Developing Small Business Effectiveness in the Context of Congruence

Interest in small business management and development is flourishing today (Carland, Hoy, Boulton, and Carland, 1984; Peterson, 1989). Many small business owners are seeking and identifying sources to assist in the successful management of their businesses (Davig 1986, Stoner 1987). A small business is defined by the U.S. Small Business Administration (SBA) guidelines as an organization that has fewer than 500 employees and sales that do not exceed $50 million. These small fires cannot expect to compete successfully by meeting the majors "head on." Small firms, because of their size and sales, must achieve success by managing the key variables that impact the effectiveness of their business. Recent articles in the management literature suggest that an organization will be more effective if certain factors are congruent or match each other (Covin 1991; Hoffman, Cullen, Carter, and Hofacker 1992; Randolph, Sapienza, and Watson 1991). The management literature highlights several variables that influence organizational effectiveness in small businesses that include a fit between technology and structure (Hoffman, Cullen, Carter, and Hofacker 1992; Randolph, Sapienza, and Watson 1991) technology and strategy (Covin, Prescott, and Slavin 1990) and the environment, industry and strategy (Covin 1991). The purpose of this article is to extend the organizational effectiveness framework by developing an integrative model for examining and understanding the congruence of key variables in small business management. CONGRUENCE Definition Several researchers have attempted to define congruence and identify key interacting variables in the context of organizational effectiveness. Leavitt (1962, 1965) defines congruence in the context of fit or best match between key variables. He proposes four interacting variables that influence organizational effectiveness: technology, task, structure, and people. He suggests that these four variables are highly interdependent and must be congruent for a business to be effective. Changes in business strategy should consider all the variables because no one variable can explain effectiveness outcomes. Three perspectives on congruence are offered by Joyce, Slocum, and Von Glinow (1982). Differentiation of their three perspectives is based on the interactions among variables. The first point of view, effect congruence, focuses on the causal interactions, or main effects, of situational and individual characteristics on behavior. General congruence considers the main effects along with any interaction effects between the situation and the individual. Finally, functional congruence adds the possibility of confounding, moderating, or intervening variables which might complicate the main and interaction effects. Van de Ven and Drazin (1985) expand the definitions of the concept of "fit." The first of three definitions, selection, suggests that the successful business firm has been forced to adapt to its situation. A causal relationship is implied between context variables and organization specific variables. The second definition of fit, the interaction definition, focuses on relationships between variables and the resulting effect on performance. By analyzing all pairwise comparisons of variables the congruent business firm can be described. Finally, the system definition, indicates that all business variables must be considered simultaneously. Pairwise comparisons or other dissection efforts result in faulty interpretations of the functioning of the actual business. A holistic viewpoint must be maintained to achieve relevant results. A number of authors have provided integrative models of congruence. In general, these authors use a combination of the system viewpoint and the interaction perspective. For example, Miles and Snow (1984) argue that a business must have a tight "fit" among strategy, structure, and process to achieve excellence. They state that "tight fit" is the causal force at work when excellence is achieved by various managerial and business characteristics. …