determinants of survival and growth of micro …

ABSTRACT

OF THE PHD THESIS

DETERMINANTS OF SURVIVAL AND GROWTH OF

MICRO-ENTERPRISES IN THE FOOD

INDUSTRY IN THE GALILEE

PHD COORDINATOR: PHD STUDENT:

PROFESSOR CONSTANTIN SASU, PHD OKSANA GOZIKER

Iași, 2018

DETERMINANTS OF SURVIVAL AND GROWTH OF MICRO-ENTERPRISES IN THE FOOD


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ALEXANDRU IOAN CUZA UNIVERSITY OF IAŞI

FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION

DOCTORAL SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION

Mrs. / Mr. …………………………………………………..

We are informing you that on October 27, 2018, at 11 o'clock in the Room R402, R Building, UAIC, Ms. Oksana Goziker will hold the public defence of the PhD thesis "Determinants of Survival and Growth of Micro-Enterprises in the Food Industry in Galilee" in order to obtain the scientific title of Doctor in" Economic Sciences ", Marketing "field. The doctoral committee has the following composition: President: DINU AIRINEI PhD, Professor, Dean of the Faculty of Economics and Business Administration, "Alexandru Ioan Cuza" University of Iasi; Scientific Coordinator: CONSTANTIN SASU PhD, Professor at "Alexandru Ioan Cuza" University of Iasi; Committee members: ADRIANA ZAIŢ PhD, Professor at "Alexandru Ioan Cuza" University of Iaşi; DAN-CRISTIAN DABIJA PhD, Professor at “Babes-Bolyai” University, Cluj-Napoca; FLORIN ALEXANDRU LUCA PhD, Professor at Technical University "Gheorghe Asachi" Iasi; We convey the summary of your doctoral thesis and we invite you to participate at the public defence of the thesis. The thesis can be consulted at the Library of the Faculty of Economics and Business Administration.



