Robert Baldock

UNDERSTANDING SMALL FIRM RESPONSES TO REGULATION

This article aims to contribute to our understanding of the varied responses of small and micro enterprises to regulation and their implications for regulatory policy, using statutory occupational health and safety requirements as an example. Particular emphasis is given to the relevance of an understanding of business responses to regulation that is informed by a wider range of evidence and perspectives than that which has tended to dominate recent policy developments around regulation. Evidence is presented on small firms’ awareness of, and attitudes towards, the health and safety legislation and their responses to the enforcement activities of health and safety inspectors. A framework for understanding owner-manager attitudes and organisational stances towards health and safety regulation and enforcement is advanced which emphasises their varying characteristics and motivational bases, including a regard for the different contexts in which firms operate. The framework supports the view that most small firms have a reactive stance towards regulation, but also that attitudes and motivations can range from overt avoidance to more positive and even proactive stances. This understanding points to the need for a multidimensional approach towards encouraging compliance that accords a central role to direct contact and enforcement in stimulating improvement in practices. The perspective developed is related to the debate around the role of regulation in general in shaping the performance and development of enterprises, particularly with respect to the potential wider economic role that can be played by well-implemented regulation and associated mechanisms of support.

Targeted Support for High-Growth Start-ups: Some Policy Issues

Launched in 1999/2000, the new high-growth start-up programme is part of a shift in small and medium-sized enterprise (SME) policy in the United Kingdom away from a narrow focus on supporting established businesses with growth potential, to include start-ups and other types of SME. In this context, the authors consider some of the policy issues surrounding the design, development, and implementation of the new programme, with the aid of results from in-depth research in the East Midlands region. After a brief description of the new enhanced support programme for high-growth start-ups, and the policy context in which it was introduced, the authors review the support needs of this type of business and how the new programme might contribute to addressing these. In the final section they consider some of the wider policy issues raised by the programme in terms of the extent to which: first, effective regional models can be developed to encourage widespread participation by appropriate private sector organisations; second, access to appropriate finance, including seedcorn and venture capital, can be increased for high-growth-potential start-ups; third, universities are able to contribute to the generation of new business activity and become integrated into regional business support infrastructures; and fourth, the enhanced support programme is tuned to the needs of the target group and is effectively delivered.

Playing with Numbers: A Methodological Critique of the Social Enterprise Growth Myth

Abstract Social enterprise is a contested concept which has become a site for policy intervention in many countries. In the UK the government has invested significant resources into social enterprise infrastructure, partly to increase the capacity of social enterprises to deliver or replace public services. Government publications show the number of social enterprises to have increased from 5,300 to 62,000 over a five-year period. This paper explores the myth of social enterprise growth in the UK through a methodological critique of the four government data sources used to construct and legitimise this myth. Particular attention is paid to how political decisions influence the construction of evidence. We find that growth is mainly attributable to political decisions to reinterpret key elements of the social enterprise definition and to include new organisational types in sampling frames.

Influences on Small-Firm Compliance-Related Behaviour: The Case of Workplace Health and Safety

The authors investigate the relative roles of a number of influences on workplace health and safety in small firms and, more specifically, the adoption of compliance-related improvement measures. From findings drawn from a survey of over a thousand British small enterprises, marked variations in firm behaviour with respect to health and safety were found, underlining the heterogeneity of small firms in this respect, and the way such behaviour reflects their varied contexts. Factors identified as being particularly associated with a propensity to make compliance-related improvements were: regulatory enforcement activity, use of external assistance with respect to health and safety issues, enterprise size and growth performance, management training and experience, and membership of trade or business associations. Although, as a group, ethnic-minority businesses were found to be neither more or less likely to make improvements of this type compared with their white-owned counterparts, detailed analysis revealed that such variations did exist between individual ethnic groupings; variations that are themselves seen to reflect a number of factors, particularly the employment size and sectoral context. Primarily the authors conclude that inspections on the part of regulatory officials are the most important influence, although there is some scope for more innovative approaches to encouraging compliance-related improvements.

Policy support for small firms in rural areas: the English experience

This paper is concerned with small business development in rural areas and the policy approaches currently being used to support them. The key question underlying the paper is the extent to which small businesses located in rural areas have distinctive support needs, associated with the characteristics of rural businesses themselves or their owners, and/or the characteristics of the external operating environment for business in rural areas. A related question concerns the possible influence of enterprise characteristics and the characteristics of rural areas on how the business support needs of rural businesses are best addressed. The study comprised a desk-based review of existing literature relevant to the support needs of rural enterprises and/or the means of addressing them. It also included primary research on policy initiatives and programmes concerned with enterprise development in rural areas. Telephone interviews were conducted in 2001 with representatives of Business Links with catchments that included rural areas, as well as other key agencies (for example, the Countryside Agency). In addition, twenty-four case studies were completed of rural policy initiatives, based on face-to-face interviews. Following a brief review of key literature, an overview of the policies currently being operated by Business Link is described, based on the survey. This is followed by an identification of good-practice principles of rural business support, based on an analysis of the case-study support initiatives. The paper concludes by identifying the implications of the analysis for future enterprise support policy.

