Abstract
Popular and political support of small businesses and entrepreneurship is mostly taken as given in Western civilization. Along with such support, government programs at various levels are thought to have positive effects in encouraging wider economic benefit, through enhanced employment and investment, while spurring other positive outcomes for business owners and communities. Detailed, focused explorations of such mechanisms in the literature are rare; fewer lucidly study both the political and pecuniary aspects of policy initiatives in useful ways. Entrepreneurship, Small Business and Public Policy: Evolution and Revolution, by Robert J. Bennett, bridges the gap between hopeful pronouncements of public policy and the realities of how small business and entrepreneurship programs might affect their intended client bases, and succeeds as a sensible, unruffled examination of a complex topic.
The book has as its stated objective the taking apart of public policy as it concerns small businesses and entrepreneurs; policy initiatives are addressed conceptually in the book’s first segment. The undertaking seeks to understand these policies, their means and intended ends, and to provide for a comparative analysis of these programs in various international environments. Bennett notes that “many research authors feel demands for intellectual support for policies that ignore full policy costs, displacement of existing firms, deadweight and dependency” (p. 1), and in this respect, the reader is immediately on notice that these policies are not going to get a free pass. In noting the importance of small businesses to an economy, Bennett also identifies aphorisms that are often accepted without being challenged, such as the notion that small businesses are “dynamic, efficient, or valuable” (p. 5). He recommends a reality check about true levels of innovation and the importance of larger firms to economic stability.
Chapter 2 considers the various cases that are made for policy initiatives in support of small businesses and entrepreneurs, including creation of an enabling or business-friendly environment in support of smaller ventures; the need for government to tailor regulatory structures to not unduly burden small businesses; support to smaller firms for the sake of their potential innovative capacity; and the potential existence of market failures, including information or finance gaps. Chapter 3 identifies constraints on policy, challenges whether policy initiatives are necessary or if they can meet targets or fill their intended gaps, and offers that some initiatives might cause more harm than good. Chapter 4 considers the meta-institutional role in support of small and entrepreneurial programs and provides a helpful overview of the development of toolkit-type arrangements that have been used in support of the business-enabling environment concept.
The second part of the book explores international case studies; these reflect on the lessons of the book’s first segment and allow for broader understanding. Chapter 5 examines the case of the United States with small business and entrepreneurialism, focusing on the Small Business Administration (SBA). Bennett’s portrayal of the unique environment of American exceptionalism and a weak, underresourced SBA, with unclear objectives and tendencies toward corruption and moral hazard in programs, provides a view that balances worthy intention and positive spin with valuable critique.
Chapter 6 gives a case review of Britain as an early industrial power and how it has focused on small business and entrepreneurial development. Unlike in the United States, where the SBA began in 1953, small business policy became explicit in Britain in 1971 with the Bolton Report, based upon a market failure argument. The British experience can be described as mixed, with prominent criticism of bureaucratic processes. Chapter 7 considers a different sort of exceptionalism in the case of East and Southeast Asia, finding a focus on investment and exporting; Bennett finds the presence of cultural influences, such as Confucian structures and an emphasis on relationships. It is interesting to consider how these features could affect close relationships between businesses and government. Chapter 8 considers China’s approach to small businesses. Bennett shows that small firm and entrepreneurial success in China is frequent despite, rather than because of, government policy intervention. Chapter 9 rounds out this segment of the book with an examination of developing economies.
Chapter 10 leaves the reader with an uncertain way forward. Small businesses and entrepreneurs are important, but policy interventions in this area are not so clearly defined either in what they accomplish or how they benefit intended clients or the larger economy. Policies may introduce inefficiency and create a variety of inadvertent consequences, no matter how well-intended. Here, Bennett provides a list of ways to revolutionize policy in this area; the list is a useful starting point for policy makers. He suggests that a “re-balance of support between small firms and large firms and re-thinking . . . [of] areas where market failures may emerge” (p. 145) is needed, and it is easy to support this assertion given the book’s critique of existing methods.
One of the greatest strengths of the text is Bennett’s ability to cut through largely unchallenged rhetoric of politics and policy surrounding small business and entrepreneurship programs. For students of economic development, there are many great ideas for future research in this book; when uncontested notions are stated outside their usual context, the need to examine assumptions becomes more pressing. This is to be applauded. Political forces and public policy might be satisfied with simple activities and even outputs for performance, but the sensible approach taken here is that government intervention in markets for economic purposes should reasonably lead to positive outcomes for the larger economy. Bennett’s questions are not unreasonable, but they do raise concerns about the policy process and its intentions, and of the true nature of seemingly well-intended interventions. Bennett achieves his objective in evaluating these programs on a conceptual basis, and encouraging readers to think carefully about the means and ends of this type of policy intervention. This book will prove most useful to policy makers working with small businesses and entrepreneurship programs, and students of economic development, who may use this source to provide background for their own assessments in specific case studies.