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Siwan Mitchelmore, Jennifer Rowley, (2010),"Entrepreneurial competencies: a literature review and development
agenda", International Journal of Entrepreneurial Behaviour & Research, Vol. 16 Iss 2 pp. 92-111 http://
dx.doi.org/10.1108/13552551011026995
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John E. Thompson, Roger Stuart, Philip R. Lindsay, (1997),"The competence of top team members: A framework
for successful performance", Team Performance Management: An International Journal, Vol. 3 Iss 2 pp. 57-75 http://
dx.doi.org/10.1108/13527599710190957
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This article reports our research into the management competences important for
owners or senior managers of small businesses in expanding their organizations.
Our focus was on Chinese owned and managed enterprises in Hong Kong.
Besides sharing the key substantive findings, and illustrating them with case
material, we also make the point that our research methodology was qualitative
and inductive in order to be sensitive to local needs and perspectives. The
practical advantage of such research is that it can avoid the dangers of imposing
inappropriate “solutions” borrowed from larger organizations in the West.
Our sponsor, the Management Development Centre of Hong Kong (MDCHK)
was concerned to contribute to the growth of the economy by providing small
business owners and managers with the competences required for growth. In
Hong Kong, small business makes up an unusually large portion of the economy.
Redding[1, p. 146], for example, cites figures from 1983 showing that 98.45 per
cent of manufacturing establishments employed less than 200 people and
contributed 63 per cent of value added. The continuing growth of the Hong Kong
economy may therefore substantially depend on the growth of the smaller
businesses within it. MDCHK wanted to discover the competences that were
important for the expansion of small enterprises. While we were not devotees of
the competence movement, we accepted the idea of competences as a guiding
paradigm, because MDCHK made a point of being sensitive to local factors and
the special needs of small businesses.
The research focused on what differentiated between growth and non-growth
in 21 Chinese-run organizations of less than about 500 staff. Two company cases
may serve to introduce our concerns regarding the competences salient for
company expansion. The first company has 250 employees, the second has
around 50; both are growing substantially.
Many thanks to Charles Foley at the Management Development Centre for the initial concept of
the research and for his sponsorship, on behalf of the MDC, of this project, whose views do not
necessarily coincide with this article. Our thanks also to all those who volunteered to be
interviewed. Special mention should be made here of the work of Michelle Chow and Madeline
Yan, Research Assistants at the Management Development Centre of Hong Kong. The project,
being largely qualitative in orientation, drew on a great deal of interpretative effort on their part.
Journal of Management Their contribution to the project, through scheduling and conducting interviews with the
Development, Vol. 13 No. 4, 1994,
pp. 4-15. © MCB University Press, majority of respondents and helping to assess the companies’ competence profiles, has been
0262-1711 substantial.
Case One: Elixir Expanding
This manufacturing company was bought by the existing owner in 1962. It had Small
30 employees and had been kept at that size with very little growth for many Businesses
years. In 1972, the company set up a factory in Taiwan, and its employee size had
increased to about 80 in 1980. Real expansion began in 1984, when sales increased
sharply and the company had to extend its production floors and lines to meet
demands. In 1988, products were sold into China, in addition to the Chinese 5
communities in Europe, US and Australia. Sales continued to boom in China, and
in 1992, the company launched its product to Western customers in the Western
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market demand was not great. In the mid 1980s, the demand increased. In 1990,
the owner redefined his career interests and decided to expand the tutorial
business. During that time, the company was registered as a holding company for
all the businesses.
The real growth of the company took place in 1991 when the owner decided to
expand strategically. Parents were willing to spend more to get a tutorial service
and competition in the tutorial business increased. At present, there are seven
tutorial centres of different names at different locations, with 15 full-time and 30
part-time staff.
A Learning Culture
The supervisors and tutors receive different types of training. Supervisors are
trained in management skills, specifically in communication and giving feedback.
The tutors are trained in teaching skills and customer relations skills, including
how to handle complaints. In a regular meeting, three-quarters of the time is used
to discuss and share work problems. The company’s approach to recruitment is to
look for people who have a strong sense of responsibility, patience with children
and a willingness to follow the company’s system. A good attitude in customer
relations is as important as good teaching skills.
Closeness to Customers
To ensure long-term customer relationships, it is important to convince parents of
the suitability of their choice of tutorial service, and to keep the students happy at
the tutorial centres. The supervisors of the tutorial centres have responsibilities to
talk to parents regularly, especially when there is a student drop-out. The
company takes drop-outs seriously and aims to uncover problems and raise
opportunities for improvement.
Since the tutorial business relies on word-of-mouth, having close
communication with the parents is important. The company regularly publishes
newsletters to inform the parents about the company’s moves, future direction,
key issues raised by the tutors and educational ideas and principles.
