This paper attempts to suggest some economic rationale of protecting small business in competition policy and, in this context, assesses the regulation against SSM (super supermarkets) openings, which has recently been legislated in Korea.
Modern competition policy is mostly enforced along the objective of securing consumer welfare. But the competition policy in America or the European was born with multiple, and sometimes contradictory, goals. The Sherman Act in America, for instance, was allegedly ‘special interest legislation, and the principal protected class was small business.’ And in the European competition law, protection of competitors has been included in its objective, too. Though people seem to routinely remark that competition policy pursues economic efficiencies, it is quite a recent case. It is often necessary to protect ‘competitors’ in order to protect ‘competition’ or competitive process itself, not least because competition does not always take place in a ‘level field’. Competition in actuality may not always be competition ‘on the merit,’ i.e. ‘fair’ competition. Competition policy can actively intervene and protect weak, small businesses in some asymmetric market conditions. In this perspective, protection of small business may not necessarily conflict with promotion of consumer welfare as the legitimate goal.
It is frequently disputed whether what competition policy is supposed to pursue is consumer welfare or allocative efficiency. This is whether to aim at consumer's surplus in particular or total surplus (producer's surplus added) as a whole. Protecting consumer welfare can be interpreted as a (quasi-) Pareto welfare criterion whereas pursuing total surplus implies the Kaldor-Hicks (compensation) criterion.
Though there are some persuasive economic cases for the total surplus goal, competition authorities in many countries tend to (at least implicitly) choose the consumer welfare goal in practice. Thus it can be argued that competition policy as usually enforced is based on a Pareto welfare criterion, which means losers should not be entailed or should be adequately compensated for a business action to be allowed or a change to be implemented.
Meanwhile, when there is conflict of interests between consumers and producers, there are quite strong cases for the priority of consumers. The case for free trade for instance can also be understood as based on a Pareto criterion in practice, though it corresponds to a Kaldor-Hicks criterion in the literal sense. Whatever disputes it may cause in theory, in practice any policy change might be hard to justify or cannot be realized without some adequate compensation for those thereby harmed.
The SSM regulation is a ‘business coordination' scheme to restrict or prohibit store opening by large retail firms in a designated area. The only purpose of the scheme is to protect small incumbent retailers. It is an entry restriction in essence and might cause consumer harm, and is thus prima facie anticompetitive. As with the case for free trade, however, it can be argued that the regulation could only be revoked on the precondition of some compensating measures.
Actually a specific, direct compensation toward small retail businesses would be almost impossible to arrange, and the compensation schemes usually take the form of a support or promotion policy. But such indirect compensation schemes tend to be limited in scope or quite ineffective. The SSM regulation may be rationalized as a supplementary measure to those indirect schemes. In sum, the SSM regulation as a business coordination scheme, possibly anticompetitive, can be considered as a practical, temporary device to supplement the required compensation for the damage to small retail business.
We need to briefly overview the current state of SSM regulation and the relevant experience of foreign countries. SSM may be roughly defined as a medium-sized supermarket owned and operated by a large retail firm. They have almost quadrupled in number during the recent decade. In early 2010 numerous bills calling for SSM regulation were proposed in the parliament, and the so-called ‘twin laws’ were legislated as substantial amendments to the relevant Acts in November 2010. Formally a mandated arbitration procedures as it is, the regulation would very probably work as an entry restriction.
Major countries also have similar experience in the conflict between small incumbent retailers and large incoming retail firms. In Europe in particular, entry by large discount retailers has been regulated with a view of protecting small business, apparently in the form of urban planning. Since the 1990s, however, along the market opening trend under the WTO system, direct schemes for small business protection have been abolished or weakened in most developed countries.
There have been heated disputes on SSM regulation, and the main points of the pros and cons are summarized and critically reviewed. First, the core case for regulation is the necessity of protecting small business. Whatever is the normative position, any social change may not secure enough support without adequate concern for the underdog in the change. SSM regulation, though anticompetitive in itself, can be taken as a practical, temporary supplement to compensate the damage done to small retailers.
