SMEs 2 Flashcards
Intro?
- What is the rationale for intervention in the SME case? Do the SMEs really need assistance….
- Who do we assist e.g. new firm start-ups; self-employed; existing firms; fast growth firms; firms in specific sectors of the economy?
- What types of research areas might inform policy?
- Is intervention effective?
Diverse examples of interventions - common themes - EU regions?
- Business Wales in terms of interventions for small firms –
- Finance, IT (e.g., helping firms engage with the cloud), sales and marketing, start up and business planning, skills and training, business ideas and innovation
Specific interventions?
- E.g., development bank of Wales
- E.g., Sell2Wales – way of promoting local business
Access finance available to support small business?
- Start up Loans of up to £25,000 can give you a much-needed boost if you’re just starting out or looking to scale up.
- British Business Bank’s Finance Hub for more finance options for smaller businesses
- Small business located in the North of England, the Northern Powerhouse Investment Fund could provide the funding you need to help your business realise its potential.
- Growing ideas - Innovate UK supports businesses to develop and realise the potential of new ideas through funding and research collaboration. Knowledge transfer network
EU plays a role in SME and enterprise support?
- Promoting spirit of enterprise
- Improving admin environment
- Monitoring completion of internal market
- Adopting company and competition law
- Improving tax environment
- Training, information, export assistance
- Encouraging new firms and innovation
- Networking
- Capital provision
Research and themes to support policy?
- What are barriers to small firms?
- Why do some grow faster?
- Why do firms fail?
- What explain variation of start up and growth rates across space?
- Factors explaining level of entrepreneurship?
A focus on finance - long history?
- That small firm problem is due to access to finance
- MacMillan 1931 – finance problems, lack of security, mezzanine level capital (this is where there was a real difficulty)
- Bolton 1971 – institutions failing to meet capital req of SMEs – expense of finance to small firms – inadequate provision – high fixed cost of lenders and greater risks of lending to SMEs
- Wilson 1979 – still problem compared to large firms – venture capital diff to obtain – bias in the banks – lack of financial expertise in SMEs to gain finance
Barriers - just finance?
- Studies pick up on complex menu of factors
- Internal – insufficient skills, resources at enterprise level
- Administrative/regulatory burdens – tax systems, complicated laws
- Financial – mainly access to finance
2016 survey most commonly answered obstacle was competition in the market
Simplistic to assume all firms want to grow?
- Hakim – many firms have no desires to grow – see as risky
- May have to add collateral to business loans such as house
- Many small firms don’t survive the first year and those that do are happy to sustain – Storey
How do we differentiate fast and slow growth of SMEs?
- Flyers – Trundlers – Failures
- People factors
- Firm factors
- Strategy factors
- Shown to be v complex – thus policy is difficult to develop
Examples of people/resource factors?
Motivation, unemployment, education, family history, training
Example of firm factors?
Age, sector, legal form, location, ownership
Examples of strategy factors?
Planning, new products, management training
What influences rates of entrepreneurship in an economy?
GEM reveals series of factors might be important
e.g., the level of change in markets from year to year
Presence of property rights
Ease of access to physical resources
Extent to which public policies support entrepreneurship
New firm formation?
- Explaining variation in new firms formation and growth in absolute numbers of small firms across regions
- Varies quite dramatically
e.g., most dense in London, least in Scotland
