2.1 Researches on the growth of small- and medium-enterprises
2.1.1 Researches on the definition of small- and medium-enterprises’ growth
No definition of small- and medium-enterprises’ growth is found in foreign scholars’ researches at present. But domestic scholars have defined the growth of small- and medium-enterprises from different angles, such as Huixin Yang, Xiaojing Zhu, Xiaotao Yao, Tao Wan, Feng Ji, etc.
Huixin Yang and Xiaojing Zhu think that enterprise growth includes not only the expansion of enterprise scale but also the improvement of enterprise competence. Enterprise growth includes three aspects. One is the expansion of quantity, namely the pure quantity increase of business resources, including the value increment of assets, the increase of sales, and the rise of profits. The second is the reformation and innovation of quality. It refers to the changes of business resources’ nature, the reengineering of organizational structure, and the reform of dominant theme. The third is the long-lasting effect of enterprise. In other words, the enterprise can continuously benefit the increase of social and consumer welfare, driving the progress of technologies and contributing the growth of economy. The growth of an enterprise in a cluster can follow three strategies, namely the common growth (depend on internal resources), the emerge-and-purchase-based growth, and the trans-organizational growth (Yang, Zhu, 2006, p27-28). Xiaotao Yao and Tao Wan study the growth of small- and medium-enterprises from an angle of social net, thinking that the growth is based on social net-structured relationships and it can achieve development by obtaining sorts of sources from social net (Yao, Wan, 2003, p79-80). Feng Ji defines the growth of enterprise from three aspects, namely entrepreneur, enterprise, and strategy, thinking that a rapid growth of enterprises can be achieved as entrepreneur, enterprise, and strategy combine rightly and exert effect (Ji, 2004, p16-17).
2.1.2 Researches on the driving forces of small- and medium-enterprises’ growth
Many scholars inside and outside are engaged in researches on this field. They perform researches and discussions from many angles, such as network, investment, and competition.
medium-enterprises’ growth. Penrose thinks that the driving forces for enterprises’ increase in scales and quality is due to its capability of mining and using internal resources (Penrose, 1959). H.I.Ansoff proposes the influencing factors in small- and medium-enterprises’ growth from four aspects, namely the scope of products and market, the type of chosen strategy, the competitive advantage, and the coordinative effect of branches in enterprises (Wang, Li, Zhang, 1987, p1-29). Chandler also studies the growth of small- and medium-enterprises, thinking that the key for the growth and development of enterprises is whether the management coordination mechanism formed by management levels and corresponding organizational structure works or not (Chandler, 1994). Peter F. Drucker points that management and management structure are two important factors in the process of a small- or medium- enterprise growing into a large enterprise. And he also mentions that whether an enterprise can grasp an opportunity for further development is determined by its internal resources. The capability of realizing its own potential in development is also an important factor that affects the growth of an enterprise (Drucker, 1987, p794-795). Porter researches some small- and medium-enterprises in clusters, thinking that the driving force of their growth is competition, especially the competition in the fields of skillful labors, capitals, common infrastructures, and policy supports (Porter, 1990). Everett M.Rogers finds in his researches that the technological innovation is an important force in driving the enterprise growth. He also thinks that the employees who possess innovative ideas can drive the development of enterprises by technological researches (Zhang, 2006, p191-192). Barrow discusses the growth of small- and medium-enterprises from the design of organization, the business mode, the market strategy, the finance management, and the personnel management in his work “The Essence of Small Business” (Barrow, 1993). P.A.Julien thinks that the development of small enterprises is determined by their abilities of obtaining and controlling information, systematic innovation, and forming enterprise net, in his researches (Julien, 1998). Capello researches the factors that affect the growth of small- and medium-enterprises from a cluster angle, thinking that the collective learning is one of forces that drive the development of small- and medium-enterprises. In his opinion, the collective learning under the condition of mutual trust and cooperation guarantees the knowledge for enterprises’ growth (Capello, 1999, p353-365).
