Investigating the relationship between formal time management practices and business performance of UK SMEs

Objectives
This research aims to investigate the relationship that exists between time management practices and business performance.
Prior Work
Terziovski’s (2009) research into formal and informal SME management practices concluded that formal structure and innovation strategy are the key drivers for innovation leading to high performance. This builds on previous work (Patel, 2005; Prakash and Gupta, 2008) arguing that formal structures add clarity to employees’ roles, leading to greater employee commitment and overall organizational effectiveness. Others, such as Fiegenbaum and Karnani (1991), Appiah-Adu and Singh (1998), Narayanan (2001) and Qian and Li (2003) argue that SMEs are competitive because of flexible organisational structure and centralised decision making which supports informality. Hence a theoretical tension exists between formality and informality in SMEs.
Approach
An online management questionnaire was e-mailed to 10,000 UK employer SMEs, evenly stratified across the manufacturing, distribution and business services sectors, in October 2014, yielding 757 usable responses. The questionnaire contained three sections: business and management characteristics, operational efficiencies and time management efficiencies, based on Kaplan and Norton’s (1992) balanced scorecard approach. Addressing the fundamental hypothesis that “Formal time management practice (TMP) is positively associated with improved business performance”, five associated hypotheses relating time to TMP and business performance were tested to explore their interrelation, controlling for business and management characteristics, using binary logit regression analysis.
Results
Adoption of formal time management systems is significantly associated with business size (<.001). There is a positive correlation between formal time management systems and employment growth and future sales turnover. Micro businesses are less likely to use formal time management practices (only 74% adopted software for this) when compared with businesses of other sizes (95% adoption rate). Moreover micro businesses that did adopt a formal time management system have a negative association with business growth thus highlighting the lack of suitability for micro businesses. Above average business efficiency is a significant factor that is strongly associated with future business growth (<0.001); projected employment growth (<0.05); projected sales growth (<0.05) and adopting Cloud technologies (<0.01) is positively associated with above industry average efficiency.
Implications
The findings of the research are timely as it contributes to the productivity puzzle which is a major concern for the UK economy. The findings indicate that organisations with formal time management systems and latest technologies like Cloud computing enjoy higher efficiency levels highlighting the need for driving digitisations amongst SMEs.
Value
The findings support the need for formality in SME business practices, suggesting a key area for business support, alongside the need for further research to understand the relationship between TME and competitive advantage.

Permission granted on 13/04/17, by the ISBE (http://isbe.org.uk/) to make the full text of the conference paper available in the Middlesex University Research Repository.