Environment and Planning C: Politics and Space

The authors describe an investigation into the regional dimension to the process of small-firm growth and development in the United Kingdom in the 1990s. Recent trends in the growth performance of small manufacturing and service-sector firms are presented for the UK regions and an attempt is made to establish if there are regional variations in the set of factors which may determine faster growth. In particular, a detailed examination of the impact of public policy assistance to small firms in Northern Ireland, as delivered by the Local Enterprise Development Unit—the small-business agency for the region—is undertaken in an attempt to measure more precisely the contribution of the policy environment to small-firm growth within one region of the United Kingdom.

In its 1998 White Paper on competitiveness, the British government stressed the importance of entrepreneurship in halting Britain's apparent relative economic decline and in enhancing international competitiveness. In this document the potential contribution of entrepreneurship is envisaged primarily in terms of the need to increase the supply of entrepreneurs capable of starting and growing innovative new businesses; less recognition is given to the entrepreneurial vitality of the existing business base. This is in keeping with much of the influential policy and research literature, in which concentration through core growth of single firms has tended to be valued, rather than growth through diversification by entrepreneurs starting additional firms. The authors researched diversification as an entrepreneurial phenomenon through case studies of new high-growth Scottish companies. Most business founders in the study had established more than one company, and many had successfully pursued entrepreneurial forms of diversification. The high-growth companies were, in effect, embryonic business clusters, rather than single unidimensional businesses. This supports the notion that the greatest source of new high-growth businesses is entrepreneurs with existing businesses, not novice entrepreneurs. This has implications for future policy support for entrepreneurship.

The authors are concerned with innovation in rural small and medium-sized enterprises (SMEs), their support needs, and the types of policies required to encourage and support innovation; the authors draw on a national study of innovation and the use of new technology in rural firms. Their aims are to present recent evidence of the nature and extent of innovative activity in rural SMEs; to identify barriers to innovation in rural SMEs, together with any weaknesses with respect to their innovative performance that may affect their future competitiveness; and to contribute to the development of a policy agenda designed to support and strengthen the innovative performance of rural SMEs. Using a broadly based definition of innovation (including product, process, marketing, and new-market development) the authors demonstrate considerable sectoral variations in the nature and extent of innovative activity in rural SMEs. This is explained in terms of sectoral differences in the ways in which SMEs seek competitiveness and of the role of innovation in this process. Nevertheless, the authors demonstrate a strong correlation between the level of innovation shown by firms and their performance, in terms both of sales and of employment growth. With the exception of marketing and new-market development, only a minority of managers perceived their rural environment to be a constraint on their ability to innovate, although more detailed analysis showed SMEs in the more technology-based sectors to be disadvantaged in a number of respects. Support needs are identified in relation to marketing, the use of the Internet, process innovation, and access to specialised training. Emphasising the distinctive characteristics of the rural environment, the authors describe a policy agenda for the encouragement and support of innovation in rural SMEs which includes a recognition of the so-called ‘rural premium’.

Various governments around the world have introduced small-firm structured networking as an economic-regeneration tool into their respective economies. Early observations of the initiative in the United Kingdom suggested that the ability of the broker to identify the propensity of firms to cooperate with each other has a critical impact on the successful formation of new networks. The limited number of existing networks vitiated any study of these trading entities by means of established techniques for measuring commitment or trust. Hence an alternative model, based on relationship and entrepreneurial marketing, was developed. A survey of small manufacturing firms was used to validate the model. The results demonstrate that the model can be used by brokers to identify rapidly propensity to cooperation among a group of potential network participants.

The authors describe the development of a model for the evaluation of the tax affairs of UK small unincorporated firms (with fewer than 20 employees). After a brief review of the literature relating to small-business taxation, the main parameters of the NatWest/Manchester Business School tax model for unincorporated businesses are established, Subsequently the model is employed to evaluate small-business taxation from two angles. First, the authors offer a post-1999 budget analysis of the impact of taxation on small-business owners and their employees. Second, the authors discuss a set of proposals which have the potential to improve the neutrality of the tax system towards small-business owners' decisions.

The author uses new survey evidence of sector business associations and local chamber of commerce services. He analyses the membership of these bodies by size and type of business. In the main part of the empirical analysis the author assesses association services in four categories: (1) individual services to members, (2) excludable collective services available only to members, (3) nonexcludable services available to all businesses, and (4) self-regulation. It is demonstrated that association services tend to develop in niche markets chiefly by diversification rather than by intensification. Most associations seek to develop excludable and individual services as their primary focus. Because of this inherent tendency, government policy is most likely to be successful if it works with the grain of these trends rather than against them. Hence, government policy is argued to have had too high an emphasis on using associations to develop the individual competitiveness of their members, rather than focusing on their role to improve collective industry standards and through this individual business performance. Failure to recognise the limitations of individual supports by associations may undermine the potential of the government's 1998 white paper on competitiveness.

The authors examine the developing role of personal business advisors (PBAs) within Business Link. Drawing on a national survey of PBAs, they highlight trends and variations in practice and perceptions relating to four key areas: the client focus of PBAs and the identification of growth firms, the nature of PBA — client relationships and factors affecting successful support, the nature of the PBAs' workload, and PBA staffing issues. The findings highlight issues that might inform future policy developments. These include most particularly, the effects of the increased commercialisation of the PBA's job and the impact of PBA turnover. Recommendations are made regarding implications for policymakers and concerning areas for future research.

The authors aim to develop a better understanding of small-business owners' attitudes towards, and experiences of, management training through a study of small mechanical engineering firms and key support providers in three European regions: Stuttgart (Germany), Aarhus (Denmark), and South London (England). Important differences between the three regions in support networks are highlighted. The limited networking between small-business owners and training providers in South London is explained by a lack of embeddedness of UK small engineering firms in the institutional framework supporting business. The absence of a critical mass of engineering businesses, the limited experiences of business owners and the weak business-support network in South London are mutually reinforcing and perpetuate the isolation of small and medium-sized enterprises (SMEs) from external training providers. Drawing on experience in Stuttgart and Aarhus, some policy proposals are offered which are aimed at increasing the take-up of management training by UK SMEs.

Recent studies of the role of lobby groups in European Union (EU) policymaking have drawn attention to the concept of ‘multilevel governance’ as a powerful explanatory tool in analysing how these organisations exert political influence on EU institutions. One of the longest standing of these groups is the Comité des Organisations Professionnelles Agricoles (COPA). Until the mid-1980s, COPA was regarded as being remarkably successful in influencing the content and direction of the EU's Common Agricultural Policy (CAP), More recently, however, commentators have noted a marked decline in COPA's influence, citing as evidence the organisation's abortive attempts to blunt the radical edge of the 1992 reform package of the Common Agricultural Policy. In this paper the authors use Grande's conception of multilevel governance to provide a thorough examination of why COPA carried little influence with the European Commission's Agriculture Directorate, Directorate-General VI (DGVI) during the 1992 reforms. An illustrative case study is presented of a minor though notable element of these reforms, the so-called ‘agri-environment’ regulation, EU 2078/92. In explaining COPA's slight effect on the final text of the regulation, Grande's notion of multilevel governance emphasises the eclectic positions adopted by COPA's constituent farming unions towards the regulation, and the complexities of a negotiating process transacted simultaneously with different EU institutions, each requiring the tailoring of specific lobbying strategies by COPA's secretariat. The authors conclude that the negative outcome of COPA's lobbying resulted not only from disarray among this organisation's national policy constituencies, but also from skillful counterlobbying mounted by DGVI to prevent COPA from derailing the delicate CAP reform process.