There is consensus among economists that small and medium enterprises contribute significantly to overall economic growth. Several countries including the United States have recognized the role played by small and medium enterprises in the economy and have drafted policies that support the growth of the sector. In many of these countries including the US and Greece, small and medium enterprises have been credited with creating millions of jobs, a major precursor to economic growth and development. Greece dedicated the year 1983 to small and medium enterprises with subsequent inclusion of small and medium enterprises in the five-year plans of social and economic development.
Recognition of small and medium enterprises as the engines of economic growth was initially received with cynicism among some economists and experts who argued that they had little chance of competing with more established firms in the mainstream economy. In fact, a number of economists predicted that small and medium enterprises will in the long-term be swallowed by large firms and thus will make minimal impact on the overall economy.
Time has however proved wrong the latter view with the emergence of solid evidence showing the critical role small and medium enterprises play in the economy. Murphy et al. (2002, p. 65) contend that small and medium enterprises have always been evolving with the changes in capitalist economies that dominate the world economic system today. Initially, many economists held the view that the survival of small and medium enterprises depended n on large corporations. However, evidence from recent studies has uncovered a complementary relationship between the two especially driven by the interdependence between the different industrial sectors. Ayyagari et al. (2003) say that the differences between the two are so marked that their distinction can easily show in their respective cultures.
Small and Medium Enterprises in the Greek Economy
According to Bendis & Eugenia (2001, p. 126), small and medium enterprises in Greece represent over 90% of all business establishments, providing over 60% of all employment in the economy and contributing about 38% of Greece’s gross national product. Furthermore, small and medium enterprises contribute about 20% of Greece’s exports.
In western countries including Greece, culture and political leadership largely shape the organizational culture of small and medium enterprises. In the US and Europe, small and medium enterprises operate in the private sectors and are considered the epitome of free enterprise and innovation. In Japan, they are sources of innovation to large firms (Murphy et al., 2002, p. 70). In Greek, small and medium enterprises mostly dominate the handcraft, manufacturing, and processing industries and spot an organizational culture characterized by simple organizational structures, rapid decision making, innovativeness, efficiency in production, independence, and flexibility in their operations.
In this discussion, the focus will be on the organizational culture of Greek small and medium enterprises and their impacts. There will be an evaluation of the organizational culture of Greek small and medium enterprises within the general confines of organizational culture. The key to this evaluation is a mini-research on Greek small and medium enterprises with the aim of collecting data for analysis so that their organizational culture can be studied.
This discussion used both secondary and primary data in its analysis. There was an analysis of existing literature on the organizational culture of Greek small and medium enterprises. The trends identified in the secondary data were compared with trends identified after primary data was analyzed.
Both sampling and case study methods were involved in this research study. A sample of 100 businesses was selected randomly through the simple random sampling technique. The businesses were selected from a list of small and medium enterprises provided by the government of Greece. The participating businesses were located in different parts of the country. Willing owners and employees of the businesses selected were selected to form a sample of participants to whom an open-ended questionnaire was administered.
In total there were a total of 225 people participating in the study. The questionnaire contained questions that sought to answer research questions regarding the culture of small and medium enterprises in the country. Each and every small business participating in the study formed a case study for the research. Besides questionnaires, research assistants conducted one on one interviews with both managers and employees of participating businesses in order to obtain first-hand information and data on the culture of small and medium enterprises in Greece.
It is important to reiterate that participation in the study was voluntary and no participant was coerced to be involved against his/he own will. Research assistants thoroughly and clearly explained the purpose of the study to the participants. The participants were also assured of their confidentiality and the efforts that had been put in place to ensure their privacy was not breached. Data collected was analyzed through various data analysis methods to produce results contained in the body.
Literature review: Organizational Culture
Organizational culture can be defined as the common values that govern collective behavior in an organization. Organizational culture encompasses the language, symbols, beliefs, and habits that guide the interaction of employees with each other as well as with clients and other stakeholders. Organizational culture describes the work environment and the ways through which employees interact with one another in the pursuance of company goals and objectives.
Sakas & Konstantopoulos (2009, p. 437) say that organizational culture is a diverse subject that cannot be used to describe various corporate relations and trends in the economy. As defined above, organizational culture can be used to describe the culture within a single business entity in the economy. It can also be used to describe the trends that are common in a particular industry in the economy.