Some people worry that local markets will be monopolized by SSMs. But such a result seems a quite remote possibility, and consumer choices could be enlarged rather than curtailed. As for the competitiveness of the retail industry, though it is argued regulation can have a positive effect, that is not so convincing. Entry regulations mostly tend to induce inefficiency and thereby reduce business competitiveness. There is the unconstitutionality issue, too, which looks somewhat far-fetched. Finally, those arguing against regulation fear the bursting of trade conflict, specifically the potential infringement of the GATS provisions. Such a problem may be technically possible, but practically not so plausible given the current situation in many European countries.
In concluding remarks, the expected effectiveness and the unintended consequences of regulation are addressed. It is far from clear what consequences SSM regulation as a business coordination scheme will have and how effective it will turn out. Given the present conditions and policy environment, it seems that regulation may not have a significant effect in the long run, which is confirmed by the experience of foreign countries. Potentially serious problems are the uncertainty that regulation inevitably involves and the wrong signals it can transmit to small business in general. And regulation will lead to a perverse result that it effectively protects the incumbent SSMs from the further entry by other SSMs. The scheme needs to be limited temporally as well as spatially.
It is advisable for the competition authority to have some role as the advocate for consumer welfare in the business coordination procedure, and try to restrain the potential anticompetitive effect of the regulation. The discussion so far is not only specific to the SSM regulation, but extended to retail markets in general. Changes will incessantly occur and what follows could be viewed as an ongoing restructuring process rather than a problem of conflict from a dichotomous perspective.

This research examines why entrepreneurs seek growth for their ventures. We test two explanations with this inquiry. The first argues that the entrepreneur is motivated by the personal benefits expected from growing one’s firm. The second advances the position that an entrepreneur believes they can achieve high growth because they have an innovative opportunity that is competitively unique. We view this study from an expectancy theory viewpoint so we could surmise that those with particular motivations will have a different perception of growth. The expected outcomes in this case are related to greater personal financial rewards or independence. Entrepreneurs may therefore seek growth because they want to enjoy the higher income and independence offered compared to alternatives such as employment in established organizations. The second, opportunity-centered pursuit of growth arises from the assumption that expectancy in achieving an outcome helps influence the decision to aspire to that outcome. It is Schumpeterian in the sense that growth may arise out of opportunities to benefit from significant change. These opportunities represent a high level of newness and are initiated by producers, who teach consumers to want new things. Innovative opportunities therefore offer the potential for bigger gains. As a consequence, entrepreneurs are more likely to have growth aspirations when they have innovative opportunities that make this possible.
This leads to our main research question : do entrepreneurs seek growth because of their personal motivations, because they have innovative, unique opportunities, or both? We build and test hypotheses based on this research question, drawing on data from 196 entrepreneurs participating in the 2008 Global Entrepreneurship Monitor survey in Korea.
Our research finds support for both the motivation and opportunity perspective. Growth requires greater challenges, and this is weighed against possible outcomes. Those with higher goals (income, independence) also have the need to accomplish more. This provides the motivation for growth aspirations, which are expected to result in the fulfillment of these goals. Growth aspirations are also associated with the belief that efforts will lead to successful outcomes in this case, when one has an innovative opportunity with few competing options. The effect of low competition is also strengthened when the opportunity has high technological newness.
While prior studies have looked at human and social capital effects on growth, we examined the impact of the perceptions of the opportunity. Our findings support the view that resources can affect expectancy, and these are not just personal, but also material. Individuals weigh the perceived effort needed to achieve their desired results and their decisions reflect the belief their efforts will lead to successful outcomes. Innovation carries higher expectations of success, which can lead to better performance. Our findings thereby indicate that an innovative opportunity, from a market and technology perspective, may contribute toward one’s aspirations for growth.
