The role of diagnostics as a means of engaged scholarship and enhancing SME research

Abstract

This paper explores the methodological challenges facing SME researchers through overdependence on quantitative methods. It proposes how a diagnostic-based form of engaged scholarship can enhance the portfolio of research tools and address existing deficits in current research methods by building on tools developed as part of a multi-determinant research process for exploring SME growth. The paper argues existing methods of SME research are insufficient to address their heterogeneous and context-dependent nature. New tools are therefore required to mitigate embedded shortcomings in terms of depth and breadth of understanding alongside impact for practice and for SMEs as active stakeholders in the research process. The design and implementation of diagnostic tools has the scope to address these deficits. The benefit of this paper is to outline an additional approach to SME research which addresses embedded issues in existing methods. It proposes a tool that addresses certain academic research challenges, but also integrates research more substantially with policy and SME requirements. In thus doing it makes a novel contribution to debates on how SME research is undertaken, to the development of methodological tools appropriate for dealing with the challenges of contemporary research, and to methodological approaches integrating research within wider networks and communities.

Keywords

diagnostic engaged scholarship research methods SME growth SME research

Introduction

Small and medium-sized enterprise (SME) growth continues to be a critical area of interest for both academics and policy makers. With economic growth increasingly seen as both principal objective of governments and dominant process of social amelioration, SMEs, in terms of start-up and scaling-up enterprises, have become an integral element in achieving such growth. Holistic interpretations of how the SME sector functions have run alongside its segmentation as policy-makers seek to uncover the most efficient model, and therefore units, of intervention. Such an approach has seen specific SME sub-sets prioritised under presumption their performance will drive the whole sector, growth outputs synonymous with socio-economic outcomes.

Integral here has been a focus on questions of ‘how much’ the SME sector can grow and how to optimise this with minimal outlay. Pursuit of ‘silver bullet’ solutions to growth focusing on ‘fetishised’ sectors (Acs and Muller, 2008; Massey et al., 1992) or key groups of SMEs (Birch and Medoff, 1994; NESTA, 2009; Smallbone and Massey, 2012) have been driven by dependence on output data (largely employment, turnover and profits). Although relevant, too often this data is applied to explain the question of SME growth through deductive framings. Indicative of preferences within both academic and policy-circles for the presumed greater validity of quantitative methods and complex statistical models, questions of ‘how much’ have been pursed at the expense of those asking ‘how’ or ‘why’ (McKelvie and Wiklund, 2010).

To address these more abstract questions above, it is fundamental to explore new approaches to SME research (Dobbs and Hamilton, 2007; MacPherson and Holt, 2007; McKelvie and Wiklund, 2010; Trehan et al., 2018). Overdependence on quantitative and deductive methods, with presumed benefits around robustness and objectivity, has failed to provide such integrated insights. Here, three critical weaknesses are important. First, reliance on large datasets limits the level of penetration of individual firm circumstance, with implications for the depth of research (Daft and Weick, 2001). Second, framing analysis within narrow theoretical fields limits the potential breadth of such understandings (Frank and Roessl, 2015; Gibb and Davies, 1990). Finally, the principal use of output data, as explained above, limits the type of relationships built between academics and business practitioners, raising questions over the impact, and therefore validity of research (Marzo-Navarro et al., 2009; Simba and Ojong, 2017; Trehan et al., 2018). Exploring such issues has in particular argued for more qualitative research. Whilst this may address deficits found on the quantitative side through more inductive and immersive approaches, concerns continue over how applicable such small sample, intensive data may be.

In this paper a potential third way of conducting SME research is proposed. Positioned within the engaged scholarship approach (Van de Ven, 2007), the paper argues the development of diagnostic tools can address a number of recognised deficiencies. Diagnostics, a form of research through which data analysis is applied at the subject alongside the sample level, provide a framework through which broad theoretical understandings of SME growth can be applied with designed-in flexibility allowing for an element of inductive inquiry. Diagnostics also represent a format which can be widely disseminated, allowing for the collection of larger datasets. Importantly, diagnostics allow for the mitigation of several problem formulation issues associated with quantitative research in terms of breadth, depth and impact. Such an approach would make a notable contribution to enhancing research methods through addressing the enduring gaps between the quantitative and qualitative, the deductive and inductive, and the theoretical and practice-driven.