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TABLE OF CONTENTS

Introduction

2.Literature Review

1.1 MSEs: The Definition and Contribution to the Economic Growth

1.2 MSEs in Israel as an industrial and economic phenomenon

1.2.1 The Galilee

1.3 The Typology of MSEs in Israel as an industrial and economical

phenomenon

1.3.1 The Surviving rate of Israeli enterprises

1.4 Food service activity

1.4.1 Food Service Definition

1.4.2 Food Service Activities in the World

1.4.3 Food Services Activities in Israel

1.5 Organization and Management

1.5.1 The Role of the Manager

1.5.2 Enterprise Structure

1.5.3 Management Strategy

1.6 Size Based Differences Between the Enterprises

1.7 Israeli Entrepreneurial Sector

1.7.1 Tax Authority-Based Business Classification

1.7.2 The Business Licensing Process

1.7.3 Education is Power

1.8 Factors Affecting SMEs

1.8.1 Endogenous Factors

1.8.2 Exogenous Factors

1.9 Factors Affecting Food Service Industry SMEs

1.9.1 Endogenous Factors



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1.9.2 Exogenous Factors

2. The Conceptual Framework

3. Methodology

3.1 The Research Aims

3.2 The Advantages of Mixed Methods Research (Research Paradigm)

3.3 Research Procedure

3.4 FIRST STAGE

3.4.1 First stage objectives

3.4.2 Research Population

3.4.3 Research Tools

3.4.4 Validity, Reliability and Generalization

3.4.5 The Role of the Researcher Throughout the In-Depth Interview

Process

3.4.6 Qualitative Data Analysis

3.4.7 Ethical Considerations

3.5 SECOND STAGE

3.5.1 Research Population

3.5.2 Research Tools

3.5.3 Validity, Reliability and Generalization

3.5.4 The Role of the Researcher

3.5.5 Official Data Analysis

3.6 THIRD SRAGE

3.6.1 Research Population Definition

3.6.2 Research Tool and Instruments

3.6.3 The Questionnaire Development Validity and Reliability Results

3.6.4 The Quantitative Data Validity, Reliability and Generalization

3.6.5 The Role of the Researcher Throughout the Close-Ended

Questionnaire Distribution

3.6.6 Data Analysis

3.6.7 Ethical Consideration



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4. Findings

4.1 FIRST STAGE: Self-reported Factors Relative to Business

Success/Failure Provided by In-depth Interview Analysis

4.1.1 Theme 1: Managerial capabilities:

4.1.2 Theme 2: Long-term and Short-term Business Planning

4.1.3 Probing In-depth Interview Related Factors on a Quantitative Scale

4.2 SECOND STAGE: A Focus on Quantitative Aspects of Business

Success/Failure Related Factors Based on Governmental Statistics

4.2.1 Business owners self-reported feelings of success (2013-2015)

4.2.2 Company’s performance evaluation based on three criteria:

employees, sales and volume of the credit

4.2.3 Future Predictions

4.2.4 The Barriers of the Operation of the Company

4.3 THIRD STAGE: The Extent to which the Discovered Factors May Affect

the Micro-Restaurant Probability to Survive

4.3.1 Financial Management Issues

4.3.2 Dealer Status

4.3.3 Prior Knowledge, Readiness and Experience

4.3.4 Managerial Strategies for Business Eco-System Evaluation

4.3.5 Personality

4.3.6 Staff Oriented Strategies

5. Discussion

5.1 Owner Personality Related Characteristics and Their Effect on the

Probability of the Enterprise to Survive

5.1.1 Gender

5.1.2 Self-Esteem

5.1.3 Is the Existed Education Enough

5.1.4 Age

5.1.5 Staff Oriented Managerial Strategies



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5.2 Restaurant Related Characteristics and their Effect on the Probability

of the Micro Venture to Survive and Succeed

5.2.1 The design and location of the restaurant

5.2.2 Businesses performance related activities

5.2.3 Potential Business Client Bases

6. Conclusion

Theoretical and managerial implications

Originality and personal contributions

References

Appendices



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Introduction

The title of the research: Determinants of Survival and Growth of Micro-

Enterprises in the Food Industry in the Galilee (North of Israel).

The research objectives:

The purpose of the research is to explore the factors influencing

restaurant micro - enterprise survival for microenterprises in the food

industry in the Galilee.

The gap in knowledge:

The small and medium-size enterprises (SMEs) are a widely spread type of

business critical for the economic growth. According to the OECD (2017),

they accounted for about 99 percent in the majority of the countries

(OECD. 2017). In some countries, the amount of small and medium size

businesses exceeds the 99% point. For example, in the United States 99.7

percent of all U.S. firms are small businesses. Their labor force account for

about 50 percent of all U.S. workers (SBA1, 2012). In Canada, the amount

of small and medium-size firms is about 99.9 percent, which represents

89.9 percent of the total private labor force (Statistics Canada Business

Register, 2012). In Japan, 99.7 percent of small and mid- size firms employ

69 percent of the total working population (Economist Intelligence Unit,

2010). As far as the European economy is concerned, the role of the SMEs

1

U.S. Small Business Adminstration



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is very important as well. The amount of all the SMEs is approximately

99.8 percent with 66.5 percent of employment (EC, 2016-2017).

In Israel the situation is approximately the same. According to the Small

Businesses Association (SBA, 2017) in 2015 in Israel the small enterprises

market included 520 thousand enterprises. Among the entire

entrepreneurial sector 99.5% represented small and medium- size

businesses (enterprises that employless than 100 workers) (SBA, 2017).

According to the same report SMEs created 1.75 million places of work,

from among which 61% represented the amount of self-employed. As well

it was found that this sector contributes 53% to the GDP.

The majority of all SMEs are microenterprises. According to the SBA (2017)

the average amount of micro-enterprises (employing 0-9 employees) in

the OECD sector represented 90.15%, while in Israel it amounts to 92.33%

(SBA, 2017).

