Human Resources, Financial Resources and Performance in Small Business

Small business entrepreneur / owner was highlighted as a vital resource. According to history (1994), the employer of the experience, knowledge and skills are generally considered the main parameter influencing the firm’s survival and development. Mullins (1996) states that the employer’s capacity decision affects organizational processes that are the basis of competitive advantage and for growth. Rangone (1999) defined the entrepreneur as “unique” resource that supports the rest of the resources.

Several studies have been undertaken in order to learn about the relationship between human or financial resources and performance of small firms. Cooper, Gimeno-Gascon and Woo (1994) found that human resources, and especially the owner’s education, are correlated with growth. Moreover, industry knowledge and financial resources contribute to the growth and the survival of the company. According Westh (1995), the founder of the experience affected the performance and survival of high-tech companies in a period of six years from the date of foundation. Brush and Chaganti (1999) examined the small commercial and service oriented businesses. Their study designates two dimensions of human resources – own resources and the commitment owner. A significant positive correlation was found between the two dimensions and net cash flow. No correlation was found with the record of employment growth. Westh et al. (2001) results support the hypothesis that if the founder of the company has a significant prior knowledge of the industry, we expect the company to record profitability is above the average of its competitors. Premaratne (2001) indicates a correlation between the subsidies to the company and increased sales. However, he did not support a correlation between grants and profitability. Wiklund and Shepherd (2005) found a significant positive correlation between access to capital and performance. Peña (2004) examined the relationship between human resources (education, management experience, prior entrepreneurial experience, business families, the implementation of the ideas learned in previous work) and increased profits, increased sales and increase in the number of employees. We have found a positive correlation between education and the application of ideas learned in previous work, and an increase in the number of employees and sales. Chrisman, McMullan and Hall (2005) used education and prior experience as control variables. A correlation was found between previous experience and an increase in the number of employees and sales. There is no correlation was found with education.