Small Firm Sector Research Articles

Factors influencing companies' response to environmental responsibility

AbstractThe growth in the small firm sector over the last decade has created a situation where approximately 98% of all businesses are classed as small. The economic impact of the sector is obvious and is recognized and fostered by the UK Government; the environmental impact of these firms, however, has been overlooked. To date, empirical evidence has indicated that small firms have been reticent to take a more proactive role in improving environmental performance. It is argued here that there is a need to develop greater environmental awareness within the small firm sector. Empirical evidence is used to investigate the attitudes that exist within small firms towards the environment and the actions they are prepared to undertake. This is compared with similar evidence obtained on the attitudes and actions of large firms. Through the use of discriminant analysis, certain factors have been identified which explain the relatively low use of environmental audits in the small firm sector. Initiatives are proposed which seek to develop greater environmental commitment from businesses, especially those in the small firm sector. Copyright © 1995 John Wiley & Sons, Ltd. and ERP Environment

The bank financing of small firms in UK: Issues and evidence

This paper focuses on the, often strained, contractual relationships between banks and small firms in the UK. In the UK both the adequacy of the supply of debt finance to small firms (the so-called finance gap) and the contractual conditions attaching to it have frequently been seen as a major constraint on the development of the small firm sector. In this regard, the main UK clearing banks have been identified as the main culprits and have frequently been criticised for being too ‘risk-averse’, particularly in relation to the financial needs of rapidly growing small firms.

THE ENVIRONMENTAL RESPONSIBILITY OF SMALL FIRMS: INVESTIGATING CURRENT AWARENESS AND PRACTICE

This paper addresses the issue of environmental auditing by smaller business units and compares the actions of the small firm sector with those of larger organisations. It will focus on four key themes: the necessity to bring small firms to environmental account; the relationship between organisational size and the use of environmental audits; the reasons why smaller business units are less likely to undertake an environmental audit; policies that could improve the environmental practices of smaller firms.

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT: THE ROLE OF SMALL FIRM FORMATION AND EXPANSION FOR REGIONAL ECONOMIC WELL-BEING

Entrepreneurship, understood as the formation and growth of small, autonomous firms, is increasingly believed to be an important determinant of national and regional economic development. While several empirical studies in recent years have suggested that small firm formation is a major source of net new job creation, most studies that take on a regional perspective focus only on (gross) formation of new firms. The further development of these firms is thus neglected, and the positive relationship between small firm dynamics and economic well-being remains an assumption. In this study, a unique and comprehensive data set is used for examining how gross dynamics-births, turbulence, and growth-among establishments in small versus large firms relate to regional economic development. The results suggest the following: firstly, high gross birth rates lead to high net birth rates. This relationship is not self-evident, since high birth rates could be accompanied by high death rates. The results also show that the net effect of gross firm births is contingent on current small firm density and on the sectoral distribution of the start-ups. Secondly, out of the net dynamics measures tested (net formation and expansion surplus of small firm and large firm establishments) net small firm formation appears to be the most important predictor of growth in economic well-being. Thirdly, measures of gross business dynamics can explain more of the changes in regional economic well-being than can measures of net dynamics. In all, the results suggest that gross dynamics are important both for creating a net surplus of new firms and for reallocating resources for better use. They also suggest that for regional economic well-being, the vitality of the small firm sector is of great importance.

Equalizing Opportunity through Small Business Development: A South African Perspective

The active development of the small firm sector is thought to present a vehicle highly appropriate to the task of equalizing opportunity in a very unequal society—the developing country of South Africa. This article seeks to evaluate the merits of the above assumption. It calls for a closer understanding of the unique difficulties encountered by a minority business group that has experienced a long history of prejudice and discrimination, namely the black, essentially small business sector of South Africa. The author calls for careful appraisal of available development initiatives in order to effectively serve the interests of this group.

