How Small Consultancies Grow: Challenging Problem-Based Theorising

This paper explores the adequacy of problem- based theorising in explaining the growth of small management consultancies. Literature on professional service firm growth tends to skip over the entrepreneurial stage, assuming ‘crises’ of governance during growth periods. Using interviews with 42 founders who grew their firms, the paper identifies challenges and potential solutions that impacted success. The paper argues that challenges were generally pre-empted by founders through the deployment of expertise that was acquired during experience, education or the use of software. The paper finds no evidence for the assumptions of ‘problem based’ theories of growth, and argues that changes in technology, experience and education may have rendered the theory useless – at least for understanding the growth of small consulting firms.

Introduction: Success in Small Consulting Firms
The growth of SMEs is fundamental to a healthy, vibrant economy. Indeed, as Albaz et al. (2020:5) argue 'better understanding and improving the SME ecosystem [by] enabling the growth of SMEs' is a central part of solving the productivity gap in many countries. Small management consultancies, which represent 97% of Western Europe's consulting market (IBIS 2020), are a crucial part of this ecosystem and the growth of small consultancies is around 20 per cent per annum -four times the rate of the largest consultancies and their numbers are growing at around 10 per cent a year (compared to negative growth of large consultancies) (MCA 2019). In terms of market size, employment and impact, small (0-50 employees) management consultancies (SMCs) are a growing driver of economic activity.
Understanding the success potential and barriers of SMCs, therefore, is of central importance not just to owners and investors, but also to government policy makers interested in productivity. However, the vast majority of research on consultancies focuses on the multi-national end of the market: the Big four, strategy consultancies, and large system integrators (e.g. O'Mahoney 2013;O'Mahoney & Sturdy 2016). Even within the research on small consultancies, studies on the conditions of success for firms tends to fall between personal monographs or single-case studies (interesting, but ungeneralizable) and sector-level or institutional studies (useful for government policymakers but not for owners or investors). However, despite the importance of growing smaller consulting firms to the wider economy, there are few evidenced-based studies of the growth of small consulting firms. Given that 45 percent of small management consulting firms fail within their first five years of operations 'it is surprising how little empirical research has been conducted in this field' (Reihlen & Werr 2015:22). This paper seeks to begin addressing this absence.
Academic studies that have examined the growth trajectories of Professional Service Firms (Greiner & Malernee, 2005;Masurel & Van Montfort 2006;Witmeur & Fayolle, 2011;Empson, 2012) tend to follow Greiner (1972) in identifying a multi-stage growth model which identifies a number of key stages in a firm's development and highlights the periodic 'crises' which prompt movement to the next stage (for example, Empson 2012). However, 'problem-based' approaches have traditionally been criticised for being deterministic, teleological, and generalised (Geroski, 2002;Rutherford et al. 2003;Phelps et al. 2007). Moreover, many of these studies are now dated and potentially miss out on the potential for digital technology to address the challenges that firms face or indeed the significant growth in consulting experience that is a feature of the 21st century (Sahlin-Andersson & Engwall 2002). This paper concurs with critiques of many multi-stage growth models that they can miss out on the micro-level challenges and adaptations that many small firms face, especially those that are highly successful (i.e. generate significant, sustainable, long-term profits for their owners). Achieving this is rare for the new solo or independent practitioner and usually requires some form of growth into a firm that has value beyond its founder (Maister 2012).
To this end, the paper examines firms that began as solo practices, have grown and then been sold (usually to larger firms or to private equity) 1 . Specifically, we seek to identify the common challenges and solutions that founders experience in creating a 'saleable' company. Using in-depth interviews with 42 founders who sold their companies, this paper makes two contributions. First, empirically, using in-depth interviews with 42 founders who grew and sold their consultancies, the paper identifies five common barriers to growth and how these were overcome. These are: cash-flow; client acquisition; recruitment; the complexity of operations; and governance strategy. In each case, the challenges are outlined, and the tactics deployed by the consultancies to overcome these are detailed. These represent the empirical contributions which will be most relevant to management consultants.
Second, theoretically, which will be of more interest to academics, is that the paper finds no evidence to support the 'problem-based' theory of growth for small professional service firms (Empson 2012). Instead, the paper finds that most interviewees actually anticipated crises and made necessary changes in advance to their governance, structure and policies to avoid unnecessary disruption. The paper argues that the cause of the failure of 'problem-based' theories for small consulting growth is threefold. First, it is based on inadequate evidence. Second, it does not take into account the proliferation of consulting experience and education over the last twenty years which has created more experienced founders. Finally, it does not consider the significant enabler of digital technology to consulting growth, especially in the form of software called Professional Service Automation. It is argued that this minimises some of the problems which earlier analyses argued causes crises for PSFs.
The paper progresses as follows. First, we examine the literature on the successful growth of SMCs, highlighting the limited amount of work and potential themes of interest. Specifically, the paper highlights concerns with the dominant 'problem-based' theory of growth. After detailing the methodology, the findings first provide some narrative on the typical lifecycle of such firms, and then identify five challenges that were common across SMCs that were sold, and the various strategies taken in overcoming these. In the analysis, these challenges are contextualised within the current literature and it is argued that problem-based theorising needs to be amended. Finally, potential research opportunities for improving on problem-based theory are detailed, as are opportunities for better understanding the growth challenges of small consultancies.
1 Growth, sale and exit is not a perfect proxy for success as some successful firms choose not to sell or incorporate in their own right (Greenwood and Empson 2003). However, such firms generally require a similar growth trajectory to those that are sold, and experience similar challenges. More generally, 'success' might rightfully be framed in different ways (the ability to work on what you enjoy or spend more time with the family). However, we argue later that the firm that is ready to be bought is also a firm that allows the owner to achieve these goals, whether or not they sell.

Literature Review: The Lifecycle of SMC Growth: Criticisms and Opportunities
The risks and rewards of small consulting firms are highly polarized. Forty-five per cent of small management consulting firms fail within their first five years of operations (Knaup 2005), yet the market growth of the sector is around 20 percent, and their numbers are growing at around 10 percent a year (compared to negative growth of large consultancies due to consolidation) (MCA 2019). Most consultancies that survive the first five years pursue a 'business as usual' strategy, remaining very small or taking on one or two people, whilst a minority seek to grow, often with a view of selling the firm in the future (SBA 2006). The end-goal of selling the firm is often ignored in studies of PSF growth, which is an odd absence, as the requirement of the buyer very much influence the strategies and practices of the firms that wish to be built. Indeed, there is a small industry that has grown over the last decade specifically advising growing consulting firms that wish to be bought (see for example, Equiteq).
There are few credible academic studies 2 concerning what makes a difference to the growth of small consultancies. A review in 2014 concluded that 'it is surprising how little empirical research has been conducted in this field' (Reihlen & Werr 2015). Most studies examine success factors in large consultancies (e.g. Bettencourt et al. 2002) or focus on interesting academic themes which are not specifically linked to growth, such as controlling high-trust creative employees (Winch and Schneider, 1993;Zucker 1991), the ambiguity of the consultant-client relationship (Ram 1999), or knowledge management (Løwendahl et al. 2001). Where growth (or 'lifecycle') is studied, work tends to follow variations of Greiner's (1972) classic model of the stages of organizational growth, which emphasises different stages of growth punctuated by associated crises which prompt new organisational forms. Greiner argues not only that specific solutions to the challenges of a phase cease to be appropriate as the firm grows, but also that leaders are generally slow to recognise the need for change until the challenges turn into acute problems. There has been significant critique of the lifecycle model of growth generally (Becker et al., 2015;Delmar and Wiklund, 2008) as overplaying the biological model, being teleological, and often lacking substantial evidence for each stage of the argument; Levie and Lichtenstein (2010:317) show that there is 'no consensus on basic constructs of the approach, nor is there any empirical confirmations of stages theory'.
In the context of PSFs, adapting Greiner's theory, Empson (2012) follows his general arguments concerning crises and founder resistance to change. She constructs a multistage model for firm governance in which the first crisis occurs for founders who have recruited senior professionals who eventually 'expect an increasing involvement in the firm's decision-making processes and share of the profits' (p.15). The resolution to this crisis is a 'collegial' form of governance whereby founders surrender both control and equity to satisfy the demands of senior managers. The next crisis is prompted by the growing complexity in the firm that strains the efficiency of collegial decision-making (i.e. several partners co-operating through consensus) and results in disorganisation. The solution is found in governance through committees, until the next phase of growth, which leads to a crisis of frustration, and so on. The subsequent stages Empson (2012) identifies are not that relevant to this paper as they focus on the first stage only. Yet although Empson (2012) suggests that the process of evolution is more complex than Greiner suggests, she represents the sequences as necessary to avoid failure (at least in her sample). The subsequent model is teleological. To this end, one of the cases presented ('BoutiqueCo') is presented as a failure ('organisational death') for not achieving the Collegial phase, despite later being sold to a larger consultancypresumably based on sustainable future profits. Moreover, whilst this model makes several assumptions about small consultancies, Empson included only one small consultancy, which employed 30 people (personal communication with author, 2020).
One limitation of this model (and others) is that it represents the governance, structure and decision-making of the firm primarily as a function of its size (and therefore its complexity). Moreover, it makes three related assumptions (again, following Greiner) that perhaps are rooted in a period when entrepreneurialism and, indeed, small PSF experience (and perhaps management education more generally), was not so common: first, that founders are generally ignorant of and surprised by the challenges of growth; second, that founders are jealous of their power and authority; and third, that time spent on management administration (controls and co-ordination) represents a serious challenge to the success of consultancies. There is good reason to question these assumptions. Concerning the first, it is now commonly argued in the consulting literature that management knowledge, and more specifically, consulting expertise, is no longer a rare commodity (Sahlin-Andersson & Engwall 2002; Sturdy and O'Mahoney 2018), and thus with the proliferation of consultancies, consultancies for consultancies, business schools, and consulting experience, it might be argued that 'crises' are more predictable and manageable by founders than they were twenty years ago. This insight links with the observation by Phelps et. al (2007:11) that it is desirable to study 'sets of problems not linked by sequence, and [also study] the organizational capabilities to absorb and utilize new knowledge to address these problems'. In short, Empson may have identified a problem that no longer exists for many founders.
Concerning the second point, there is little to no evidence that founders jealously guard their equity or power, especially in the face of having a slightly smaller stake in a much larger pie. Indeed, more widely, Phelps et al. (2002:7) argued, 'support for a clearly identified set of problems that pertain at different stages of an organization's life...is limited' (Phelps et al. 2007: 7). Concerning the third point, developments in digital technology, especially concerning ERP systems, process automation, and management information systems now offer small firms the ability to cut time spend on management tasks. For example, SPI (2019) found the use of Professional Services Automation (PSA) -integrative software to manage administrative processes for firms, increased revenue per project by 50%, primarily due to the time freed up for additional billing. Whilst PSA was available in 2012, when Empson was writing, it was highly expensive and only used by larger firms.
In summary, there is good reason to question the lifecycle and problem-based approaches to growth both generally, but also specifically in the context of professional service firms. There is also a need for detailed empirical evidence about the specific challenges encountered by firms at specific stages of their growth. To this end, the paper seeks to understand the challenges of growth in the first stage of growth and explores 'what crises small consulting firms face when growing and how these impact growth'.