Research methods in SME growth: A critique and a way forward

Growth in the small and medium-sized enterprise (SME) sector – that subset of businesses employing fewer than 250 – remains a prominent research subject. How such research is conducted has however come under increasing scrutiny in recent debates (Dobbs and Hamilton, 2007; MacPherson and Holt, 2007; McKelvie and Wiklund, 2010; Trehan et al., 2018). Prominent criticisms have endured in relation to the relevance of much analysis on SME growth, raising issue with reductive tendencies in defining a set of critical determinants through application of deductive and quantitative approaches (Daft and Weick, 2001; Fleetwood and Hesketh, 2006; Grant et al., 2001; Newby et al., 2003). Too often the objective of research on SME growth is extending academic debate or valorising policy responses over and above providing meaningful insight for the benefit of SMEs themselves (Dutta and Thornhill, 2013; Hill and McGowan, 1999; Simba and Ojong, 2017).

As a result, an argument has grown on the need for greater understandings of the SME growth process, considering not only its key determinants (Davidsson and Wiklund, 2013; Wiklund et al., 2009) but their co-dependence (Baum et al., 2000; Weinzimmer, 2000) and relationship to context (Easton, 2010; Fleetwood and Hesketh, 2010; Gilman et al., 2015; Paauwe and Boselie, 2005). Detailed analysis of specific factors and their importance in firm growth represents a wide literature in SME research. Little of this, however, progresses an integrated understanding of dependence between multiple factors involved in the growth process (Dobbs and Hamilton, 2007). SME growth is not a smooth or linear process (Bygrave, 1989), thus each individual growth journey is highly distinctive. This distinctiveness has been further valorised by increased research focused on the specific contexts of sets of entrepreneurs and small businesses, cognisant of social and demographic factors (Baker and Welter, 2017), institutional and environmental constraints (Benyon et al., 2020; Davidsson et al., 2017), and cultural and ethical values (Munoz et al., 2018). Such journeys occur within contexts where growth and its drivers are similarly distinctive (Bennett, 2008; Dobbs and Hamilton, 2007). Generalist understandings on SME growth and how these are achieved are therefore questionable, at risk of imposing aggregation bias or extrapolating misleading frameworks (Frank and Roessl, 2015; Godard, 2004).

Three specific areas are pertinent regarding quantitative-based generalism. First, dependence on quantitative methods as part of a robust, objective, and theoretically-founded process limit the depth such research attains. As a result, a relatively low level of penetration is achieved (Daft and Weick, 2001) generalising data rather than appreciating its unique value in individual SME contexts (Baker and Welter, 2017; Grant et al., 2001). Second, limitations in the number and extent of growth determinants constrain the breadth of such analysis. Thus, the rigid demands here of research questions (Newby et al., 2003) and pursuit of general meaning (Frank and Roessl, 2015; Gibb and Davies, 1990) risk reducing complex growth processes to research on specific management disciplines, practices or phenomena (Blackburn and Stokes, 2000). Finally, existing research faces deficiencies in terms of impact. Here, objectives of building theory achieve unsuitable outputs in relation to business needs (Marzo-Navarro et al., 2009; Simba and Ojong, 2017), limiting the extent to which research informs organisation and policy practices (Bansal et al., 2012; Barge and Shockley-Zalabak, 2008; Scott and Mole, 2012) and encourages SMEs to share important and accurate information (Darabi and Clark, 2012; Whitehurst and Richter, 2018) (Figure 1).

Figure 1.

Deficiencies and solutions in SME research methodologies.

Responding to these deficiencies requires SME research to extend its portfolio of methodologies and techniques, allowing for a more holistic understanding of processes which determine firm performance and consideration of questions of causality (Davidsson et al., 2017; Hill and McGowan, 1999; Kraus et al., 2016; Osiyevskyy et al., 2016). Here, qualitative methods can contribute, requiring researchers to more intimately explore SMEs.

The adoption of more qualitative research does however need to work alongside quantitative approaches to counteract accusations of subjectivity (Hill and Wright, 2001) and support broader objectives of knowledge creation as a framing device (Blackburn and Stokes, 2000). It is thus important to explore experimental research approaches (Kraus et al., 2016), devising models both more suitable to the context of the SME (Hill and Wright, 2001) and integrating academic questions with broader social, economic and cultural issues (Holland, 2005; O’Hare et al., 2010).

