Presentation

Personal Research Focus

Informal Learning in Small Business

Gun Sung Joung

Small BusinessDefinition of Small BusinessProper Function of Small BusinessSignificance of Small Business ResearchProblem of Small Business ResearchCharacteristics of Small Business

Informal LearningDefinition of Informal LearningDefinition of Formal Training

Relationship between SB & ILEffectiveness of Informal Learning in Firm SizeEffectiveness of Formal Training in Firm SizeInformal Learning in Small Business

Future Study PlanDiffusion of InnovationSEM (Structural Equation Model)How to Stimulate Informal Learning In Small Business

CONTENTS

Small Business

Small Business

A small business is managed and owned independently by a private in-dividual or group. Types of small businesses entities include those that are generally privately owned corporations, partnerships, or sole propri-etorships.

The U.S. Small Business Administration stated that the legal meaning of “small” normally refers to businesses with fewer than 500 employees for manufacturing businesses or with less than $7 million annual receipts for nonmanufacturing businesses in the United States, fewer than 50 employees in the European Union, and fewer than 15 employees in the Australian.

Definition of Small Business

Small Business

Small businesses contribute almost half of the private gross domestic output, more than half of the private sector employment, and three-fourths of the net new jobs every year (U.S. Small Business Administra-tion, 1999).

According to Mazzarol (2000), small businesses will continue to play significant roles as a new growth engine in economic development, in-cubators for drastic change, and solutions for reducing unemployment at the commencement of the new millennium.

The realization of the huge potential of small business has been ac-cepted since the beginning of the Industrial Revolution (Mazzarol, 2000).

Proper Function of Small Business

Small Business

Bamji (2003) stated that even though informal learning and formal train-ing take place in all small businesses, a small number of owner/man-agers control knowledge that provides them with a continuously compet-itive advantage.

In this situation, the purpose of this study was to examine small busi-ness characteristics as identified in research on the relationship be-tween business size and the effectiveness of informal learning and for-mal training in the workplace.

Findings from this study will help owner/managers better understand the characteristics of small businesses and locate more effective ap-proaches to improving job competencies in the workplace.

Significance of Small Business Research

Small Business

Even if labor economists suggest that small business training has a sig-nificant relationship with productivity and that effective management of human resources is a necessary condition of small businesses growth, most current research has focused on large firms (Black, Noel, & Wand, 1999; Patton, Marlow, & Hannon, 2000). The connection between small business and performance has received less attention from academia and industry (de Kok, 2002).

On the other hand, several acknowledged basic characteristics of small business include barriers that act to obstruct small business owners from making up their minds about training in the workplace.

Problem of Small Business Research

Small Business

High Training Costs for Small Businesses

More Time Limitation in Small Business

Side Effects of Small Business Training

Low Effectiveness of Small Business Training

Insufficient Managerial Competency of Small Business Owner

High Bankruptcy Rate among Small Businesses

High Business Crime Rate in Small Business

Characteristics of Small Business

Informal Learning

Informal Learning

Informal learning is any learning activity that is engaged in to pursue understanding, knowledge, or skill without externally forced curricular standards (Livingstone, 2001).

Informal learning occurs in various ways, including on-the-job training, coaching, mentoring, self-directed learning, and networking (Lohman, 2005; Marsick & Watkins, 2001).

Eraut, Alderton, Cole, and Senker (1998) maintained that learning from other people and the reflection on that learning are the most significant dimensions of workplace learning.

Definition of Informal Learning

Informal Learning

Formal training is highly structured and has less flexibility and choice for students or trainees (Eraut, 2004).

Formal learning is considered as designed learning that is well orga-nized, typically institutionally sponsored and classroom-based (Colardyn & Bjornavold, 2004).

Definition of Formal Training

Relationship betweenSmall Business & Informal Learning

Relationship between Small Business & Informal Learning

The effectiveness of formal training has a positive relationship with the size of a business, because most small businesses normally may de-pend on informal learning and small businesses cannot afford to invest in employee training at the same scale as large firms in my MA thesis.

Effectiveness of Formal Training in Firm Size

Relationship between Small Business & Informal Learning

Most HRD practitioners believe that effectiveness of informal learning has a negative relationship with the size of a business because small business owners/managers normally prefer informal learning to formal training. However, the effectiveness of informal learning has a positive relationship with the size of a business in my MA thesis.

For this reason, the greater the number of resources will invest in infor-mal learning, the more effective will be the informal learning almost to the same degree as formal training.

Effectiveness of Informal learning in Firm Size

Relationship between Small Business & Informal Learning

Klass et al. (2000) stated that small businesses usually depend on in-formal learning, because it is not easy for firms of this size to under-stand the complexity of human resource training and expertise.

Informal learning also is usually preferred to formal training by small organizations because it may be less expensive (Koch & Van Straten, 1997) and closely related to a small business’s everyday activities, which helps a firm to focus on workers’ specific individual and work role needs more effectively (Curran et al., 1997).

Owners/ managers may not be satisfied with the quality of training pro-vided by external parties in small business, often because it is not easy for individuals or organizations to fully understand the practical prob-lems that normally arise (Storey, 1996).

Informal Learning in Small Business

Future Study Plan

Future Study Plan

Diffusion of Innovation

Rogers (1995) stated that the main elements in the diffusion of new ideas are: (1) an innovation is an idea, practice, or object perceived as new by an individual or other unit of adoption. (2) A communication channel is the means by which messages get from one individual to an-other. (3) Time is involved in diffusion in the innovation-diffusion process, innovativeness, and an innovation’s rate of adoption. (4) A so-cial system is a set of interrelated units that are engaged in joint prob-lem solving to accomplish a common goal.

With regard to research interest, (1) an innovation: new valuable knowledge and skills (2) that is communicated through certain chan-nels: informal learning (3) over time (4) among the members of a so-cial system: small business.

Future Study Plan

Structural equation modeling (SEM) is a statistical technique for testing and estimating causal relations using a combination of statistical data and qualitative causal assumptions.

SEM is a family of statistical techniques which incorporates and inte-grates path analysis and factor analysis.

SEM (Structural Equation Model)

Future Study Plan

My research focus, the innovation is new valuable knowledge and skills which are attained in workplace of small business. The informal learning could be one of effective and efficient ways to diffuse the innovation in small business. Therefore, diffusion of innovation could be a good prac-tical method and conceptual frame work to get an effective and efficient training result and to remove some obstruction factors in small busi-ness.

In methodology, SEM (Structural Equation Model) will help to under-stand relation and cause about informal learning in small business through multiple regression, path analysis, and factor analysis.

Finally, I hope to find to some catalyst for accelerating the effect of in-formal learning to get over limited resources in small business.

How to Stimulate Informal Learning in Small Business

Thank you