Presentation at RSA by Kevin Mole to ERC Research Showcase June 2017.

1. Dr Kevin Mole
Warwick Business School
Enterprise Research Centre
Kevin.mole@wbs.ac.uk
Leadership and
Management: An activity
based perspective

2. What are we studying and why
• Studying leadership and management
practice, because management practice is
central to productivity.
• Usual explanations of this centre on external
factors, but these have had limited success
• Therefore we need to within firm factors and
since the decision-makers are the firm leaders
to understand firm leadership and its
relationship to management practices.

3. The long tail…
of under performing firms..
“It is this "long tail" of underperforming companies that has
been particularly concerning the government. It has been urging
firms to copy the best practice in their industry, and to spur them
on it has been publishing comparisons”.
(BBC news Business: The Economy Productivity: Mind the gap! Friday, October 23,
1998 Published at 07:43 GMT 08:43 UK)
Research by the World Management Survey (WMS) rated UK
management practice as “mediocre…the UK’s score is dragged
down by a long tail of under performing companies”.
UK Commission for Employment and Skills. Productivity - avoiding the low road Steven
Toft 13 March 2015

4. Distribution of firm growth rates
employees and turnover
Anyadike-Danes, M. and Bonner, K. and Hart, M. and Mason, Colin (2009) Measuring business growth: high
growth firms and their contribution to employment in the UK. available at http://strathprints.strath.ac.uk/16124

5. Consequences
• The consequences of the long tail and
firm distribution is there are a lot of firms
with very poor and in some cases non
existent management practices.
• Some have particularly pointed to family
businesses as having poor practices

7. Business practices reflect the agency
of the management
“Overall, the findings suggest that rather than
depicting employment practices in small
businesses as the inevitable consequence of
market circumstances, encouraging greater
small business involvement with business
advisory networks and IiP may have the
potential to increase the adoption of HPWPs in
the sector.” (p.1149)
(Ning Wu, Nick Bacon, and Kim Hoque, 2014 The adoption of
high performance work practices in small businesses: the
influence of markets, business characteristics and HR expertise,
The International Journal of Human Resource Management 25
(8), 1149-1169)

8. Leadership
• Central to understanding the growth of
entrepreneurial ventures since growth
opportunities cannot be identified and
exploited without the facilitation of
individuals and teams.
• Entrepreneurial leadership has been
defined as “influencing and directing the
performance of group members toward
achieving those organizational goals that
involve recognizing and exploiting
entrepreneurial opportunities”.

9. What are practices?
New firms don’t come with a manual!
• Firms develops practices to achieve its tasks necessary for
survival.
• If these practices are perceived as effective they are likely to
be repeated and become refined as the firm members
achieve their task requirements.
• Refined Practices are known as organizational routines. The
firm becomes competent in its routines.
• Growth capabilities are the practices that the firm
incorporates as it develops which enable it to competently
deal with growth.
• A Resource-based View of the firm

10. Is a practice a routine?
A practice or routine ‘cares for the employees’? An MD of a
wholesale trade firm provides an example:
“My policy on human resources generally is to solve my
employees’ problems. So, this is the way I run my business. So if
my employee has an issue with their husband's tax return – our
employees are mainly female – I give them my accountant to sort
it out. If they want to borrow a van to move to a new house, if
they want to store goods, if they need a home office, they can
sort it out. [...] I'll do all of that and this is how I see my way of
engendering loyalty about work. And people don’t leave.”
Source: Koryak and Nicolaou (2016) Sustaining growth – the HR dimension HR
practices and management and leadership skills of High Growth SMEs available at
http://www.enterpriseresearch.ac.uk/wp-content/uploads/2016/06/ERC-InsightPap-
KoryakNicolaou.pdf

11. ...practices in growing firms are
informal ...
“So you create that vision, you have a culture that gives
permission to people to do things and you have a very clear
strategy with a number of milestones in that strategy and a
number of things that you need to do. And I think if people
understand that and if you have the right people then you can
do that. That links back into HR and the fact that you have to
have the right people with the right skills and right attitude
etc. etc. which is why HR is that the core of strategy, it has to
be. You can't achieve any of these things without people, well,
we can't anyway. “
Source: Koryak and Nicolaou (2016) Sustaining growth – the HR dimension HR
practices and management and leadership skills of High Growth SMEs available at
http://www.enterpriseresearch.ac.uk/wp-content/uploads/2016/06/ERC-
InsightPap-KoryakNicolaou.pdf

12. …yet some best practices are
identifiable.
Key processes linked to performance include
• continuous improvement,
• market orientation,
• performance management,
• HRM practices
SME leaders might evaluate their firm against
these standards

13. KeySource: Koryak, O., K. F. Mole, A. Lockett, J. C. Hayton, D. Ucbasaran and
G. P. Hodgkinson (2015). 'Entrepreneurial leadership, capabilities and firm
growth', International Small Business Journal, 33, pp. 89-105.

14. Management practices matter but
managers practice them and match
them to outcomes!
• Growth capabilities are those that enable the firm to grow such as
organizational resources (finance, people, knowledge) and
capabilities: (continuous improvement, innovation, ability to add
value, internationalization)
• The managerial capabilities and skills need to match the strategy.
Exporting requires commercial skills (marketing) and to involve the
staff in innovation. Exporting to ‘earn and learn’ many firms need to
innovate to be able to compete in export markets.
• For market penetration effective control of quality and process
control maybe required. As in the ‘faster part of the stream; with a
good crew’ Diversification often requires the ability to acquire other
firms as this brings with it more managerial knowledge of markets

15. The project
We need to understand
the way in which the SME
managers exercise
leadership of their small
business and make the
sort of decisions that
enable their firm to move
forwards towards the
thicker part of the tail
0
0.5
1
1.5
2
2.5
3
3.5
The tail
The tail

16. Data
• A number of datasets are available for this
research.
• Previous research has been conducted using
the Workplace Employee Relations Survey
(WERS) which has a panel element.
• In addition, there is data that has been
collected from previous BEIS projects that may
be matched with IDBR data.

17. Implications
• Since entrepreneurs are the key decision-makers
for their organizations, their influence on the
performance of their business cannot be over-
estimated. The management of SMEs matters
greatly for their economic performance and by
extension influences consumers and other
companies within their ambit.
• Social networks are also of critical importance for
entrepreneurial performance. In this project, we
will examine the interactive effects of skills and
networking in influencing growth using an
activity-based perspective.

18. Thank You!
Q & A