A New Conceptualisation of Business Development for SMEs: A Focus on Development Potential

Despite an increase in the amount of research on the programmes that many governments around the world are using to guide firm development, develop managerial capability, and encourage firms into undertaking practices that will result in improved performance, there is no agreement within the research community on an appropriate way of conceptualising the task of ‘business development’ or of designing specific developmental programmes. Instead, there is a plethora of frameworks that categorise the overall policies and the programmes in terms of: the service they deliver (for example, ‘hard’ or ‘soft’ programmes); the target group (for example, women, ethnic groups, older or younger people); or by the outcome they wish to achieve (for example, the development of export capability).

Although they are useful from an operational perspective, that is, from the perspective of a policymaker faced with the task of allocating scarce resources, these approaches do little to address a critical aspect of business development that is especially evident in small firms: the interrelatedness of the firm and its owner. After reviewing the available frameworks, and discussing the problems of operationalising them, the author presents a new framework and demonstrates its use by applying it to the case of New Zealand. This framework is based on two dimensions: the development potential of the firm and the development potential of the individual—an approach that has hitherto not been used, despite the recognition of the interrelatedness of the firm and the individual, especially in countries where there are large numbers of micro enterprises. The framework contributes to the ongoing debate on the design of effective developmental programmes by enabling policymakers to focus on the key issues—developmental potential—rather than simply on the individual's membership of a specific target group.