Despite the importance of the SMEs in the economic development of

countries, most of those enterprises do not survive. Each year numerous

new small and medium-size businesses try to find their place in the local

and global markets, but the majority of them fail. According to EC (2016)

among EU Member States,the business average birth rate was11% while

their overall death rate was 10%." In the United States the situation is

even worse, the rates of newly opened and closed small and mid-size firms

varies from 10 to 12 percent (SBA, 2014).

The research question:

During the last decade, the average growth in the number of small and

medium-size businesses in Israel was 3%, with 10% of new born and 7% of

failed companies, in comparison to the previous year (SBA of Israel, 2013)

Moreover, the most problematic sector amongst the micro and small size

enterprises (MSEs) in Israel and the world is the food industry. The failure

rates in this industry represent approximately 80% of failed enterprises



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after eight years of activity, according to the Israeli Central Bureau of

Statistics (CBS, 2014). The food industry is therefore the sector

representing the most acute problem. Thus, the purpose of the study

aimed at creating criteria and guidelines for the development of a more

stable entrepreneurial society. In this respect, the first research question

proposed: Which factors are relevant for the Galilee area micro-restaurant

survival?The second research question, in turn, suggested the analysis of

the extent to which overall factors that were found as relevant may affect

the micro-restaurant chances to survive. Following this and based the

analysis results, it will be proposed the criteria and guidelines would cater

best to the needs and challenges of the Galilean food industry.

In order to tackle this problem, the research will be divided into three

steps. In the first part, the research will propose a literature review

pertaining to the leading factors affecting microenterprises (MEs) survival

rates both in Israel and abroad. Then the second part of the research will

examine the relevance of those general factors to the particular

microcosm of the food industry in the Galilee. Based on the findings in the

second part of the research, the study will then try to propose a key

entrepreneurial criteria that will be best suited for the MEs in the Galilean

food industry.

Chapter 1. Literature Review deals witht the definition of MSEs and their

contribution to the economic growth, approaching: MSEs in Israel as an

industrial and economic phenomenon, the typology of MSEs in Israel as an

industrial and economical phenomenon, organization and management,

size based differences between the enterprises, Israeli entrepreneurial

sector, factors affecting SMEs, and factors affecting food service industry

in SMEs.



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Chapter 2. The Conceptual Framework reflects the contribution of the

units that compound the model external circle to the understanding of

aspects that may be responsible to the Galilee area micro-restaurants low

sustainability.

The conceptual framework of the research leans on five interrelated fields

that include: Organization and Management, Israeli Entrepreneurial

Environment, Israeli Food Service Industry, Galilee area of Israel,

Microenterprises MEs,The Galilee area Micro-restaurants,Factors

responsible for the Micro-restaurants survival in the Galilee area of Israel.

Figure 1

Conceptual

Framework

Model

Israeli

Entrepreneuri

al

Environment Organization

and

Management

Galilee

area of

Israel

Israeli Food-

Service

Industry

The Galilee

area

Micro-

restaurants Microenterprise

s MEs

Factors

Responsible for

the Micro-

Restaurants

Survivalin the

Galilee



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Chapter 3. Methodology is reffering to research objectives and research

procedure.

The Research Objective is to explore the factors influencing restaurant

microenterprise survival and growth for microenterprises in the food

industry in the Galilee.

The research procedure was comprised of three main parts.

The first stage of the study addressed the factors underpinning the

survival of the enterprise. In-depth semi-structured interviews had been

conducted with ten participants. These interviews were designed based on

the information that was provided by the Literature review. A content

analysis had been operated to provide a deeper understanding. It has also

enabled the researcher with an opportunity for a retrial of the result. Re-

trial of the findings is an important methodological procedure underlying

such aspects as generalization and validity.

The second part of the research attempted to examine the tendencies that

characterize the food service enterprises on the industrial level. The data

that was gathered for this purpose had been provided by the Israeli

central bureau of statistics. Through the analyzed data it had been

impossible to select the specific group as well as did not include

enterprises with less than five employees in order to perform a more

specific statistical analysis. This supports the fact that microenterprises are

usually ignored and that despite their numerical superiority in the totality

of the enterprises.

