‘North-South’ contrasts in the characteristics and performance of small firms

Abstract

In recent years there has been considerable interest in spatial differences and inequalities in the United Kingdom. Empirical evidence has indicated that there are ‘north-soudi’ contrasts with areas in the ‘soudi’ of England having recorded higher levels of economic prosperity, rates of new firm formation, levels of disposable income and ‘wealth’, and a greater tendency to retain and create jobs. These contrasts have led some commentators in the media and die popular press to suggest that these contrasts are leading to the development of a ‘divided kingdom’ rather than a United Kingdom. This study analyses die characteristics of small firms in the two locations and refutes a number of anecdotal tales and myths. The study draws upon data from 243 small firms in the Cranfield Small Firms Data Base (CSFDB) almost equally split between die ‘north’ (51%) and die ‘south’ (49%). Firms in die sample range in size from 1 to 181 employees, and from less than £99,999 to over £10 million sales turnover. Data was first subjected to univariate Chi-Squared Analysis and the results show both some clear differences and some surprising similarities. It is clear that some of the variations could be explained by industry differences. However, firms in all locations demonstrated similarities in die pattern for example of: employment size, dependence upon single products or services, customer and competitor base, use of computer technology, preference for owning rather than hiring or leasing assets, lack of training for either management or workforce, lack of formal market research, the use of solicitors and accountants as die major source of advice and information, and a lack of contact with small firms assistance agencies. The univariate analyses provided basic information about die differences between die sample firms in the ‘north’ and those in the ‘south’. In order to identify the combination of factors which best characterised the firms, a discriminant analysis was conducted using the diirteen variables found to show differences at die 0.01 level of significance. The results showed that firms in die ‘north’ are primarily firms with a large number of YTS trainees, have product liability insurance, are run by the founders, have some contact with small firms agencies, relatively small sales revenue, ‘non-local’ suppliers, received Development Board finance, and an: manufacturing firms. Firms in the ‘soudi’ are service firms with ‘local’ suppliers having no contact with Government schemes or assistance agencies but have received finance from employees.