Methodology
Exploring the relationship between the crises of growth and their impact upon firms is an exploratory and explanatory research challenge. The research undertaken therefore was exploratory, qualitative, and assumed a loosely critical realist metatheory -using induction and abduction to move from data to analysis (O'Mahoney and Vincent 2014).
The methodology identified 42 small consulting firms that had started in the last fifteen years and had grown from founder(s) to a minimum of 19 people (max 173). Firms were selected which still had the founder as CEO so that a continuous narrative of the firm to date was available. Firms were eliminated if they were more than fifteen years old because the founder may not have remembered challenges from much further back. Over 150 firms were contacted, and 42 interviews were granted. We held semistructured exploratory interviews with the founders of all firms, for an average of 66 minutes. Interviews covered questions such as: • The growth of the firm in terms of finance and staff • The drivers of growth internally and externally • Periods of stagnation • Any challenges or crises that occurred • The impact of these challenges and crises on growth • The response of the firm to the challenges or crises As interviews progressed, common themes were identified and prompted additional questions around specific topics which are identified in the findings. These interviews were transcribed and coded, and data were inducted into themes and abducted in reference to the literature in order to identify (i) the challenges and (partial) solutions to these challenges, and (ii) how these related to growth.
In addition, 3 interviews were held with Directors at Professional Service Automation companies as these appeared to be important in the growth of SMCs and the author wished to gain a deeper understanding of how they worked.

Findings
The findings in our sample suggest that expertise available to the Partners of growing firms, either of founders, consultants, mentors or IT systems, meant that they did not experience 'crises'. To a great extent, impending crises were overcome before they happened through strategic decision-making which translated into specific actions that anticipated strains on the firm. This is not to suggest that the governance, structures, processes, and systems of the firms did not alter as they grew but that these were adopted proactively rather than reactively in response to problems.
We first identify five common challenges that the consultancies experienced when they grew, and the ways in which our sample overcame these. We then move on to explore specifically the question of whether these challenges caused crises which changed the firm.

Five Challenges of Growth
Cashflow A common challenge faced by 29 of the consultancies was the challenge of growth vs. cashflow. In the words of one founder 'you're in a Catch-22: you can't employ people until you land large projects, and you can't land large projects until you've employed people' [F1]. At its heart, this is a challenge of capital. Assuming no holidays, a newish solo consultant has around 250 working days of which up to 50% will be spent on business development, administration, and company set-up. Even if all those 125 days are billed to a client at £800/day, the solo consultant is left with revenue of £100k. Whilst this sounds far from the breadline, after tax, operational costs, insurance, pension contributions etc. this will often leave the consultant with around £50k, which is rarely enough to employ another consultant. The challenge is made more challenging by the cashflow situation in most small firms: 'most clients will pay a small amount up front, but the remainder of the payment will be up to three months after the end of the project.... Then you get the odd client that just doesn't pay' [F12]. In short, significant growth from cashflow is a real challenge for small consultants.
The challenge of capital for growth was overcome by successful consultancies in a variety of ways. Note that these points are not exclusive, and most consultancies did more than one. First, all but two of the consultancies either started as joint partnerships or took on partners within the first two years of operations. These partners were generally people they had worked with previously or had studied (typically an MBA) with. In two cases, the partners were spouses. This helped solve the cashflow issue as there are economies of scope and scale when working as a partnership, and joint profits can more easily fund additional resources. Second, ten of the consultancies gained start-up funding, either from a larger consultancy that was interested in purchasing them later, or through private equity that took a stake in the company. In all cases, the founders were experienced, successful, and highly networked consultants, and in half of these cases the founders had been involved with starting and selling consultancies before. Third, several (13) consultancies did grow from cashflow outsourcing their administrative tasks to free up billable days. Their first hire was usually an administrative assistant, sometimes using an outsourced service, but more commonly by hiring someone for an increasing number of days as the business grew. As assistants grew more familiar with the business, they frequently undertook more complex and business critical tasks. In the words of one founder, 'an additional day or two billing a week might add up to £80k in revenue'. Finally, several consultancies mentioned using early tactics to increase revenues and improve cashflow by charging a greater percentage of the project up-front, raising their prices, saying no to problem clients, and value-pricing.

Clients
Consulting is a demand-driven industry, and there is no growth without a corresponding increase in sales. Virtually all the interviewees reported that they began with 'clients in hand', that is, they took clients with them from their previous employment, had a significant network 'friendly' to business development advances, or had even won a project before starting up. Although such business is useful for starting up, it cannot be relied upon to generate growth. Indeed, small new consultancies face significant challenges 'not only in time investing in business development when [they] really need to be billing the client' [F6], but also 'having to displace incumbents that already have a presence in clients' [F8].
The primary method of achieving client growth was delivering high quality work and then publicizing this in the form of testimonials and case-studies. Whilst it is not surprising that consultancies claim to be delivering high quality work, most had an explicit strategy early on of 'going beyond contract' [F13] in order to generate levels of satisfaction that would lead to repeat business and useful referrals. This was often supported by various awards (for example from the Management Consulting Association) for successful projects which acted as both signals to the market, but also as benchmarking for say, innovation, workplace quality, or project quality. More strategically, as they grew, many consultancies focused on 'expanding the matrix' [F20]. That is moving into adjacent industry segments or service lines that would allow cross-selling. One consultant (unsurprisingly) drew a 2x2 matrix with 'services' on one side and 'industries' on the other. He intimated that as the company grew, the matrix grew into a 4x4 matrix, with the advice that 'for some consultancies, it makes more sense to stay in the same industry -say, the health service -and focus on expanding services, whilst with others, it makes more sense to focus on specialist services, but replicate them in several different industries.
Other less innovative approaches to boosting client numbers included networking, using thought leadership (especially LinkedIn), and 'never refusing an opportunity to talk' [F19]. It should also be stressed that a number of interviewees pointed to the role of luck. For example, several pointed to fortuitous conversations or contacts that led to sizeable contracts often at crucial junctures (for example the 2008 recession). Interestingly, there were three points of contrast with most 'popular' advice to small consultancies. The first concerns fees. Most advice to small consultancies by self-styled 'gurus' (see for example, Sam Ovens, Taki Moore or Russ Ruffino) is to raise prices, ideally by negotiating project fees by value ('value-based pricing') rather than day rates. Yet among our sample, value-based pricing was relatively rare because 'there is only limited appetite for this among clients... ' [F9] and it 'only suits certain types of projects and certain types of buyers'. Project-based pricing was much more common. Moreover, most of those interviewed estimated that their day rates were average or lower than average, at least for the first few years of their operations. Even once established, most interviewees chose to use their stronger position to turn down work that didn't align with their strategy rather than raise their prices significantly.