The third part of the research bore upon the information provided by the

two previous stages in order to develop a structured questionnaire and to

make a survey that will provide the necessary quantitative information for

the subsequent development of the business management guidelines.



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Table 1: The research procedure stages:

Research stages

Aim Research tools

Research population

Stage 1: Qualitative

To understand the factors involved in success or failure of SMEs

The semi- structured questionnaire

The sample included 10 restaurant owners of the private restaurants that employ up to 9 employees and act or were closed in the Galilee part of Israel between years 2010-2017.

Stage 2: Quantitative

To understand the factors involved in success or failure of SMEs

Secondary data analysis accepted from the CBS

All the businesses related to the Israeli food and beverage industry

Stage 3: Quantitative

To gather information that will aid to develop guidelinesfor Galilean micro-restaurants survival improvement

The close-ended questionnaire built on the basis of information gathered during the first two stages

The sample included 90 restaurant owners of the private restaurants from Tiberias, Nazareth and Zefat, employ up to 9 employees and act or were closed in the Galilee part of Israel between years 2010-2017.

Chapter 4. Findings is structured by the stages of research. In the first

stage are approached the self-reported factors relative to business

success/failure provided by in-depth interview analysis. The second stage



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makes a focus on quantitative aspects of business success/failure related

factors based on governmental statistics

Chapter 5. Discussion deals with the owner personality related

characteristics and their effect on the probability of the enterprise to

survive (gender, self-esteem, education, age, staff oriented managerial

strategies), and restaurant related characteristics and their effect on the

probability of the micro venture to survive and succeed (design and

location of the restaurant, businesses performance related activities,

potential business client bases).

The conclusions summarize the results of this research, the situation of

hypothesis testing, the presentation of managerial implications and

theoretical contributions, as well as the limits and future directions of

research.

The bibliography underlying this research paper is presented in the

alphabetical order of the authors and contains a number of 209 titles.

The annexes represent the documentation that held the thesis.

The summary of the thesis includes: the content; keywords; synthesis of

the main parts of the thesis; CV of the PhD student.



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Conclusion

The research, I have conducted, was based in area I had lived in for more

than twenty years. During these years, I observed a lot of new restaurants

appear and disappear. Since I live in a highly developed tourist area this

vicious circle made no sense to me. I was therefore extremely curious to

find out as the reasons behind such rapid restaurant failure. In order to do

that I have formulated the research questions that were intended to shed

light on the factors relevant to the survival of micro-restaurants in the

Galilee. I wanted to be able to come-up with the criteria that would

develop guidelines that truly address the challenges of the Galilean

restaurant industry. During my research, however, I stumbled upon a

difficulty in obtaining relevant data.

The initial research objectives were related to the development of a risk

management evaluation tool for micro businesses in Israel. It was guided

by my dream to provide microbusinesses with a risk management tool

that would aid their owners to recognize and evaluate possible risky

events on time. The provided information should have been instrumental

in aiding the micro-restaurant owner to make the most appropriate

business decision. In this respect, I had to collect past, long-term

information on both macro and micro levels. The analysis of this data

should have provided me with the information necessary for the creation

of a risk analysis tool.

Unfortunately, the data collection process was impossible for the number

of reasons. First of all, there was no long-term information about this

Israeli entrepreneurial sector. Thus, I was unable to develop a model that

could provide the business owners with the kind of a general forecast

based on the specific economic changes. Moreover, due to ethical

confidentiality considerations it was impossible to achieve any information

representing businesses activity criteria like: profits, sales volume, working



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capital, changes in business assets, return on equity (ROE), liquidity level,

return on assets (ROA), capital and turnover ratio.

