Richard Sennett describes three factors which impact on the nature of modern work and organizations. How do these factors impact upon Smaller and Medium sized Enterprises (SMEs)?

Essay by hotsanjaysoniUniversity, Bachelor'sB-, March 2005

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Small and medium sized businesses are well recognized and acknowledged worldwide as vital and significant contributors to economic development, job creation, and the general health and welfare of economies, both nationally and internationally (Morris and Brennan 2000). The small business sector represents a statistically significant proportion of the world economy.

Richard Sennett considers three factors that idolize the modern forms of organizational flexibility as:

a) Discontinuous reinvention of institutions

b) Flexible specialization of production

c) Concentration without centralization of power

Discontinuous reinvention of institutions

Modern organizations are moving towards reducing the layers in their management structure with a view to increase the efficiency and flexibility of operations. This is because of the reason that in today's dynamic environment change is what puts an organization in a position of competitive advantage and helps in being cost effective in the global market. This reduction in the layers helps in monitoring and controlling the work of employees in an efficient manner and also allows the managers to control more number of subordinates under them and hence makes space for the performance of multiple tasks by the managers. Due to this whole idea of downsizing of organizations, the current organizations which are running on purely capitalistic lines with pyramidal structures face problem because many employees have to be laid off in order to take advantage of the strategic decision for change. This affects the morale of the employees and actually demotivates them. This is evident from the fact that the percentage of organizations that have downsized themselves with a view to be cost and productivity efficient is very less compared to what has been thought of.

SME's have been characterized by few employees and almost direct control and authority over all activities by the principal owner. This allows the organizations to be able to...