Anticipating Problems
New legislation which will lead to full-day instead of half-day study for primary
schools will give less time for tutorial business. In addition, there is the possibility
of compulsory registration of the tutorial centres. Under this new legislation,
tighter building and fire safety regulations would be applied. Some of the existing
venues which do not meet the requirements would have to move. This makes the
sourcing of new venues more difficult. In this case, the company seems to be fully
aware of the approaching problems.
A Matter of Competences
These two companies were among six which stood out as being successful in
terms of expansion, compared with 15 others which were not growing. Our
concern was to identify the competences at the most senior levels which made the Expanding
difference between growing companies such as the ones above and those which Small
were not growing. In adopting the competence paradigm, we were conscious of
making four explicit assumptions, recast and adapted from Albanese’s[2] initial
Businesses
three:
(1) In the modern business environment, the performance of managerial staff
is a major factor in the growth of organizations. 9
(2) Business expansion depends on individuals’ ability to engage in particular
kinds of managerial reasoning and action.
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(3) These required abilities can be broken down for analytical purposes into
component parts or “competences”, which can be clearly distinguished
and assessed.
(4) The relevance and effectiveness of management education and training
which focuses on these managerial competences will be enhanced.
We were careful to avoid a fifth assumption:
(5) A single set of universal competences can be drawn up to cover all
managerial jobs and contexts.
Albanese[2, p. 66] claims that no-one argues this fifth assumption, and it appears
to be avoided by the American Assembly of Collegiate Schools[3]. Nonetheless,
the fifth assumption is implicit in competence-based educational proposals in the
UK (e.g. [4-6] and hence has been the source of outrage among the management
education and development community[7-9].
Rather than borrowing competence frameworks from other authors, we
deliberately began with no formal definitions, lists or hypotheses concerning
competences. By the end of our research, we had arrived at the following very
broad working definition of managerial competence:
a body of knowledge, area of skill/ability, personal qualities/characteristics, set of awarenesses,
attitudes or outlooks, or motivations/drives, that may, in their various ways, positively and
constructively contribute to effective business/managerial thought or action.
Managing a small business is bound up with the entrepreneur’s life plans, values
and personal idiosyncrasies, and this is reflected in the breadth of our definition.
Methodology
All 21 companies volunteered for the research, via MDCHK. They all met the
following criteria:
● Run by “innovators”, having started their own company, not simply
having inherited it.
● Chinese origins, upbringing, etc.
● Business at least three-years old.
● Independent, not a subsidiary or tied subcontractor.
● Between 20 and 600 employees in size.
Journal of ● Respondents knowledgeable about or able to recollect the earlier stages of
Management the company.
Development ● Respondents, if senior managers but not the owners of the company, have
13,4 been with the company for at least three years, in order to be in a position
to substantiate their description of the company’s history with meaningful
historical illustrations.
10
This sample was broken down as follows:
(1) Company size:
● below 20 employees (5)
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● 20 – 50 employees (4)
● 50 – 100 employees (4)
● over 100 employees (8).
(2) Business nature:
● manufacturing (12)
● service (9, including 5 in retail or trading).
(3) Interviewees’ profile:
● owner (16)
● senior manager (5)
● male (19)
● females (3);
● primary education (3)
● secondary education (6)
● tertiary education (12)
● below age 30 (3)
● age 30 – 40 (12)
● age 40 – 50 (3)
● over 50 (3).
Data was collected, in Cantonese, through intensive, in-depth interviews, usually
one-to-one, of one hour to 90 minutes in duration, using structured open-ended
questions and critical incidents, covering points in the history of the company.
Data Analysis
Following a study of the interview transcripts (in English), a typology of
competences was developed. This typology was “grounded”, i.e. the competence
areas had come from the actual cases rather than being imposed on them through
an abstract theoretical model. Each company was then rated on each competence
area. Also, the sample companies were classified into five categories, once again
inductively developed, as follows:
(1) Under 30 by design. Two companies were small because this was an
explicit intention of the owners. In both cases it was envisaged that the
companies in question may, in the future, be incorporated into, rather than
grow into, a larger organization. Both were in services rather than
manufacturing.
(2) Small (under 50) but growing. Three companies which figured among the Expanding
smallest in our sample nonetheless demonstrated significant recent Small
growth and had specific plans for further significant expansion. All were Businesses
in services rather than manufacturing.
(3) Under 100, at or near peak size. Eight companies, four in services, four in
manufacturing, had no explicit intention to remain small, but had less than
100 staff and were either stagnant or losing staff, or had been growing 11
very slowly and showed no sign of getting significantly bigger.