One such experimental approach is engaged scholarship, a process which positions the firm as research partner alongside subject (Bartunek and Rynes, 2014; Trehan et al., 2018; Van de Ven, 2007). Whilst balancing questions of relevance, insight, and rigour (Baker and Welter, 2017; Barge and Shockley-Zalabek, 2008; Gulati, 2007; Van de Ven and Johnson, 2006), engaged scholarship similarly faces criticism for its limitations in scholarly application (Kieser and Leiner, 2009; McKelvey, 2006).

One critical element of the engaged scholarship debate is that of problem formulation. For Van de Ven (2007), a key aspect of problem formulation is diagnosis, based on a principle of engaging with firms who know and experience problems of application. Established tendencies within engaged scholarship however fail to address two specific issues with this question of problem formulation. First is engagement, cognisant of both time-resource limitations of the SME community (Whitehurst and Richter, 2018) and trust-based requirements of such dialogue (Vangen and Huxham, 2003). Second is abstraction, as the case study setting of much engaged scholarship risks ongoing accusations around qualitative subjectivity and thus broader relevance (Hill and Wright, 2001).

One potential solution here is the broader development and application of diagnostics and diagnostic tools, a form of analysis framed within theoretical debates yet applied through context-based application. Diagnostics represent a method of research capable of consolidating the rigour of survey-based inquiry with the sensitivity associated with more intimate forms of analysis, and balance the learning opportunity of real-world application with broader means of conceptualisation. Specifically, diagnostics illustrate potential to address key elements of the depth, breadth, and impact debate.

Active application of a diagnostic in not only exploring the firm but conceptualising their practice allows for addressing a key limitation to the depth of understandings: the question of bounded rationality (Easton, 2010; Fleetwood and Hesketh, 2010; Johnson and Hoopes, 2003; Paauwe and Boselie, 2005). Insight offered through formulating the problem avoids overlaying development questions with narrow theoretical approaches (Dutta and Thornhill, 2013), instead integrating the esoteric nature of SME’s to form and interpret their reality (Hill and Wright, 2001).

Similarly, diagnostic methods allow for greater breadth through incorporating a wider set of determinants (Baum et al., 2000; Weinzimmer, 2000). Here, the iterative nature of SME decision making and practices is included through accommodating greater levels of diversity and sensitivity (Hill and McGowan, 1999; Van de Ven and Johnson, 2006), thus providing more esoteric perspectives (Frank and Roessl, 2015; Gilmore and Carson, 1996; Johnson and Hoopes, 2003).

Perhaps most significantly, diagnostics provide a platform for a key impact measure in terms of co-production (Antonacopoulou, 2010; Bartunek, 2007; Rouse, 2020). Integrating a broader range of stakeholders – and embedding collective interests within the research process – address several issues around quality and resource efficiency in research application (Darabi and Clark, 2012). As a result, researchers increase their chances of asking the right questions (Barge and Shockley-Zalabek, 2008), leveraging different perspectives and competencies (Baker and Welter, 2017), and creating more interactive spaces for knowledge creation (Antonacopoulou, 2010).

Orthodox approaches to researching SMEs present a number of embedded issues. These issues are founded in questions of rigour and theory-building preferring quantitative methods. As a result, such methods risk the same subjectivities that make more experimental approaches the poorer cousin in methodological terms. Rooted in issues of depth, breadth and impact, addressing these deficiencies requires the development of new research tools allowing for the blending of quantitative and qualitative methods and the integration of SMEs themselves as research stakeholders through a process of engaged scholarship. This paper proposes one such tool is the diagnostic with its significant scope to enhance engaged scholarship approaches through more robust integration of the problem formulation question. It develops this proposition through documenting the development of a diagnostic tool – Promoting Sustainable Performance – the processes employed, and its capability in addressing embedded questions of depth, breadth and impact.

Addressing issues of depth, breadth and impact: The diagnostic approach

Calls for new research methods to complement conventional tools adopted in examining SME development have grown in recent years, driven by concerns over how valid, applicable, and generalisable more orthodox approaches can be considered. In response, this paper argues the development and application of diagnostics may contribute towards addressing such concerns, enhancing a portfolio of engaged scholarship tools and thus research methods. Diagnostics, long used by consultants and practitioners, represent a method through which researchers can explore SME development in a broad and holistic capacity, moving beyond surface level events towards a deeper appraisal of underlying causal mechanisms (Easton, 2010; Fleetwood and Hesketh, 2010; Paauwe and Boselie, 2005), and stimulate interaction with the subject as a stakeholder in the research process (Bansal et al., 2012; Barge and Shockley-Zalabak, 2008; Darabi and Clark, 2012). In addressing these issues, diagnostic-based methods can provide two principal benefits. First, they are able to establish broad associations through use of multiple variables to act as an inductive framework prior to further examination with conventional quantitative and qualitative approaches. Second, they provide the foundation for building relationships with SME communities, more actively involving them in the research process whilst collating robust and potentially longitudinal datasets. Diagnostics can thus contribute towards a wider portfolio of engaged scholarship methods through their enhanced problem formulation potential.

