Q1 entrepeneruship

Question 1

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

Answer 1

FSB 2015

Question 2

New and small firms promote economic development

Answer 2

Baumol, 1968

Question 3

o New and small businesses, are the greatest source of new jobs

Answer 3

Birch, 1979

Question 4

This is at all points of the economic cycle

Answer 4

DTI 2004

Question 5

even when large firms are downsizing

Answer 5

Birch 1979

Question 6

o Small firms make a more consistent contribution to employment registering a national gain in jobs despite severe recession

Answer 6

Storey 1994

Question 7

recession shit by story only attributes it to misleading interpretation of the data and use of unsuitable data.

Answer 7

Davis et al 1994

Question 8

o Yet, despite the controversy the significance of small firms in job creation becomes widely accepted quite quickly

Answer 8

Storey and Johnson 1987

Question 9

Job generation in small firms is accelerating

Answer 9

Birch 1979

Question 10

Study of job creation from 1995-1999 = small firms = 66% of all new jobs. An amount greater than their 56% share in employment

Answer 10

DTI 2004

Question 11

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

Answer 11

FSB 2015

Question 12

o Similarly, in the US small businesses provided 38% of GNP, 44% of gross business product and 47% of total employment in 1982

Answer 12

Carland et al 1984

Question 13

promotes new firm formation as a means of combating unemployment and poverty

Answer 13

Storey 1994

Question 14

o New firms and their employees can be taxed, with the capital recycled into economic development projects e.g. education

Answer 14

Westhead et al 2011

Question 15

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

Answer 15

Westhead et al 2011

Question 16

o A vibrant small business sector seen as critical to driving economic growth through innovation and market expansion

Answer 16

Bravo and Biasco 2010

Question 17

new firm formation  ‘efficient’ markets through competitive forces that link new business formation and growth and productivity growth in the economy as a whole.

Answer 17

Storey 1994

Question 18

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

Answer 18

Schumpeter 1934

Question 19

o Viable businesses may be more efficient users of resources and consumers should enjoy lower prices and greater choice

Answer 19

Westhead et al 2011

Question 20

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

Answer 20

Westhead et al., 2011

Question 21

o Small firms are the seedbed of the economy from which large successful corporations grow. e.g. Microsoft/ Body Shop.

Answer 21

(Bridge et al, 2003

Question 22

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

Answer 22

DTI 2004

Question 23

o Empower disadvantaged group, such as women or younger people or ethnic minorities reduces social inequality

Answer 23

Westhead et al 2011

Question 24

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

Answer 24

Storey et al 1987

Question 25

• 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

Answer 25

Storey 1994

Question 26

• 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

Answer 26

Shane 2009

Question 27

• There are administrative issues of targeted support

Answer 27

(Birch, 1979)

Question 28

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.

Answer 28

Stockton vs Guildford