Secondly, Long Wang, Canhua Kang and other domestic scholars study the driving forces of small- and medium-enterprises’ growth. In Long Wang and Canhua Zhang’s researches on the growth of small- and medium-enterprises, they propose that the driving force is the innovation net. They think that the innovation net can effectively decrease the uncertainty of innovation and overcome the ability limits of individual enterprise in complex technology innovations, which can help member enterprises gain driving forces generated by the win-win games (Wang, Kang, 2005, p85-86). Jing Cheng thinks that venture investment can drive the development of high-tech enterprises. She advocates to construct a mechanism for venture investment and to develop a growth board capital market, realizing a benign cycle between venture investment and growth board market, driving the growth of small- and medium- enterprise (Cheng, 2004, p25-26). Ruilong Yang thinks that the driving forces for small- and medium- enterprises’ growth are enterprises’ resources’ values, scarcity, hard-to-be-imitated and hard-to-be- substituted, which can provide an enterprise with sustainable growing forces (Yang, 2005, p66-67).
2.1.3 Researches on barriers and restraints in the growth of small- and medium-enterprises
Scholars who are engaged in this field include Yimin Ma, Weijun Fan, Ziyin Ni, Yongliang Zhao, Rongchang Jia, Xianfang Gong, and Yanjun Ma. They discuss this issue from angles of business idea, credit, technology, financing, and property right.
Yimin Ma analyzes the barriers in the development of small- and medium-enterprises from five aspects, respectively the short-term business idea, the ethical credit crisis, the insufficiency of core competence, the unregulated organizational administration, and the imperfect exterior support system (Ma, 2006, p78-79). Weijun Fan thinks that there are six factors that restrain the growth of small- and medium- enterprises. One is stresses on technology too much. The second is the failure to deal with market changes in time. The third is the traditional idea on capital operation. The fourth is the construction of teams in an enterprise. The fifth is the dependence on policy too much. The sixth is the imperfect enterprise system (Fan, 2005, p20-27). Ziyin Ni and Yongliang Zhao discuss the barriers in the growth of small- and medium-enterprise from five angles. One is absence of clear strategies and program for future development. The second is that the enterprise follows an opportunity-oriented development mode that was used in the beginning and the enterprise may blindly enter a wrong industry that conflicts with its resources and capabilities. As a result, the enterprise can not mine the proposed values and effects from limited resources. The third is that the family members control the enterprise and the business decision-making right is centralized in the entrepreneur. The fourth is that the enterprise replaces the economic behavior regulations with ethics and morals. The fifth is that the shortage of clear organizational responsibilities, controlled management, competition mechanism, common values, and collective corporate culture (Ni, Zhao, 2005, p38-39). Rongchang Jia thinks that there are six factors that block the growth of enterprises, namely strategies, financing, property right, talents,
technologies, and management (Jia, 2004, p8-11). Xianfang Gong and Yanjun Ma think that the governance mode that combines the ownership and control right together in an enterprise has many disadvantages. The entrepreneur who has led a small- or medium-enterprise to a success does not necessarily have a son who is good at business. Therefore, the enterprise has to change its governance mode in order to survive. If an enterprise fails to make adjustment in governance structure and management mode, it will not gain further development and even face living crisis (Gong, Ma, 2003, p11). According to Tushan Jiang, an officer in Shaanxi Federation of Industry & Commerce, the government activities exert important effects on the development of small- and medium-enterprises and presently these effects tend to be negative. He also thinks that many severe problems restrict the growth and development of small- and medium-enterprises, such as the incomplete reformation in local governments, the redundancy of personnel, the lagged-behind policy guidance of government to small- and medium-enterprises, the poor execution of local policies, and the terrible credits (Gu, Fang, 2003, p75-76).
2.2 Researches on the cluster environment in which small- and medium-enterprises grow 2.2.1 Researches on the definition of small- and medium-enterprises’ cluster
Many foreign scholars are engaged in researching this field, such as Marshall, Weber, Krugman, Hoover, and Williamson. Some domestic scholars try to define the small- and medium-enterprises’ cluster, such as Baoxing Qiu, Aaihua Xiong, Jingduo Chang, and Jianfei Zan.
Marshall defines a corporate cluster as an industrial region from an “external economy” angle, naming a special region that collects the specialized industry as an “industrial region” (Marshall, 1964). Michael Porter defines the small- and medium-enterprises’ cluster from a competitive advantages angle as some small- and medium-enterprises and institutions in certain specific industry collecting together in one specific region and forming a stable and sustainable collection with competitive advantages (Porter, 2002, 1998). Weber defines the corporate cluster from an angle of local factors as a high-centralized stage as enterprises combine together to realize the local industrialization (Weber, 1997). Krugman thinks that the cluster is a special economic entity formed in the interaction of transportation costs and production factors’ transmission under the precondition of an increase of scale pays in amounts of enterprises (Krugman, 2000). Hoover, taking the economy of scale as a breakthrough, thinks that the small- and medium-enterprises’ cluster is an enterprise-collected scale economy in one specific industry and region (Hoover, 1990). Williamson, from an angle of the organization form of production, thinks that the corporate cluster is an organization combined by many mall- and medium-enterprises based on specialization and coordination. It is an inter-medium organization between pure market organizations and leveled institutions. It is more stable than market and more flexible than leveled institutions (Williamson, p57-63).
