In order to explore the early motivations for the owner-managers to consider employment, it is useful to consider in more detail the nature of the limitations of human capital that they experienced. The interviews did not identify a specific point at which each of the owner- managers decided that their human capital was insufficient for the requirements of the business. This is to be expected as the growth and development of the firm has already been identified as a gradual and evolving process (Chell 1985; 2008).
The realisation on the part of the owner-managers that they would require additional sources of support, beyond immediate friends and family, gradually emerged following a consideration of their personal vision for the future of their companies. Robert Cain, for example, had begun to extend his own area of activity beyond landscape gardening, to giving presentations at gardening conferences and writing a regular newspaper column. In order to succeed in these activities, he required the advice and support of people who acted as gatekeepers to these fields of activity. He stated, ‘I want to see how far I can push this (business)’ (RC 218) and said that he was ‘relying on other people who are in (his) trade’ (RC 214) to do so. His approach to testing out new fields of activity was exploratory and speculative.
Robert was one of four non-employers who made reference to the need for advice through the course of the early development of the business (NL210; NL350; RC52; RC112; RC 152; AS 107; SK 107). Each of the four referred to knowledge that they did not have but required if they were to continue to be successful. Neal Leavis identified a need for advice on administrative tasks; Robert Cain, as has been noted, identified the need for advice on how to succeed in new activities and also to complete some of the larger projects he had undertaken; Angela Smith expressed a desire to gather advice on business development if she was to expand her
142 operations; and Sandra Keith felt that she needed advice on how to draft contracts with her clients.
There was also some evidence among the responses from the non-employers that they were coming to recognise the importance of learning and the need to enhance their existing knowledge and abilities. Neal Leavis, Angela Smith and Michael Watson all referred specifically to the ‘learning curve’ that they had experienced during the development of their business (NL 8; NL114; AS179; MW 162). In more general terms, all of the non-employers made explicit reference to their own personal requirements for learning.
Such learning indicated a need for the development of skills and knowledge that went beyond simple requirements for advice. Aled DeVere for example, was studying for the Chartered Institute of Management Accountancy (CIMA) qualification at the time of the interview. He recognised that this was an unusual qualification for a self-employed artisan to pursue and that he did not fit the professional profile of the rest of the class. Aled had been responsible for his own business accounts and had been helping other nearby businesses with theirs. He felt therefore that he needed a professional accountancy qualification in order to enhance his knowledge:
I’ve been doing company accounts for about eight years, and… without knowing really what I was doing ha ha. But secondly, I’ve actually… never had a professional qualification as such, I mean I worked professionally, as a professional photographer, as a professional chef for about 10 years, but I actually don’t have any professional qualifications. So… it’s running my own business better.
AD115
Similarly, Neal Leavis expressed a need to learn basic bookkeeping in order to run his business, stating ‘I taught myself that… it’s not perfect but… you’ve got to do it’ (NL234). Nonetheless, he saw that he needed an accountant for the more complicated aspects of the work. Neal also identified gaps in his technical knowledge that needed to be filled if he was to complete existing contracted work and take on more. Michael Watson also recognised that his skills, which were limited to brokering mortgages, meant that he could not expand his sphere of activity into insurance and other areas that were required by customers seeking mortgages. He found this frustrating as he could see that there were markets to be exploited, but he was constrained by the limitations of his own human capital.
143 In spite of their expressed reluctance to employ, all of the non- employing owner-managers, apart from Robert Dougall, had begun to recognise that an employee of some kind might be useful to the business at an opaquely defined point in the future. This recognition may be supported by the argument that limitations of human capital create a need for enhanced learning opportunities. It has been noted in the literature review that such high level learning occurs through the owner-manager’s interaction with their environment (Chaston and Sadler- Smith, 2001). Such learning is enhanced by ‘generative’ learning (Clarke et al, 2006, p443), which requires an interaction with others, particularly those with a diversity of experiences. Robert Cain expressed this need most clearly but it was implicit in the responses of the other non-employers.
Such learning would, according to Clarke et al (2006), allow the owner-manager to disengage with every day operational activity and focus on the creation of strategy. This will be supported by ‘social interaction’ and ‘participation’ in the wider business community (Higgins, 2009, p85). Therefore, it can be argued that the limitations of the owner-managers’ human capital were beginning to weaken the reluctance to employ. It is not necessarily the case that such interaction has to be with employees. As will be seen in section 5.3, it can occur through involvement with networks of social capital. Therefore, the limitations of human capital can be said to weaken the reluctance to employ but is unlikely to outweigh the earlier expressed de- motivators to employment. It is therefore, in the conceptual framework, classed as an early weak motivator to employment.
The owner-managers who were already employers were also able to recall that supplementary advice, knowledge and skills were needed in the early stages of their ventures. These needs could also be linked to limitations in their human capital. For example, Mike Hart, who owned a youth oriented fashion store, recognised that he was finding it more difficult to predict the coming season’s youth fashions as he got older. Norman Daniels identified a need for expert support with larger contracts that required electrical and plumbing knowledge and this need became more pressing as he procured more work. John Stuart found that he also needed additional design expertise as his business expanded. Yet the initial answer for these business owners was not to immediately employ someone, despite the fact that they became employers later.
It can be seen therefore, that human capital in the form of the business owners’ own skills and knowledge were vital in enabling the owner-managers to develop a viable business but that this
144 requires supplementation later, as their ambitions for the business grow. All of the non- employers and three of the seven employers were able, at least initially, to find sources of expertise other than employees, and this signifies that limitations to human capital is a weak motivator to choosing employment. This is encapsulated by the fact that there was evidence that social capital provided an alternative to employment and this is discussed as a key outcome of this research, in section 5.3 and in the concluding chapter.