Dosimetr´ıa cl´ınica de referencia: Protocolo TG-51

Reluctance to seek help Excessive optimism Unaware of environment

Inability to adapt to change and to innovate

Nepotism and negligoice in developing subordinates Exaggerated opinion of competency in business Limited formal education

Personal taste/opinion used as the standards to follow Dedsion-making based on intuition, emotion, etc. Oriented toward past events ignoring the future Little reading in business related literature Advice from least qualified sources accepted.

As observed by Keisner (1984),

"...evidence suggest that while there are uncontrollable factors that cause some of the business turnover and failures, in the vast majority of cases the contributing factors to failure are such that they could be corrected by the owner-manager recognising the failures, and correcting them through using available resources, including training and education." p. 19.

Peterson, Kozmetsky and Ridgway ( 1983) likewise observed in their research that the most frequently cited suggestion for reducing small business failures was increased management education. But it is has also been recognised that managerial assistance should not be a 'shotgun' approach, given broadly to everyone in the same measure (Larson and Clute, 1979). Dickson (1983), on the other hand, emphasised that educational opportunities

available should not only be appropriate to the needs perceived by the small business owner-managers but must be provided in ways most attractive to them. Thus the importance of identifying educational needs of small business owner-managers and the training delivery methods that would be most appropriate or acceptable to them. The fact that personalities as well as management characteristics vary from industry to industry (Bums, 1989) [quoting Sadler, P.J. and Barry, B.A. (1970)], means that this exercise should be undertaken for respective industrial sectors.

SM ALL BUSINESS DEVELOPM ENT PRO G RA M M ES

In view of the significance of the small business sector in the economy, it is generally held that it will be necessary to reduce the problems the sector encounter in the business environment in order to enhance its efficiency and effectiveness. Hence strengthen the sector's contributions to the social and economic development process. B ut unfortunately, although the importance of the sector has been generally recognised for some time, it was not until the 1960s that governments felt it necessary to establish units focusing on small enterprise development (Neck, 1987). For example. Great Britain where modem industry may be said to have originated has been one of the last countries to make any explicit arrangements in favour of small-scale enterprises (Harper, 1984). However, it has been generally recognised that govemment intervention through appropriate policies is desirable to promote a conducive environment for the small business sector to thrive. That is, special govemment assistance is required for the sector in order to bring to a more manageable level, the problems encountered by the sector, hence maximise thereby the potential benefits derivable from the sector.

Every aspect of the small enterprise scene seems to require appropriate policies (Neck, 1977b). Though there already exists a wide range of facilities and services in place in the business environment that might serve the needs of small businesses, there is still the need for special provision for them as they are often disadvantaged by size to compete effectively with the larger firms for facilities available in the free market. In such areas where the free market fails to satisfy their peculiar needs, govemment often encourage other parties to fill the gap, or where appropriate, to provide the service itself (Mohammed,

1988). Thus many new public funded institutions have been established in the past two decades to focus attention on small businesses, especially when no institutional framework is available or that existing is not strong enough to effectively channel govemment assistance to support small businesses.

Though Haskins and Gibb (1987) and Owualah (1987) have attempted to classify types of assistance available to small businesses into software and hardware activities, they also realised the inadequacy of such classification. Haskins and Gibb (1987) noted that the categorisation leaves aside some important issues such as govemment regulations, while Owualah (1987) said that types of assistance are more diffuse than clear cut in some cases. Haskins and Gibb (1987) also noted other possible forms of categorisation. But in view of inadequacy of any form of framework, none will be adopted, hence assistance types will be individually discussed. Areas where government assistance have been concentrated are discussed below.

Finance

Various arrangements have been made to increase small businesses' access to finance and loans at more favourable interest rates, amortisation and moratorium periods. Such arrangements include government sponsored loan schemes disbursed through govemment development and specialised financial institutions, commercial banks and sectoral development institutions. Short- to long- term loans are available through these sources for venture capital, equity investment, fixed assets and working capital. Special loans/grants are also available in some developed countries, for example. United States of America, for research and development activities (Thompson and Leyden, 1983). To overcome small businesses' inability to provide adequate collateral security requirements for loans in commercial banks, govemment loans guarantee schemes are also operated. By this wise, in case of default, the participating lending institution is guaranteed repayment of the entire outstanding loan or a sizeable proportion of it.

Govemment financial assistance schemes are often subsidised, hence lower interest rates than market rates are charged. Corresponding easy access to the facilities generally generate excessive demand, inducing corruption. Government loans also reduce

competition and commitment in the business environment and encourage small businesses to be unnecessarily more capital intensive, thereby promoting uneconomical use of resources. It has therefore been generally observed that subsidised loans is a disservice to the economy and to the small business in particular. As a result of high risk of default and fraud, control measures required to minimise abuses often tend to complicate or prolong the loan application process. Furthermore, measures introduced to minimise delinquent accounts tend to be stringent and subsequently deprive small business owners of independence in the control and management of their businesses. Thus the whole exercise tend to be self-defeating.

