Mark Hart

Small business performance: business, strategy and owner-manager characteristics

Purpose: This paper aims to contribute to the understanding of the factors that influence small to medium-sized enterprise (SME) performance and particularly, growth. Design/methodology/approach: This paper utilises an original data set of 360 SMEs employing 5-249 people to run logit regression models of employment growth, turnover growth and profitability. The models include characteristics of the businesses, the owner-managers and their strategies. Findings: The results suggest that size and age of enterprise dominate performance and are more important than strategy and the entrepreneurial characteristics of the owner. Having a business plan was also found to be important. Research limitations/implications: The results contribute to the development of theoretical and knowledge bases, as well as offering results that will be of interest to research and policy communities. The results are limited to a single survey, using cross-sectional data. Practical implications: The findings have a bearing on business growth strategy for policy makers. The results suggest that policy measures that promote the take-up of business plans and are targeted at younger, larger-sized businesses may have the greatest impact in terms of helping to facilitate business growth. Originality/value: A novel feature of the models is the incorporation of entrepreneurial traits and whether there were any collaborative joint venture arrangements.

Differential gains from Business Link support and advice:a treatment effects approach

The provision of advisory support to small firms is almost ubiquitous in OECD countries, although it is organised in different ways and is justified on slightly different grounds. In England publicly supported advisory services are provided through the Business Link (BL) network. Here, we consider two questions: what sort of companies receive advisory support from BL; and, what types of firms benefit most from that support? Our analysis is based on a telephone survey of 2000 firms, around half of which had received intensive assistance from BL between April and October 2003. Probit analysis suggests that the probability of receiving assistance was greater among younger businesses, those with larger numbers of directors in the firm, and those with more gender diversity among the firms leadership team. Our business-growth models suggest that BL intensive assistance was having a positive effect on employment growth in 2003. BL had a positive but insignificant impact on sales growth over the period. Employment growth effects tend to be larger where firms have a management and organisational structure, which is more conducive to absorbing and making use of external advice. The analysis suggests that BL might increase its impact through targeting these larger, more export-orientated, businesses. Employment growth effects differ little, however, depending on either the ethnic or the gender diversity of the leadership team.

Assessing the effectiveness of business support services in England: evidence from a theory based evaluation

