Although crucial for guiding empirical research, earlier theories of firm growth cannot explain small firm growth phenomenon without inclusion of wide range of determinants of firm growth. In this context, the most widely used framework is based on Storey (1994a) which incorporates includes firm, entrepreneur and environment. Based on Storey’s (1994a) framework and with authors’ extension to account for quality of institutions in TEs we discuss main determinants classified into four groups of factors: firm, human capital, strategy and growth aspiration, and the institutional environment.
Firm Related Factors
Based on GL and JLT discussed in previous section the validity of size-age growth theories has been tested empirically by number of studies,
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Human capital refers to the range of skills, knowledge and experience that facilitate growth. However, very little research has been conducted to measure the influence of human capital on entrepreneurial performance and motivation in TEs (Aidis and Praag, 2007). Haber and Reichel (2007) find that human capital of the entrepreneur especially in the form of managerial skills, were the greatest contributing factor to performance. Other authors point to the role of training as an alternative mechanism to enhancing employees’ and managers’ skills (Kirby, 1990; Cosh, et al., 2000). They find a positive relationship between training and employment growth, especially if the training is embodied in the wider range of management training and human relations practices in the firm (Cosh et al., 2000). Training is expected to be directly associated with growth, in particular if the firm is involved in innovation and competes on the basis of quality rather than simply price (Bryan, 2006). Skilled employees are more productive because they have higher problem-solving abilities, leading to greater efficiency within the firm. To sum up, firms which are strongly motivated to grow, train their workforce to facilitate the growth (Hallier and Butts, 1999). Based on above discussion we state following
Investments in training and development are linked with a range of organisational and individual benefits, such as being a major determinant of economic growth and organisational performance (Santos and Stuart 2003). According to Pigors and Myers (1977), training is very essential to organisations...
Mohammed, J., Bhatti, M., Jariko, G., & Zehri, A. (2013). Importance of Human Resource Investment for Organizations and Economy: A Critical Analysis. Journal Of Managerial Sciences, 7(1), 127-133.
In the first stage of growth, the founders of an organization develop skills and create new products. Learning is a huge component of this phase of organizational growth. Entrepreneurs learn what works and what doesn’t. People’s behaviors are governed by organizational culture rather than by hierarchy (Jones, 2010).
Overall, human resource plays an important role in the business growth of a company. This is mainly due to the strategic issues faced are mostly human related based. Hence, with strong human resource management, companies will be able to maximize the gains from their employees that will result in maximum productivity that further leads to higher and sustainable growth.
Training is an intervention used by many Human Resources Departments (HRD) to improve performance and develop knowledge, skills, and abilities on the job (Prieto & Phipps, 2011). However, training often fails to deliver the desired and expected outcome. Organizations must design and implement training programs in the most effective manner and know the factors that contribute to training effectiveness. Firms wishing to enhance Return on Investment (ROI) from learning and training must understand all the factors affecting transfer training and intervene to minimize factors inhibiting transfer (Saks & Burke, 2012).
Stature in humans increases until adulthood and tends to decrease with advancing age after about 45 years
human capital by Poisat (2006). He argues that a successful and highly productive business can
Training is an integral part of any organization’s development and is an ongoing process. Training programs will vary according to the position held within a company. “Training is a learning experience that seeks a relatively permanent change in individuals that will improve their ability to perform on the job” (DeCenzo & Robbins, 2007, p. 223, para. 1). Good organizations can be linked with the training and development of good employees. Any organization’s success in growth and innovation is dependent upon the talent, motivation, and leadership of its employees. Efforts made to recognize the value of each employee and the job he or she performs will contribute to a workplace environment that inspires, supports, and rewards employee development.
Training and development are important asset to an organization. A lack of training can have many negative consequences on an organization. Employees are the key component in the success of a business. When employees are unhappy with their job, they are less motivated to be productive. This loss of productivity leads to loss profits and over moral within the company. Employees need to know that their personal values are important to the organization. Their reactions are important when the corporation is in the process of making changes and decisions. In the textbook, Crafting and Executing Strategy, Thompson, Strickland and Gamble (2012) state “No company can hope to perform the activities required for successful strategy execution without attracting and retaining talented managers and employees with suitable skills and intellectual capital” (p.332).