This opportunity perspective also finds support with respect to the competitive environment, which is strengthened through the interaction with technological newness. Environmental variables can impact expectancy judgments. Where there are few competitors for an opportunity, it may increase an entrepreneur’s belief that efforts will lead to successful outcomes. There could be less competition because the technology has not been adopted by rivals, or because the geographic region or industry is not populated with intense competition. That we found an interaction effect with technological newness and competition supports the first explanation.
However, given competition exhibits an independent effect, we should keep in mind the evidence that choice of industry plays a key role in growth ambitions. With a perception of fewer competitors for one’s product, an entrepreneur may see the potential for profits before rivals notice and respond. Perhaps the interaction effect with technological newness indicates that technologically innovative, competitively unique opportunities are even more likely to provide growth potential. This research is valuable to academic research in contributing to our understanding about the drivers of entrepreneurial growth ambitions. For policy makers, it offers implications for ing and motivating growth-oriented entrepreneurs.

Entrepreneurial activities have a critically important influence on economic development and entrepreneurs contribute greatly to the revitalization of a community’s economy, as well as economic development, through job creation (Macaulay, 2003). Moreover, as job creation comes into the spotlight as one of the core national challenges in the real world, many researchers suggest that studies on entrepreneurs are urgently required for a reinvigoration of entrepreneurial activities.
Unfortunately, however, entrepreneurship researches using intention approaches based on the Theory of Planned Behavior developed by Ajzen (1991) have been predominant among studies on entrepreneurs in South Korea. These researches, which are only focused on exploring any determinants of entrepreneurial intentions just on the assumption of entrepreneurial activities before entrepreneurial behaviors, have some limitations in explaining the revitalization of entrepreneurial firms. Some research shows a significant difference between entrepreneurial intentions and actual behaviors, and also the attitude towards entrepreneurial occupations. This is supported by the report of Brenner et al. (1991) where 55% of respondents who were the students of graduating class at the college of business administration preferred managing their own business among the given options, but only 5% of the entire students actually ed and ticked off managing their own business as the most probable employment position.
Accordingly, approaches to field-oriented, empirical behavior theories intended to induce participating voluntarily in entrepreneurial behaviors, in addition to entrepreneurial intentions, are necessary for the revitalization of entrepreneurial firms. Combining conventional entrepreneurship researches with the Expectancy theory (Vroom, 1964), representative of the theories of cognitive behavior, may be an alternative for that. In this context, an advanced study (Edelman et al., 2010) combining Expectancy theory with entrepreneurial startups (Edelman et al., 2010) was recently published, and the combined approach as an alternative attracted public attention.
Aimed at examining closely the processes of entrepreneurial motivation, this study is exploratory research based upon the results of the studies performed by Gatewood (1993) and Edelman et al. (2010) who attempted to apply the viewpoint of Vroom's (1964) Expectancy model of ‘effort → performance → outcome’ on entrepreneurship research. Especially, focused on the process of ‘performance → outcome' as one of the Expectancy theory constructs, in-depth empirical analyses of the instrumentality and valence of Expectancy theory were made in this study using the expanded Expectancy model in which growth intention is added to the parameters in the light of reflecting the argument of Gatewood (1993) that the addition of specific endogenous/exogenous variables leads to a reinforced construction of the Expectancy theory.
This study aims to determine whether Expectancy theory is an appropriate model for field-oriented behavioral approaches to guiding emerging venture and small/medium businesses to revitalization and sustainable growth, and to make suggestions for what roles are given to entrepreneur, managers, policy makers and the like by motivation factors themselves and their interactions and the resulting products. For this purpose, the following hypotheses were set up :
Entrepreneurial activities have a direct effect on entrepreneurial outcome satisfaction. (Hypothesis 1); Entrepreneurial activities have an effect on growth intentions. (Hypothesis 2); Growth intentions have an effect on entrepreneurial outcome satisfaction. (Hypothesis 3); and, Growth intentions act as a mediator between entrepreneurial activities and entrepreneurial outcome satisfaction (Hypothesis 4).
To test the hypotheses listed above, the questionnaires were collected from 237 managers at venture and small/medium businesses in South Korea from Seoul and the surrounding metropolitan area, were used in this study.
