In light of the very different approaches adopted towards small business in different countries, there is little agreement about definitions. Like entrepreneurship, small business is ‘easier to describe than to define’ (Burns and Dewhurst, 1989, p.3). Because of geographical disparities between countries, it is natural that each country will define the term in a way that suits its needs. For example, the nature of small business in the USA – the world’s largest economy - is different from the situation in Fiji. Therefore, definition of small businesses located in the US will not be appropriate for the Fiji environment. As Wingham (1998) says:
The disparity over the years between the definition of small business adopted globally has resulted in nations seeking to define their own perception of the phenomenon. Thus, definitions that are advanced by participating nations will vary. However, the description in each case in many ways defines the prevailing culture and attitudes of business monitors and governments toward these entities at one particular point in time. (Wingham, 1998, pp. 96-97)
Whatever criteria are applied when defining a small business, a common objective is to eliminate larger firms from the preferential treatment intended for smaller ones (Harper, 1985a). As shown in Table 3.4, there are four definitions of a small business in Australia.
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Table 3.4: Definition of small business in Australia.
Wiltshire Report (1971) Business in which one or two persons are required to
make all of the critical management decisions
(finance, accounting, personnel, purchasing,
processing or servicing, marketing and selling) without the aid of internal specialists, and with specific knowledge in only one or two functional
areas.
Australian Bureau of A business having fewer than 20 persons is referred to
Statistics (1988) as ‘small’ irrespective of the industry in which it
operates.
Beddall Report (1990) A small business may be defined as one which
employs up to 20 persons in the non-manufacturing sectors; and up to 100 if a manufacturer. It should also be independently owned and managed, be closely controlled by its owner/managers, who also contribute most, if not all, of the operating capital, and have the principal decision-making functions resting with the entrepreneurs.
Ang (1991) A small business possesses most of the following
characteristics: it has no publicly traded securities; the owners have undiversified personal portfolios; limited liability is absent or ineffective; first generation
owners are entrepreneurial and prone to risk taking;
the management team is not complete; business experiences the high cost of market and institutional imperfections; relationships with stakeholders are less formal; and it has a high degree of flexibility in designing compensation schemes.
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Whilst these definitions exhibit congruence in terms of general principles, ‘clarity and cohesion in the adoption of definition to facilitate global comparison is lacking’ (Wingham, 1998, p. 97). In the UK, the Bolton Committee of 1971 defined small firms as those which have a small share of the market and are managed by owners/part-owners in a personalised, non-formal structure in which the owner has the total freedom to make decisions (Singh, 1992). In the USA, a small business in the manufacturing sector is defined as having less than 100 employees. In other sectors of the economy the major criterion is output-based (Storey, 1982). In the European Union, a small business employs between ten and 99 staff, a medium-sized enterprise between 100 and 499 staff, and small and medium enterprises (SMEs) are defined as businesses with less than 500 employees (Buhalis and Cooper, 1998). In other countries, the prevailing definitions incorporate factors other than the number of employees and may include reference to sales, energy consumption or number of customers. Small businesses may also be distinguished on the basis of level of investment and capital. For example, in Singapore, a small business must have at least 30% local equity with not more than S$8million in net fixed assets (Choo, 1992, p. 3). Table 3.5 provides a typology applied to small business enterprises based in South Africa under the headings ‘survivalist’, ‘micro’, ‘small’ and ‘medium’.
Small businesses in Fiji may also be grouped under ‘micro’ and ‘small’. Many ‘livelihood operations’ (Taylor 1987) operated generally by Fijians and Indo-Fijians fall under the survivalist category. Within the South Pacific, it is difficult to quantify small business activities because many either lack a formal structure or else operate within the family paradigm. The difficulties of defining small business in Fiji are exacerbated by the fact that many businesses do not keep up-to-date records and rely on the employment of friends and relatives on an irregular or part-time basis. Despite this constraint, Hailey (1988) noted that a small business in Fiji could be defined by using criteria such as the number of employees, annual sales turnover, level of profit, the size of assets, the decision-making structure, and the degree to which control is separated from ownership.
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Table 3.5: A typology of small business enterprise
Types Description
Survivalist Run by largely unemployed people. They often fail to produce
even a minimum income; virtually no training takes place and opportunities for growth into a viable business are extremely limited. Poverty and survival strategies appear to characterize these enterprises which are often run by women.
