Management capacity development to support business growth. A Grounded Theory Study in German SMEs

Abstract

Understanding how small and medium-sized enterprises (SMEs) support their growth strategies through the development of management capacity (MC) is of fundamental importance, particularly given the central role SMEs play in the economies of their respective countries, and the fact that there is a lack of research and useful theories in this specific field. The objective of this study is to develop a framework for MC development (MCD) in growth-oriented SMEs. This study builds on grounded theory by conducting 14 interviews with key informants: 12 founders/CEOs and 2 top managers of German SMEs (and former SMEs). Data analysis was performed by using the qualitative data analysis software ATLAS.ti. The major findings of the study are that, contrary to previous SME HR research, most companies in this study had formal processes for HR practices in place, and there was clear evidence of certain forms of strategic plans, the pursuit of strategic objectives and the taking of strategic decisions manifested itself. In addition, most participants considered their organisation to have an alignment between growth strategy and MCD strategy. However, implementing it into business practice was perceived as extremely challenging. This study thus contributes to the field of SHRM literature by showing how MC is instantiated in SMEs. Furthermore, there is, arguably, a valuable practical application of the research study as it provides growth-oriented SMEs with a clear and logical framework from which to develop MC pro-actively as a major facet of their growth strategy.