A typology of new manufacturing firm founders in Wales: Performance measures and public policy implications

Abstract

A typology of new manufacturing firm founders in Wales is presented. Factors associated with the parental entrepreneurial background, employment history, and the characteristics of the founder's previous employer prior to start-up are explored. Through the adoption of principal components analysis and cluster analysis a typology of new firm founders is detailed on the basis of 14 characteristics. The six founder types are shown to have different abilities to generate new jobs, create new wealth, and export their manufactured products. Public policy should not solely be concerned with the number of new firms and the rate of new firm foundation. Different founder types have established new firms of variable “quality” in terms of potential for job generation, wealth creation, and ability to export on a competitive basis. There is no shortage of potential new firm founders in Wales, and public policy should aim to discourage those individuals who are clearly “unsuitable” for entrepreneur ship. If the objective of policy is “geographical welfare,” there is the case for extra assistance to be directed to those regions associated with deep-seated factors that make them less conducive to “successful” entrepreneurial formation and development. Assistance could vary according to local “need. ” In the cause of “regional equity, ” policy measures and schemes could be restricted to those areas with the lowest levels of entrepreneurial potential. Government in this way could minimize its financial commitment to new firms policy while maximizing its effectiveness. Finally, it is suggested that public policy should be targeted to those “founder types” in problem areas who have the greatest potential for establishing “successful” new ventures.