In this study, all the variables involved in research analyses were operationally defined on the basis of preceding studies. First, entrepreneurial activity is defined as a sort of instrumental means required to achieve a personal goal in life which is the desired outcome of an entrepreneurial activity completed by an entrepreneur through specific behaviors, and refers to the entrepreneur's trust in subjective probability (Gatewood, 2004). Second, based upon the study by Park and Gu (2007), the definition of growth intention was subdivided into subjective measurements : resource accumulation intention, technical improvement intention and market expansion intention, instead of quantitative and objective indexes. Third, it was assumed that for entrepreneurial outcome satisfaction, the outcome desired by an entrepreneur would motivate him/her to initiate his/her own venture or small/medium business. In this connection, the respective six elements identified as either reasons or motivations for business initiation by Carter et al. (2003) that is, self-realization, financial success, independence, role, innovation, and recognition were employed as subfactors of entrepreneurial outcome satisfaction.
To determine the reliability (Cronbach’s α) and validity of the assessment instruments employed in this study, SPSS 17 and AMOS 7.0 were used for statistical analyses. Chronbach’s α values of all the variables exceeded 0.8, suggesting that they are reliable. In addition to that, in order to validate the measurement instruments for entire latent variables, confirmatory factor analyses were conducted to determine their convergent validity and discriminant validity. These analyses show that the research model fits are equivalent to χ² =160.510, df = 108, P = 0.001, RMR = 0.026, GFI = 0.931, AGFI = 0.892, NFI = 0.948, TLI = 0.975, CFI = 0.982, RMSEA = 0.045, and CMIN/df = 1.486. Besides, all of the factor loadings (0.50), C.R. (lC.R.l > 1.96) and P values (P < 0.01), average variance extracted (AVE, ≥ 0.5), and latent variable reliability (≥ 0.7) of respective variables exceeded their criteria, indicating that they all have convergent validity (Bagozzi and Yi, 1988). Next, the results of comparing the squares of inter-variable correlations to AVE values indicate that the said squares are lower than AVE values, suggesting that they have discriminant validity (Lee and Lim, 2011). Thus, it was demonstrated that the measurement instruments all have adequate reliability and validity, which means that it is feasible to make a structural equation modeling analysis for hypothesis testing.
Structural equation modeling analyses for hypothesis testing show that the fit indexes are χ²= 313.360, df = 129, P = 0.000, RMR = 0.058, GFI = 0.872, AGFI = 0.830, NFI = 0.899, TLI = 0.926, CFI = 0.938, RMSEA = 0.078, and CMIN/DF = 2.429. The results of hypothesis testing are summarized as follows : first, entrepreneurial activities did not have a significant positive (+) direct effect on entrepreneurial outcome satisfaction (H1); second, entrepreneurial activities had a significant positive (+) effect on growth intentions (H2); third, growth intentions also had a significant positive (+) effect on entrepreneurial outcome satisfaction (H3); and finally, growth intentions acted as a complete mediator between entrepreneurial activities and entrepreneurial outcome satisfaction without any direct effects (H4).
Lastly, the results of this study suggest the followings in the academic and practical aspects. Regarding academic suggestions, first, while there is almost no attempt to apply Expectancy theory to entrepreneurship research in the country, this study empirically demonstrates that the theory is an appropriate frame for researches on entrepreneurial behaviors. Second, growth intentions have the significance of an important variable which strengthens the frame of Expectancy theory by playing a role as a mediator between entrepreneurial activities and entrepreneurial outcome satisfaction, which implies that post-initiation growth can contribute greatly to achieving several important desired outcomes in life among Korean entrepreneurs. Fourth, the entrepreneurial outcome satisfaction characterized by giving priority to high-level desires primarily featuring advanced economic structures was observed. Specifically, in terms of the standardized coefficients that growth intentions affect entrepreneurial outcome satisfaction, self-realization (0.890) ranked first, followed by innovation (0.889), financial success (0.778), role (0.720), recognition (0.601), and independence (0.582), which supports the above-mentioned finding.