Employment
With small firms especially, when methods or products are rarely significant assets, people are (for once) a firm's greatest asset and its best guarantor of quality. Yet, why would good consultants want to work for an unknown firm when the likes of McKinsey & Co. might beckon? Moreover, why should a good consultant stay if they are not being promoted or given equity? By far, the most common theme that firms reported helping their people strategy was around culture, values, and narratives. A common culture and values were held as central in ensuring smooth growth in the firm, defined by one founder [F22] as 'what is done when the boss isn't looking'. Many echoed the sentiment of F9, that 'your first few hires are absolutely crucial in setting the culture of the company.... The one time I recruited the outstanding person who didn't fit our values, it came back to bite me'. Another added 'Even before the company started, [the co-founder and I] had a list of things we would do, and a longer list of things we wouldn't do'. What the values were seemed less important than the fact that they were embedded in the recruitment, promotion, evaluation, training, and communication efforts of each firm, and that people who didn't adhere to these were often managed out. This said, a commonly mentioned value was openness. Many founders concurred with F8 that 'because you're dealing with bright, ambitious people who easily find jobs elsewhere, you must keep them involved, and not do deals behind their backs'.
The narrative of the firm generally concerned its story: 'it's about why we do what we do, how we do it, and what our ambitions are' [F3]. One founder said that their narrative and culture allowed them to compete with the big names when it came to recruitment, as they could promise 'challenges, growth and people development, based on a oneto-one relationship between partners and recruits'. In this case, the narrative they created around their size became an advantage in recruiting exceptional IT talent straight out of universities.
At a senior level (which firms tended to recruit first), consultants tended to either be known to the firm -often, but not always, acting as associates before they are taken on. A few (6) consultancies merged with other consultancies, but all did so in a very gradual way. A typical story was F10: 'we became aware of an aligned consultancy that we often passed work to, and vice versa.... Eventually, we ended up sharing some office space and [then] working on projects together, before creating a joint venture that eventually became the new company'. This 'slow courting', as F30 put it, was crucial in finding companies that were not just aligned in the market, but also in terms of values.

Processes
Most firms reported a 'tipping point' at between 15-20 employees when levels of complexity meant that they needed to systematise their operational processes. This not only included reporting but also (in fewer cases) methods and services that became more 'commodified' or 'productised'. Several interviewees commented that this point was the most important in their company's growth, with one founder summarising the sentiment that 'once you have these processes in place, it is really a matter of scaling them...' [F18]. Another commented that 'In terms of growth, nothing is as difficult as the period when you need to move from using several spreadsheets and apps to an integrated system'.
To take reporting first, all firms reported implementing some form of Professional Services Automation (PSA) software, such as Kimble or SherpaDesk. These applications provide integrated systems for reporting and workflow management for project management, people management, marketing, pipe-line management, and billing. Interestingly, it is only in the last ten years that PSAs have been affordable for smaller consultancies, and their impact on these firms has not been studied in any depth by organisation and management scholars. Yet, they had provided a significant impact for two reasons. First because they take much of the operational growing pain away by providing a single and integrated workflow management and reporting where, for example, pipeline requirements related to business development were linked to recruitment decisions. Secondly, PSAs are developed from the feedback from thousands of PSFs, and thus provide 'best practice' guidance for founders concerning workflow, key performance indicators and project management. Two quotes illustrate this: "[The PSA] is great -it does everything, but you don't need to use everything. You use more of it as you grow. Like, we now measure around fifteen performance metrics, but this will grow as we get bigger." [F30] "It's like having a ready-made operational infrastructure that's been tested in hundreds of other sites. Because that expertise is built into the system, you're not reinventing the wheel." Concerning the commodification of methods and services, this is something that all the consultancies did to a greater or lesser extent, primarily driven by the requirements of future buyers. As one founder intimated, 'buyers want intellectual property when they buy because it is less likely to up sticks and leave when the buy-out period is over' [F15]. Certainly, compared to consultancies that were not sold, commodified services and methods were much more common. Many founders felt that these services would provide the basis for sustainable returns after the first few years: "working like hell will make you profits over the short term because you can provide much higher value than anyone else -of course the client will be delighted because they're getting twice the work for half the price. But over the long term that is unsustainable, first because you'll have a nervous breakdown, but second because it's hard to convince employees without equality to work as hard as you used to." [F6] On that note, many founders felt that the ability of employees to feed into improvements in processes, methods, and services (either internal or customer facing) helped provide them with more autonomy and the recognition that the firm was listening to them. The exceptions to the introduction of commodified services were firms where the value of the firm was very much in highly skilled, sought-after consultants, for example concerning big data analysis, or artificial intelligence. Here, buyers were generally keen on getting hold of the scarce resource rather than buying in specialist methods.

Strategy and Governance
A challenge for all ambitious management consulting firms is knowing how to grow. Growing too fast can risk cashflow and cultural cohesion, whilst too slow can lead to disgruntled ambitious employees keen on promotion. Moreover, appearing attractive to a potential buyer, as one founder suggested 'is not necessarily the same thing as being a good consultancy' and thus expertise in branding, digital media, and PR is also necessary. Yet, many of those interviewed had either started small consultancies before (n=11), had access to a mentor who had started the company before (n=16), or used a consultancy to advise their growth (n=23). In addition, with reference to the previous section, many (n=10) also said that they received advice from their PSA company, or at least that the use of the software provided them with insights into what they 'should' be measuring.
Contrary to the literature, less than a fifth of interviewees reported non-partners demanding equity or decision-making. Some said that they provided senior consultants with equity to encourage them to join the firm, but none reported that this resulted in those employees requiring input into governance. Several (n=7) pointed out that a growing firm can help satisfy the demands for promotion from ambitious consultants, and also provide an exciting challenge which helped lower churn. Only three firms reported significant differences of opinion between partners prior to sale, and two of these resulted in one partner leaving the firm.

Avoiding Crises
None of those interviewed described the challenges detailed above as crises or even problems that changed the form of the company. When asked specifically about crises, founders generally spoke about circumstantial, external issues such as the 2008 recession (or more recently, COVID), ill health, or family pressures. Changes in company form, structure, and governance for these firms were generally not forced by challenges but were instead pre-empted by founders based upon their previous experiences.
A typical answer when asked about the business outgrowing the current systems and structures is provided by Sarah: "We didn't ever attempt to run the business on spreadsheet. ...We've been on a time sheet system time management system....I have in my previous life, got involved in some depth with all of the different systems that were then available on the market and so we made a decision fairly early on about which one we were going to go with, and we also made an investment fairly soon. I think the benefit of going into a business that you've done before, is that you know what you're going to need, and we didn't even try to do it without it." Sarah had not only been a CEO of a larger consultancy in the same segment, but had detailed previous experience of the software and systems that the consultancy would need later. Others mentioned education, such as Mark: What is evident here is not only that governance crises were generally avoided, and did not lead to changes in the firm, but also that founders had access to a diverse set of expertise that enabled them to anticipate change before it was needed. What one founder described as 'getting ahead of the curve'.

Discussion
The findings cast doubt on current problem-based theorising (Empson 2012;Geroski, 2002;Rutherford et al. 2003;Phelps et al. 2007) at least as it applies to the growth of small management consulting firms. First, there is little evidence among interviewees that changes to growing firms are prompted primarily by a crisis of governance (i.e. the sharing of power by founders). Instead, most of them changed the structure, strategy, and governance of the firm proactively in order to anticipate crises. In order to avoid crises of partnership governance founders shared equity, used non-executive directors or implemented new systems.
The challenges which were more present for the interviewees were those detailed in the findings: cashflow, clients, employees, processes and governance, but as we have seen, these did not lead to crises which caused changes in the firm, but were generally anticipated and proactively managed: cash-flow challenges were ameliorated by merging, creating a Partnership, accepting venture capital or freeing up billable hours; limited client prospects were overcome by providing outstanding work, seeking referrals, 'expanding the matrix', and using LinkedIn more effectively; limitations to resource were overcome by emphasising unique (or rare) values and culture, providing a narrative that was more engaging than the larger competitors, growing the firm to provide promotion prospects and excitement, and merging with similar firms; Operational complexity was overcome through the use of PSA. It should be noted that this administration, prior to the invention of PSA, was a challenge to many firms. Indeed, Empson (1997) tells of a small consultancy (30 employees) whose failure was partially due to 'time spent on management tasks... [and] lack of management controls' (p. 8). The challenge of strategic knowledge was overcome through their own experience, the use of mentors and consultants, and the solutions provided by PSA software.
It should be stressed here that many of the 'solutions' to these challenges are perhaps relatively new: online networks such as LinkedIn, the use of PSA software, the proliferation and growth of the consulting industry, the ubiquity of the MBA and the availability of expertise on the internet were certainly non-existent when Greiner (1972) penned his seminal paper, and have accelerated significantly since Empson (2012) was written. The literature on PSF growth should be updated to include the advances both in information technology and the proliferation of expertise on firm growth among founders and their networks.

