Knowledge that Transforms

We model entrepreneurial learning as a calibrated algorithm of an iterated choice problem in which entrepreneurs learn by updating a subjective stock of knowledge accumulated on the basis of past experiences. Specifically, we argue that entrepreneurs repeat only those choices that appear most promising and discard the ones that resulted in failure. The contribution of the paper is twofold. First, we provide a structural model of entrepreneurial learning in which failure is as informative—though clearly not as desirable—as success. Second, to complement standard economic models in which agents are rational, we allow our entrepreneurs to have myopic foresight. Our entrepreneurs process information, make mistakes, update their decisional algorithms and, possibly, through this struggle, improve their performance.

The principal objective of this paper is to compare and contrast financial profiles for a longitudinal panel of 871 small and medium-sized enterprises (SMEs) In the Australian manufacturing sector that have embarked upon different development pathways and to examine possible connections between enterprise growth and the experience of common financial problems. Collectively, the findings represent a departure from much received knowledge in SME financial scholarship. The experience of growth seems not to have influenced the return on Investment, asset structure, financial structure, liquidity and solvency ratios of the SMEs studied; but the margin, operating expenses, turnover, and financing expense ratios do appear to be affected by growth. Overall, the financial profiles produced are quite unremarkable; there Is no evidence of problematic financial consequences of growth. The only differences in financial profiles found are those that are readily explained by differences in the scale or growth resource needs of the businesses examined.

Leadership succession continues to form the core of the family business literature. Numerous studies have suggested factors that influence family members' initial satisfaction with the succession process, but this body of work is highly fragmented and lacks a unifying framework. In this paper, we draw on stakeholder theory and other organizational, behavioral, and economic theories to develop a conceptual model that integrates the findings from the literature. The research and practical implications of this integrative, ready-to-test, model are discussed.