The importance of properly training new employees cannot be understated. Having a well trained staff can spell success for any business. It was shown that both good training, and motivation had positive correlation to employee performance (Muhammad, 2012). The proper training of a company's population is imperative to increasing profitability and success of the business. This is why measures ...
For today’s challenging environments, human capitals are playing an importance role in the organization in order to have dominant position in competitive advantage. Human capital developments are indispensable because it is unique and valuable assets for successful today. Undeniable, practices of human capital development is a significant process to employing and selecting the qualified employees to the organization. So, have a systematic functions and proper practices in strategic way not only can retain and attract the employees, it also can let the organization more understand the demand of employees. Development activities, empowerment, training and energetic participation to decision making process are the examples of human resources management (HRM) practices, all of these can assist employees’ to creative innovative ideas and let them active in innovation process. Job identification, participation to decision making, job analysis, performance evaluation, training-development and career management are the positive and strong relationship for innovation and HRM practices on strategic planning process. In order to achieve organizational innovation, human capital development helps the organization to develop organizational skills and perform well in critical operations. (Taheri and Marjani, 2015). So, function or human capital can lead to innovation activities because the possibility of discovering and expertise in the organization. Therefore, objective of the organization can be achieve by innovation in the
Surijah (2016) wrote that to offer innovative products or services demanded by its customers. created through knowledge management and its learning culture. employees should be creative, professional, morally competence and affectively committed to their company. There are congruent relationships among corporate strategy, learning culture, human resource strategy and human capital which have a significant impact on the performance. In a high competitive business environment, a company should adopt creative corporate strategy and learning culture, as well as employs high competent and affectively committed employees. human capital plays an essential role in bringing the company into a success. Managers should practice transformational leadership
One of the causes that influences an organization’s human resource is its strategy. A strategy refers to a plan that in place to guide business operations and activities. The business strategy then provides schedules and activities for the employee, and as a result affects the human resource. The scope is to build on qualifications and capabilities, therefore influences human resource to higher capacity while the unsuitable distribution of tasks may dampen human resource to poor results. Managers in the organization play a significant role in influencing human resource. The type of leadership structure and leadership style implemented by the organization establishes the level of encouragement that a leader and their leadership have on human resource. An ineffective leadership will fail to mobilize human resource into performing required tasks due to poor control of employees. Effective leadership influences human resource management responses to the management’s needs towards competitiveness. Ammi, F. T., & Mushatt, S.
The success of a business is greatly dependent on its entrepreneur. An entrepreneur is someone who takes the financial risk of starting and managing a new business venture. In order to be a successful entrepreneur, one must be ready to take a risk and invest one’s own savings into a business. The job requires that the individual be ambitious and committed to working hard in order to achieve the set targets. A successful entrepreneur is able to multi-task and communicates effectively with people, possessing leadership qualities such as confidence and motivation. The individual must play the role of constant motivator and inspire employees to improve their work performance, whilst ensuring a comfortable environment for the employees to work in. According to Schumpeter (1982), an entrepreneur is more of a ‘heroic’ than an ‘economic’ figure; his motivation should not solely be monetary, rather stemming more from inspiration and ambition.
The Effect of the Development of Large Firms on Society Many firms choose to expand in size because of the cost and market share benefits the firms can reap. However, the development of large firms may not always be of benefit to consumers, and the advantages and disadvantages will be discussed in the following essay. Because larger firms such as Shell Petrol Station are able to experience internal economies of scale through lower unit costs, many of the cost savings are then passed on to the consumers through lower prices. Hence consumers are then able to enjoy greater consumer surplus, defined as the difference between the maximum price that a buyer is willing to pay for a good or service and the actual price paid. As seen from the diagram below, the marginal cost curve shifts to the right such that the new marginal cost = marginal revenue equilibrium lowers the price and increases the output level compared with the initial equilibrium.