Conclusions
The paper sought to shine a light into the under-examined challenges and solutions to growth for small consulting firms by interviewing founders that had successfully grown and sold their companies. It identified five challenges and potential solutions to these which shaped the nature of these firms and argues that 'problem-based' theories of growth need amending, at least in relation to small management consultancies, and perhaps PSFs more generally. More generally, it appears that ambitious small consultancies with exposure to expertise and PSA software can create a scalable infrastructure that potentially overcomes the organisational and strategic challenges that impacted firms twenty years ago and more.


The Effect of Corporate Governance and Company Characteristics on Disclosure of Sustainability Report Companies

This research is a proof-of-concept of important analytical and / or experimental functions and / or characteristics. In the era of globalization, business competition has become very fierce. Many companies cannot last long because they are unable to compete with other similar companies. To face this competition, companies are required to work effectively and efficiently. In order for companies to work effectively and efficiently, companies need a good work plan. A good work plan is usually made by management. Management is required to be able to produce decisions that can support the development of the company so that the company's goals can be achieved. This study aims to examine and examine the effect of good corporate governance and company characteristics on the disclosure of sustainability reports. The data used in this study are secondary data in the form of financial reports of basic and chemical industry sub-sector manufacturing companies reported to the IDX from 2016 2018 sourced from the Indonesia Stock Exchange (IDX) website, namely www.idx.co.id. Measurement of good corporate governance is the board of commissioners and audit committee and measurement of company characteristics, namely the road size of the company. The data analysis used in this research is multiple regression analysis. The results of this study are the independent board of commissioners and profitability has a significant effect on the sustainability report and the audit committee and company size has no significant effect on the sustainability report.

I. INTRODUCTION
In the era of globalization, business competition has become very fierce. Many companies cannot last long because they are unable to compete with other similar companies. To face this competition, companies are required to work effectively and efficiently. In order for companies to work effectively and efficiently, companies need a good work plan. A good work plan is usually made by management. Management is required to be able to produce decisions that can support the development of the company so that the company's goals can be achieved.
According to [9], in addition to pursuing profits, companies must also pay attention to and be involved in fulfilling community welfare and contribute actively to preserving the environment. This indicates that the company may continue as a profit-making entity as long as it does not harm the environment and society. The substance of the existence of social responsibility appears in order to strengthen the sustainability of the company by building cooperation between related stakeholders.
Many things must be done to achieve environmentally responsible and sustainable development. One of the main challenges of sustainable development is the demand for innovative choices and ways of thinking. The development of knowledge and technology is not only required to contribute to economic growth, but also to help solve problems related to risks and threats to the sustainability of social, environmental and economic relations [13].
A sustainability report is a form of voluntary report as a form of social and environmental responsibility. Sustainability reports are needed so that stakeholders, including the community, know all forms of corporate responsibility to society and the environment. This includes financial reports, CSR reports or sustainability reports as an initial assessment of a company's credibility. The internationally recognized sustainability report reporting standard refers to the Global Reporting Initiative (GRI).
The company must carry out social responsibility as a form of responsibility for the company's activities. These activities also need to be reported through the social responsibility report presented in the annual report, or the company can present its responsibility report through the sustainability report as a separate report from the annual report. Sustainability reports can be used as a form of company transparency in disclosing information on the impact of its activities. These tragedies occurred because of the company's ignorance of the company's social environment. This incident gave awareness to the company to carry out activities that are environmentally and socially responsible. Research on sustainability reports has also begun to develop, which indicates that the phenomenon of sustainability reports is starting to be carried out by many companies. This is an interesting topic to research. Several previous studies have examined several factors that influence companies in disclosing sustainability reports. In testing several factors that influence the disclosure of the sustainability report, it was found that the results were inconsistent between one researcher and another. Several previous studies have examined several factors that influence companies in disclosing sustainability reports. In testing several factors that influence the disclosure of the sustainability report, it was found that the results were inconsistent between one researcher and another.
In the research The Importance of Sustainability Reports In Non-Financial Companies, Leverage has a significant effect on the sustainability report [6]. Another study conducted entitled Factors affecting the disclosure of sustainability reporting which resulted in Current Ratio (CR), Size and Meeting of the Audit Committee had a significant effect, while the governance committee and type of industry had no significant effect [21].
Research examined the characteristics of companies and corporate governance with the practice of Sustainability Report disclosure, showing that the independent variables of profitability, company size, audit committee, and board of directors have a significant effect on Sustainability Report disclosure practices [31]. The independent variables of liquidity, leverage, company activity and governance committee have no effect on the practice of sustainability report disclosure.
Different results are also shown by the results of research, where the independent variables used are financial performance, company size, capital structure, and corporate governance. Financial performance variables are proxied by profitability, liquidity, leverage, and company activities [18]. corporate governance is proxied through the audit committee and the board of directors. The results of the study indicate that the independent variables leverage, company size and the board of directors have a positive effect on the publication of the sustainability report and the independent variables of profitability, liquidity, company activity, audit committee and capital structure have no effect on the publication of the sustainability report.
By looking at the results of previous studies regarding Sustainability Report disclosures. This study tries to reexamine the effect of Corporate Governance and Company Characteristics on Sustainability Report Disclosure. However, previous research rarely uses the governance committee variable, so the authors add the governance committee variable in corporate governance and use the net profit margin to calculate profitability. Based on the above background, the author will conduct research with the title "The Effect of Corporate Governance and Company Characteristics on the Disclosure of Sustainability Report in Companies Listed on the Indonesia Stock Exchange".

A. Stakeholders Theory
Stakeholder theory is a theory that explains how company management meets or manages stakeholder expectations. Stakeholder theory says that a company is not an entity that works for its own interests but also to provide benefits to stakeholders. The social activity of a company must go beyond maximizing profit in the interests of its shareholders. However, if it is expanded further, it is not only the interests of shareholders but also of all parties related to the company. These include, among others, suppliers, customers, governments, local communities, investors, employees, political groups and trade associations.
Therefore the company will consider the interests of stakeholders because of the moral commitment of the company management to the stakeholders, this moral commitment will encourage the company to formulate a corporate strategy (which takes into account the interests of stakeholders) in which the company's strategy will affect the achievement of the company's financial performance. One of the strategies chosen by the company is the publication of a sustainability report that considers the interests of stakeholders.

B. Sustainability Report
According to GRI defines a sustainability report as a practice in measuring and disclosing company activities, as a responsibility to internal and external stakeholders regarding organizational performance in realizing sustainable development goals. Sustainability reports will be one of the media to describe reporting on economic, environmental and social impacts (such as the triple bottom line concept, CSR reporting, etc.).
In the GRI guidelines, there are three main components of disclosure that show the impact of a company's activities on the economy, environment and society in the standard disclosures section. The three dimensions are expanded into 6 dimensions, namely: economy, environment, labor practices, human rights, society, and product responsibility. Of the six dimensions there are 34 constructs and the total of all disclosure items according to GRI is 79 items.
In carrying out sustainability report reporting activities, there is no certain standard or practice that is considered the best. Every company has unique characteristics and situations that influence how they perceive social responsibility. This causes the implementation of the sustainability report to be adjusted to the operational conditions of each company.
According apart from company characteristics, sustainability report disclosure is also influenced by the company's financial performance [16]. Financial performance consists of profitability, liquidity, leverage and company activities. In this study only focused on profitability, because companies with management are able to create high profits from existing assets will understand the importance of disclosing social, environmental and economic activities, which will ultimately be disclosed in the sustainability report.
In this study, the characteristics of the company that affect the disclosure of the company's sustainability report will be focused based on the size of the company and the type of industry, because these two things really describe the characteristics of a company and have. Based on Bapepam's decision Kep-24 / PM / 2004, it is stated that the audit committee holds a meeting at least the minimum is the same as the minimum stipulation for the board of commissioners meeting which is stipulated by the company's articles of association. Meetings were held to coordinate to be effective in carrying out monitoring reports and the implementation of corporate governance in order to get better [31].

C. Corporate Governance
According to the Finance Committee on Corporate Governance in [9], corporate governance is a process and structure used to direct and manage business and corporate activities towards increasing business growth and corporate accountability. According to the Indonesian GCG General Guidelines cited in Solihin (2009), GCG has principles in the form of (1) transparency, (2) accountability, (3) independence, and (4) fairness and equality.

D. Independent Board of Commissioners
Explain that the Independent Commissioner is a commissioner who is not a member of management, majority shareholder, official or in other ways has direct or indirect contact with the majority shareholder of a company that oversees the management of the company [22]. The existence of an independent commissioner is regulated in the provisions of the Indonesian Stock Exchange (IDX) Securities Listing Regulation Number I-A concerning General Provisions for Listing of Equity Securities on the Exchange which took effect from 1 July 2000.
Companies listed on the IDX are required to have independent commissioners whose number is proportional to the number of shares owned by non-controlling shareholders, provided that the number of independent commissioners is 30% of the total number of commissioners.

