PurposeIn order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).Design/methodology/approachThe authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.FindingsWithin their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.Research limitations/implicationsThe study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.Practical implicationsThe authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.Originality/valueThe study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.
Since the film of Al Gore An inconvenient truth, sustainability stands high on the national agenda of most countries. Concern for the environment is one of the main reasons in combination with opportunities to innovate. In general, innovation and entrepreneurship are important in the realm of national economies because they hold the key to the continuity and growth of companies (e.g. Hage, 1999; Cooper, 1987; Van de Ven, 2007) and economic growth within a country. It is therefore obvious that national governments are investing money to enable and improve innovation management and entrepreneurial behaviour within organizations with sustainability in mind. Policy measures are aimed at reduction of carbon dioxide emission, waste management and alternative use of energy sources and materials. In line with these measures companies are urged to integrate sustainability in their business processes and search for innovative sustainable solutions. While on a national level policy measures towards a more sustainable society are defined, enterprises - and especially small and medium sized companies - lag behind and fail in incorporating these measures appropriately in their day-to day business. As a result research for sustainability has become an important driver for innovation. Within the Centre for Innovation and Entrepreneurship (CI&E) at The Hague University of Applied Sciences we have taken the initiative to develop an innovation and research program for the construction industry to help small and medium sized companies (SME's) integrate sustainability in their business processes, while simultaneously professionalizing students and lecturers. This paper is part of ongoing research among 40 companies in the region of South-Holland. The companies are mostly SME's varying from very small (6 employees) to middle-sized (more than 100). According to Rennings (2000) while innovation processes toward sustainable development have received increasing attention during the past years, theoretical and methodological approaches to analyse these processes are poorly developed. This paper describes a theoretical approach developed at our university's Centre for Innovation and Entrepreneurship, which combines education and research. It is an inductive approach that departs from real-life problems encountered by companies, and is aimed at developing a model that supports companies in integrating sustainability in their business and innovation processes. We describe the experiences so far with a number of companies in the construction industry, which participate in the innovation and research program described above and the barriers they encounter. Our sustainable program is centred on four themes: cradle-to-cradle, social corporate responsibility, climateneutral construction and sustainability and customer orientation in the building process. It is an exploratory research in which students and undergraduates are involved under the supervision of a lecturer as senior researcher of this program. Through an in-depth analysis of the companies, participant observation and indepth interviews with the owners/directors of the companies, experts and prominent sustainable trendsetters, insight is gained in innovation processes towards sustainable development. Preliminary conclusions show that on a company level one of the main bottlenecks is the dilemma posed by the need for profit for the continuity of a company, while taking into account people and planet. The main bottleneck is however the inability of companies to translate policy measures into strategy and operations. This paper is set up as follows. In section 2 we give an account of European and Dutch policy measures geared at stimulating sustainability in a business context and especially the building and construction industry. In section 3 an overview is given of the economic importance and characteristics of the Dutch building and construction industry and the problems in this sector. These problems are offset against the opportunity of sustainability as a strategic option for SME's in this sector. In section 4 the innovation and research program developed at the CI&E is introduced in the context of the main research question. Following that in section 5, methodological choices are addressed and the research design is presented. We finalize this paper in section 6 with our conclusions and recommendations for further research.
We examined scholarly and practitioner work to identify a definition of governance relevant to the small business enterprise. In addition, we reviewed growth articles to identify frequently used growth indicators and make inferences to governance literature. In order to ensure that these terms and variables are embedded in practice we examined 12 cases of Dutch SME firms in the process of growth using a textual analysis methodology. In addition, we interviewed 15 accountants/advisors on their experiences with Dutch SME firms as their clients. The combination of a thorough literature review with the collected surveys and interviews from two independent sources (SME owners/managers and SME accountants/advisors) allows us to triangulate data. We provide a tentative framework identifying nine preliminary governance categories.