Funding the growth of UK technology-based small firms since the financial crash: are there breakages in the finance escalator?

This paper presents recent research assessing the impact of the financial crisis on young and established technology-based small firms (TBSFs) and considers whether their ability to contribute to economic growth is being affected by ongoing problems in obtaining external finance. It reports on original findings from a survey of 100 TBSFs undertaken in late 2010 as well as 20 in-depth interviews with a range of finance providers. The surviving TBSFs exhibited considerable demand for external finance since 2007, particularly for working capital and early stage R&D, sought mainly from banks, but also with younger TBSFs seeking business angel finance and innovation grants and more mature TBSFs seeking venture capital finance. However, both debt and equity finance have become harder to access for TBSFs, particularly for early stage funding and for more R&D intensive firms, hampering their growth potential. Where external finance has been available, the terms and conditions set by providers were often unacceptable to business owners. The paper concludes that the smooth operation of the finance escalator has proved difficult to achieve under recent financial conditions and identifies a number of breakpoints relating to TBSFs which government policy needs to address.

The implications of new technology for the skill and training needs of small‐ and medium‐sized printing firms

Investigates the implications of digital technology for the skill and training needs of small printing firms. The picture that emerges is one where the emphasis is on re‐training due to technological change. The bulk of this training takes place in the workplace, with initial training typically being supplied by an equipment or software supplier as part of the initial purchase package. The skills gained by the key workers selected for initial training are then passed on informally to other staff in the firm. There is rarely a high level of commitment or a systematic approach to training that might be expected given the scale of the investment costs that many of these firms have incurred. Only a few proactively‐managed small‐ to medium‐sized enterprises are recognising the need to constantly update their workforce skills.

Is there a debt finance gap relating to Scottish SMEs? A demand-side perspective

This paper investigates whether or not there is evidence of market failure in the provision of bank finance to Scottish SMEs. The key question is whether SMEs have been experiencing difficulties because of the unsuitability of the business case they were putting to the banks or because of sub-optimal lending practices. The paper draws upon evidence from the 2006 Annual Small Business Survey (Scotland), based on a survey of 1014 Scottish SMEs, and a follow-up in-depth survey of 39 SMEs that had reported problems in accessing bank finance. While the findings show that less than one-fifth of the firms trying to access bank finance encountered problems and that only a small minority had to abandon their projects completely as a result, both start-up and early stage businesses and manufacturing SMEs were disproportionately likely to experience problems. These were largely attributed by owner-managers to their lack of a track record of debt management in the case of young businesses and difficulties of providing the necessary collateral in the case of manufacturing SMEs. The risks associated with projects involving product and market diversification was also a factor. The paper concludes that these funding gaps are likely to have become larger since 2007 as a result of the credit crunch.

Bridging the gap in support for ethnic minority owned businesses: the case of Devon and Cornwall

This paper presents findings from recent research undertaken into the characteristics and support needs of ethnic minority owned businesses (EMBs) in Devon and Cornwall. The study was commissioned by PROSPER (formerly Devon and Cornwall TEC and Business Link), in collaboration with the Rural Race Equality Project in South West England. EMBs have been the subject of growing interest from a variety of sources in recent years, generating considerable debate about their distinctiveness in comparison with other small firms and their needs in terms of public policy. Not surprisingly, perhaps, a great deal of this research has focused on areas where EMBs are concentrated, such as London and Birmingham. In contrast, this research focuses on EMBs in an area which is some distance from the main centres of EMB concentration and where the ethnic minority population is more dispersed, many in a rural context.

Targeted support for new and young businesses: the case of North Yorkshire TEC’s “Backing Winners” programme

This paper reviews the first year experience of a programme (Backing Winners), launched by North Yorkshire TEC in 1995 to provide support for new and young businesses with growth potential. The Backing Winners (BW) programme differs from previous schemes in that it is not restricted to clients who are unemployed, it provides access to some key business services (such as office services), and there is no grant offered to individual businesses. Delivery of BW is focused on Personal Business Mentors (PBMs) whose role is similar to that of the PBA in Business Links. Based on a survey of 144 clients businesses and interviews with representatives of each of the Enterprise Agencies (EAs) contracted to deliver BW, the conclusion is that it was successful during the first year of its operation. Clients were very satisfied with their PBMs and some were active users of group training and office services. The paper also considers a number of policy issues raised by the study. These include broad issues such as the extent to which there is a case for targeting support on new and young firms such as these, and the extent to which the operation of a selective approach at the start‐up stage involves “picking winners”. In addition, BW raises a number of delivery issues which include: the need for adequate resourcing to enable the workload of PBMs (or PBAs) to be compatible with effective delivery; the need to reconsider the use of freelance consultants as PBMs (or PBAs); the need to recognise that many small manufacturing firms have sector‐specific support requirements; the need to set performance targets to agencies contracted to deliver such programmes, which recognise differences between agencies and their catchments.