Lightfoot, Geoffrey (1998) Financial management and small firm owner-managers. (PhD thesis), Kingston University, .

Abstract

This study investigates financial management and small firms through considering some of the financial concepts that are used by owner-managers, their meanings and the relationships between them. At the same time, it examines the contexts through which these concepts are given meaning - how, for example, the business, the owner-manager and the environment have to be constituted for the concepts to have the meanings they are given. Particular attention is given to the rhetorical constructions that allow the emplacement of certain financial management procedures in small firms to the exclusion of others. In this it differs from existing research into small firms which the study depicts as being locked in to a paradigm of 'best practice' that has both unflatteringly compared procedures in small firms with an idealisation of practices in large firms and proceeded to quantify difference rather than attempt to explain it. The study used discourse analysis procedures to examine two key areas: pricing and cashflow management. From this a number of conclusions are offered as to owner-managers' organisation of their businesses. The principal findings are fourfold. Owner-managers are able to create and manage the interplay between formal accounting procedures with both informal knowledge about the business and wider moral and social conventions in ways that blur such distinctions and emphasise both personal authority and business legitimacy. Secondly, the study shows that as this informal knowledge is often grounded in the owner-manager, ownership and knowledge derived from ownership help define the owner-manager's authority in such a way that external advice is made of limited use or irrelevant. Third, value in the business is revealed as both movable and reflexive. Owner-managers use the prices that they set, for example, as a measure of their own worth and of wider status considerations. Finally, the flexibility in the use of formal and informal knowledge allows the owner-manager freedom to define some areas as calculable (and so subject to 'rational' decision-making) and others 'unknowable' (and thus subject to personal, subjective relationships). As the future is typically rendered 'unknowable' this both allows different treatments of suppliers and customers and helps explain issues such as why owner-managers apparently resist blandishments to increase their planning activities.

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