Management training in small firms – a case of market failure?

Abstract

The take‐up of management training is lower in small than in large firms. A case is often made in the UK that this reflects an ignorance on the part of owner‐managers in small firms of the benefits of training. In other words, the argument is often put that the market is subject to failure and so justifies the provision of subsidies. This paper critiques this view. The analysis shows that market forces explain rather better the lower take‐up of management training by small firms. The authors therefore suggest the assumption of ignorance leading to market failure is unreasonable, and hence they question the case for further public‐funded subsidies.