The Israeli bureau of statistics, was the only source of information was

found as available, but unfortunately even this information was highly

limited. The information available dated only a couple of years back (2013-

2015). This short-term range did not provide me with the possibility of

making long-term analysis. In addition, the information management

strategies used by the national institutions completely lacked uniformity.

The information gathered was not industry specific as it referred to the

entire Israeli food and beverage industry without such relevant categories

as enterprise size, its type and its location. In the other words, the data

available was clearly insufficient in order to achieve my initial research

objectives. Although I had no possibility to develop a proper risk

management evaluation tool, I still wanted to help micro-restaurant

owners to succeed. This desire made me look for alternative ways that

would be instrumental in achieving the purpose of the research.

I therefore decided to make the most with the information that was

available to me. My starting point found that microbusiness (with up to 5

employees) were simply ignored by the central bureau of statistics. (CBS,

2016). It means that no available information exists in the Ministry of

Industry and Trade when it comes to self-employed businesses or to those

that employ up to 4 employees. Based on the information provided by the

professional literature, it was clear that in order to help this sector it was

necessary to understand where the problems lay. It is therefore in this

respect that the first stage of the research intended to recognize aspects

that could be responsible for micro-restaurants low probability to survive.

This information was based on qualitative surveys.

The second stage of the research attempted to analyze tendencies that

may characterize the food service entrepreneurial activity. This stage was

highly important, as the Israeli CBS agency has all the necessary tools in



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order to achieve a highly representative sample. Based on such a

representative sample as well as on survey results provided by the

government supported research authority, it could aid to complement

results provided by the first, qualitative stage of the research.

The chart below concludes the research results:

Moreover, these first and second stages and their possible contribution to

research objectives, exposed me to a new perspective as to the micro-

Business owner

(the producer)

Government (the regulator)

Poor interaction between the Tax Authority, Ministry of Interior and Business Support Authority (MAOF) provides a fertile ground for the private firms that try to sell lies to the other potential clients and creates an information gap in understanding of:

Business Establishment Process

• Business Dealer Status

• Number of potential Client bases

• Business Legalization Process

• Business Planning

• Food Type (Kosher or Not)


• Business Location • Number of potential

Client bases

Business activity success

• Businesses Potential for growth


• Staff and financial management

• Gender

• Self-esteem

• Education level



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restaurant assistance and that, in turn, allowed me to answer my second

research question.

Starting the new research, I had felt a kind of disappointment. I was afraid

that not developing a risk management tool meant that I would not be

able to find something new. However, this feeling quickly went away as I

realized that analyzing the different aspects of micro-restaurants was a

huge field of activity.

Prior staring my research, I was sure that one of the possible reasons for

the micro-restaurant failure would be business owner low education level.

I had numerous aspects underlying such an assumption. The first one was

related to the fact that the north of the country, is mostly characterized by

widely spread agriculture and tourism industries, that usually require low-

tech employees. The second reason came from the evidence I have got

through my master research. During this research I attempted to

investigate factors responsible for the local area unemployment. My M.A.

thesis was sponsored by one of the government official bodies and it was

based on a highly representative sample. According to my M.A. study, it

was found that in year 2008, the local population was mostly

characterized with the average of approximately 12 years of schooling.

Since that period, the situation was not much changed, as no industrial

innovation had occurred. Having understood that ten years have passed

since that period, I attempted to find the information that could approve

or reject my previous findings, but unfortunately, yet again, the local

authority statistical unit could not help me with, as it simple does not exist

more. Additional municipal units also were unable to help me, as they do

not keep track of such information. How may this be possible, as such a

basic and an important information does not exist? What is the criterion

the local education system should compare to in order to improve the

existed situation that does not looks as worthy to follow on the entire

country level?



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The lack of government regulation

Throughout the first stage of the research, I approached a lot of business

owners. Some of them were quite pessimistic as to their business future.