According to Niemela (2010, p. 234), there is an intricate link between organizational culture and the performance of an entity or an industry. Business leaders have acknowledged the importance of developing organizational cultures and many have put in place mechanisms that enhance organizational culture in order to enhance the competitive advantage of their business entities (Mertins, 2008, p. 28). For instance, some companies, both small and large enterprises have found a way of leveraging their culture of innovation to produce quality products that have enabled their survival in the competitive 21st-century business world.
Vrazalic & MacGregor (2007, p. 213) say that organizational culture is a wide and deep phenomenon that encompasses all aspects of external and internal relationships while guiding behaviors of members who may not be aware of its influence over them. There is consensus among many culture experts that culture, be it economic or social is based on sets of assumptions on the world as well as human relationships.
While different entities spot different organizational cultures, it is safe to conclude particular sectors have trends that are unique to them only. One such economic sector is the small and medium enterprises (Kollias et al., 2003, p. 30).
As noted earlier, this sector’s culture especially in Greece is characterized by rapid decision making, innovativeness, efficiency in production, independence, and flexibility in their operations. However, there are other distinguishing characteristics that differentiate small and medium enterprises’ organizational culture from the rest of the economic sectors and make it stand out as unique.
Generally, small and medium enterprises are characterized by a small workforce commonly less than 50 employees. According to International Monetary Fund (2009, p. 20). small and medium enterprises are labor-intensive and are an important source of employment in many economies. Additionally, Kollias et al. (2003, p. 23) say that most observers agree that most small businesses are characterized by improved productivity, improvement of obsolete technology, and smoother operations mainly because they invest less capital in equipment compared to larger organizations.
According to Panagiotis (2011, p. 36), organizational culture varies from one organization to another. He however quotes a simplified matrix developed by Robert Quinn and John Rohrbaugh (1983) that simplifies elements of an organization’s culture in four quadrants. Collectively, they called these values the competing values framework. The framework has four dimensions with the first one emphasizing values of flexibility, discretion, and dynamism while the second emphasizes stability, order, and control. He adds that the above values and most common in start-up companies or in this case small and medium enterprises where companies pursue adaptation, change, and use of organic processes.
The competing value frameworks summarize organizational culture into four different types namely collaborate, create, control, and compete.
Organizations with hierarchical organizational culture have adopted a bureaucratic structure where stability and control reign supreme. Business managers in hierarchical organizational cultural settings value standardization as well as control that is carried out through a well-defined administrative structure (Rathakrishnan, 2009, p. 213).
Organizations with a competitive organizational culture on the other hand operate in a more or less similar way as hierarchical organizations but with an external focus that emphasizes integration (Panagotis, 2011, p. 40). Such organizations focus on building relationships with stakeholders to ensure the competitiveness of the business entity.
Organizations that have adopted a collaborative approach to organizational culture pot similar characteristics like those of control type but with an emphasis on flexibility and discretion (Vrazalic & MacGregorn, 2007, p. 220). These business entities value collaboration through closer cohesion among employees and a human working environment.
Create or adhocracy is another organizational culture that business entities adopt. In this situation, the culture is similar to that in collaboration but focuses on external focus and differentiation. They pursue policies that encourage flexibility and adaptability and emerge stronger out of a chaotic situation.
As mentioned earlier, each and every single small and medium enterprise business entity in the Greek economy spot its own organizational structure. However, there are those overall trends that characterize small and medium enterprises and help in distinguishing them from the rest of the businesses in the economy.
It is important to note that the discussion may not entirely be devoted to exploring the types of organizational cultures discussed above. While they will subtly feature in the analysis, the discussion will concentrate on the characteristics and parameters of small and medium enterprises discussed earlier.
Organizational Culture of Greek small and medium enterprise business
The research focused on many elements of Greek small and medium enterprises’ culture. Among the elements tested was entrepreneurship. The Greek small and medium enterprise businesses’ performance was measured against the performance of the European Union as a bloc. In entrepreneurship, many Greek citizens had a strong urge to become self-employed. The study found out that approximately 50% of participants expressed the desire to own their own businesses. According to the European Union average of people who want to own their own businesses is slightly above 30%.
The study also found out that 30% of Greek citizens are in the process of starting small businesses or have already started a small business. Compared to the European Union average of 23%, the Greek citizens rank high in entrepreneurship. The statistics above prove that entrepreneurship culture is deeply entrenched in the Greek population and more Greeks are likely to venture into small businesses compared to the average European. The research also did investigate the gender aspect in Greek entrepreneurship. According to the study, 13% of Greek entrepreneurs were women. In the general European population, women entrepreneurs form approximately 7%.
