Summary Enterprise and small business : Principles, practice and policy. Book cover image

Summary Enterprise and small business : Principles, practice and policy.

- Sara Carter
ISBN-10 027370267X ISBN-13 9780273702672
239 Flashcards & Notes
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A snapshot of the summary - Enterprise and small business : Principles, practice and policy. Author: Sara Carter ISBN: 9780273702672

  • 1 Defining and measuring the small business

  • Labour Force Surveys
    • Used to estimate number of self employed individuals and uncorporated businesses.
    • Data is coming from a survey.
  • 'N shaped business ownership' puzzle of the US. Two explanations:
    • Static explanation: there is an equilibrium rate between economic development and business ownership.
    • Dynamic explanation: rate of entry & exit. The enterprise churn.
  • Explanations for changes in business ownership
    • Cost disadvantages: BO went down. Because before 80s, era of mass production, this means the minimum efficient scale (ME) was important. This promoted concentration of ownership and drove SE away.
    • Technological changes: in 80s more PC, so BO went up. Lead to less economies of scale, smaller MES, more flexibility and new industries.
    • Innovation: SE have advantages, less bureaucratic and more flexible.
    • LE fragmentation: LE transfers risk by franchising. Leads to rise of BO.
    • Development of service sector: more tailor made goals, rise of BO.
    • Changes in Labour Market: unemployment pushed to selfemployment. BO rises.
  • Bolton's Quantitative approach of SE
    • There is no single measure (asset, turnover) likely to fully account for size of an enterprise.
    • So there's a variety of measures.
  • Storey criticised Boltons qualitative approach
    - LE may run in highly personalized manner
    - Independent is relative concept (SE may be legally independent, but still rely on LE)
    - SE may perform in niche, and therefor have large market share
  • Problems with Bolton's quantitative definition
    • Quantitative criteria are arbitrary and country/industry specific
    • measures are eroded over time (inflation)
    • no uniform definition
    • How to measure informal/illegal/homeworking/network marketing?
  • Bolton's qualitative approach of smaller enterprise
    • Independent (not part of LE)
    • managed in a personalized matter
    • relatively small share of market
    • greater uncertainty
  • 2 Government and Small Business

  • Implications for government action
    • SE wants to maintain and develop product markets themselves.
    • SE wants government to maintain strong economic environment.
    • No demand for government to do things for specific firms.
  • Government action is good for 3 reasons
    • Market failure: SE have lack of control and suffer specific barriers or unequal treatment, government should help this remove. (Training example)
    • Create Jobs: SE can encourage economic growth.
    • Develop a vision: strategic vision for the whole economy. Government should try to boost this.
  • LE dominance has long been encouraged by government
    • Planning of supply during wars led to consolidations.
    • Until 60s government encouraged price cartels.
    • Growth of socialism led to nationalism & big subsiding.
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