While some aspects mentioned by the interviewees were unique, it was

still possible to trace a common thread and pin point at generally

experienced difficulties in the business establishment process. Moreover,

although some restaurants were in the impossibility of getting any proper

food licensing, they had been allowed to serve food, to employ people and

act as if business as usual without even having an approved electricity

system! These ventures were known as active businesses. Their owners

submitted their official financial reports to the authorities and yet they

were illegal. Listening to some of the interviewees, I simply could not help

thinking: "How is it even possible?". In the beginning I thought, that is I

hoped that I must have misunderstood something. Surprisingly, these

situation that were related to me by the interviewees proved right.

Having found that prior to opening a business, its owner must approach

TAX, VAT and National Insurance authorities, I was sure that they are

sufficient in order to support me with all the needed knowledge, but the

reality was simple opposite. The provided information was simple fuzzy.

Some of the terms that the respondents operated with like "exempt

dealer", I simple did not find. As well, I did not find any information

related to the license obliged business and the license authority request.

Approximately the same level of disappointment, I had felt when

attempted to analyze Ministry of Interior information as to the licensing

process. The final twist of the related information analysis was the found

that the responsibility as to the business legalization lies on the local

municipality. Moreover, during the 2007 survey, it was found, that no one

really may assess the provided support effectiveness.

According to the information posted by VAT, TAX and Ministry of Interior

officials, no cooperation was found between the financial and legalization



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structures. Although Israel considers itself as a developed democratic

country with highly developed High-Tec, communication systems and

informational freedom, there was not found any computerized platform

centralizing the "three whales" information in order to provide the

potential entrepreneurs with all the needed and friendly formulated

information. Instead, the governmental authorities attempt establish

agencies called MATI and MAOF and that were intended to support the

new business owners at their business life-cycle different stages. Being

provided by the governmental officials, in my opinion they should be the

most effective.

Unfortunately, the results were far away from the expected. No MATI or

MAOF sites provide any precise information as to the different stages of

opening up a business. In order to get this information, the research

respondents had to be in touch with agency advisors as well as to

participate different courses. Such a possibility could have been effective,

as the field of the business management is a multidimensional and rich.

However, an OECD (2016) report criticized MATI for its lack of

effectiveness. That means that the government provided support was

found to be as ineffective.

Having found all this, the reality was not found as looking optimistically.

Throughout the analysis, I always attempted to ask myself, if for me as a

person who really knows what kind of information to look for, it took so

much time, what happens to regular person? And this in addition to the

fact that I did not find what really needed. I did not like to say that the

information did not exist, I just want to say that I was unable to find it.

As you know, the nature does not suffer vacuum. When I attempted to

find the business establishment process required information, I

encountered with a lot of firm that provide the assistance in business

opening or its managing. The key words like "a simple way to open

business" all the time had attracted my attention. The simplified



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explanation of the such a complicated process turned me back to the

interview were one of the respondents told me about "project manager".

According her, PM charisma made her feel sure in him without any

references as to his knowledge and abilities. The possibility to escape the

problems simply made her to be blind. The negative consequences were

not long in coming. The restaurant collapsed. Its building, because of the

huge debt, remained to be full of the construction mistakes and the

inability to accomplish its building, prevents the owner from suing for

swindle.

The discussed above do not provide an optimistic picture. The government

regulation looks to be simply insufficient as MATI and MAOF not really

provide all necessary information in the way the average person may

understand it. In addition, the lack of the government regulation provides

a fertile ground for the private firms that try to sell lies to the other

potential clients.

Facing a data void

"How much money does the person need in order to establish his or her

business?" is the first question that the authorities should provide

information for. However, the answer for it is nowhere to be seen. First of

all, the owner does not know how much money he or she needs to invest.

As a result, he is unable, based on his possible profits, to calculate the

period required in order to return his investment. He will then be unable

to calculate his restaurant capacity planning etc.