In this section, the paper focuses on the development and implementation of a business diagnostic tool for research and impact purposes, addressing three specific aspects of the diagnostic. First, it considers the development of the diagnostic framework and how this relates to the call for more inductive methods. Second, it discusses how the application and execution of the framework contributes towards the mitigation of enduring research issues of breadth, depth and impact. Finally, it considers the diagnostics potential as a reflexive research tool, capable of adaptation in response to specific findings and contexts.

The diagnostic framework

A wide number of approaches have been used to measure organisational growth and performance, often comparing businesses within the same industry and benchmarking against market leaders. What many of these methods have in common is the limited insight they offer into broader performance and practice issues amongst SMEs. Research often relies on quantitative data, takes a siloed approach to knowledge and expertise, is progressed using narrow forms of academic rigour, and fails to appreciate the importance of context, depth and nuance.

Promoting Sustainable Performance (PSP) is a research tool developed in order to address these deficiencies. PSP provides an impartial perspective of SME growth to steer informed decision making by academics, business leaders and policy makers through a five-stage multi-methodology research process involving literature reviews, quantitative data collection, qualitative interviews, case studies, and focus groups (Figure 2). The PSP process collects and analyses data on a broad range of business, management and entrepreneurial issues at the heart of SME growth and performance, here interpreting SMEs as those firms with at least 10 employees and at least 3 years trading history. It draws on a multi-disciplinary team of expert researchers from a wide range of disciplines to investigate SME growth through integrating perspectives including markets & competition, growth patterns, organisational change, management & strategy, innovation, ICT, performance management & measurement, HRM, training, advice and networks, corporate social responsibility, and supply chain. PSP has been designed to question and challenge the way both academic and practitioner communities measure and capture the factors that define the growth of SMEs by applying a mixed method, integrating qualitative data collection and analysis methods with the traditional purely quantitative approach, on a longitudinal basis via more integrated subject engagement.

Figure 2.

Promoting sustainable performance methodology.

This model has been fully applied in different countries, regions and contexts. In so doing, a cyclical feedback and loop mechanism has resulted in a honed survey stage over a period of 12 years.

More recently PSP has developed the principles of the diagnostic approach. A fundamental part of PSP is an early stage quantitative survey, a questionnaire incorporating 64 substantive questions covering multiple disciplines determined as essential to understanding the growth process during its development stage. This stage has been adapted into a diagnostic tool that both allows it to become more than a deductive piece of quantitative enquiry and effectively utilises the quantifiable framework created in the questionnaire. Here, the objective was to create a diagnostic capable of producing an informed conversation around the growth requirements of individual businesses and the business service provision being offered by multiple stakeholders. Previous analysis using the PSP process illustrated there were some common problems which SMEs experienced. These included unfulfilled aspirations, a lack of purpose, vision, values and strategy, poor managerial and leadership capabilities, misunderstanding of the value chain, a lack of exploitation of knowledge, poor employee engagement, and poor performance measurement & management (Gilman et al., 2013). Development of a diagnostic would address these areas with an ability to provide subject-level feedback to businesses, in this case in the form of a report, alongside support a further dialogue by acting as the foundation for a facilitated conversation, or qualitative interview element of the PSP method.