(4) Over 100, but further growth uncertain. Five companies, all in
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manufacturing, had achieved growth to at least 100 in size (in one case up
to 500), but had reached a stage where consolidation was required and
where there was great uncertainty about future growth. In all cases,
expansion had been achieved through setting up operations in China.
(5) Robust growth. Three companies, all in manufacturing, had attained a size
of at least 250 and were still growing.
Comparisons were then made between the competence profiles of different groups
of companies, with the aim of identifying the competences which made a
difference between the growing companies and the rest.
Table II lists, in its fourth column, the competences that we found were
common in our sample regardless of expansion, and which may have
contributed in their various ways to survival rather than growth in Hong Kong.
Table II also compares our competence findings with Flamholtz’s[11] research
on the competences required to avoid “growing pains” in organizations.
These “fourth column” findings stand alongside, but are different from those
of Flamholtz. This contrast is in accordance with Flamholtz’s emphasis on
growth, rather than on competences salient for survival.
Table II also shows that there are strong parallels between our eight
competence areas for growth and Flamholtz’s six development areas. There are
some differences, however, which warrant comment.
First, in Hong Kong, strategic human resource development and promoting a
learning culture, the latter being an important aspect of corporate culture
management, were more important in small but growing companies than in
larger, robust growing companies. Flamholtz’s findings (regarding managing
corporate culture) were the other way round. Second, two Hong Kong
competences, global oriented outlook for business and analytical market
approach, remained important for all growing companies, suggesting the need
for constant, exhaustive appraisal and reappraisal of markets and
products/services, continuing well beyond the early stages of company growth.
Some comparison can also be made with Boyatsis’ [12] competence
framework developed for larger US companies. There are similarities in terms
of the entrepreneurial, intellectual and interpersonal demands identified.
There are two differences. First, our findings emphasize the importance, for
survival, of being in touch and doing business with the outside, whereas the
Boyatsis model focuses much more on internal management issues. Second,
our findings play down the importance of areas such as “socio-emotional
maturity”, self-confidence and oral communication.
There may be three main reasons for this. First, in the Chinese cultural
environment there may have been insufficient self-disclosure to assess such
areas. Second, the conformity implied by Boyatsis’ self-control may not be
salient in small business. Third, the need for Boyatsis’ stamina and adaptability
may have been taken for granted in Hong Kong’s unstable and stressful
working environment and, like water around the fish’s gaze, escaped explicit
recognition.
Expanding
Areas Small
a Global-oriented outlook for the business:
Businesses
– Worldwide market perspective
– Global vision and attitude
a
13
Analytical market approach:
– Formalization of research for market information
– Clarity and centralization of marketing strategies
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a
Table I.
Important areas for all growing companies Competences Generally
b Important areas for growing (still small) companies Salient for Growing
Companies
Journal of
Flamholtz’s stages of
Management business growth and Corresponding
Development associated development Hong Kong Additional Hong Kong
13,4 areas findings findings
Concluding Observations
At a time when Hong Kong businesses are expanding across the border into
China, such that they now employ more people in China than they do in Hong
Kong itself, it is perhaps ironic that the two illustrative companies in the first half
of this article have not pursued this direction. They nonetheless illustrate
competences that are required for growth by companies in Hong Kong.
At Elixir, although concern for quality and good working relationships with
staff are strong points, the top management competences that, according to our
analysis, have enabled the company to sustain its growth are a global oriented
outlook, analytic market approach and ability to conceptualize and formulate
company strategy.
At Midland Technology, while the company is close to customers and has the
ability to anticipate future business problems, our research suggests that its
growth is likely to be sustained because of other competences. These are the Expanding
management’s vivid vision, and its ability to promote a learning culture; Small
formulate overall strategy; adopt a strategic approach to human resource
development; manage finances systematically; seize relevant opportunities; and
Businesses
analyse the market.
Around half of the companies in our sample had at some time expanded into
China, but a majority of these companies were no longer growing, either because 15
of corresponding staff reductions in Hong Kong itself or because China staffing
levels had themselves reached a peak.
We believe that management development policies can be based on
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References
1. Redding, S.G., The Spirit of Chinese Capitalism, de Gruyter, Berlin, 1990.
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Development, Vol. 8 No. 2, 1989, pp. 66-76.
3. American Assembly of Collegiate Schools of Business, Outcome Measurement Project, Phase
III Report, May 1987.
4. Manpower Services Commission, Management Competencies: A Classification, MSC
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York, NY, 1982.
Further Reading
Snell, R.S. and Lau, A., “Competencies for Growing Small Business Organizations into Larger Ones:
A Study of Hong Kong Enterprises”, report for the Management Development Centre of Hong
Kong, 1993.
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