M arketing Assistance

Small businesses are usually limited to their traditional market links due to lack of access to distribution channels as well as lack of skill and initiative in marketing. Thus marketing assistance to small enterprises include special advisory services on marketing. They are provided with marketing information and are helped to undertake market studies and research to formulate sound marketing strategies. In many countries small businesses are also encouraged in various ways to participate in export marketing. Other means to improve marketing opportunities to small businesses include preferential government purchasing schemes and reserving certain fields for them (Neck, 1977). Government contracts are often used as a powerful tool to overcome lack of demand for small businesses products and services. Government policies in many countries mandate large contractors to subcontract part of their work, especially on government jobs, to small businesses. The extensive use of subcontracting, particularly in Japan, is often acclaimed to have effected also lower costs. But the danger inherent in the system is that the smaller firm is a potential victim of exploitation by the larger firm. This was frequently the case in Japan prior to legislation to curb some unethical practices, though some elements of exploitation still persist unreported (Cross, 1983). However, ability of small businesses to attract patronage largely depends on the quality of their products and services, as well as their exercise of dynamic marketing practices and efficient strategies. The import of

technical and managerial expertise in this respect can not be overemphasised, but this in essence is lacking in most small businesses.

Access to Raw Materials and Equipment

The primary reasons why small businesses experience shortages in raw materials or lack appropriate equipment are probably lack of funds for procurement and scarcity of these items, even when funds are available. The former factor tends to be more predominant in developed countries while both factors are critical in developing countries. Lack of finance is, however, being alleviated through financial assistance in the form of special loans for equipment, hire purchase or equipment leasing schemes, working capital loans for regular, advance or bulk purchase of raw materials as well as credit guarantees to suppliers.

Small businesses in developing countries contend in particular with scarcity of imported raw materials and equipment. A dearth of foreign exchange in these countries usually results in governments adopting the rationing of import licences, a policy which normally discriminates against small businesses in favour of the larger firms. The latter have substantial political and economic power advantage as well as the administrative resources to undertake the protracted bureaucratic procedures required to obtain an import licence (Page and Steel, 1984, p.27, 28). Thus government assistance to improve small businesses' access to raw materials and equipment also involve redressing their difficulties in respect of obtaining imported inputs. Direct allocation of foreign exchange quotas is also being made to them individually or rationed from allocations to their industrial associations or specialised development institutions. Assistance and/or advisory services to deal with administrative problems related to importation may also be available through government departments or government- sponsored advisory agencies.

Improving the Policy Environment

The environment created by public laws, regulations and policies often has a negative effect on small-scale enterprises, even, when the government has an official policy of promoting them (Page and Steel, 1984). The ambivalence in many instances results from

inappropriate standards which make compliance quite beyond the scope of small businesses or practically impossible for them to survive. "As a result the rules are widely ignored; they remain in force and are an obvious pretext for petty corruption since any policeman or similar official can be fairly sure of finding some regulation which a given firm is breaking" (Harper, 1984, p. 37). Thus misconceived policies and regulations need to be drastically modified, or totally abolished in order not to force them to remain clandestine or to make them perpetual victims of harassment by overzealous or corrupt officials. But it is also recognised that exemption of small businesses from regulations will also discourage their expansion to the size covered by the laws (Page and Steel, 1984). Hence Marsden (1987) has recommended minimum regulation and maximum openness. In addition, it is generally held that small businesses will be best encouraged by removal of those regulations and policies which discriminate against them but favour competing larger enterprises. Positive discrimination in favour of small businesses is therefore frequently advocated and this has even been legislated in some countries such as Japan and United States of America (Neck, 1987). Existence of such legislation has facilitated provision of subsidies, fiscal incentives and other governmental assistance to small businesses, thereby encouraging their competition with larger enterprises as well as their optimal compliance with statutory requirements rather than exempting them from statutory duties.

Co-operatives and Industrial Associations

The underlying principle of co-operatives is that a number of independent businesses jointly establish a separate enterprise to provide themselves with those services which they cannot individually afford. If co-operatives are properly organised and managed they are capable of facilitating their members' access to finance, input supplies, especially, scarce raw materials, spares or expensive machinery or auxiliary equipment. Co-operatives are inherently suitable for promoting the survival and growth of their individual members. They function as the primary suppliers of input resources to their members an d subsequently purchase their end-products for more efficient marketing. Thus by providing easy access to input supplies and steady market, they enhance the competitive advantage of their individual members as well as their corporate strength in the economy.

Industrial or trade associations on the other hand, are usually non-profit making organisations with the primary objective of protecting and promoting generally the sectoral interests of their respective groups in the society. Hence strengthen their corporate and individual members' position to compete and survive in the economy. They also represent their members interests in negotiations with government, other bodies or sectoral groups. Industrial associations may also provide physical and economic support to their members, helping in particular to obtain finance, raw materials, machinery and access to market They are also instmmental in providing training, technical information and advice as well as other specialised services to their members.