Micro Very small businesses, often employing family members and
one or two employees and run by the owner. Many are
‘informal’ in the sense that they lack the appropriate licences, value-added tax registration, permits and accounting
procedures. The capital base is frequently limited and technical and business skills generally rudimentary.
Small Constitute the bulk of the established businesses and generally
employ between 5 and 50 people. These enterprises are usually owner-managed; operate from business premises; are registered for tax and meet other formal registration requirements.
Medium Compose a category of enterprise falling between ‘big’ and
‘small’. They still tend to be owner/manager-controlled but would generally employ over 200 people and hold capital assets (excluding property) of R5 [South African currency] million at the upper limit.
Source: Allie and Human (1998, p. 33)
In Hailey’s (1988) survey of businesses in Fiji, he found that while the Indo-Fijian and European businesses were concentrated predominantly in urban and peri-urban centres, the typical Fijian business was rural-based, and employed between two and five staff. Fijian entrepreneurs specialised in businesses such as retail stores, transport
and service-related businesses because of the relative simplicity of operation and
lower level of management skills and capital. For these reasons, the service sector has become saturated with Fijian entrepreneurs, leading to low profit margins. Hailey (1988) also found that Fijian males dominated small business, and that a large number of them started their business after gaining experience from employment elsewhere,
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suggestive that entrepreneurship can be learnt or at least that relevant experience gained elsewhere can provide useful boost. In contrast, many Indo-Fijian entrepreneurs were nurtured in a family business environment. Hailey (1988) noted that three-quarters of Fijian business enterprises were legally registered as sole traders. Generally, Fijian traders preferred independence and avoided partnership
arrangements with their extended family or mataqali (tribe). An independent
approach also minimised communal responsibilities. This strategy, however, did not preclude them from employing family or relatives as low cost labour.
Hailey (1988) observed that small businesses operated by Fijians faced a number of problems. Firstly, they had a limited market and this often created cash flow problems. Secondly, lack of economies of scale meant that traders had to sell a few consumer products at a high margin – approximately 20% above those charged by Indo-Fijian shopkeepers. Higher prices directed non-captive clients elsewhere, and banks would not loan money to these traders on account of their low turnover. These problems compounded the perennial challenge of the Fijian obligation to make generous contributions - cash and kind - for village projects and activities, and to show generosity through extending trade credits to customers (often Fijians). In practice the latter may not pay at all or at least fail to pay back in a timely fashion thus signalling the death knell for many businesses. Added to the fact that ‘Fiji’s business arena is a maze of protocol, inter and intra connections, false modesty, etiquette, decorum, niceties, and competition’ (Qalo, 1997, p. 93) these problems help to explain why Fijians have low participation in entrepreneurial activities.
The traditional Fijian system of kerekere has profoundly hindered their economic
development. Kerekere is the Fijian custom of sharing things with fellow Fijians and
is a long established practice. One twentieth century chief justified the retention of
kerekere by stating: ‘Why should one man be richer than another?’ (quoted in Deane,
1921, p. 123). Such ‘socialist’ sentiments may not be prevalent in modern Fijian society, but it may be inferred that deep in their minds, chiefs would not like to see
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ordinary Fijians becoming richer than them. A wealthier society may lead to greater demands for liberalisation and individualism within the Fijian social system.
Small businesses in Fiji operate at two different ethnic levels (Fijian and non-Fijian) and under different conditions. Consequently, it is very difficult to formulate a definition of small business that includes different elements involved in the operation of small business. Despite this constraint, Hailey (1985) defined a small business in Fiji as a small enterprise having an annual turnover of less than F$50,000, fewer than five paid employees and managed personally by its owner. Qalo (1997) found difficulty in defining a small business without reference to government regulations, and reinforced Taylor’s (1987) advice that researchers should distinguish between registered businesses and ‘livelihood operations’ such as market vendors, gardeners, and fishermen.
For the purposes of the present research, a small business in Fiji’s tourism sector has been defined as either ‘a new venture offering a new tourist service and product, or an existing business offering a new or an existing tourist service and product; has less than 100 employees and is managed by an individual or a family’. This definition is fairly close to the definition adopted in the European Union, and offers the researcher a useful degree of flexibility.
3.9 THE MOTIVATIONS AND PERSONALITY TRAITS OF