The questionnaire adapted for the diagnostic began life with a comprehensive multi-disciplinary literature review combined with analysis of existing major surveys (most of which were not multi-disciplinary e.g. The Workplace Employment Relations Surveys, Small Business Survey, Annual Business Inquiry, Business Growth Survey) already being carried out by academics and policy-makers. This review was designed to identify the kind of questions necessary to fill the requirement of a multidisciplinary approach to examining and understanding SME growth. Here, the concern was building a tool which would enhance understanding of the processes, context and dynamics of growth rather than simply provide data on the outputs. Similarly, the tool would help identify key resources and dependencies both within and outside of the firm. At the time of development, both academics and policy-makers had been influenced by the theoretical literature on High Performance Work Systems, yet even within this debate the siloed approach to growth was being ultimately challenged through growing recognition of the role played by tangential internal and external factors (Gilman and Raby, 2013). A tendency to focus on the Resource Based View was similarly prominent in debates, which although progressive from the point of view of its emphasis on employees as key resources was also too internally focused (Priem and Butler, 2001; Salder et al., 2020). The multidisciplinary team of academics who worked on the research process included well-regarded experts in Strategy, HRM, Value Chain, Operational Management, Accounting and Finance, Ethnicity and Family business, Entrepreneurship, Leadership, Marketing, Corporate Social Responsibility and Innovation (see also Table 1).

Where questions employed within the reviewed sample of questionnaires were already useful, these were utilised within PSP so that comparability could be maintained between the different surveys. The whole process of model and question design took a period of approximately 2 years from start to completion. This process involved two key activities. First of these was a set of focus groups and consultations with as many of the relevant actors from academia, policy, business service provision and businesses as possible. These sessions were formed around addressing the question ‘If we forget about domain specific issues, what do we need to know about SME growth?’. Framing the development process also allowed for the partial detachment of collaborators from the subjects to which they are wed; critical here was to consider growth and the firm as the object of inquiry as opposed to individual disciplines. The project was coordinated and ultimately designed by academics within a research centre within a university, and further piloted and tested through application in Kent and Nord pas de Calais (2010).

Following the devised approach offered three distinct advantages. First, it allowed for a coordinating infrastructure to promote a multidisciplinary research approach into questions of organisational competitiveness and growth. Second, it provided a means to generate enterprise activities grounded on good quality research. Finally, it allowed flexibility for addressing questions of theory, policy, regional economic development, and the provision of business support and advisory services.

Alongside these focus groups and consultations, a steering committee made up of representatives from Central Government departments, Local Government, Regional Development Agencies, Business Link, Federation of Small Business, and Chambers of Commerce and local universities was formed to advise during and after the development of the questionnaire. Members of this committee confirmed that the PSP questionnaire complemented both individual and collective goals and aspirations with potential for aiding the translation of research into practice, encouraging partnership working, informing service provision development and business perception, and guiding economic development strategies. Specifically, the approach showed potential to support individual-level interventions improving business advice provision and enhancing innovation, skills, and productivity alongside collective objectives of global competitiveness, sustainable prosperity, and knowledge-based growth.

The resulting questionnaire from this process involved a total of 64 substantive questions covering 47 variables. These questions were categorised across 13 subject areas the focus group and consultation process deigned as fundamentals for SME growth. This was further attenuated into five distinct categories which function as the evaluation framework for the diagnostic (Table 1). These five categories outline key fundamentals supporting SME growth, which are:

Characteristics identifies key areas such as age, sector, experience, ownership, size, etc.

External Relations identifies key areas of markets, competition and supply chain

Performance and Planning identifies key areas of growth, management and strategy, and performance measurement and management

Added Value identifies key areas of innovation, corporate social responsibility, and technology

Knowledge and Resource Management identifies key areas of human resource practices, training and development, finance and funding, and sources of information, advice and guidance.

Table 1.

Diagnostic categories.

Category	Subject areas	Variables
Characteristics	Characteristics	Age; Sector; Ownership; Management; Experience; Size
External Relations	Markets and Competition	Market distribution; Export locations; International sales method; Length international trading; Market conditions; Competitors; Competition strategy; Competition factors
External Relations	Supply Chain	Collaborations; Collaborative partners; Customer type; Supplier type
Performance and Planning	Growth	Growth trends; Growth expectations
	Management and Strategy	Management; Strategic plan; Strategic issues; Strategy ownership
	Performance Measurement	Performance measures
Added Value	Innovation	Product innovation; Process innovation; Innovation obstacles
	Corporate Social Responsibility	CSR projects
	Technology	Technology utilisation; Investment planning
Knowledge and Resource Management	HR Management	Investment planning; HR management; HR practices; Employee pay; Employee engagement; Working hours
	Training and Development	Training budget; Training days; Training provider; Skillset development
	Finance and Funding	Finance sources
	Information, Advice and Guidance	Memberships; Advice sought; Advice source; Network involvement; Benefit of networks

