Abstract

Each day of the year, over one thousand firms close their doors and go out of business. The major cause of such business failure or bankruptcy is managerial incompetence, which accounts for about 45 percent of the total. Weak management in a large firm generally is remedied by "horizontal promotion." The manager who has reached his level of incompetence has simply moved out of the normal path of progress into a non-functional position. However, in the small firm, because of the need to achieve high productivity per man hour and per investment dollar, there is no room for those who cannot pull their own weight and there is no such thing as a nonfunctional position. Limitations to growth of the small firm are directly related to the degree of management capability. Success or failure is determined by the level of managerial competence. Functions performed by managers can be divided into three types of problem solving activities dealing with people, things and concepts.