An Investigation of Factors Affecting the Information-Search Activities of Small Business Managers

How much should I charge for this new product? Where can I find the money to finance my growing business? Which job applicant will make the best employee? These are just a few of the many decisions that small business managers constantly face. And any small business manager "worth his salt" knows that a good decision has to be based upon adequate and accurate information. So what type of information-search activities do managers engage in? Do their information-search activities vary by the type of decision being made? Are there patterns to their information-search activities? And if so, what do these patterns tell us about the small business manager? Recently, researchers have shown a growing interest in the decision-making and information-search activities of small business owner/managers. Much more than their counterparts in large organizations, the small business owner/manager deals personally with a wide range of issues, generally without the support of functional specialists or the benefit of their specialized knowledge. When confronted with a decision-making situation, they must decide when and where to search for information, when to rely on their own expertise or intuition, and when to rely on the advice of others. Time and resource constraints also undoubtedly influence their information-search activities, as well as the importance they place on different issues. Given the range of issues facing the small business owner/manager and the central role of information-search activities in the decision-making process, it would be helpful to know whether the information-search activities of small business owner/managers differ across decision areas and whether the importance they place on issues affects their search activities. It has been argued, for example, that the questions asked by small business researchers do not always take into account the actual concerns and interests of small business owner/managers (Banks and Taylor 1991). A more effective strategy involves asking entrepreneurs directly about their needs and the issues they define as most important. Finally, it would also be helpful to know whether perceptions regarding one's effectiveness in dealing with a particular issue affect a small business owner/manager's choice of information source or the intensity of the information search. Literature Review Banks and Taylor (1991) have stated that it is important to recognize the problems that entrepreneurs themselves have defined when performing research on entrepreneurship and small business. They argued strongly for surveying entrepreneurs and small business owner/managers regarding their concerns and noted considerable differences between the concerns of the academics and the practitioners they surveyed. They found, for example, that workforce-related issues and issues dealing with government regulations and paperwork were of the greatest concern to practitioners, while academics addressed a much wider variety of concerns. Alpander, Carter, and Forsgren (1990) also found that issues about human resources and internal operations were cited most often by owner/managers to be the most critical problems encountered by their firms in their formative years. They reported that most owner/managers acted on their own in making their most important decisions and employed a decision process that was based on significant thought and conscious analysis and evaluation of the problem and alternatives to its solution. Understanding the concerns owner/managers bring to the decision process, then, can help us better understand how their unique perspective might influence that process. While small business managers use a variety of information sources, they are apt to rely heavily on their own experience and easily accessible information when making decisions. In an earlier study, Rice and Hamilton (1979) found that most small business people relied on their own accumulated experience to make decisions, while Peterson's (1988) findings suggest that unstructured and unplanned processes, such as inspiration, are common in small business. …