Using this framework, the questionnaire was translated into a diagnostic. The diagnostic uses a set of formulas for the attribution of values across the subjects’ response. Of the 64 questions involved in the questionnaire, 45 are used in the diagnostic analysis; those questions which used open formats were not feasible for analysis in the diagnostic format. Attribution of values to responses is drawn from the key research and literatures discussed as part of the questionnaire design process. Thus, each diagnostic variable is allocated a value, shaped by key research, which equates with low-, mid- or high-level growth tendencies. These responses are collated to create a detailed report using the above five categories to provide participating firms with a more specific understanding of key issues which they face. The diagnostic additionally creates a more detailed analysis delineating the five categories across individual questions; this analysis can serve as the subject of detailed discussion between a trained facilitator and the business. Critically, the analysis provides a framing for the individual SME on key areas of intervention, including those of which the entrepreneur may not be aware. Therefore, the value of the diagnostic becomes one of creating and defining an approach which seeks to develop interpretation and understanding of the growth issues facing the business (Table 2).

Table 2.

The diagnostic process.

Stage	Process
1	The company completes the diagnostic (online, paper version or telephone interview)
2	the company receives a copy of the completed questionnaire and a four page summary report of the results
3	The company is encouraged to reflect on the survey and report
4	The company is invited to a facilitated discussion with a growth expert
5	A roadmap is jointly created between the company and facilitator of required actions
6	Actions are progressed and continued research process is created

The creation of a diagnostic and adaptation of the PSP questionnaire has allowed for a new set of tools to evolve in collecting business data, conducting surveys, delivering support, and incorporating the survey subject as a stakeholder in the research process. This approach has significant potential to contribute towards addressing the enduring issues of breadth, depth and impact in the research process.

The diagnostic contribution

Adaptation of the PSP questionnaire to a diagnostic tool has been undertaken to develop an experimental research tool capable of responding to certain ongoing deficiencies within conventional forms of SME research, building on an engaged scholarship approach. Specifically, this has aimed to address recurring issues of depth, breadth, and impact through the design of the diagnostic and its implementation.

Depth

Growing criticisms of SME research have focused on its limited levels of penetration (Daft and Weick, 2001) and ability to provide insight into the specific context of individual SMEs over aggregated understandings (Grant et al., 2001). The diagnostic provides a research process which moves beyond preferences for deductive research constraining understanding and interpretation through narrow theoretical approaches (Dutta and Thornhill, 2013). The diagnostic developed here addresses these limitations in depth in two specific ways. First, in place of the theoretically-constrained deductive approach, the diagnostic has been created through a process where moving beyond the siloed approach embedded through industry demands for rigour and validity is integral, thus addressing questions of problem formulation (Van de Ven, 2007). A good example with many of the businesses that go through the diagnostic is that initially they tend to see their main problem as being associated with single issues such as marketing, and therefore these issues are vaunted as a panacea for more complex problems, i.e. how can the firm better understand and use marketing in order to address turnover issues. Adoption of a multi-determinant approach in the questionnaire allows for a more inductive form of analysis in understanding associations between key factors (Baum et al., 2000; Weinzimmer, 2000). Second, the diagnostic addresses embedded issues of bounded rationality in SMEs through application of a broader framework. Through this framework, SMEs are challenged to explore and question their practices, considering new dimensions of the growth process and new ways in which their business can be interpreted and understood (Hill and Wright, 2001). Once businesses have explored their practice, they move beyond the single-issue problem to start to ‘self-realise’ the extent of factors impacting how they might increase their performance through practice enhancements. This reflective element embedded within the diagnostic leads firms to exploring and adopting a much more strategic approach to addressing their growth issues. Thus, the diagnostic provides a framework capable of achieving a depth of analysis offering benefits to both researchers and participants whilst maintaining elements of a research method incorporating requisite demands for objectivity, rigour and validity through the ability to apply a robust data collection and sampling process.

