A QUALITATIVE STUDY OF MANAGERIAL CHALLENGES FACING SMALL BUSINESS GEOGRAPHIC EXPANSION

Geographic expansion is a common growth strategy used by small, entrep reneurial firms. Yet, despite the importance of geographic expansion a s a growth strategy, it is a neglected area of small business research . To date, research in the area of small business growth has focused o n broad issues, such as the common ''obstacles'' to firm growth and th e relationship between firm growth and firm profitability. Whereas thi s literature is suggestive, it does not provide specific prescriptive advice to small business managers pursuing geographic expansion as a g rowth strategy. As a first step in generating prescriptive advice in t his area, this study examined the managerial challenges that faced one small firm during the early stages of its efforts to expand geographi cally. The subject organization, referred to as the Local Advertising Company (LAG), operated in a single location from 1968 to 1990. As a m eans to initiate firm growth, the owners of the company opened eight n ew locations in 1991 and eight more in 1992. However, problems ensued. This study used a qualitative research methodology to conduct an asse ssment of the managerial challenges facing the LAC during its geograph ic expansion effort. Seventeen key employees of LAC were interviewed f or the study. The qualitative case study methodology used provided an opportunity to gather in-depth information from informants regarding t heir individual assessment of the managerial challenges encountered by LAC during its geographic expansion. Collectively, the respondents id entified a number of specific management issues that became problemati c during LACS geographic expansion effort. Through a content analysis technique, these issues were organized into 15 thematic categories inc luding training, recruitment and selection, the relationship between t he field staff and the original owners, and 12 others. Each of these c ategories represents the separate managerial challenges faced by the c ompany during its geographic expansion. The study provides a descripti ve analysis of each of the 15 categories of managerial challenges that emerged. The research results suggest that the successful management of a geographic expansion growth strategy requires managers to deal wi th a unique set of issues. For example, the training of new employees may become problematic when the most experienced personnel in the limi t reside in the home office and the new trainees are located in widely dispersed geographic locations. In addition, the results of the study provide an extension to both practical and theoretical knowledge in t hree distinct areas: planning for growth, managing growth, and the rea sons for growth. First, the results of the study support the importanc e of planning for growth, but suggest that planning must be complement ed by learning and a willingness to evolve one's plan as growth progre sses. In terms of the management of growth, the case shows that runnin g a small business and growing a small business do not include the sam e skill set. The owners of LAC had been quite successful managing thei r single location for 22 years. However, this ability to run a busines s did not complement the need to anticipate start-up problems in new, remote sites, which is inherent in a strategy of geographic expansion. In addition, the case demonstrated that the management of growth requ ires a cognizance on the part of the original owners of a firm to dele gate control. Finally, with regard to the reasons for growth, research ers generally characterize firm growth as being motivated by either ec onomic (e. g., economies of scale) or emotional reasons (e.g., employi ng family members). The owners of LAC initiated firm growth for the pu rpose of wealth creation to fund their retirements. This illustrates t hat firm growth; can be motivated by a combination of both economic (e .g., wealth creation) and personal (e.g., retirement security) reasons .