In England, publicly supported advice to small firms is organized primarily through the Business Link (BL) network. Using the programme theory underlying this business support, we develop four propositions and test these empirically using data from a new survey of over 3000 English SMEs. We find strong support for the value to BL operators of a high profile to boost take-up. We find support for the BL’s market segmentation that targets intensive assistance to younger firms and those with limited liability. Allowing for sample selection, we find no significant effects on growth from ‘other’ assistance but find a significant employment boost from intensive assistance. This partially supports the programme theory assertion that BL improves business growth and strongly supports the proposition that there are differential outcomes from intensive and other assistance. This suggests an improvement in the BL network, compared with earlier studies, notably Roper et al. (2001), Roper and Hart (2005). En Angleterre, l’aide aux petites entreprises, soutenue par le secteur public, est principalement organisée par le réseau Business Link (BL). Nous basant sur la théorie des programmes qui servent de base à ce soutien entrepreneurial, nous définissons quatre propositions que nous testons empiriquement à l’aide d’informations obtenues dans le cadre d’un nouveau sondage réalisé auprès de plus de 3000 petites et moyennes entreprises anglaises. Nous bénéficions d’un grand soutien eu égard la valeur accordée aux agents de BL dont le profil privilégié accroît le pourcentage d’adhésion. Nous bénéficions d’un grand soutien pour la segmentation du marché de BL qui concentre ses efforts à aider les entreprises naissantes et celles à responsabilité limitée. Si l’on tient compte de la sélection d’échantillons, on observe que les “autres” types d’aide n’ont pas d’influence majeure sur la croissance mais, par contre, on note une augmentation considérable de l’emploi suite à une aide intensive. Ces résultats soutiennent en partie la thèse de la théorie des programmes, à savoir que BL accroît l’essor de l’entreprise et soutient vigoureusement la proposition que l’aide intensive et des autres types d’aide sont sources de résultats différentiels. Ces conclusions suggèrent une amélioration au sein du réseau BL, par rapport aux études antérieures, particulièrement celles de Roper et al. (2001), Roper and Hart (2005). En Inglaterra, el asesoramiento a las pequeñas empresas, apoyado por el sector público, se organiza principalmente a través de Business Link (BL),una red de vinculaciones empresariales. Empleando la teoría de programas que sirve de base a este apoyo empresarial, desarrollamos cuatro propuestas y las comprobamos empíricamente con datos obtenidos de una nueva encuesta de más de 3000 PYME inglesas. Encontramos mucho apoyo al valor para los operadores de BL de ocupar un lugar destacado para incentivar la tasa de aceptación. Encontramos apoyo a la división del mercado de BL que concentra la ayuda intensiva en las empresas incipientes y en las de responsabilidad limitada. Teniendo en cuenta la selección de muestras, no encontramos que el crecimiento era afectado significativamente por otros tipos de asistencia, pero se evidencia un aumento considerable en el nivel de empleo debido a la ayuda intensiva. Estos resultados respaldan en parte la aseveración que BL aumenta el crecimiento comercial y apoya totalmente la propuesta que la asistencia intensiva y de otros tipos produce consecuencias diferenciales. Estas conclusiones sugieren una mejora en la red BL en comparación con los estudios anteriores, notablemente Roper et al (2001) Roper and Hart (2005). In England wird die öffentlich unterstützte Unternehmensberatung für kleine Unternehmen hauptsächlich durch das Business Link (BL) Netzwerk organisiert. Mit der Programmtheorie, die dieser Unternehmensbetreuung zugrunde liegt, entwickeln wir vier Vorschläge und prüfen diese empirisch mit Daten aus einer neuen Umfrage unter mehr als 3000 englischen KMUs. Wir finden bedeutende Hinweise, dass ein BL Betreiber einen hohen Bekanntheitsgrad benötigt, damit seine Dienste angenommen werden. Wir finden eine Fundierung für die Marktsegmentierung der BL Netzwerke, die das Ziel hat, intensive Unterstützung speziell für junge Unternehmen und solche mit beschränkter Haftung zu bieten. Unter Berücksichtigung der Stichprobenauswahl finden wir keine bedeutenden Auswirkungen auf das Wachstum durch „andere“ Unterstützung, finden jedoch eine erhebliche Beschäftigungssteigerung durch intensive Unterstützung. Dies untermauert teilweise die Behauptung der Programmtheorie, dass das BL Netzwerk Unternehmenswachstum fördert und bekräftigt die These, dass intensive und andere Unterstützung unterschiedliche Ergebnisse liefern. Dies deutet auf eine Verbesserung des BL Netzwerks im Vergleich zu früheren Studien, insbesondere Roper et al. (2001) sowie Roper and Hart (2005) hin.

The use of counterfactual scenarios as a means to assess policy deadweight: an Irish case study

The evaluation of industrial policy interventions has attracted increasing policy and academic attention in recent years. Despite the widespread consensus regarding the need for evaluation, the issue of how to evaluate, and the associated methodological considerations, continue to be issues of considerable debate. The authors develop an approach to estimate the net additionally of financial assistance from Enterprise Ireland to indigenously owned firms in Ireland for the period 2000 to 2002. With a sample of Enterprise Ireland assisted firms, an innovative, self-assessment, in-depth, face-to-face, interview methodology was adopted. The authors also explore a way of incorporating the indirect benefits of assistance into derived deadweight estimates—an issue which is seldom discussed in the context of deadweight estimates. They conclude by reflecting on the key methodological lessons learned from the evaluation process, and highlight some pertinent evaluation issues which should form the focus of much future discussion in this field of research.

Burden or benefit? Regulation as a dynamic influence on small business performance

This article contributes to contemporary debates concerning the impact of regulation on small business performance. Reassessing previous studies, we build our insights on their useful, but partial, approaches. Prior studies treat regulation principally as a static and negative influence, thereby neglecting the full range of regulatory effects on business performance. This study adopts a more nuanced approach, one informed by critical realism, that conceptualises social reality as stratified, and social causality in terms of the actions of human agents situated within particular social-structural contexts. We theorise regulation as a dynamic force, enabling as well as constraining performance, generating contradictory performance effects. Such regulatory effects flow directly from adaptations to regulation, and indirectly via relationships with the wide range of close and distant stakeholders with whom small businesses interact. Future research should examine these contradictory regulatory influences on small business performance.