E. Audit Committee
According to Bapepam Circular Letter Number. SE03 / PM / 2000 regarding the audit committee explains that the purpose of the audit committee is to assist the board of commissioners to: 1. Improve the quality of financial reports; 2. Creating a climate of discipline and control that can reduce the opportunity for irregularities in company management; 3. Increasing the effectiveness of the internal and external audit functions; 4. Identifying issues that require the attention of the board of commissioners.
Based on Bapepam's decision Kep-24 / PM / 2004, it is stated that the audit committee shall hold meetings at least the same as the minimum requirements for board meetings which are stipulated by the company's articles of association. Meetings were held to coordinate to be effective in carrying out monitoring reports and the implementation of corporate governance in order to get better [31] F. Profitability Profitability in this study uses ROA as a proxy for profitability. ROA shows the company's ability to make efficient use of total assets for company operations. The formula used to calculate ROA is to compare net income divided by total assets [2].

G. Company Size
Company size is generally defined as a comparison of the size or size of an object. Meanwhile, a company is an organization founded by a person or group of people or other bodies whose activities are to carry out production and distribution in order to meet the economic needs of humans [27]. In general, large companies will disclose more information than small companies because large companies will not escape the pressure of social responsibility.

A. Types of Research
This research is a causal research, namely research that aims to test the hypothesis about the influence of one or more variables on other variables. Researchers used the research design to provide empirical evidence about the Board of Commissioners, Audit Committee, Profitability, and Company Size as independent variables and Sustainability Report Disclosures as the dependent variable.

C. Population and Research Sample
Population is a generalization area consisting of objects / subjects that have certain qualities and characteristics that are determined by researchers to study and then draw conclusions [29]. The population in this study were manufacturing companies in the basic industrial and chemical sub-sectors listed on the Indonesia Stock Exchange (BEI) in the 2016-2018 period.

D. Data Analysis Methods
Data analysis was performed using multiple linear regression analysis including the following analysis: Data analysis method in this research is descriptive and verification analysis. Verification analysis in this study uses panel data regression analysis (pooled data). The data processing tool in this study uses SPSS software.
Determination Coefficient Analysis (R2) is useful to measure how far the model's ability to explain the variation of the dependent variable. The coefficient of determination is 0 and 1. A small R2 value means that the ability of the independent variables to explain the independent variables is very limited. A value close to 1 means that the independent variables provide almost all the information needed to predict the dependent variable.

A. Results
The coefficient of determination (R2) measures how far the model's ability to explain the variation of the dependent variable. The coefficient of determination is between zero and one. A small R2 value means that the ability of the independent variable to explain the dependent variable is very limited. A value close to one means providing almost all of the information needed to predict the variation of the dependent variable [12].
In this statistical calculation, the R2 value used is the adjust R square. Adjust R square is an indicator used to determine the effect of adding an independent variable into a regression equation. The value of adjust R2 has been freed from the influence of the degree of freedom (degree of freedom) which means that the value has really shown how the influence of the independent variable on the dependent variable. Following are the coefficient of determination of this study which are presented in Table II. Based on the table above, the R2 (R Square) number is 0.313 or (31.3%). This shows that the percentage of the contribution of the influence of the independent variables (Independent Board of Commissioners, Audit Committee, Profitability, and Company Size) on the dependent variable (Sustainability Report) is 31.3%. Or the variation of the independent variables used in the model (Independent Board of Commissioners, Audit Committee, Profitability, and Company Size) is able to explain 31.3% of the variation in the dependent variable (Sustainability Report). While the remaining 68.7% is influenced or explained by other variables not included in this research model.  136> 1,693), it means that partially there is a significant influence between the Independent Commissioner and the Sustainability Report. So from this case it can be concluded that partially the Independent Board of Commissioners has a significant effect on the Sustainability Report of manufacturing companies in the basic industry and chemical sub-sectors listed on the IDX.

B. Hypothesis testing 1. Statistical Reliability of Each Independent Variable (ttest)
2) For the Audit Committee variable, namely T Count <T Table (-0.699 <1.693), it means that partially there is no significant influence between the Audit Committee and the Sustainability Report. So from this case it can be concluded that partially the Audit Committee has no significant effect on the Sustainability Report in manufacturing companies in the basic industry and chemical sub-sectors listed on the IDX.
3) For the Profitability variable, namely T Count> T Table (-3.222> 1.693), it means that partially there is a significant influence between Profitability and Sustainability Report. So from this case it can be concluded that partially Profitability has a significant effect on the Sustainability Report in manufacturing companies in the basic industry and chemical sub-sectors listed on the IDX. 4) For the variable of Company Size, namely T Count <T Table (1.601 <1.693), it means that partially there is no significant effect between Company Size and Sustainability Report. So from this case it can be concluded that partially Company Size has no significant effect on the Sustainability Report of the basic industrial and chemical manufacturing sub-sector companies listed on the IDX. This model is used to test the effect of Profitability, Company Size, and Sales Growth on the Sustainability Report. The regression model is systematically formulated as follows: Y = -0,501 + 0.351 x1 -0.001 x2 -0.622 x3 + 0.044 x4 + ℮ where a. β0 = -0,501; meaning that if the Independent Board of Commissioners, Audit Committee, Profutability, and Company Size are worth 0, the Sustainability Report is worth 0.501. b. β1 = 0.351; This means that if the Independent Commissioner increases by 1, the sustainability report will increase by 0.315. c. β2 = -0.001; it means that if the Audit Committee increases by 1, then the sustainability report will decrease by 0.001. d. β3 = -0.622; it means that if the profitability increases by 1, then the sustainability report will decrease by 0.622. e. Β4 = 0.044; this means that if the size of the company increases by 1, the sustainability report will increase by 0.044. C. Discussion

The Effect of the Independent Board of Commissioners on the Sustainability Report
From the analysis above, it can be concluded that Sig <0.05 is seen, which means that there is a significant influence between the Independent Board of Commissioners and the Sustainability Report. The results are the same as the research of obtaining the results of the Independent Commissioner that have an effect on the sustainability report [31].

The Effect of the Audit Committee on the Sustainability Report
From the analysis above, it can be concluded that Sig> 0.05 is seen, which means that the effect is not significant between the Audit Committee and the Sustainability Report. The results differ from the research of which states that the Audit Committee has a significant effect on the sustainability report [31].

Effect of Profitability on Sustainability Report
From the analysis above, it can be concluded that Sig <0.05 is seen, which means that there is a significant influence between Profitability and Sustainability Report. The results differ from the research where the results of profitability do not affect the sustainability report [18]. 4. The Effect of Company Size on the Sustainability Report From the analysis above, it can be concluded that Sig> 0.05 is seen, which means that there is no significant effect between Company Size and the Sustainability Report. The results differ research which states that company size has a significant effect on the sustainability report [18].

A. Conclusion
From the results of this study, the following conclusions can be drawn: 1) The Independent Board of Commissioners has no significant effect on the Sustainability Report with the direction of the positive regression coefficient in other words, it can increase the Sustainability Report. Thus simultaneously, the Independent Board of Commissioners can improve the Sustainability Report.
2) The Audit Committee has a significant effect on the Sustainability Report with the direction of the negative regression coefficient, in other words it can increase the Sustainability Report but not in the same direction. Thus simultaneously, the audit committee can improve the Sustainability Report.
3) Profitability has a significant effect on the Sustainability Report with the direction of the negative regression coefficient, in other words it can increase the Sustainability Report. Thus simultaneously, Profitability can improve Sustainability Report. 4) Company size has no significant effect on the Sustainability Report with the direction of the positive regression coefficient, in other words it cannot increase the Sustainability Report but is unidirectional. Thus simultaneously, Company Size can increase Sustainability Report.

B. Suggestion
Some suggestions that can be put forward in the results of this study are due to the imperfections of the research conducted by the author, so the authors provide suggestions that are expected to be able to add knowledge from this research, namely as follows: 1. Further research is needed to find out more things to influence the sustainability report apart from the Independent Board of Commissioners, Audit Committee, Profitability, and Company Size.
2. The research time should be made long, in order to provide a better picture. Because the results are likely to be different when using different periods.


Effect of Product Image of SME in East Java Province on Purchasing Decisions

This research was conducted with the intention to identify the effect of product image excellence, product image strength and product image uniqueness on the decision making of purchasing SME products in management study program students in East Java. The population determined in this study were all active students of management study programs in East Java Province. The sampling technique used in this study was purposive sampling. This research was conducted through a survey approach. The data in this study were analyzed using multiple regression techniques to test the hypothesis proposed in this study. This research has urgency both for the development of marketing science or for stakeholders related to the development of SMEs. The novelty element of this research compared to other studies in the same field is the use of dimensions in the product image that are excellence, strength and uniqueness that are enhanced into research variables. This research has proven that product image, product image strength and product image uniqueness have a significant influence on purchasing decisions.