It is clear that each business is unique, and a general sum of money does

not provide any kind of valid information, however, in order to develop a

proper business plan, the authorities should provide the entrepreneur

with somewhat of a minimum average sum required. This sum may

include all basic governmental business opening fees and various other

indication of common future costs. The same goes for the information

regarding the different business dealer status in Israel. For the time being,



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no official governmental site is offering precise information about this

subject. The only sites that provide this sort of information are privately

owned business counselling firms. These cannot tender non-partisan

advice since they are interested in getting clients, so the national

authorities should really step in there.

And what about business dealer statuses and their characteristics related

information? Why it is possible to be found only in the private sites? And

why there is no possibility to create a database that will provide the owner

with the possibility to find all the related information in one single place

that is government supported and in the way that will be understandable

by the simple but highly creative and talented people?

The Business Owner

The business owner is the most important part of the puzzle called

business. Business owners represent the drive and the performance

mostly defines the characteristics of the venture and its success.

Throughout the research were discovered and tested various owner

personality related aspects. Some of these aspects initially were perceived

as an additional evidence to the aspects that were already discussed and

could not provide something new. However, it was their analysis that

helped us see the bigger picture.

As I had already mentioned, when I started my research, I suggested that

one of the explanators of businesses low ability to succeed could be due

to the fact that the local entrepreneurs were undergraduate. Prior to

conducting the research, I thought that in order to be able to have a

better business picture, the entrepreneur should have higher education.

Surprisingly, the statistically approved results, showed a completely

different picture, since those owners who succeeded the best had

mastered less years of study.

Since I had found these results confusing, I decided to change my research

strategy and to start from the basic entrepreneurial characteristics. In this



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respect, one of the most multivocal aspects was the respondent gender.

Although owner gender was not found as significant while explaining the

probability of the enterprise to survive, a relationship between owner

gender and business dealer status was found. Throughout the analysis, it

turned out, that females, in contrast to males, were found to be more

frequently associated with businesses defined as exempt dealers. In turn,

that type of business was found as having lower chances to survive. This is

extremely interesting, since it was previously found that the main

difference between males and female is in their ability to achieve business

growth and profitability (Gottschalk and Niefert, 2013). The current

finding added, that gender may affect differences in the approach to

starting the business. In this respect it was interesting to understand what

may explain such a decision, as other than the business dealer status

choice, asin most important success factors no difference was found

between the genders (Chong, 2012).

The possible answer could come from the additional owner related aspect

called self-esteem level, that was found as associated with the firm’s

success (Chandler and Jansen, 1992) as well as with gender (Moksnes et

all., 2010). Respondent self-esteem levels did not have a direct effect on

the probability of the micro-restaurant to survive according to my

research. However, it was found that women ranked themselves lower

than the men do. It was also found that low micro-restaurant owner self-

esteem was associated with the owner’s higher education level. Education

level, in turn, was found as directly affecting micro-restaurant survival

rates.

Thus, men who felt less self-confident although they possessed a lower

level of education did not worry as to their ability to survive in the

business management whirlpool. Women, in contrast, as a result of low

level self- confidence, saw themselves applying for the higher education

for the number of reasons. The first of them was related to the desire to



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decrease the gap of intergender rights. Getting a higher education was

associated with something that previously was perceived as mainly

masculine prerogative, so women could see it as only a possibility to

overcome their insufficient self-esteem. Unfortunately, this could not aid

women in improving their businesses probability to survive, as according

to the Chandler and Jansen (1992), not the education level, but its type

was found as the most important education related criteria.

Moreover, the most interesting finding was that higher education

positively correlated with a higher frequency of the managerial training

attendance. Managerial training courses could support the business owner

and provide them with the appropriate managerial tools. They clearly

could be perceived as a required educational type Chandler and Jansen

(1992). However, my research found this as contradicting due to the low

effectives of the training provided. Moreover, it leads us to the previously

discussed problem of government assistance insufficiency.

