Q1 entrepeneruship Flashcards
Es are small and medium sized enterprises with under 250 employees. Small businesses accounted for 99.3% of all private sector businesses at the start of 2015 and 99.9% of these were SMEs
FSB 2015
New and small firms promote economic development
Baumol, 1968
o New and small businesses, are the greatest source of new jobs
Birch, 1979
This is at all points of the economic cycle
DTI 2004
even when large firms are downsizing
Birch 1979
o Small firms make a more consistent contribution to employment registering a national gain in jobs despite severe recession
Storey 1994
recession shit by story only attributes it to misleading interpretation of the data and use of unsuitable data.
Davis et al 1994
o Yet, despite the controversy the significance of small firms in job creation becomes widely accepted quite quickly
Storey and Johnson 1987
Job generation in small firms is accelerating
Birch 1979
Study of job creation from 1995-1999 = small firms = 66% of all new jobs. An amount greater than their 56% share in employment
DTI 2004
o SMEs are strong contributors to wealth and GDP, the combined annual turnover of SMEs in 2015 was £1.8 trillion, 47% of all private sector turnover in the UK
FSB 2015
o Similarly, in the US small businesses provided 38% of GNP, 44% of gross business product and 47% of total employment in 1982
Carland et al 1984
promotes new firm formation as a means of combating unemployment and poverty
Storey 1994
o New firms and their employees can be taxed, with the capital recycled into economic development projects e.g. education
Westhead et al 2011
o New firms have a multiplier effect since they create a spiral of spending, create additional jobs and new ventures which create further jobs and wealth
Westhead et al 2011
o A vibrant small business sector seen as critical to driving economic growth through innovation and market expansion
Bravo and Biasco 2010
new firm formation ‘efficient’ markets through competitive forces that link new business formation and growth and productivity growth in the economy as a whole.
Storey 1994
o New firms create a productivity gain if incumbent firms are unable to match the productivity of new businesses they are either forced to exit the market or their market share is reduced
Schumpeter 1934
o Viable businesses may be more efficient users of resources and consumers should enjoy lower prices and greater choice
Westhead et al 2011
o Greater productivity can enable firms to sustain competitive advantage in local and international markets. This will give fresh wealth from exporting abroad and reduce the flow of imports while preventing displacement of existing businesses
Westhead et al., 2011
o Small firms are the seedbed of the economy from which large successful corporations grow. e.g. Microsoft/ Body Shop.
(Bridge et al, 2003
o However, most new and small firms are born to die small and young with on average 1000 businesses starting and closing each day in England and Wales
DTI 2004
o Empower disadvantaged group, such as women or younger people or ethnic minorities reduces social inequality
Westhead et al 2011
Raise issue not necessarily a good idea of blanket support to all new businesses irrespective of need or ability with 40% of firms ceasing to trade within 3 years of creation & only 4% of new firms generating 50% of jobs
Storey et al 1987
- Suggest it might be better in the SHORT-TERM to identify winning entrepreneurs with innovation & growth potential e.g. tech/ knowledge based entrepreneurs to maximise returns from public policy intervention
Storey 1994
- Encourage formation of high quality, high growth companies. Policy makers should stop subsidising the foundation of the typical start-up and focus on the subset of business with growth potential
Shane 2009
- There are administrative issues of targeted support
(Birch, 1979)
high levels of unemployment and low levels of new firm formation, therefore we must try to increase the number of new firms, focusing on quality new first start ups and encourage existing businesses to grow.
vs
higher rates of NFF, therefore may not be a good idea to increase the number of new firms, in that context we want to encourage quality new firms, even family firms, to be innovative and entrepreneurial to grow & export their goods & services outside the local economy to stop new firm displacement and act as a catalyst to the spiral of economic development.
Stockton vs Guildford