INTRODUCTION
Purchasing decisions are determined by factors including other prices, packaging and the product itself. Purchasing decisions consider things that are very important for the company or consumers because of considerations regarding the decision to buy or not [1]. In this case, which is a major factor in product purchase decision making. Product valuation as a key to purchasing. In this discussion, the products agreed on the benefits incurred from the costs incurred by consumers to obtain. If the product has greater benefits compared to the costs incurred, of course consumers are interested inbuying. The purchase decision process does not only end in the purchase transaction, but ultimately in the consumer purchase decision [2]. Post-purchase is a determinant for repurchasing. When consumers feel satisfaction with purchases made, the consumer's decision to make a repeat purchase will be taken. This is because the decision to purchase arises from the motivation within the consumer [3]. The motivation is certainly different for each consumer, so the company must be able to reach and maintain their respective market share so as not to turn to competitors [4].
One thing that can be done for this is brand image. The product is considered as a company's promise to consumers accurately in providing value and benefits for certain things. In addition, the product is understood as the value of a product both tangible and intangible in influencing market share. Therefore, the product plays a very important role because as a form of company promises to consumers. Thus it can be further understood that the product as a bond of consumer feelings to the company [5]. Every company can offer similar products, but not with the promises given. This is due to differences in views of existing products in consumers. Therefore, every company is required to be able to create and offer highly quality products in order to be able to compete with competitors while maintaining the image of the product [6]. The purchase decision is also defined as a decision in buying a particular product. on the basis of perceptions of product attributes. The intended product attributes include quality, value and price. In this case it can be understood that consumers decide to buy not only on the basis of quality, but also in terms of costs [7]. Every company can do various waysto maintain or even improve product image [8]. The methods include utilizing technology, setting competitive prices. do promotions on target and others [9]. In addition, the purchase decision is also interpreted as a fulcrum that gives rise to a certain action. In purchasing, consumers' decision to buy depends on the motivation that exists in these consumers. In order to meet the needs and desires of consumers, companies must be able to understand appropriately related to consumer behavior [10]. Consumer behavior can be known through consumer attitudes. Consumer attitudes are accurate consumer responses to products. These responses can be positive or negative, agree or disagree. If the company is able to understand consumer attitudes towards the products offered, then the company can determine further strategies in maintaining or even improving product quality according to what is needed and desired by consumers [11]. In East Java, most students, especially in the study program of consumer behavior management, stems from attitudes, product humility and subjective norms [12]. Consumer behavior is most commonly found in fashion products produced by small and medium enterprises (SMEs). They argue that SME products are very good quality and have affordable prices. It is also influenced by attitude factors, namely on the basis of liking the reliability of SME products, so it is certain to have beneficial benefits for them [13]. Therefore, the factors that attract students in making purchasing decisions on SME fashion products need to be examined. Based on these explanations, research is needed on "The Effect of Product Image on Decision Making Purchases of SME Products in Management Study Program Students in East Java".

Product Image
Product image is defined as a set of consumer perceptions of the product. This perception depends on the experience and information obtained by consumers. The image formed from this perception impacts purchasing decisions and ends in product loyalty. Product image includes two aspects, namely cognitive aspects and affective aspects [9]. Cognitive aspects are consumers' knowing and feeling that the product is able to meet the needs and desires of consumers, while the affective aspect is the emotional sense of consumers that the product is able to provide pleasure, comfort andothers. Product image is also understood as a consumer's preference for products that start from the entire product display in the minds of consumers [6]. The product display consists of product performance display and product image display, which is in accordance with the attributes and advantages of the product. In addition, the product image is also defined as a series of product perceptions that are formed from past consumer experiences in using or consuming the product. Product image depends on the sense of confidence and experience of the product. Therefore, consumers who have a positive image about the product are certainly interested in making a purchase [14]. The product image consists of three elements including the attributes, benefits and personality of the product. Product attributes are all things related to the product such as content, price, taste and product packaging. Product benefits are the benefits obtained by consumers for the use or use of the product. Product personality is a characteristic or product characteristic. Product images are formed by sharing factors. The factors that shape the image of the product include excellence, strength and uniqueness of the product. Thus it can be concluded that the product image is the perception and preference of the product derived from the appearance of the product in the minds ofconsumers.

Buying Decision
Purchase decisions occur between two or more parties. In general, the party consists of five people. First, the initiator is the party who first recommends buying a product. Second, the influence giver is the party who has the strongest perception in the final purchase decision process. Third, the decision maker is the party that determines the product purchase. Fourth, the buyer is the person who makes the purchase. Fifth, users are people who use or consume products. Companies, especially marketers, must be able to understand how the consumer decides to buy. In this case what must be understood is the party that makes the purchase decision and the stages of the purchasing process. This is because purchasing decisions vary by consumer. Moreover, if the purchase decision involves a variety of considerations and many. Therefore, purchasing decisions dependon how marketers act and evaluate and consumer perceptions. Purchasing decisions consist of five stages: problem identification, information search, alternative assessment, purchase and post-purchase valuation [7]. The five stages can be used as a marketing strategy and communication by the marketer. In addition, purchasing decisions are also influenced byseveral other factors such as cultural, social, personal and psychological factors [15]. The cultural factors in question are social class, subculture and others. Social factors in question are family, consumer social status and others. Personal factors in question are lifestyle, economic conditions, personality, and self-concept of consumers.
Psychological factors in question are motivation, perception, learning process, trust and consumer behavior [4]. Purchasing decisions are determined by various factors including price, packaging and the product itself [3]. Purchasing decisions are understood as very important for companies and consumers because they have an impact on whether to buy or not.

The Relationship between Product Image and Purchasing Decision
It has been explained that the product image is a set of consumer perceptions of the product. Therefore, if there is a change in the product, especially the brand, it will also affect the change in perception in the minds of consumers [5]. Products with a strong image can certainly excel in long-term competition. In addition, it can also attract, maintain and even increase consumer interest in buying [2]. Therefore, the stronger the product image, the higher the consumer's interest in buying. Thus, it can be concluded that the product image influences the purchase decision.

Research Conceptual Framework
Product image as the most important factor used by companies in attracting consumers to buy. This is because the product plays a very important role in purchasing decisions, so the purchasing decision depends on consumers' perceptions of the product through several factors such as cultural, social, personal and psychological factors. The better the consumer's perception of the product, the higher the consumer's interest in buying. In addition, consumer buying interest also depends on the comparison between price and product quality. This is because the price is used as a form of product quality. The higher the product price, the better the product quality. In this case, if the price of the product is high, but does not have good quality, consumers are not interested in buying it. Thus, research hypotheses can be as follows: H1A The uniqueness of the product image has a positive and significant effect on the decision to purchase SME products in East Java. H1B The strength of the product image has a positive and significant impact on the decision to purchase SME products in East Java. H1C The superiority of the product image has a positive and significant impact on purchasing decisions for SME products in East Java. H2 The uniqueness of the product image, the strength of the product image and the superiority of the product image simultaneously have a positive and significant impact on purchasing decisions for SME products in East Java.

Research Design
This research was conducted with a survey approach. Survey research is research conducted by examining problems that occur along with sociological and psychological factors that exist both in large and small populations.
Based on the data obtained, this study is included in quantitative research. Quantitative research is research that analyzes hypotheses from problems that occur by providing answers according to data analysis obtained from respondents. The independent variables in this study consisted of three namely the uniqueness of the product image (X1), the strength of the product image (X2) and the superiority of the product image (X3) with one dependent variable, the purchasing decision(Y).

Techniques
The population determined in this study were active students of management study programs in various tertiary institutions in East Java Province in the academic year 2019/2020. The sample determined in this study was an active student in a management study program in East Java Province who had consumed or was limited to knowing the existence of SME products. Sampling of respondents in this study using purposive sampling technique. Purposive sampling technique is sampling that refers to certain characteristics in accordance with research needs. The characteristics determined are active students of management studies in East Java Province. Determination of the number of samples is based on the number of students of 200 people. However, only about 10-15% or 20-25% is taken. Based on location, this study prioritizes students in the Surabaya, Sidoarjo, Pasuruan and Probolinggo regions to achieve a better level of generalization of research results. Data collection techniques used in this study were questionnaires. Questionnaire is a data collection technique by providing various written statements to respondents. The statement was made for the problems that were examined including the strength of the product image, the uniqueness of the product image, the uniqueness of the product and the willingness of consumers to buy. The questionnaire was given to respondents for three days to be answered by respondents, so researchers expect answers that are true and honest from respondents. In analyzing data, the techniques used are instrument test, classic assumption test and multiple regression analysis through the SPSS for windows program.

Test Instrument
The instrument trials consisted of two namely validity and reliability tests. Validity test is used to find out how much the ability of statement items in explaining variables in order to obtain valid data.

