Owner-Managers and the Practice of Strategic Management

Abstract

The distinction between management of operational effectiveness and strategic management has been a core belief of much management literature. Operational management is concerned with the ongoing activities of the business in relation to existing products or services and in respect of existing markets. Strategic management, in contrast, is concerned with the future success of the business and may entail major changes in the benefits to be offered customers, in organizational capacity, and in competitive posture. The application of strategic management to small firms can be seen as posing particular challenges. This can be inferred from, for example, the organizational studies of Mintzberg (1979) who has argued that the typical owner-managers of small businesses, especially entrepreneurial ones, manage in quite a different way from the methods indicated by the strategic planning literature. Such businesses are governed, it is said, using more personal and arbitrary forms of control. However useful these arguments have been to the progress of understanding small businesses in the past, the time is fast approaching (and perhaps has arrived already) when this kind of argument is becoming fruitless and sterile. In this article it is assumed we now need to understand whether and how managers in small businesses have taken up the language and practice of planning and strategic analysis, and we need to understand with what results these have been taken up. At the heart of the article is the analysis of the results of a survey of owner-managers and other managers. The article is concluded with a look at the implications of the findings.