The Job Creation Effects of Small and Large Firm Interaction

Geoff Robson is a lecture and Colin Gallagher is emertius professor of managment at the school of busienss managment, univeristy of newcastle upon tyne. England, in this paper, the effect of the interaction between small and large firms on the creation of jobs in the united kingdom over the period 1971 to 1989 are examined in detail. the result of four recent studies are used to assess the contribution of different size of firms to aggregate employment change. small firms have a greater ability and potential to create jobs than do large firms. the advantages which account for this extra ability, both due to the nature of small firms themselves and to the nature of the intereaction which take place between small and large firms, are identified and evaluated. Governement funding for small firms should be directed in that manner by which the nation will gain the most. it would therfore be wise to target those firms which are based in the wealth creating parts of both manufacturing and service sectors, which have eitehr grown idependently of large firms or whose growth would not adversely affect large firm growth and in particular, those small firms in which new innovations and technologies are likely to be developed should have priority for aid. the practical problem to date is taht of our inability to identify successfully those firms, however there is a danger that by viewing the small firm sector in isolation from large firms, sub-optimal economic and political decision may be reached. Although small firms in jobgeneration terms are iherently advangeaged and thier perfomace numerically dominant, it is important that small meaningfull, changes in large firm perfomance should not as a result be overlooked.

Advice and Training Support for the Small Firms Sector in West Yorkshire

The objectives of this research were an assessment of the support and training needs of small businesses in the Bradford region of West Yorkshire, and an assessment of the small business support network in the region. The research was targeted at small businesses with less than 50 employees. The research took place in June/July, 1991. Following qualitative and exploratory interviews, questionnaires were sent out to small businesses within the region. The questionnaire results identified the areas where the businesses felt they needed most support. They also quantified small businesses′ attitudes to existing support services, and examined the support which the entrepreneurs would be likely to give to new training and support schemes. The results showed that the businesses felt that the existing support was inadequate. The results also identified a demand for training courses that matched the specific needs of the small business. Proposes guidelines for the type of training courses that small businesses would like to see.

A Smallest-Space Analysis of Employment Changes in Japan

This paper examines Japanese employment changes at various career stages along firm, industry, and occupational dimensions, using the 1975 Social Status and Mobility data. Smallest-space techniques depict differences in workers' mobility patterns. Findings suggest the dichotomy of large versus small-firm sectors oversimplifies the labor-market structure, since mobility patterns vary not only according to firm size, but also to industry and occupation. At all career stages, government employees exhibit mobility patterns different from private-sector workers. Job movements are bounded by industrial origins, as most workers, except those from the traditional primary sector, remain in the same sector after shifts. This tendency is most evident during later career transitions. Workers' destinations are constrained by their past occupations. Mobility barriers between upper white-collar positions and production work are obvious. The persistence of upper white-collar occupations increases during later career transitions, but this is not the case for production occupations.

Understanding the competitive process A guide to effective intervention in the small firms sector

The paper describes a project undertaken within the Economic and Social Research Council's ‘Competitiveness of British Industry’ research programme. The aim of the project was to assist agencies who intervene in a local economy to try to help individual small firms. Guidance currently available to such agencies was considered to lack an adequate theoretical basis in relation to either the choice of firms who should be granted assistance, or the form of assistance which might be given. In particular, there is a lack of recognition that there is scope for management strategy among smaller firms, affecting the way they compete in the market place and having a clear bearing on their revealed performance. From a study of 100 small firms located in Telford New Town criteria were derived for classifying the ‘competitive stance’ of small firms. This was identified as the key to the potential performance of the small firm. The extent to which it reveals a potential for future growth can determine whether a firm is or not a suitable candidate for assistance. And the strengths and weakness in an individual firm's stance can determine the most suitable form of assistance to give. The survey and analysis exercise leading to the identification of components of competitive stance are described, and the classification of firms into a range of stance types. Then the usefulness of the competitive stance classification as a guide to selection of firms and choice of form of assistance is considered.

Policy Review Section

In this Policy Review Section, James Cornford and Kevin Robins of the Centre for Urban and Regional Development Studies, University of Newcastle upon Tyne, discuss the major changes currently taking place in the British broadcasting industry which have emanated from economic, political and technological pressures over the past decade. Cornford and Robins review the evolution of government policy with its measures to introduce greater levels of competition and consider the policy implications of these changes in broadcasting legislation and regulation for local and regional media development. In the second article, Michael Fuller, Michael Murphy and Sarah Vickerstaff of the Canterbury Business School, University of Kent, summarize the results of two studies examining the current training activities of companies in Kent in the light of major developments taking place in the local economy and the County's proximity to the continent. In considering the implications for current training policy, they argue that efforts should concentrate on the small and medium-sized firm sector with a particular emphasis on improving the ‘in-house training’ capacity of managers and supervisors.

