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NOTE: Since 2009 the title of the International Journal of Entrepreneurship Education (IJEE) has been changed to the title above.  ISSN numbers: IJEE 1649-2269 and IRE 2009-2822

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SME Management: (What) Can We Learn from Entrepreneurship Theory?

IJEE Vol 6: Issue 1, 2008

Author(s): Jorg Freiling (University of Bremen, Germany)

Abstract:
Small- and medium-sized enterprises (SMEs) are often regarded as entrepreneurshipdriven.
There are many reasons for this. For example, the entrepreneur as a person plays a much
more vital role than in large firms and entrepreneurial spirit is not weakened by hierarchies and can
more easily pervade the firm. Facing the peculiarities of SMEs, entrepreneurship theory seems to
offer a lot to understand their very nature and to derive managerial implications. At present,
entrepreneurship theory is not sufficiently connected with SME management and needs to be refined
to respond to managerial challenges in evolutionary contexts. It is the purpose of this paper to
strengthen this link. To this end, the paper scrutinizes entrepreneurship research and identifies the
entrepreneurial functions as a promising stream to locate managerial challenges and to integrate
them into a cohesive approach. The model rests upon the execution of the following functions which
respond to particular managerial challenges: (1) the innovation function contributes to system
renewal, (2) the coordination function (internally) and the market-making function (externally)
make system exploitation possible, and (3) the risk management function allows for system
protection. A causal model proposes that the situation-specific mix of the entrepreneurial functions
explains the strategic and financial performance of small firms.

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