Co-operatives and industrial associations play a major role in the delivery of government- sponsored assistance programmes to small businesses. Their activities may therefore be statutorily controlled and membership may in some instances be mandatory for all small businesses or intending beneficiaries of government assistance. For example, membership in Chambers of Commerce is compulsory for small businesses in West Germany and Austria (Haskins and Gibb, 1987), while laws for the promotion of co­ operatives and industrial associations exist in Japan (Anthony, 1983). However, Harper (1984) noted that as a result of the history of failure and the painful experiences of some who have participated in co-operatives, the word 'co-operative' has become an anathema in some developing countries. Why co-operatives fail include lack of commitment, knowledge and minimum number of members, managerial incompetence, neglect of marketing function, generous external support, fraud, abuses, and exploitation by one or few dominant members. Industrial or trade associations would also likely fail as a result of similar factors. Notwithstanding, Harper noted a few successful co-operatives.

Training and Advisory Services

Training, advisory and extension services often constitute major components of government- sponsored technical and managerial assistance to small businesses. Training is imperative and central to small business development in view of critical shortages of skilled and qualified employees in the sector, and more importantly, the managerial incompetence of most small business owner-managers. Other factors that have made training an

attractive, politically neutral intervention option have been highlighted by Harper (1984, p. 67):

training courses and training institutions can be established without any necessity to make painful changes in policy or other programmes,

- the training itself can fairly easily be managed since it is generally centralised and under the control of its originator,

- nobody ever objects to any form of education, it is perceived to be self-evidently valuable,

unlike lending schemes, training courses cannot easily be objectively evaluated so that sponsors are spared the embarrassment of explicit failure,

- it is labour intensive and can provide more employment opportunities.

Although technical training in vocational skills is also generally undertaken for especially employees of small businesses and would-be small business owners, the main focus of most training programmes is managerial and entrepreneurial skills development for both intending and existing small business owners. However, the fact that training is not a panacea to all small business problems is normally recognised. But its perceived relative importance and capacity to facilitate managerial competence of owner-managers in order to promote efficiency and effectiveness in the running of small businesses is always emphasised. Hence in some instances participation in a prescribed training programme may be used as a prerequisite to access to further development assistance or other aid packages. However, Harper (1989) has identified the danger of such approach. Notwithstanding, emphasis on training has led to a plethora of training courses for the small business sector. Increased availability of training, however, has not necessarily been matched by quality and relevance to small business needs (Rosa, 1989). Thus the need for further studies to ensure effectiveness in the transfer of knowledge and skills in the education and training of small business owners is always recognised. And the fact that "...managerial practices relate closely to the nature of the enterprise" (Neck, 1987, p. 29) imply that training needs and methods cannot be generalised. This underscores the need and relevance of identifying managerial training features (contents and delivery methods) perceived by small business owners in different industrial sectors as most appropriate to their needs.

Advisory and extension services are always required to complement training. They are essentially external continuing education and development programmes, through counselling and consulting, to meet inherent lack of in-house managerial and technical expertise in small businesses. They serve as valuable sources of timely and relevant information and expert advice to small business owners to facilitate efficient and effective decision making in various aspects of business management: legal, accounting, taxation, finance, personnel, production and marketing matters.

Extension services, however, are distinguished from other advisory services in that they are on-site, counselling and follow-up activities. Thus the small-business owner will not have to leave his business premises before receiving counselling and consultation with specialist advisers. Thus travelling time and expenses and other related costs would be saved. Extension services also enable advisers or consultants to have first-hand information or assessment of actual practices and problems, to provide immediate remedies by training on-the-job in the actual business environment as well as to follow-up on implementation. However, extension services may be more expensive and time consuming in view of additional travelling time and costs expended by advisers.

Advisory and extension services are usually provided by government-supported centres or through government- funded personnel within other public departments or institutions. On the other hand, private consulting firms or expert practitioners in industrial associations and training institutions may be contracted by government agencies to provide these services as part of government- sponsored small business development programmes. However, the quality of services offered depends largely on the experience and quEilifications of the consultants and advisers available. To gain the confidence and co­ operation of his client, the adviser must also be a good salesman, communicator and possess enviable experience or exposure in small business management. It has been also rightly observed that no country has a sufficient supply of practitioners with the right set of qualifications, and even if there were, it would be wrong to employ so many of them as small business advisers (Harper, 1984).

Apart from shortages of highly qualified and experienced personnel, advisory and extension services are both time consuming and expensive, in view of the fact that counselling and consultation are on a one-to-one basis. This factor also makes these

services inequitable as a limited number of people can benefit at a time from the resources available as well as being cost-ineffective. Furthermore, utility of advice or information provided is not normally obligatory, final decision rests with the small business owner- manager. Hence to ensure effectiveness, it has been recommended that advisory services, including extension services, should be charged for on a full-cost basis so that the providing agencies have ready evidence, from the market, of their utility (Marsden, 1987,