Policy Review Section

In this Policy Review Section, Alan Hughes of the Small Business Research Centre, Cambridge University, examines trends in the small firm sector during the 1980s. A major part of the changes in the numbers of small firms in the UK manufacturing sector is shown to be the result of a change in the way the data are collected. Increases in the number of small businesses in manufacturing and the economy as a whole have been heavily concentrated in the very smallest size classes. It is concluded that there is a need to shift the emphasis in policy making away from removing barriers to new start-ups and towards alleviating barriers to the survival of existing efficient smaller businesses. In the second article Ash Amin and John Tomaney of the Centre for Urban and Regional Development Studies, University of Newcastle, review the various policy measures which central government and the private sector have pursued in the North East in the 1980s. They conclude that there is a mismatch between the underlying economic problems of the North East and the urban regeneration initiatives on offer which, through various forms of private-public sector partnership, have sought to map out a vision of a post-industrial future based on growth-inducing service industries. Given the clear limits to personal expenditure in the North East and intensifying competition from identical strategies elsewhere, it is questioned whether such a consumption-led strategy can guarantee sustainable growth.

BUSINESS GROWTH PROGRAMMES: A MODEL FOR SUCCESS

Ever since the Bolton Committee published its Report in 1979, the small firm sector has been a focus for economic regeneration and employment creation. The potential of this sector was further highlighted by the controversial research findings of Birch. Notwithstanding the rigour and robustness of the work, it was used to strengthen and validate the U.K. government's policy of providing considerable assistance towards encouraging new “start‐ups”.

The Role of Technology in Small and Medium‐sized Enterprises

In Britain there has been considerable growth in the small firms sector during the 1980s. Whilst some have been at the forefront of technological innovation, many others outside the high‐tech area have been more reluctant to change. Aspects of the role of small firms in the economy are noted and some of the helps and hindrances to technological innovation in such firms are reviewed. Four company cases from the components industry are featured, outlining how these companies introduced various types of technological change to improve quality and integrate their manufacturing processes. The factors which led them to consider technological change and the ways in which they managed the process are outlined in relation to market pressures. Their experiences point to the importance of human factors and training within strategies for change.

Small new firms and the return to alternative sources of finance

This study analyses the returns to alternative sources of finance in the small new firm sector. Prior work in this area has concentrated on large established firms and has been subject to significant problems of interpretation. Many of these problems are absent when considering small new firms and this paper suggests that the various forms of finance used differ in terms of the return on capital employed they are associated with. In particular, sources of bank finance for small new firms are associated with higher returns than other available sources of finance.

Market orientation: a sustainable small scale advantage?

The job generation process is of vital importance in society. A recent study in Norway shows that as much as 82% of total net gain in employment in the private sector during the period 1977-88, is generated by small firms with less than 20 employees. The self-sustaining strength of the small firm sector defies the theory of economies of scale. Surveys conducted among small and medium sized owner-managed firms (SMB) in Norway show that customer orientation is more common among small than medium size firms, and that this orientation is becoming more widespread. Although the marketing concept in theory is based upon the philosophy of customer orientation, recent research findings show that such orientation is not easily engendered in large firms. In this study it is argued that customer orientation is a natural (as well as a necessary) strategy in most small firms, and since customer orientation is not easily engendered in larger firms, it may be considered to be a distinct sustainable competitive small scal...

Networking and Small Firms

JOSEPH SZARKA IS A LECTURERE IN FRENCH and managment at the university of Bath, England. His paper reviews the mangment literature on networking and puts forward and thery small firm development in terms of network formation. this model holds that it is insfficient to consider the small firm in isolation: the small firm is particulary dependent on the nature and quality of its relations with otehr firms and with the external world. these relations can be conceived in terms of exchange networks, commmunication networks and social networks. goods and services, inforamtion, ideas and values are mediated by those networks and sociocial network. Good and services information ideas and values are mediated by those networks. depending on the likages between firms, network constitutions can be based on relations of control, co-ordination or co-operation. Network constitution is shown to influenc the viability and development paths of member firms. Factors encourging network formation and development are analyssed The key issue of economic effectivness and efficiency are related to questions of concetnraion and market condition. the paper concluded by emphasising the role of network formation for the expansion of the small firm sector.

