Small business and entrepreneurship article summary
Article Summary Small Business and Entrepreneurship Does More Mean Worse? Three decades of enterprise policy in the
Tees Valley – Storey 3 distinct phases of enterprise policy in the UK:
- 1970: no effective enterprise policy
- 1980: an attempt to increase the number of start-ups
- 1990: concentration on business quality
This paper argues that the policies in the 80’s had little impact on economic growth because of an increase in number of new firms led to a fall in quality of the firms (concerning disadvantaged areas). Bolton showed the importance of small firms:
- Providing competitive threat (preventing monopolies)
- Source of wealth and job creation 1980: Enterprise Allowance Scheme: uncreative destruction lot of new firm creation but no benefits in net income (lot of people without skills participating in scheme)
1992: Business Link: single point of access to public focus on businesses that were likely to grow to a significant size
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Prior research findings: Factors effecting the growth of a firm:
- Age + - Employment in same trade +
- Age^2 – - In-mover +
- Male + - Owned business before +
- Education + - Full time business +
- Unemployment – - Choice of sector +/-
- Manager in prior job + - Limited company +
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Hypotheses
- H1: new firm formation would be higher in the 80’s than 70’s/90’s
Confirmed
- H2: businesses founded in the 80’s will be of lower quality than those founded in
70/90’s
Confirmed (big difference in characteristics of owners
- H3: Founders of new firms who were previously unemployed or likely to become unemployed are less likely to start a quality business
Not confirmed
Tees Valley – Storey 3 distinct phases of enterprise policy in the UK:
- 1970: no effective enterprise policy
- 1980: an attempt to increase the number of start-ups
- 1990: concentration on business quality
This paper argues that the policies in the 80’s had little impact on economic growth because of an increase in number of new firms led to a fall in quality of the firms (concerning disadvantaged areas). Bolton showed the importance of small firms:
- Providing competitive threat (preventing monopolies)
- Source of wealth and job creation 1980: Enterprise Allowance Scheme: uncreative destruction lot of new firm creation but no benefits in net income (lot of people without skills participating in scheme)
1992: Business Link: single point of access to public focus on businesses that were likely to grow to a significant size
-----------------------------------------------------------------------------------------------------------------
Prior research findings: Factors effecting the growth of a firm:
- Age + - Employment in same trade +
- Age^2 – - In-mover +
- Male + - Owned business before +
- Education + - Full time business +
- Unemployment – - Choice of sector +/-
- Manager in prior job + - Limited company +
-----------------------------------------------------------------------------------------------------------------
Hypotheses
- H1: new firm formation would be higher in the 80’s than 70’s/90’s
Confirmed
- H2: businesses founded in the 80’s will be of lower quality than those founded in
70/90’s
Confirmed (big difference in characteristics of owners
- H3: Founders of new firms who were previously unemployed or likely to become unemployed are less likely to start a quality business
Not confirmed