Meanwhile, practical suggestions are summarized as follows. First, personal factors (e.g., abilities, effort, experience, etc.) and contextual factors (e.g., market, finance, culture, etc.) have significant influence upon expectancy judgment, valence, and instrumentality (Nadler and Lawler, 1983; Klein, 1989). Therefore, with reference to the interactions (instrumentality) and their products (valence) in the relationship among entrepreneurial activities, growth intentions and entrepreneurial outcome satisfaction as shown in this study, entrepreneurs and managers can strive to acquire their own skills, techniques, ability and experiences, while policy makers can indirectly support entrepreneurs and have a positive impact on entrepreneurial activities in the manner of making efforts to improve entrepreneurs' competency and problem-solving strategies. Furthermore, it also suggests that creating a positive social atmosphere about entrepreneurial activities and business administration activities plus giving institutional (supportive organizations') support for business initiation will lead to the higher possibility to achieve both successful business initiation and growth. The above-mentioned results are consistent with, and supported by, the previous suggestions that venture supporting agencies improve the personal competency and problem-solving strategies of individual entrepreneurs who initiate their own venture businesses (Mario and Schatz, 1980), and the resulting venture businesses initiated seem far more successful (Krentzman and Samaras, 1960).
Second, adding growth intentions resulted in laying more emphasis on the statistical significance of growth motivation instead of statistical valence of entrepreneurial motivation, and thus, growth motivation was stronger than entrepreneurial motivation in the terms of motivational force. This means that more proactive governmental and institutional (supportive organizations') politic considerations are required to induce business growth, beyond the current supporting policies for business initiation.
At the same time, this study has some limitations and requires further studies as listed below. First, the subject population surveyed in this study was limited to venture and small/medium business entrepreneurs in the South Korean metropolitan areas of Seoul, Incheon and Gyeonggi-do, and it is somewhat unreasonable to generalize the results because the recall rating scale based sample consisting of existing entrepreneurs was used. Second, due to some difference in conception between Expectancy theory attaching importance to the process of motivation and the Theory of Planned Behavior putting stress on behavioral intentions, the sequence of the hypotheses related to entrepreneurial activities and growth intentions as presented in this study may cause different interpretations. Finally, the reliability and/or validity of single-parameter measurements for entrepreneurial activities may be lower than that of multiple-parameter measurements.
In the spite of the limitations mentioned above, however, this study is considered greatly meaningful as the first paper published in Korea which attempted to approach to entrepreneurial behaviors through the reinforced Expectancy theory model with added growth intentions.

SMEs (Small and Medium Size Enterprises) are regarded as playing a central and vital role in the growth engine of the national economy that leads innovation, generates jobs and facilitates competition. In addition, SMEs contribute heavily to the world economy internationally also (Hean et al., 2007). The role of SMEs can be assessed from an economic and a social point of view. SMEs participate in the market and play an important role in the operation of the market mechanism. SMEs that possess flexibility can also swiftly respond to the changes in consumption trends in the market, thereby strengthening national competitiveness and facilitating future economic growth. SMEs enhance social stability. SMEs account for over 87% of the total employment in South Korea (SMBA, 2009b).