Theoretical and managerial implications

Micro-enterprises represent a significant part of the country

entrepreneurial sector. Their contribution is highly important to the

country’s economic well-being. The purpose of the research was to try to

find factors that would improve their opportunity to survive. The

research discovered unpleasant consequences created by poor interaction

between the most important economic structures, called the regulator

and the producer. This has resulted in an informational gap. In order to

change this a proper interrelation strategy development providing

different types of micro-business with the information relevant to their

business is required. In the other words, the improvement of the

communication process between entrepreneurs and their supervisors will

create favorable conditions for thrifty development and success.

In this respect, in order to minimize the interrelation gap between the

regulator and procedure, first of all the authorities that are responsible for



23

the entrepreneurial sector assistance, should base their solution on the

scientific proved results. In order support such results, researchers must

have a possibility to access all the required information on its various

levels. Information that includes quantitative data that will provide the

possibility to calculate parameters fit the different statistical and

economical procedures implementation. Moreover, different

governmental agencies must use data science based tool so that their

information is statistically valid. This will also help research as it will allow

proper information follow-up.

Limits and future directions

Despite the attempt to conduct the research in strong respect to social

research rules, it still suffers from the number of limitations that cannot

be ignored. The first is related to respondent sampling process. As it was

mentioned, there was no data-base that could provide the researcher with

the possibility to implement probability sampling procedures or use a

more representative sample. As a result, the analyzed sample was

achieved by using convenience and snowball sampling procedures.

Although target population and sampling statistical rules were rigorously

applied, in order to be able to generalize the findings of the research more

ample, long-term data compilation is required.

Since there was no reliable data-base, it was impossible to achieve precise

measurements that could be used as the business performance indicators.

As a result, a research questionnaire was developed that was intended to

collect related information based on the respondent report. In order to

increase the questionnaire validity and reliability levels, during the pilot

stage the collected data was analyzed using the Factor analysis procedure

as well as data reliability analysis. Despite this the collected data could not

provide the precise micro-restaurants performance indicators for a

number of reasons. The first is related to the respondent unwillingness to



24

report real performance information. The second one, may be related to

the respondent fear to send any business activity precise information.

Last but not least the weakness of the research is partially due to the size

of the analyzed sample. The total sample included 90 respondents. In

order to achieve 90 respondents who agreed to cooperate with the

researcher, more than 300 restaurants in Tiberias, Nazareth and Zefat

were contacted. These who rejected to take a part in the research mostly

motivated their unwillingness by fear of different official auditors. Thus,

although that the ratio of the exempt dealers and other types of the

business dealer statuses in the final sample represents a full

entrepreneurial picture, the sample size by itself may be seen is relatively

small in order to achieve more generalizable results.

Therefore, the only way to avoid such difficulties for future research

would be the creation of government controlled data-base. First of all,

controlled data -based will support the necessary information to the

researchers and will reduce the fear level as to the possible objectives of

the data collector. Secondly, it will provide the scientific society with the

possibility to achieve and analyze the related data based on real time

information as well as on the respondent provided information. Such a

multi -perspective analysis will lead to more precise picture as to the real

entrepreneurial situation. Most importantly, precise scientific results will

provide the respondent authorities with up to date information in order to

develop SM&MEs support programs that will really fit their actual needs.

Originality and personal contributions

My research aimed at discovering factors responsible for the low survival

rates of the one of the most important entrepreneurial sectors called

microenterprises particularly focusing the research objectives on the

micro-restaurants in Israeli Galilee. The were several reasons underpinning

my research choice. Firstly, food MSEs do not draw sufficient scientific

attention, I therefore wanted to remediate to this gap in knowledge.



25

Secondly, this type of businesses is extremely wide-spread and is also one

of the weakest sectors both in Israel and abroad. Since the factors relevant

to the big businesses cannot be generalized to the small or even micro-

ones (Welsh and White, 1981 in Ghobadian and Gallear, 1996), it became

clear that this type of businesses requires a unique approach. Moreover,

Israeli SMEs entrepreneurial sector does not attract a lot of attention from

the local scientific society. In this respect current research represents a

kind of pioneering work that attempted to enter an unknown field by

implementing qualitative as well as quantitative scientific approaches.



26

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