Besides, many domestic scholars try to define the small- and medium-enterprises’ cluster, such as Baoxing Qiu, Aaihua Xiong, Jingduo Chang, and Jianfei Zan. A representative Baoxing Qiu defines the small- and medium-enterprises’ cluster as follow. (1) It is composed of a group of small- and medium- enterprises that are independent but have certain special relationships. (2) The special relationships between these small- and medium-enterprises indicate specialization and coordination. The coordination is an interactive behavior between enterprises in a cluster. It will lead to the “external economy” proposed by Marshall. (3) The interactive behavior includes exchange and accommodation between enterprises. (4) The exchange is to obtain external resources effectively, sell products and services, and drive the accumulation of knowledge and technology. The accommodation is to reduce the conflicts among members and exclude uncertainty of environment in order to achieve a long-term stable relationship between enterprises. (5) There is a complementary and competitive relationship between enterprises in a cluster. (6) The long-term relationship between small- and medium-enterprises is sustained by credit and commitment but not contracts, which serves as a unique advantage of the cluster as confronting external competitors (Qiu, 1999). Aihua Xiong, Jingduo Chang, and Jianfei Zan have similar opinions on the definition of small- and medium-enterprises’ cluster. According to their opinions, many small- and medium-enterprises localize themselves in a relatively centralized geographical space and focus on certain specialized production, which helps to achieve a scaled production in one region. As a result, a close and flexible relationship with specialization and coordination in enterprises is formed. That is a small- and medium-enterprises’ cluster (Xiong, 2006, Chang, 2006, Zan, 2005).
2.2.2 Researches on the positive effects of the cluster on small- and medium-enterprises
Scholars inside and outside study the positive effects of the cluster on small- and medium-enterprises from aspects of division and coordination, external economy and scale economy, obtaining financing loan, driving innovation, saving costs, shaping brands of clusters, and knowledge overflow.
Some foreign scholars analyze the positive effects of the cluster on small- and medium-enterprises from the angles of division and coordination, external economy and scale economy, obtaining financing loan, and driving
innovations. Schmitz explains the effects clusters on the small- and medium- enterprises from an angle of division and coordination, thinking that division and coordination can improve the efficiency of an individual enterprise and the whole cluster at the same time (Schmitz, 1994, p322-336). Based on Marshall’s theories of external economy, Krugman concludes the positive effects of the cluster on enterprises as three types, namely the market-agglomerate effect, the middle investment effect, and the technology overflow effect. A. Saxenian argues the innovative root concept that in a specific cluster the mutual trust and communication between small- and medium-enterprises speed up the spread of new thoughts, ideas, information, and innovation, which drives the enterprise innovation (Saxenian, 1999). Besides, Freeman and other foreign scholars make relevant researches on the positive effects of the cluster on enterprises from an angle of clusters’ knowledge overflow. Freeman thinks that clusters’ knowledge overflow effect is the essential power that drives the development of clusters’ new net and enterprises (Freeman, 1991, p499-514). Imai K. thinks that it is easy for cluster members to generate the knowledge overflow effect due to their closeness in geography. Enterprises in a cluster share knowledge resources by formal or informal channels, what helps to improve their innovative capability (Imai, 1989). Jafe A.Trajtenberg thinks that the growth of an enterprise depends on the knowledge overflow effect that is generated from the informal information communication (Trajtenberg, 1993, p577-598).
