Small Firm Growth in the UK Regions 1994-1997: Towards an Explanatory Framework

Abstract

H ART M. and M C G UINNESS S. (2003) Small firm growth in the UK regions 1994-1997: towards an explanatory framework, Reg. Studies 37 , 109- 122. This paper examines the scale of regional variations in small firm growth in the United Kingdom in manufacturing and services over the period 1994-97. An attempt is made to develop a theoretical framework to explain these variations and to provide an empirical test with the use of multivariate techniques. The results demonstrate that, particularly for the service sector, the nature of the external business environment provides an important part of the explanation of the observed spatial variations in small firm growth for the period 1994-97. There were quite distinct processes at work in determining the spatial variation in growth rates for small firms in the manufacturing and service sectors. This finding has important implications for interventions at regional and national level designed to enhance the fortunes of the small firms. The manufacturing equation, for example, identified the positive role of regional financial assistance in stimulating growth, while the influx of service sector FDI was a significant factor for the growth of small service firms.