SMEs are more likely to experience liability of smallness (Baum, 1996) because of scarce resources. In order to overcome these limitations and to make utilization of resources which are not under their direct control, they try to build networks which are known as contributing to achieving firm performances. Firm reputation means the evaluation and the judgment by the interest circles through their long time experience of a corporation. Gaining firm reputation is an effective means of overcoming the liability of smallness and increasing firm performance (Larson, 1992; Gulati and Higgins, 2003; Roberts and Dowling, 2002). Firm reputation leads to social and economic trust in capabilities (Larson, 1992)
These days, as firm reputation (Capraro and Srivastava, 1997; Orlitzky, Schmidt and Rynes, 2003) and network types (reputation network, information network and social network) (Larson, 1992; Robert and Dowling, 2002; Gulati and Higgins, 2003; Lerner, Brush and Hisrich, 1997; Teo and Choo, 2001; Christiaanse and Venkatraman, 2002; Mahama, 2006) are known as contributing to achieving firm performances and many studies have been done so far. Although many studies have been done, they have been focused on each one or limited networks so there is still strong debate about their utility. This study aims to empirically analyze the relationships between network types, firm reputation and business performance and verified what effect firm reputations have upon network types. The main purpose of this study is to find out the mediating effects of network types in the relationship between firm reputation and firm performance, the principal objective of this research is to fill the theoretical gaps via the construction of a comprehensive model : that is, to investigate the mediation effect of network types (Street and Cameron, 2007; Lechner et al., 2006) on the relationships between firm reputation (Grant, 1991; Capraro and Srivastava, 1997; Orlitzky, Schmidt and Rynes, 2003) and business performance in the context of small and medium sized businesses. For this, questionnaire surveys were administered targeting 247 companies that operate their businesses in South Korea. Using the collected data, correlation, reliability, and validity analysis were carried out using SPSS 15.0. The major results are as followings :
First, it was found that firm reputations positively affect information networks and reputation networks, while having negative influence on social networks. This result implies that firm reputation is the key factor that influences information networks and reputation networks in Korean SMEs. This result is identical with results from antecedent research such as Barney and Hansen (1994) and Stuart (1998) which argue that firm reputation is closely related to information networks and reputation networks.
Second, firm reputations affect business performance in a positive way. It overlaps with the results of a number of studies arguing that firm reputations positively affects business performance (Capraro and Srivastava, 1997; Orlitzky, Schmidt and Rynes, 2003). This result implies that a firm should make an effort to increase its good reputation in order to improve business performance.
Third, reputation networks and information networks were found to have significantly positive effects on firm performances (Stuart et al., 1999; Robert and Dowling 2002; Deeds et al., 2004), while social networks did not directly affect firm performance. It also justifies the hypothesis that reputation networks and information networks can mediate the relationship between business performance and independent variables such as firm reputations.
Fourth, reputation networks were found to partially mediate the relationship between firm reputation and firm performance. This implies that reputation networks are an important direct driver of business performance. It also appears to be a necessary mediator of the link between firm reputation and firm performance. It would be expected to affect firm performance more efficiently if firm reputations combine with reputation networks. Finally, information networks partially mediated the relationship between firm reputation and firm performance. This result implies the effectiveness of firm reputations appears to operate at least partially via the medium of information networks. The implication here is that for Korean small firms, firm reputation can improve business performance when it is combined with reputation networks and information networks.
Through this study, firm reputation, which is also intangible resource, was found to have a positive effect upon building reputation networks and information networks. This implies that a company prefers alliances with a company with a high reputation in order to obtain the benefit of endorsement in forming a relationship, thereby suggesting that a company needs to strive for implementing and managing reputation. Also, social networks were found to have no effect upon firm performance.
The research contributes to our understanding of how SMEs can improve their business performance. It shows that to achieve and maintain a positive business performance, it is vital that a firm is able to possess an organizational structure that integrates and incorporates firm reputation, reputation networks and information networks into a coordinated framework that allows activities to take advantage of the benefits. It is hoped that this research and the findings stemming from it can aid future research into the area of improving managerial practices, and to open the door to further research that looks further into these three constructs and the respective interrelationships that exist between them. The findings may help managers of firms to better understand the key factors that should be encouraged in order to achieve economic growth and those which should be avoided. The findings may also help policy makers develop industrial policies to improve the performance of Korean industry.
Our study suffers from certain theoretical and methodological limitations. As we utilized a limited number of predictors, future research is needed to take into consideration other possible factors. Another limitation is that we utilized a cross‐sectional sample with questionnaires. Longitudinal data may be more appropriate for this type of research.
The generalization of our results is another limitation. This research was conducted on small firms in South Korea. In order to increase generalization, it may prove helpful to carry out a comparative study between two or more countries.