DISCUSSIONS
In Partial Least Square-PLS testing statistically, each hypothesized relationship is carried out using estimates. In this case the bootstrap method is performed on the sample. Following, the test results with bootstrapping from PLS analysis. The relationship between product image uniqueness with a significant purchase decision with a T-statistic of 10.778 > 1.96. The original sample value is positive that is equal to 0.672 which indicates that the direction of the relationship between product image uniqueness with the purchase decision is positive. The relationship between product image power and purchase decision is significant with a T-statistic of 6.688 > 1.96.
The original sample value is positive that is equal to 0.484 which indicates that the direction of the relationship between product image power and purchase decision is positive. The relationship between product image advantage with purchase decision is significant with T-statistic of 9.772 > 1.96. The original sample value is positive that is 0.212 which shows that the direction of the relationship between the product image advantage with the purchase decision is positive.

CONCLUSION
This research succeeded in proving that the product image uniqueness variable influences the purchase decision. In order to provoke purchase decisions on product offerings, SMEs should continue to improve product image uniqueness, especially on functional attributes. This research also proves that product image power influences purchase decision. SME is advised to be able to maintain and enhance the strengths in the offered product image. In addition, this study also proves that the product image advantage variable influences the purchase decision. This can be interpreted that the SME must be able to create while maintaining the advantages of the products offered. This study also has a number of limitations and disadvantages although this research is able to uncover important findings related to purchase decisions in the perspective of product image. It is expected that future studies will be able to perfect this research. This research only focuses on assessing one type of industry, namely SME. This study is also limited to respondents who are consumers in East Java. The variables in this study are also limited to the product image variable, while many other variables can be examined as determinants of the purchase decision. This study also only uses SEM-PLS data analysis techniques with the help of SmartPLS while many

ACKNOWLEDGEMENT
The researcher would like to thank the Ministry of Research and Technology of Higher Education who has funded this research in the grant scheme. The researcher also thanks the editors and reviewers for their valuable input and suggestions for the perfection of this paper. The researcher also thanks all those who support the activities in this study.


Formulation Of Blue Ocean Strategy Developing A Bamboo Small Business In Binjai City

The research objective is to analyze the Blue Oceans Strategy method approach to improve strategy development for the Small and Medium Bamboo Industry in Binjai City. Woven crafts are one of the most abundant businesses in the SME sector, both rattan and bamboo handicrafts have dominated the activities of SMEs in Binjai City. The woven crafts are spread in 5 (five) sub-districts in Binjai City. Their business has grown more than 15 years ago, they have participated in many exhibitions or workshops outside the city to national. The fluctuating development of woven crafts is due to the large demand for woven bamboo and rattan goods. The data processing and analysis method used was through a post-positivism research approach, namely qualitative research. The method of analysis in this study uses a Structural Equation Modeling (SEM) approach, in forming a strategy for developing SMEs and Bamboo cooperatives with the ocean strategy and blue ocean strategy models in Binjai City. The competitive strategy used by the Small and Medium Shell Industry in Binjai City at this time is to identify competitive factors in the industry which consist of product uniqueness, a touch of art, done in detail, proximity to sources of raw materials, strategic location, availability of labor, Creativity, Prices are not fixed on market prices, Can be used as souvenirs, Skills and skills of employees, Attractiveness and impact after participating in exhibitions, Sensitivity to market choices, Organizational commitment, Work environment, Availability of online order facilities, Experience and managerial skills, Product orders completed on time.

INTRODUCTION
The development of the number of SMEs in the 2018 period increased by 2.18 percent, from 48,779,151 units in 2017 to 49,840,489 units in 2018. The SME economic sector which has the largest proportion of business units is the sector (1) Agriculture, Livestock, Forestry and Fishery; (2) Trade, Hotel and Restaurant; (3) Processing Industry; (4) Transportation and Communication;and (5) services with the development of each sector recorded at 51.14 percent, 27.40 percent, 6.49 percent, 5.54 percent and 4.60 percent (Nunuy Nur Afiah, 2016).It is undeniable, small and medium industries (IKM) are economic pillars for a developing country like Indonesia. With the spirit of developing the creative economy through the creation of added value, it can answer the challenges of an environmentally friendly industry (Affif, 2012). Unfortunately, in the face of business changes, small and medium industry (IKM) players put forward the competitive side of each other in order to pursue business growth, compete for competitive advantage, compete for market share, and strive to create differentiation. So it is not uncommon for competition in the market between these business actors to bring the consequences of bankruptcy.Microeconomically, the existence of SMEs is very volatile, this can occur due to shifts in the business sector to keep up with the existing market share or because they have a capital structure that is not yet established, so the 'grow' and 'death' of MSEs are often very difficult to detect, but macroeconomically the development of SMEs always showing improvement. Judging from its role in GRDP, SMEs also continue to show strengthening.
Woven crafts are one of the most abundant businesses in the SME sector, both rattan and bamboo handicrafts have dominated the activities of SMEs in Binjai City. The woven crafts are spread in 5 (five) sub-districts in Binjai City. Their business has grown more than 15 years ago, they have participated in many exhibitions or workshops outside the city to national. The fluctuating development of woven crafts is due to the large demand for woven bamboo and rattan goods. The handicraft market has also gone out of town, such ISSN: 2722 -4015 http://ijstm.inarah.co.id as Medan, Langkat, Deli Serdang, and other areas in North Sumatra. Although only a few handicrafts have penetrated the export market, such as bamboo furniture, which is still very small in population. As noted by Kim and Moubourgne (2015) that business actors in an industry take various ways to cope with market changes by deliberately setting market boundaries to inhibit and minimize new business actors. This is done in order to protect the market share that has been achieved by business actors already in the industry. This action shows the existence of a situation of intense industrial competition which is termed a bloody ocean or red ocean (Kim and Moubourgne, 2015). Here the market space is getting fuller, the prospects for profit and business growth are also reduced, the goods produced have become commodities.

II. LITERATURE REVIEW Blue Ocean
Blue ocean is an unexplored and clearly defined market space and the opportunity for the industry to grow is enormous and does not see the trade-off between cost and value as an option to develop a business. The trade-off here is that to improve quality will lead to a consequence of increasing prices charged to consumers. Blue ocean itself can be created outside or inside a pre-existing market by expanding the boundaries of the existing market so that it requires companies to see things beyond the boundaries that can still be achieved by Kim and Mauborgne (2015).

Red Ocean
The market is constantly changing as are the number of competitors, consumer preferences, technology, and so on in an industry. Therefore, market leaders try as much as possible to provide limits and barriers to their competitors. This situation is what is meant by the red ocean. Implementing this strategy further tightens the existing competition among business actors to beat each other so as to create a red ocean for business actors.

Creating Value Innovation
Value innovation is the first step of the blue ocean strategy and as a strategy that embraces the entire system of corporate activities. The existence of value innovation will require companies to direct the entire system towards the goal of achieving a leap in value for buyers and for the company itself. Meanwhile, the competition-based red ocean strategy assumes that the structural conditions are defined and companies are forced to compete in those conditions. This assumption is referred to as the "structuralist" or "determinism" environmental view .Based on the figure above, it can be seen that of the 108 companies, it was found that 86 percent of these initiatives were line extensions or extensions, namely major improvements in the existing red ocean. However, the initiative represents only 62 percent of total revenue and 39 percent of total profit. While the remaining 14 percent are initiatives aimed at creating blue oceans. This initiative was able to generate 38 percent of total revenue and 61 percent of total profit.

Non-consumers in the formation of Blue Ocean Strategy
One way to achieve a blue ocean is to challenge two things that are commonly applied to the red ocean, namely focusing on existing consumers and sharpening segmentation to accommodate differences on the part of buyers. To maximize the size of the blue ocean, companies must look at non-customers and develop what buyers generally value. There are three levels of non-consumers that can be turned into consumers. These three tiers differ in their relative distance to the market. The first level is the closest to the market. This group is people who make purchases of products out of necessity. When another product offers something they think is more suitable and appropriate, they will leave the industry, but if given a jump in value, they will not only stay, but also increase the frequency of their purchases and break down the huge latent demand. The second level is people who refuse to buy offers from the industry. They are buyers who see the industry's offerings as an option to satisfy a need, but they refuse to buy them. They feel the products offered are ineffective or out of their reach. In general, their needs are satisfied by other products or ignored.

Strategy Canvas
As noted by  that the strategy canvas is a framework for action as well as a diagnosis for building a good blue ocean strategy. There are two functions of the strategy canvas that can ISSN: 2722 -4015 http://ijstm.inarah.co.id be utilized, namely the strategy canvas that summarizes the current situation in a well-known market space, so that it can be used to understand where the competition is currently being poured out, understand what factors are being used as a competition arena in products, services, and delivery, as well as understanding what consumers get from competitive offerings in the marketplace. The strategy canvas produces three things, namely: 1) The strategy canvas shows the strategic profile of an industry by clearly describing the factors that affect competition among industry players.
2) The strategy canvas shows the strategic profile of the current and potential competitors, identifying those factors that are the investment venues for them strategically.
3) The strategy canvas shows the company's strategic profile (corporate value curve) which describes how the company invests in competitive factors and how the company invests in these factors in the future.