Firm performance and size: Explanations from the small firm sectors

This paper has presented the case that small firms deserve greater attention from economists who, in the past, have been interested primarily in larger firms.

The size of the small-firm sector in Hungary

The size of the small-firm sector in Hungary

The role of small firms for regional revitalization

In the past few years, in which the economies of most industrialized countries showed figures of stagnation phenomena, it has become increasingly evident from a variety of studies and official government policy statements that small and medium size firms are more and more regarded as generators of economic growth, as primary sources of technological change and--via job creation--as one of the major factors in maintaining social stability (see Rothwell and Zegveld, 1982). Economic growth does not take place uniformly on a nation-wide scale. Specific regions provide a specific incubator function for specific new activities. Research on the incubator hypothesis already has a long history since the early attempts of Hoover and Vernon (1959). The main question here is the identification of favourable locational conditions that act as attractors of new activities. In this framework, a regional profile analysis may be a useful analytical tool in order to identify by means of a strength-weakness analysis which regions are favourable candidates for the locational requirements of new firms (e.g., the regional entrepreneurial vitality, the industrial diversity, the available infrastructure, etc.) (see Ni]~amp et al., 1988). While traditional regional policy has primarily addressed itself to providing various incentives to firms to locate branch plants in development regions and to aiding establishments (such as the Voest-Alpine in Austria) already located in such regions, local authorities are nowadays increasingly focussing attention on the revitalization of indigenous regional resources which may trigger the creation of new--often knowledge-based--activities, particularly in the small firm sector (see also Keeble and Wever, 1986; Storey, 1982). This paper aims at discussing in more detail the regional development potential offered by the small firm sector. The paper is organized as follows: In section 2 the role of small and medium sized enterprises (SMEs) in the economy is discussed, in particular with respect to its employment and development potential In section 3 the innovative role of SMEs will be discussed in more detail. It will be argued in this section that the innovative potential of SMEs is co-determined by the regional incubator profile at hand. Some empirical evidence from the Netherlands will be presented in order to demonstrate the plausibility of the previous statement. Section 4 will then outline the principles of a multi-dimensional locational profile analysis for SMEs, while section 5 will descr~e the results of a case study in which a regional incubator profile is related to the specific regional importance of a set of SME branches. This

The Process of Job Creation and Job Destruction in the Italian Economy

ABSTRACT: Longitudinal analysis of labour flows provides a number of important indications on the characteristics of job creation and job destruction in the Italian economy, and on the role played by small firms in this process. The main indications may be summarized as follows:1)the ratio of total separations to total work‐force is remarkably high, and almost completely independent of the business cycle: one out of four workers leaves his/her position each year in the economy at large. In the small firms sector alone turnover is much higher, with total separations almost approaching 50|X% of employment;2)as the economy takes a downturn, it is mainly the number of jobs created through expansion of existing firms that follows this cycle, while separations remain roughly constant;3)the proportion of jobs created via the establishment of new firms is modest compared to that attributable to the expansion of existing plants (16.0‐14.491)). Likewise, the proportion of job losses due to closures visi vis employment shedding by contracting firms, is of the same order of magnitude;4)job creation and destruction is very high in the small firm sector. Employment in firms of dimension (0‐19) is 25.8 % of total employment at the beginning of the observation period (1978) and reaches 28% at its end (1984). Yet the proportion of job creation attributable to small firms is approximately 60% of the new positions due to expansion of existing firms in manufacturing, and 68% in the services. The fraction of jobs destroyed by small firms is somewhat lower: about 46% in manufacturing and 59% in the services;5)he small firms contribution to net job creation appears even more remarkable both in the aggregate, as well as within all sectors of economic activity and geographical areas.In 1978‐80 net employment change in manufacturing is 106,000 units per year; correspondingly net job creation by firms (0‐19) is alone 222,000. In the services the proportion between net employment change and the share of the small firms is 1:3.In 1981‐83, while in manufacturing over 213,000 jobs are destroyed on average each year, net creation by small firms is still positive (+ 48,000); in the services the overall change is very small (+ 3,000), while the net contribution of small firms is + 53,000.