Breadth

Whilst conventional research methods risk limitations in breadth through the rigidity of research questions, the looser approach to a research question employed through the PSP questionnaire and diagnostic allows for greater flexibility alongside a broader association of variables. This achieves greater sensitivity in relation to the more organic nature of practices in SMEs, accounting for the iterative nature of routines and bounded nature of decision making (Frank and Roessl, 2015; Gilmore and Carson, 1996; Johnson and Hoopes, 2003). The more inductive approach used through the diagnostic provides a breadth capable of such sensitivity at both the firm and the determinant level. This sensitivity allows the researcher and the owner-manager to incorporate and understand a range of diverse perspectives which might otherwise be addressed as separate and siloed characteristics and variables. As both explore meaning in real time, they create a level of debate and understanding capable of leading to a wider awareness of real-world problems. The diagnostic also brings to the fore the issue of time and priority. Understanding the wider range of issues leads to a move away from a singular focus on operational issues – ‘busy fool’ syndrome, where day-to-day pressures lead to firefighting and ad hoc decision making – to a realisation of the importance of thinking and planning, a process which influences behaviours and actions. As a result, the diagnostic has potential to not only make the research process more interactive (Antonacopoulou, 2010; Bartunek, 2007; Rouse, 2020), linking previously unrelated determinants of growth, but to emphasise the SME as the entity of the research and therefore the context within which the growth process emerges (Hill and Wright, 2001).

Impact

The growing issue of impactful research present two specific challenges for orthodox methods of SME research. First is the question of producing research capable of more broadly informing practice, influencing organisations, and shaping investment in the support of SME growth (Barge and Shockley-Zalabak, 2008; Bansal et al., 2012; Beynon et al, 2020). The second relates to the quality and consistency of intelligence gained through the research process, particularly in consideration of both time limitations and data sensitivity held by SMEs (Darabi and Clark, 2012). The diagnostic approach is designed to address both issues. In regard to practice and policy, data collected through the inductive diagnostic method provides a comparative dataset for classic quantitative research findings. Data collected through the diagnostic thus offers a point of mediation on research findings founded in a process which classic quantitative researchers may find more robust, and therefore agreeable, than the problematic subjectivities of standard qualitative approaches. Data is collected quantitatively but interrogated and interpreted through a more inductive approach. Combining both sets of data and the resultant understandings provide a strong foundation from which skill, behaviour and competency requirements can be extracted and thus form future workshops and interventions. In terms of research quality, the reciprocal nature of the diagnostic creates an environment where firms have a vested interest in sharing and interpreting accurate data and where the reflective nature of the process contributes to individual development rather than simply being an isolated academic exercise (Darabi and Clark, 2012; Whitehurst and Richter, 2018).

Take the example of IT Software Support Co. They came to the university saying that their core problem was that they required more revenue and they needed it fast. Here, a diagnostic was completed and then followed up with a facilitated discussion. Our discussion illuminated some key facts that the company had not previously considered.

First was a reliance on one main customer, a major high street retailer. Secondly, their relationship was in the main transactional and originated from the friendship between the two original founders of both companies who were no longer in control. Therefore the transactional relationship was no longer underpinned by friendship links and changing economic conditions were leading the retailer to question whether the service of IT Co might not be gained cheaper elsewhere. Therefore it brought to the fore the fact that the value chain relationship had never been considered, and nor had the fact that the customer themselves may have serious business challenges.

IT Co had never considered what their value proposition is. IT Co had also not considered or even thought about their own competitive advantage. However, through the facilitated discussion they were able to verbalise that they worked on the basis of providing the highest quality service based on a relational approach. They discussed being able to make the world a better place, more efficient for their clients, allowing them to concentrate on their own core business. Yet, they had never once shared this with any of their clients. They also had expert knowledge and technical skills in abundance within the company and felt that they were capable of exploiting current and new opportunities. Not least they realised that their business was capable of competing in the global market, not just the UK.

The three directors went away absolutely amazed by what they had just revealed about their company through the probing of the facilitator and the diagnostic and were back within days working with the university towards the creation of a holistic business strategy. Despite already saying that they had a strategy the diagnostic was able to raise questions, helping them to identify that what they originally thought was a strategy was in fact not the case at all.

Thus the diagnostic moved the discussion away from a siloed approach to explore and challenge new dimensions of growth by bringing in a broader set of variables. Many other issues were discussed/revealed; all were able to gain a wider understanding of the real world of growth. The quality of the intelligence collected through both the quantitative and the qualitative aspects of PSP allowed the Directors to, in their own words, move away from being ‘busy fools to becoming strategic leaders’. It allowed the research to gain a greater contextual understanding than would have been the case with quantitative research and apply it more representative than would have been the case with qualitative research.