At the same time, many domestic scholars try to study the positive effect of the cluster on small- and medium-enterprises from angles of driving innovation, costs saving, and shaping the cluster brand. Xiaochun Tu thinks that a cluster can benefit enterprises’ innovation in technology and management, pointing out that the driving forces generated by a cluster for enterprises include the following aspects. One is the net between enterprises. The second is the direction of government to innovation. The third is the close production-academy-research cooperation net between universities and research institutes. The fourth is that the intermediary institutions provide opportunities for the foundation and innovation of new enterprises. The fifth is the open learning mechanism (Tu, 2003, p29-32). According to Yongsheng Shang, the open collective learning mechanism is an important factor that drives innovations in enterprises of clusters. By means of a collective learning mechanism and the knowledge overflow effect, enterprises can obtain the knowledge that is hard to get by an individual enterprise (Shang, 2006, p38-40). Yiqing Wu thinks that under the same technological condition, the cost saving effect of the cluster on enterprises is caused by the aggregated economy, the economy of scale, the division of labor, the scope economy, and the supply of labor. It is the corporate aggregation and specialization that help to realize the economy of scale and improve the production efficiency of the cluster and enterprises, decreasing the transaction cost (Wu, 2004, p6-11). Jingfen Zhu thinks that the vertical suppliers in the cluster contribute to the decrease of transaction costs and risks (Zhu, 2003, p57-63). Wei Qiao thinks that a general cluster brand can benefit the small- and medium-enterprises in constructing market net, achieving coordination effects, and creating market advantages. In advertising, a general cluster brand can motivate enterprises, changing the fact that an individual enterprise refuses to invest more in advertising due to the large costs. Integrating the strengths of the small- and medium- enterprises to perform advertising can benefit them at the same time (Qiao, 2003, p75-76). Xizhen Ren emphasizes the important significance of building up a cluster brand. By means of building up a cluster brand, enterprises can save costs for enterprises in advertising on one hand. And on the other hand, it can benefit all enterprises and reduce the economic externality (Ren, 2006, p78-80). Xuemei Liu thinks that the cluster brand is abstract and refinement of all enterprises’ essence and it can bring about sustainable positive effects on enterprises (Liu, 2006 p51-53).
Besides, other domestic scholars, such as Baojun Yang, Jun Xiong, Junshu Lv, and Jing Kang research the positive effects of the cluster from different aspects. From the complementary mechanism, Baojun Yang thinks that the enterprises in a cluster form a close industrial relationship by specialization, achieving a mutual development (Yang, 2003, p18-21). Jun Xiong thinks that a cluster can help enterprises save costs in transportation, market information collection, and technological knowledge innovation (Xiong, 2000). Junshu Lv thinks that the cluster provides enterprises with unified market, product standards, common marks, and specialized technologies, driving the development of the cluster and enterprises (Lv, 2005, p74-75). Jing Kang thinks that the cluster exerts positive inspiring effects on small- and medium-enterprises from two angles, namely competitive coordination and external scale economy (Kang, 2004, p29-30).
2.2.3 Researches on the negative effects of the cluster on small- and medium-enterprises
Some scholars study the negative effects of the cluster on small- and medium-enterprises from many aspects, including the low labor division and coordination, disordering competition, poor acquirement of information, industrial structure in a cluster, difficulties in financing, government policies and system.
Mcclenahen thinks that the poor organization of enterprises’ cluster contributes the absence of a supportive and dependent specialized coordinative industrial net, which heavily restrain the development of small- and medium-enterprises in a cluster (Mcclenahen, 2002). An American economist Akerlof points out that the Lemon
market caused by information asymmetry in a cluster will restrict the development of individual enterprises and the whole cluster, and even lead to the decline of enterprises and the cluster. Xigang Xie argues that the barriers in information exchange in small- and medium-enterprises’ cluster limit the enterprise innovation and technology upgrade (Xie, 2006, p51-55). According to Jici Wang’s researches and investigations, the low technological products of enterprises and the production overlap in the cluster lead to the vicious competition, which brings about severe negative effects on enterprises and the improvement of cluster’s competence (Wang, 2002). Weiyi Wang thinks that the difficult financing and dysfunctional government service are key elements in blocking the development of small- and medium-enterprises in the cluster (Wang, 2003, p5-7). Bin Wang and Cheng Chen find that the cluster affects small- and medium-enterprises chiefly from the system aspect. They think that there is a pay-increment and self-enhancement mechanism in the path dependence of small- and medium-enterprises turning into a cluster system (Wang, Chen, 2005, p94). Bedsides, Xiaojun Xia, Qun Li, and Xiufen Gong also study the negative effects of a cluster on small- and medium-enterprises. Xiaojun Xia analyzes this issue in general and thinks that the poor organization in a cluster, the disordering competition in one industry, the old technologies in production, and the unilateral products, the dated equipments, and the cluster’s environment pollution threat the sustainable development