Small firm growth in the combined ASBS database: the impact of family business, women-leadership and BME leadership

Kevin F. Mole, Warwick Business School, 
Stephen Roper, Warwick Business School
Margi Levy, Warwick Business School

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Objectives: The paper uses a combined dataset developed from the Annual Small Business Survey for 2003-2007, to identify the correlates of small firm growth. The size of this combined dataset (c. 40,000) observations provides particularly robust estimates. 

Prior work: We look at three aspects of firms and growth: family, gender and ethnicity. A number of authors have examined the impact of family business on growth, for example. It is argued that family businesses exhibit different strategic behaviours  (Chrisman, Steier and Chua, 2008; Karra, Tracey and Phillips, 2006;  Levie and Lerner, 2009;  Miller, Le Breton-Miller and Scholnick,  2008; Oswald, Muse and Rutherford,  2009). In addition, Thompson, Jones-Evans and Kwong (2009) show that the family influence on many women-owned businesses results in a greater likelihood that they be part-time and perform more poorly (see also  Marlow, 1997; Ahl, 2006).  Generally, Aldrich and Waldinger (1990) articulated three aspects that structure the opportunities of BME led businesses, all of which might be expected to depress their growth (see also Ram, Theodorakopoulos and Jones, 2008). 

Approach: We develop a model of firm growth that focuses on the bio-demographics of the owner-managers; in particular,  we  examine  the  influence of being a family business, being a women-led business and/or being a minority led business on the growth in one year. The combined ASBS dataset enables us to have great precision in our identification of the econometric models. 

Results: The initial  results show that  family  businesses  grow  more  slowly,  but that when we control for firmlevel characteristics being led by a women or BME member made little difference to growth. The most important correlate with growth, by far, was the aspiration  of  the  owner-managers. Consequently, we are able to identify mechanisms through which the bivariate negative correlation between gender,ethnicity and growth  (SEPs)  can  be  traced.  There were significant  external material  barriers to growth: access to finance, market competition and the state of the economy being three, yet other barriers did not seem to hold owner-managers back. 

Implications: The implications are that it is the behaviour of the firms and aspirations of their managers that matters rather than their  appearance.  However,  the behaviour of  the  firms  is  likely  to  be  constrained  by  their structured position. The agency of the owner-manager was as important as the material constraints of the firm’s circumstances but both were significant statistically. 

Value: Small firm growth is such a key topic because the small number of rapidly growing firms accounts for most of the economic impact of small firms. 

Key Words: Small firm growth, family business, women-led businesses, BME-led businesses

2010, London

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