The Pricing Decision in Small Firms: Complexities and the Deprioritising of Economic Determinants

JAMES CURRAN WAS UNTIL RECENTLY Midland Bank Professor of Small Business Studies and director of the Small Business Research Centre at Kingston University, England; he continues to be closely associated with the centre and its research. RobinJarvis is Professor of Accounting andJohn Kitching a Research Officer at Kingston University; Geoff Lightfoot, formerly a research student at Kingston University, is now Lecturer in Management at Keele University, England. Price setting by small business owners has previously been analysed mainly in terms of two approaches. The more theoretical has usually taken economic rationality based on profit maximisation as the yardstick to assess owner-managers' decision-making and behaviour. Empirical approaches (often reporting findings from studies with the above starting point) have repeatedly found that the great majority of small business owners employ relatively simple cost-plus pricing. This paper argues that both approaches are inadequate. Theoretical approaches stres...