Value Curve
In their notes  explain that the value curve is a basic component of a strategy canvas. The value curve is a graphic depiction of a company's relative performance with respect to competitive factors in the industry. Therefore, by using the strategy canvas, through its value curve, it can be seen graphically about the company's general strategic profile compared to other companies.

Creating Blue Ocean Strategy
In particular,  find six basic approaches to reshaping market boundaries, referred to as the six-way framework. These six avenues challenge the six core assumptions that underlie strategy in many companies, which keep companies trapped in competing in the red ocean.

III. METHODS
Structural equation modeling (SEM) was used to analyze the data from this study. SEM is a statistical modeling technique that is highly cross-sectional, linear and general. Included in this SEM are factor analysis, path analysis and regression.

IV. DISCUSION
CFA is a special form of factor analysis. CFA is used to assess the relationship of a number of independent variables with others. Factor analysis is a technique for combining questions or variables that can create new factors and combine goals to create new groups in a row. There are two types of testing in this stage, namely: Confirmatory Factor Analysis (CFA), namely measurement model and structural equation modeling (SEM). The CFA measurement model is directed to investigate the unidimensionality of the indicators that explain a factor or a latent variable. As in the CFA, SEM testing is also carried out with two kinds of tests, namely the model suitability test and the significant causality test through the regression coefficient test.
The analysis step to test the research model is carried out through three stages, namely: first: testing the conceptual model. If the test results on this conceptual model are unsatisfactory, then proceed with the second stage, namely by providing modification treatment to the developed model after paying attention to the modification index and support (justification) of the existing theory. Furthermore, if unsatisfactory results are obtained in the second stage, then the third stage is taken by eliminating or dropping variables that have a CR (Critical Ratio) value smaller than 1.96, because this variable is considered not to have the same dimensions as the other variables. to explain a latent variable Ferdinand, (2010:132). The loading factor or lambda value (ƛ) is used to assess the suitability, suitability or unidimensionality of the indicators that make up the dimensions or variables. To test the CFA of each variable against the overall model, whether it is satisfactory or not is guided by the goodness of fit criteria.

Sumber: Ghozali (2010), output Amos (2020)
This fit test measures how close the implied covariance matrix (covariance matrix prediction results) and sample covariance matrix (covariance matrix of the sample data). In practice, the P-value is expected to be greater than 0.05 so that H0 can be accepted which means that the model is good. Chi-square test is very sensitive to data size. Yamin and Kurniawan (2009) recommend that for large sample sizes (more than 200), this test tends to reject H0. On the other hand, for small sample sizes (less than 100), this test tends to accept H0. Therefore, the data sample size that is recommended to be tested in the Chi-square test is the data sample ranges from 100 -200. The probability of the Chi-square value is 0.000 > 0.5 so that there is a match between the implied covariance matrix (covariance matrix predicted results) and sample covariance matrix (covariance matrix of the sample data).The GFI measure is basically a measure of the ability of a model to explain the diversity of data. The GFI value ranges from 0 -1. In fact, there are no standard criteria for a good GFI score limit. However, it can be concluded that a good model is a model that has a GFI value close to 1. In practice, many researchers use a minimum limit of 0.9. The GFI value in the SEM analysis of 0.919 exceeds the number 0.9 or is located between 0-1 so that the ability of a model to explain the diversity of data is very good/fit.
RMSEA is a measure of the average difference per degree of freedom expected in the population. RMSEA value < 0.08 is good fit, while RMSEA value < 0.05 is close fit. The RMSEA value in this study is 0.067, so the model is said to be good/fit. NCP is expressed in terms of Chi-square re-specification. The assessment is based on comparison with other models. The smaller the value, the better. The NCP value is lower than the Cci-square value, so the model is good.Convergent validity test is obtained from the measurement data of each variable model (measurement model), this test is conducted to determine the validity of each estimated indicator, by measuring the dimensions of the concepts tested in the study. If the indicator has a nadir (critical ratio) that is greater than twice the error (standard error), it indicates that the indicator has measured what it should have measured in the model presented by Wijaya (2011). Convergent validity can be assessed by determining whether each estimated indicator validly measures the dimensions of the concept being tested. Based on table 4.22, it is known that the nadir value (critical ratio) for all existing indicators is greater than twice the standard error (standard error), which means that all items in this study are valid for each research variable. The following are the results of convergent validity testing. The results of the loading factor test are known that all variables exceed the loading factor by 0.5 so that it can be believed that all variables are eligible for further analysis. Sumber : Lampiran AMOS 20 (2020) Causality relationship with SB strategy. Critical probability causality test The causality test shows that almost all variables have a causal relationship, except between business competition and the SB strategy which does not have a ratio that has three asterisks, which can be presented in the following explanation: 1. There is a causal relationship between the jod description and the performance of bamboo SMEs. The critical value of 5.181 is twice as large as the standard error value and the probability value (p) which has an asterisk which means it is significant. 2. There is a causal relationship between SME policies and the performance of bamboo SMEs. The critical value of 5.698 is twice as large as the standard error value and the probability value (p) which has an asterisk which means it is significant. 3. There is a causal relationship between the strategy canvas and the performance of bamboo SMEs. The critical value of 5.101 is twice as large as the standard error and the probability value (p) which has an asterisk which means it is significant. 4. There is a causal relationship between the SME policy and the SB strategy. The critical value of 1.360 is twice as large as the standard error and the probability value (p) which has an asterisk which means it is significant.
5. There is a causal relationship between the strategy canvas and the SB strategy. The critical value of 2.313 is twice as large as the standard error value and the probability value (p) which has an asterisk which means it is significant. 6. There is a causal relationship between the performance of bamboo SMEs and the SB strategy. The critical value of 4.060 is twice as large as the standard error value and the probability value (p) which has an asterisk which means it is significant. The results of the indirect effect in the table above can be described as follows: The results of the total influence show that the biggest influence on the performance of bamboo SMEs is the SME policy of 0.680, while the biggest influence on the SB strategy is the performance of bamboo SMEs of 0.724. To find out the results of hypothesis testing, it is done by looking at the probability value (probability) or by looking at the significance of the relationship between each research variable. The criteria are if p <0.05 then the relationship between variables is significant and can be analyzed further, and vice versa. Therefore, by looking at the probability number (p) at the output of the entire path, it shows a significant value at the 5% level or the standardize value must be greater than 1.96 (> 1.96). (If you use the comparison value of the t-count value with the t-table, it means that the t-count value is above 1.96 or >1.96 or the t-count is greater than t-table). AMOS 22 can set criteria for acceptance and rejection of the hypothesis as follows: If P > 0.05 then H0 is accepted (not significant) If P < 0.05 then H0 is rejected (significant) (Santoso, 2007) The hypothesis in this study is divided into 10 (ten) tests, namely: It is suspected that business competition affects the performance factors of bamboo SMEs in Binjai City. It is suspected that business competition affects SB strategy factors in Binjai City 11. It is suspected that the quality of human resources has an effect on the performance factors of bamboo SMEs in Binjai City It is suspected that the quality of human resources influences the SB Strategy factor in Binjai City. It is suspected that the strategy canvas has an effect on the performance factors of bamboo SMEs in Binjai City. It is suspected that the strategy canvas has an effect on the SB strategy factors in Binjai City. It is suspected Sumber : Lampiran Amos 20 (2020) There is a significant effect of business competition on the performance of bamboo SMEs in Observation, where the probability value has three stars. There is a significant effect of SME policy on the performance of bamboo SMEs in Observation, where the probability value has three stars. There is a significant effect of the strategy canvas on the performance of bamboo SMEs on observation, where the probability value has three stars. There is an insignificant effect of SME policy on SB strategy in Observation, where the probability value is 0.174 > 0.05 so it is known that SME policy does not significantly affect SB strategy. There is an insignificant effect of the strategy canvas on the SB strategy on Observation, where the probability value is 0.021 > 0.05 so it is known that the strategy canvas does not significantly affect the SB strategy. There is a significant effect of the performance of bamboo SMEs on the SB Strategy in Observation, where the probability value has three stars.

V. CONCLUTION
The competitive strategy used by the Small and Medium Shell Industry in Binjai City at this time is to identify the competitive factors in the industry which consist of product uniqueness, a touch of art, done in detail, proximity to sources of raw materials, strategic location, availability of labor, Creativity, Prices are not fixed on market prices, Can be used as souvenirs, Skills and skills of employees, Attractiveness and impact after participating in exhibitions, Sensitivity to market choices, Organizational commitment, Work environment, Availability of online order facilities, Experience and managerial skills, Product orders completed on time.