According to Idowu & Walter (2009, p. 195), skills and innovation are crucial to the success of small and medium enterprises. In fact, small and medium enterprises have been known to be the pioneers of research and innovation in many industries especially in the United States and Japan. Frew (2005, p. 380) adds that in fact, the view that small and medium enterprises can easily be out-competed by large corporations is mainly through lack of innovation. Innovation and the development of technical skills can take many forms. However, the adoption of trade technologies that help in improving customer service and delivery of goods and services comprise the most critical innovations.
In this area, the study focused on the extent to which Greek small and medium enterprises have adopted technologies in line with their core businesses. The study highlighted a dismally low adoption of necessary technologies in small and medium enterprises that have less than 100 employees. Only 10% of the businesses surveyed were found to have adopted online technologies in the last year. Compared to the average European Union, Greek ranks 20 percentage points in terms of adoption of technology in the small and medium enterprises sector.
The study also investigated the extent of online purchases that have been made by small and medium enterprises in Greece. The study found out that only 8% of businesses did purchases online. Additionally, Greek businesses that received orders online are ordered by the same margin. The European Union average of the small and medium enterprises receiving orders online was slightly above 31%.
Laws (1998, p. 63) says that innovation and skills are boosted through occasional employee training. The study sought to investigate the rate of vocational employee training within small and medium enterprises. Only 16% of employees in the Greek small and medium enterprises sector have participated in any vocational training in the last year. The performances of this variable like that of adoption of technology posted dismal rates compared to the European average of 33%.
The study also sought to find out the business returns these businesses have made from the adoption of new technologies that have directly led to improved services. Many of the business leaders interviewed reported positive improvements in the turnover, a development associated with improved service and product delivery thanks to new innovations and skills development.
In the 21st business environment, environmental issues are some of the issues given top priority by business leaders and consumers. Companies and businesses nowadays strive to provide “green” products. These are products and services that are deemed environmentally friendly. According to Rydelski, M. (2006, p. 243), small and medium enterprises have been identified as one of the most effective frontiers through which organizations can champion environmental issues.
The study sought to investigate the share of small and medium enterprises that have installed in place systems for comprehensive energy saving. Additionally, the study sought to determine the percentage of small businesses that have in their organizational culture simple energy savings habits. Only 3% of small and medium enterprises were found to have in place systems that can comprehensively save energy. Additionally, the researchers concluded that only 20% of businesses surveyed had in their organizational culture habits that contributed to energy savings. Furthermore, only 23% of small and medium enterprises had contributed to charity events targeting environmental issues.
There was also a small percentage of small and medium enterprises that committed a significant amount of resources towards environmental protection. 17% of firms devoted only 10 Euros compared to an average of 100 Euros for other European companies.
One of the most crucial factors that influence the success or failure of small and medium enterprises is financing (Murphy et al., 2002, p. 78). There is consensus among many economists and small and medium enterprises that access to venture capital by entrepreneurs is quite a challenge in many economies. More often than not, access to venture capital in developed economies is easier compared to emerging and third-world economies. This study sought to establish the ease with which Greek nationals can access venture capital. The study found out that there is remarkably low access to venture capital for Greek entrepreneurs.
Additionally, a majority of entrepreneurs- 69% complained of the low guarantees they receive when pursuing venture capital. The research concluded that the availability of venture capital among Greek entrepreneurs is significantly lower than the European average.
Closely related to the financing of small and medium enterprises is the level of aid that these businesses receive from the government of Greece. More often than not, governments are charged with the responsibility of creating a conducive atmosphere that will encourage the growth of the small and medium enterprise sector. However, governments are also charged with providing financial aid through state-owned banks to help ease the credit crunch experienced by start-up entrepreneurs.
The study found out a remarkably low level of state aid averaging at 7% compared to a European average of 10%. However, there was optimism and high trust in the government in the provision of start-up venture capital compared to private financiers. 66% of all respondents had a favorable view of the government concerning the provision of aid and necessary help in the establishment of small and medium enterprises. Additionally, 54% of small and medium enterprise owners felt the government was biased towards them in awarding a number of tenders.
According to Tylor (2004, p. 154), successful access to venture capital is influenced by the promptness of payouts as implemented by financial organizations. 40% of respondents reported having received their capital payouts later than the average industry length. A majority of respondents also reported having issues with the contract days that venture capital sources accorded entrepreneurs.