Business and social entrepreneurs in the UK: gender, context and commitment

Purpose – The purpose of this paper is to investigate what sort of people become social entrepreneurs, and in what way they differ from business entrepreneurs. More importantly, to investigate in what socio-economic context entrepreneurial individuals are more likely to become social than business entrepreneurs. These questions are important for policy because there has been a shift from direct to indirect delivery of many public services in the UK, requiring a professional approach to social enterprise. Design/methodology/approach – Evidence is presented from the Global Entrepreneurship Monitor (GEM) UK survey based upon a representative sample of around 21,000 adults aged between 16 and 64 years interviewed in 2009. The authors use logistic multivariate regression techniques to identify differences between business and social entrepreneurs in demographic characteristics, effort, aspiration, use of resources, industry choice, deprivation, and organisational structure. Findings – The results show that the odds of an early-stage entrepreneur being a social rather than a business entrepreneur are reduced if they are from an ethnic minority, if they work ten hours or more per week on the venture, and if they have a family business background; while they are increased if they have higher levels of education and if they are a settled in-migrant to their area. While women social entrepreneurs are more likely than business entrepreneurs to be women, this is due to gender-based differences in time commitment to the venture. In addition, the more deprived the community they live in, the more likely women entrepreneurs are to be social than business entrepreneurs. However, this does not hold in the most deprived areas where we argue civic society is weakest and therefore not conducive to support any form of entrepreneurial endeavour based on community engagement. Originality/value – The papers findings suggest that women may be motivated to become social entrepreneurs by a desire to improve the socio-economic environment of the community in which they live and see social enterprise creation as an appropriate vehicle with which to address local problems.

Small firm growth in the UK regions 1994-1997: towards an explanatory framework

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.

Joining the dots: Building the evidence base for SME growth policy

This introductory article to the special issue on building the evidence base for small and medium-sized enterprise (SME) growth policy reviews the themes covered by the contributions to the special issue and identifies a number of directions for future research and policy.

Public policy and SME performance: the case of Northern Ireland in the 1990s

Recent research has demonstrated that small firm performance in Northern Ireland has benefited from the availability of a comprehensive and well‐funded programme of selective financial assistance provided by the Local Enterprise Development Unit (LEDU), the small business agency for the region. Such assistance to small firms was seen to overcome many of the constraints of doing business in a peripheral location such as Northern Ireland. However, one question remains unanswered by that research and that is the precise way in which LEDU financial assistance impacts upon business performance. One interpretation of the research to date could be that the relatively better performance of LEDU‐assisted small firms is due to the fact that they are more likely to be faster growing businesses in the first instance, because either they are self‐selecting in presenting themselves for LEDU assistance or else the LEDU engages in a “creaming” process, which results in the granting of assistance to the more successful firms in Northern Ireland. In order to probe further into the impact of LEDU assistance, it is necessary to examine the differential impact on growth of the wide range of support programmes and initiatives for small firms operated by the small business agency in Northern Ireland. This paper will report the results of the first stage of such an analysis by analysing the business performance of two broad groups of LEDU‐assisted clients who have received different levels of assistance in the 1990s – “Growth” and “Established” clients. The analysis is based on information drawn from a specially created database of approximately 1,600 small firms who were in receipt of LEDU financial assistance in the period 1991‐97. The analysis of the employment and turnover performance of LEDU‐assisted firms revealed that Growth clients grew faster than Established clients in the 1991‐97 period and provides tentative evidence that a more intense and directed package of assistance is clearly associated with faster business growth. The age of Growth firms was much older than Established LEDU clients and, therefore, this differential growth performance cannot be related to a simple life‐cycle explanation. The shift in LEDU policy in the 1990s towards a greater concentration of effort on firms with growth potential would appear to have been successful.

Firm dynamics and job creation in the United Kingdom:1998–2013

This article is motivated by a very simple question – ‘what types of firms create the most jobs in the UK economy?’ One popular answer to this question has been High-Growth Firms (HGFs). These firms represent only a small minority – the ‘Vital 6%’ – of the UK business population yet, but have a disproportionate impact on job creation and innovation. We re-visit the discussion launched by the 2009 National Endowment for Science, Technology and the Arts (NESTA) reports, which identified the 6% figure and, using more recent data, confirm the headline conclusion for job creation: a small number of job-creating firms (mostly small firms) are responsible for a significant amount of net job creation in the United Kingdom. Adopting our alternative preferred analytical approach, which involves tracking the growth performance of cohorts of start-ups confirms this conclusion; however, we find an even smaller number of job-creating firms are responsible for a very significant proportion of job creation. We conclude by considering the question – ‘what are the implications for policy choices?’