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The prevalence of multiple owners and directors in the SME sector: implications for our understanding of start-up and growth

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  • PETER ROSA

Abstract

The contribution of portfolio entrepreneurs to the business birth rate has not been systematically researched. To explore this a triangulation approach is adopted involving three data sets: an analysis of a one year's new company incorporations in Scotland; a re-analysis of a survey of 600 male- and female-owned businesses in three industry sectors; and an analysis of a practitioner selected data set of successful Scottish entrepreneurs (‘local heroes’). The paper reports that multiple ownership and cross-linkages between firms are extensive (up to 40% of limited companies may be involved) and occur in reduced frequencies in sole traders and partnerships. There is also a strong gender effect with men much more likely to diversify their business portfolios than women. Failure rates were also low in associated companies, implying that growing clusters of companies rather than single ones may be more efficient. The highest rates of inter-company links were found in the sample of high growth companies. The study confirms the prevalence and importance of inter-firm links to the process of new firm creation, but more research is required to explore multiple directorships as a proxy for business ownership or portfolio entrepreneurship. There are policy implications of shifting the unit of analysis from the firm to the entrepreneur. On the one hand perhaps ‘no policy’ is best, if the business community is adequately recreating and growing by itself through these ownership, control and transference mechanisms. On the other hand, there may be a need for better segmentation, to identify true novice entrants who are not linked to the business community. Further, picking winners and losers may not be possible at the level of the firm, but may be more feasible at the level of entrepreneurs.

Suggested Citation

  • Peter Rosa, 1999. "The prevalence of multiple owners and directors in the SME sector: implications for our understanding of start-up and growth," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 11(1), pages 21-37, January.
    • Handle: RePEc:taf:entreg:v:11:y:1999:i:1:p:21-37
    DOI: 10.1080/089856299283272
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    Cited by:

    1. Mario Daniele Amore & Mircea Epure & Orsola Garofalo, 2023. "Organizational identity and performance: An inquiry into nonconforming company names," Economics Working Papers 1870, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Hezun Li & Siri Terjesen & Timurs Umans, 2020. "Corporate governance in entrepreneurial firms: a systematic review and research agenda," Small Business Economics, Springer, vol. 54(1), pages 43-74, January.
    3. Enrico Guzzini & Donato Iacobucci, 2014. "Ownership as R&D incentive in business groups," Small Business Economics, Springer, vol. 43(1), pages 119-135, June.
    4. Leona Achtenhagen & Lucia Naldi & Leif Melin, 2010. "“Business Growth†—Do Practitioners and Scholars Really Talk about the Same Thing?," Entrepreneurship Theory and Practice, , vol. 34(2), pages 289-316, March.
    5. A. Amaral & Rui Baptista & Francisco Lima, 2011. "Serial entrepreneurship: impact of human capital on time to re-entry," Small Business Economics, Springer, vol. 37(1), pages 1-21, July.
    6. Balsmeier, Benjamin & Delanote, Julie, 2015. "Employment growth heterogeneity under varying intellectual property rights regimes in European transition economies: Young vs. mature innovators," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 1069-1084.
    7. Domingo Soriano & Gary Castrogiovanni, 2012. "The impact of education, experience and inner circle advisors on SME performance: insights from a study of public development centers," Small Business Economics, Springer, vol. 38(3), pages 333-349, April.
    8. Caroline Debray, 2012. "Managing a hypogroupe: evolution of the modes of management and controls [Diriger un hypogroupe : évolution du management, et des modes de contrôle]," Post-Print hal-02438115, HAL.
    9. Johan Wiklund & Dean A. Shepherd, 2008. "Portfolio Entrepreneurship: Habitual and Novice Founders, New Entry, and Mode of Organizing," Entrepreneurship Theory and Practice, , vol. 32(4), pages 701-725, July.
    10. Colin Mason & Ross Brown, 2013. "Creating good public policy to support high-growth firms," Small Business Economics, Springer, vol. 40(2), pages 211-225, February.
    11. Soriano, Domingo Ribeiro, 2010. "Management factors affecting the performance of technology firms," Journal of Business Research, Elsevier, vol. 63(5), pages 463-470, May.
    12. Gary Akehurst & José Comeche & Miguel-Angel Galindo, 2009. "Job satisfaction and commitment in the entrepreneurial SME," Small Business Economics, Springer, vol. 32(3), pages 277-289, March.
    13. Simon Parker, 2014. "Who become serial and portfolio entrepreneurs?," Small Business Economics, Springer, vol. 43(4), pages 887-898, December.
    14. Cainelli, Giulio & Iacobucci, Donato, 2006. "The Role of Agglomeration and Technology in Shaping Firm Strategy and Organization," Knowledge, Technology, Human Capital Working Papers 12091, Fondazione Eni Enrico Mattei (FEEM).
    15. Peter Rosa, 1998. "Entrepreneurial Processes of Business Cluster Formation and Growth by ‘Habitual’ Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 22(4), pages 43-61, July.
    16. P Rosa & M Scott, 1999. "Entrepreneurial Diversification, Business-Cluster Formation, and Growth," Environment and Planning C, , vol. 17(5), pages 527-547, October.
    17. Charoenrat, Teerawat & Harvie, Charles, 2014. "The efficiency of SMEs in Thai manufacturing: A stochastic frontier analysis," Economic Modelling, Elsevier, vol. 43(C), pages 372-393.
    18. Christian Lechner & Christophe Leyronas, 2009. "Small–Business Group Formation as an Entrepreneurial Development Model," Entrepreneurship Theory and Practice, , vol. 33(3), pages 645-667, May.
    19. Giulio Cainelli & Donato Iacobucci, 2006. "The Role of Agglomeration and Technology in Shaping Firm's Strategy and Organization," ERSA conference papers ersa06p286, European Regional Science Association.
    20. Christian Lechner & Florian Kirschenhofer & Michael Dowling, 2016. "The influence of social capital on opportunity emergence and exploitation: a comparison of portfolio and serial entrepreneurs," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-23, December.
    21. Julita E. Wasilczuk, 2017. "Research on Entrepreneurship – Forms of Entrepreneurship (Badanie przedsiebiorczosci a jej rodzaje)," Research Reports, University of Warsaw, Faculty of Management, vol. 1(23), pages 14-26.

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