The reflexive diagnostic

The diagnostic has been developed through enhancement of the established PSP questionnaire. PSP however incorporates a multiple-phase, mixed methods approach to comprehensive research of SMEs and SME economies. PSP applies a holistic research model to capture the process of growth of SMEs. Through this process the diagnostic questionnaire is linked with ongoing literature analysis of understandings of SME development and growth and more detailed and immersive research stages involving qualitative interviews, case studies, and focus groups. Using the five-stage methodology (Figure 2), the PSP process collects and analyses data on a broad range of business, management and entrepreneurial issues at the heart of SME growth and performance.

This provides notable advantages for engaging and integrating SMEs in the research process. Participating SMEs can thus be involved in an in-depth and very useful analysis of their business, its current context and future opportunities. Participants are invited to explore this further with the research team. All participants are invited to workshops where findings are shared and offer useful advice and support for SME growth and success, thus aiming to make more explicit the implications of actions and non-actions by entrepreneurs with regard to growth (Smallbone and Massey, 2012). Also produced from the work are comprehensive reports and analyses, designed to inform internal and policy-partner products and interventions, and a range of additional practical offerings for the SME community. Previous iterations of the PSP process have informed and led to the development of the support materials based directly on the research, promoted and disseminated via a university spin-out (Business, Improvement & Growth Associates).

This application enables PSP to be used in not just its diagnostic form but as an integrated performance measurement from which to analyse the growth and performance of SMEs and SME economies. The knowledge that PSP generates via its integrated process of engaged scholarship can thus be shared amongst multiple interested parties; entrepreneurs, SME employees, researchers, policymakers. Both the diagnostic and the full PSP process can be applied as part of not only a single research process but as a benchmarking tool at SME and economy levels.

Conclusion

SME research is facing a number of ongoing questions in relation to the methods and methodologies used in exploring development and growth (Daft and Weick, 2001; Fleetwood and Hesketh, 2006; Grant et al., 2001; Newby et al., 2003; Trehan et al., 2018). Recognition of the heterogeneous and context-dependent nature of the individual firm (Baker and Welter, 2017; Davidsson et al., 2017; Munoz et al., 2018) has seen challenges emerge requiring the expansions of methodological portfolios in SME research. This paper has furthered the case for development and application of a broader suite of methods in researching SMEs. Influenced by growing tendencies in certain areas of business research to adopt more experimental methods (Kraus et al., 2016), the paper proposes the development and use of diagnostics can provide an inductive approach to data collection via a process of engaged scholarship both grounded in key literatures and capable of addressing volume. It argues that diagnostics can provide a key problem formulation role (Van de Ven, 2007) bridging the factor-specific weaknesses of quantitative methods and the subject-specific limitations found in qualitative approaches. It outlines an approach through which large datasets can be established to examine the multiple-determinant model linking inductive approaches with demands for theoretically-informed analysis and thus highlighting how a diagnostic-based form of engaged scholarship can enhance the portfolio of research tools and address existing deficits in current research methods.

Diagnostics have the capability to provide a framework through which broad theoretical understandings of SME growth can be applied with designed-in flexibility incorporating an element of inductive inquiry, allowing for sensitivity to the heterogeneity and context-specific considerations of the growth question (Baker and Welter, 2017; Hill and McGowan, 1999; Van de Ven and Johnson, 2006). Research gathered through the diagnostic provides meaningful intelligence or understandings for the benefit of SMEs themselves (Dutta and Thornhill, 2013; Hill and McGowan, 1999; Simba and Ojong, 2017). This has notable implications around the enduring issues of depth, breadth, and impact in SME research.

In proposing a diagnostic approach, this paper makes two important contributions. First, it proposes a novel method through which two key theoretical debates may be progressed. The use of an inductive approach via the diagnostic allows greater sensitivity to questions of growth as a process, addressing questions of ‘how’ over ‘how much’ (McKelvie and Wiklund, 2010). Similarly addressed are questions of the object of inquiry, the diagnostic approach focusing first on the firm as the entity as opposed to specific individual management questions or disciplines (Blackburn and Stokes, 2000). Second, it considers the need for a wider range of research tools capable of not only integrating SME subjects within the research process, with implications for the quality and authenticity of the data collected (Bartunek and Rynes, 2014; Darabi and Clark, 2012; Trehan et al., 2018), but also of delivering support capable of addressing real-world challenges faced by a wider SME community (Antonacopoulou, 2010; Bartunek, 2007; O’Hare et al., 2010; Rouse, 2020).

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iDs

Mark Gilman

Jacob Salder

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