Decision-making in the micro-business

Abstract

Despite their importance to the UK economy micro-businesses have been neglected by academic researchers. This thesis contributes to our knowledge of such businesses by focusing on decision-making in the micro-business. The research involved 55 semi-structured interviews with the owner-managers of micro-businesses in three contrasting sectors: accounting, building and printing. The study found that micro-businesses play an important role in the economy and in particular may provide a more substantial contribution to employment than previous studies have indicated. In addition, the quasi-organisational form by which many micro-businesses operate means that such firms are often more sophisticated than implied by statistical data.
An important influence on the decision-making process was found to be the effect of the owner-manager's individual, social and economic contexts. This contextual model provides the rationale for the way micro-business owner-managers make decisions. An important aspect of this model is that the interaction ofihe differing individual, social and economic contexts means that owner-managers experience unique influences and therefore develop specific ways of making decisions.
A number of generalisations could nevertheless be advanced. Micro-business owner-managers tend to base their decisions on more intuitive methods combined with the mformal absorption of mformation. They also. often adopt nsk-mmmusmg decision strategies and employ satisflcing behaviour. Such appibaches could be criticised from a rational decision-making perspective. However, given the context of micro-business decision-making, such approaches can be regarded as perfectly rational.
The conclusion arising from this research is that training and advice should focus upon enhancing the way micro-business owner-managers currently make decisions, rather than attempting to persuade them to adopt more comprehensive and so-called 'rational approaches'. Greater account also needs to be taken of the context within which decisions are made, particularly the objectives of owner-managers. This provides an important challenge to the existing paradigm that is based upon a perception that owner-managers should pursue objectives such as business growth and adopt more rational decision-making methods if they are to achieve this.