Investigating Sustainable Strategies For Turning Round ‘Stunted Growth’ Businesses

A distinctive group of small companies, and especially micro-firms, comprises those that have survived through many years, maybe many generations, providing their owners with acceptable returns and lifestyles, but have remained very small despite having significant growth potential – the ‘dwarf’ or ‘stunted’ small firm (in Italian nanismo aziendale). The ability of such firms to break out from this situation varies with external opportunities, but especially with regard to internal strategic resources and the attributes of the ownerentrepreneurs.
This paper builds from earlier work by presenting a fully developed insight model which is used to examine a wide range of scenarios representing different constraints and opportunities. The simulations confirm that simple changes in owner-manager attitudes could potentially enable a stunted firm to break into growth-mode, but also to gradually degenerate into structural instability or even crisis. A changing set of relevant external variables, such as those related to competitors’ strategies, pose further challenges. These results add significantly to the understanding of this particular aspect of growth dynamics in small firms. More directly, the model has also been developed into an easy-to-use Interactive Learning Environment (ILE), or ‘management flight simulator’ tool that could be used directly by small company owners to help them understand why their stunted nature means they might be missing opportunities for enhancing their revenues and net worth.
Simulations with the ILE, examining a potential crisis scenario, are shown to demonstrate its use.

Paper presentato: Agse Conference, Auckland (New Zealand), February 2006