A Study of the management of transition from small scale to medium scale unit with special focus on the behavioural aspects of the top management

Abstract

Economic development of any region is an outcome of purposeful human activity. Both the developed and the underdeveloped world look at the industrialization process as an important key to economic development. Most of the social scientists agree that man stands at the centre of economic activity, and he assumes various roles in the developmental process, namely as an organizer of human and materials resource, worker, consumer and exchange agent. Out of these multiple roles, his role as the organizer of human and material resources is the most important and basic one. Small scale industries, with an approximate investment of nearly Rs. 3000 crores, contribute in a significant way to the economic and productive processes in the country. Bu, unfortunately sizeable proportion of the small scale units in India is sick. If small scale units could be helped to grow, he incidence of sickness among them would greatly reduce, and the huge investments in these units could be more fruitfully employed. The present study emerged from the desire to throw light on the factors which facilitate the graduation of a small scale unit into medium scale, with a special focus on the behavioural aspects of the top management. The objectives of the study were;  To understand the problems faced by an entrepreneur in his attempts at survival and growth, and the methods used by him to resolve them.  To analyses the psychological makeup of the entrepreneur, using in-depth interviews and psychological instruments, in order to identify the type of person who is able to make the transition.  To attempt to unearth the basic heuristics employed by the entrepreneur in his decision making process The sample for the study consisted of 12 small and 9 transited units, in the chemical and engineering industries, spread over Karnataka and Gujarat. Transited units were defined as those whose number of employees was less than 50 in the first five year of starting of the unit and more than 50 at the time of data collection. Their growth rate of at least 4 persons per year further distinguished these units from the small scale units whose average growth rate was found to be only 1.03 person/year. The data collection, using structured and in depth interviews and psychological instruments, was done in four phrases: In the first phase, an interview schedule was utilized to collect data about the firm, the products, the problems of the growth of the unit, besides the education, experience and family background of the entrepreneur. The second phase consisted of administering certain psychological instruments to the entrepreneur to obtain data on congeniality of the environment to innovation, mental blocks to creativity, intelligence level, coping styles, motivational profile and divergent thinking ability. In the third phase, the entrepreneur was asked to narrate some of the critical incidents during the growth of the unit. In the fourth phase, the entrepreneur was probed to understand his decision making process to understand some of the heuristic used pertaining to transition. Being an exploratory study to understand the transitional process, a sizeable proportion of the data could not be subjected to rigorous statistical analysis. The interview data and other data were useful in enriching the understanding of the transition process. The major findings of this study are as follows:- 1. Growth orientation of the top management, including the need for personal growth and a proactive mode of problem solving facilitates the transition process. 2. The ability of the entrepreneur to manage the staff and high cohesion at the top facilitate the transition process. 3. Identification of a saleable product and product modification to suit the needs of the market and the concern for high quality are crucial elements facilitating transition. 4. The constitution of the enterprise as a limited liability entity that facilitate the transition process. 5. Maturity of the entrepreneur as indicated by several years of marital status at the time of founding the unit, also facilitate the transition process. From the rich interview data and also based on categorizations in the contingency tables, several hypotheses on the management of transition ware developed.