Panos (2006, p. 98) cites administrative trends as one of the major determinants of small and medium enterprises’ success as well as organizational culture. Whereas many countries have done away with the bureaucracies that hinder the faster establishment of start-ups, there are others that are yet to record such progress. The survey found out that the average number of days that entrepreneurs take to establish a business is 40. This is way above the average of 20 days that most European Union countries report. 46% of all respondents cited adverse effects on their business due to a delay in starting a business. The study found out that the cost associated with delayed business start-ups is quite significant in Greece compared to the average European Union rate at 20% to 7% respectively.
Brian (2004, p. 298), asserts that business expansion is a top priority for many businesses in the corporate world. The success of business expansion depends mainly on the resource availability and innovativeness of a firm. Many multi-national corporations can trace their humble beginnings to small start-ups. The study sought to find out the number of small and medium enterprises that have plans for both regional and international expansion.
The study found out that only 3% of all Greece small and medium enterprises have long-term plans of international expansion. 43% indicated that they were absolutely comfortable with the position they are in and had no long-term plans to expand regionally to the European Union or beyond. While 58% of all small and medium enterprises cited lack of resources, 40% cited stiff international completion as the reason they were not pursuing international expansion. On average, 23% of European small and medium enterprises have plans to expand internationally while 50% have long-term plans of expanding regionally.
Through the case study method, the different businesses were classified along the organizational culture types identified earlier. Additionally, the classification was based on interviews held with managers and employees in the course of the study. A majority – 48% of the businesses spotted compete and create cultures with many of them emphasizing creativity and openness in their business and organizational approach. 20% of small and medium enterprises surveyed had adopted a collaborative and hierarchical organizational culture approach.
The small and medium enterprises sector in Greece is characterized by some of the distinctive trends that are also observed elsewhere in the world economy. However, it is important to bear in mind that the Greek economy is embroiled in the Euro Zone crisis and Small and medium enterprises have been hardest hit. There is a possibility that the situation of small and medium enterprises is different from what it was before the crisis. However, it is fair to conclude that the study captures a somewhat clear picture of what the situation is right now in the Greek small and medium enterprises sector.
While most indicators show a healthy organizational culture supported by strong elements of growth, the small and medium enterprise sector in the country is in dire need of reform to ensure the stability of jobs and revenue for the authorities. There is a need to ensure that the entrepreneurship culture of Greece continues with the performance momentum that it has at the moment.
Some of the underperforming variables of the Greek economy include skills and innovation and internationalization. In the variables above, the performance is less than average. Most start-ups especially in the US are spearheaded by innovation and technological developments. Without innovation and technological development, small and medium enterprises will likely not realize their potential.
Besides innovation and technological development, businesses need to pursue expansion to new markets especially emerging markets in Africa, China, India, and South America. Internationalization exposes the business brand to new markets potentially increasing the revenue of involved entities. Greek small and medium enterprises have cited various reasons that hinder their pursuit of internationalization plans. There is a need for concerned authorities to come up with policies that will entrench internalization culture among the concerned entities.
Organizational culture is a complex and diverse issue that cannot be dealt with exhaustively. There are numerous definitions of organizational culture that vary widely according to the nature of the business that an organization is involved in. Many economists agree that studying an organizational culture of a single entity is less complex than that of an industrial or economic sector. There is no distinct culture that encompasses the characteristics of small and medium enterprises in the economy. However, there are those characteristics that stand out and that experts use to describe small businesses.
There is no doubt that small and medium enterprises contribute significantly to economic growth. In fact, some experts forecast a world economy dominated by small and medium enterprises that will be the epitome of stability in the long term. While the above assertion is subject to prove, there is no doubt that small and medium enterprises present the best chance of stabilizing the shocks-prone world economy. However, for the above to take place, a comprehensive culture has to be natured so that the small and medium enterprises operate in an environment that is favorable to their growth.
As mentioned earlier, the Greek small and medium enterprise represents a small portion of the European as well as the world economy. This sector has been crucial to the country’s economic growth for a long time. Economists contend that the sectors may also be the key to ridding the country of the economic problems it is facing. Throughout the research, the small and medium enterprises industry of Greece was characterized by instability and uncertainty that is not favorable to the overall growth of the sector. A few of the respondents did raise issues to do with procurement procedures in government departments.
Government departments offer one of the best avenues through which small and medium enterprises can engage business in. Though the government has in place a policy that calls for increased engagement between government departments and small and medium enterprises, there are fears that the government may scrap the program as part of the austerity measures taken to help the country out of the economic crisis.
This is one of the ways through which the government can foster innovative and expansionist cultural traits in Greek SMEs. The government will gradually wean the industry of its dependence by introducing other measures that will help small and medium enterprises in the long term. However, the driving force has to originate from the sector itself.
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