learning process) significantly influence firm innovation and organizational culture. Organizational culture also significantly mediates learning orientation, learning process and firm innovation, while learning leadership was found to be insignificant in relationship with organizational culture and firm innovation. However, technological knowledge has a significant moderating influence between organizational culture and firm innovation. This study’s focus on the role of learning practices among women-owned small medium enterprises is a valuable contribution to the literature on innovation and entrepreneurship. These provided dimensions that can be helpful for women entrepreneurs to enhance firm innovation. The study shed light on the importance of diverse kinds of learning practices that change the patterns of innovation. This study also provides directions to practitioners to develop and implement business innovation strategies from women’s perspectives.

The twelfth paper titled “Influence of managerial practices, productivity, and change management process on organizational innovation capability of small and medium businesses” is written by Sheshadri Chatterjee from Indian Institute of Technology Kharagpur (India), Ranjan Chaudhuri from Indian Institute of Management Ranchi (India), Demetris Vrontis from University of Nicosia (Cyprus) and Antonino Galati from University of Palermo (Italy). The paper aims to examine the influence of managerial practices, productivity and change management process (CMP) on organizational innovation capability of small and medium businesses. This study also investigates the moderating role of technological turbulence (TT) on organization capability. A theoretical model was developed based on existing literature and theories. It was then validated using the partial least squares structural equation modeling technique to analyze 327 responses from small and medium businesses. Moderator analysis was conducted to investigate how TT moderates’ organizational innovation capability. This study found that management practices have a significant and positive influence on the innovation capability of small and medium business. The study also found that both CMP and modern technology adoption are crucial toward improving their innovation capability. Finally, the study also demonstrated that TT has a significant impact on organizational innovation capability. This research study has proposed an effective theoretical model of the relationship between managerial practices and organizational innovation capability. The proposed model is effective in demonstrating to managers and leaders of small and medium businesses the importance of managerial practices, CMP and the adoption of modern technologies on organization innovation capability, which can help to develop new products.

In the thirteenth paper titled “The reciprocal relationship between search engine optimization (SEO) success and brand equity (BE): an analysis of SMEs,” Jun-Cheng Chen from TBS Business School (France) and Sylvain Sénéchal from Université Paul Sabatier (France) investigate the interdependence of SEO success and BE, with a specific focus on SMEs. The study involved conducting interviews with SEO and digital marketing experts, followed by a comprehensive analysis of their responses to investigate the mutual association between BE and SEO. The analysis of the interview data was conducted using the grounded theory approach. The placement of a brand on top of search engine results is perceived as an indication of its credibility by searchers. Well-established brands tend to have superior SEO performance due to the impact of search algorithms and their powerful brand recognition. Lesser-known brands should improve their SEO performance to enhance their BE. This study makes a significant contribution to the understanding of the interdependence between SEO and BE. Specifically, this study provides SMEs with effective SEO strategies to enhance their BE in the future. This study presents unprecedented findings on the reciprocal relationship between SEO success and BE. The study also highlights the potential risk for SMEs of falling into a negative spiral due to poor SEO performance and offers practical business solutions to address this issue.

In the fourteenth paper titled “Hustle and influence: the dynamics of illicit small business and political connections,” Maher Al Sayah from USEK Business School (Lebanon), Charbel Salloum from EM Normandie Business School (France), Hajer Jarrar from Saint Joseph University (Lebanon), Laura Salloum and Jean-Francois Verdie from TBS Business School (France) explore the political dimension of social network theory and assess how these connections motivate entrepreneurial activity and enhance postentry stages. The authors take an individualistic approach to the topic of institutional deterioration by uncovering the potential opportunities it can create, as entrepreneurship often arises when a market opportunity is perceived. This study used a quantitative approach, using a self-selection sampling method to target private entities that own electric generators (also known as “illicit SMEs”) who are providing electricity services to the community despite the deterioration of the public energy sector in Lebanon. Data was collected through a survey administered electronically to 230 illicit SMEs, using a judgmental sampling method to ensure representation from all Lebanese governorates. The collected data was analyzed using ordinal least squares regression models. The findings indicate a significant relationship between institutional deterioration and the reinvestment rate of entrepreneurs, with the moderating effect of political connections suggesting that the impact of institutional deterioration is dependent on the strength of an entrepreneur’s political connections. The research findings demonstrate the significant influence of social ties and political connections on entrepreneurial activities, particularly in the context of SMEs that are providing services “illegally.”