economies has been in small and medium-size businesses. .... side, business formation rates are much higher in the UK than they were in the past and now.
Environment and Planning C: Government and Policy 2009, volume 27, pages 189 ^ 190
doi:10.1068/c2701rvw
Reviews
Three decades of enterprise culture? Entrepreneurship, economic regeneration and public policy by D Storey, F Greene, K Mole; Palgrave Macmillan, Basingstoke, Hants, 2007, 296 pages, »55.00 cloth (US $85.00) ISBN 9781403941022 Since the advent of deindustrialisation in the early 1970s, all the net job growth in advanced economies has been in small and medium-size businesses. In that context, it is hardly surprising that the latter have been seen as the solution to national and regional resurgence and that governments have done their utmost to encourage entrepreneurship, business start-ups, business survival, and business growth. Huge amounts of money have been spent, not least in the UK, where the authors estimate that around »7 billion of taxpayers' funds are used annually for the support of small firms. They point out that this is about the same as is spent separately on the police service and universities. As in so many other areas of public spending, not least urban and regional policy, it is hard to prove that the money has been well spent. The authors) are not the first to come to this conclusion, but it is one which has not stopped the UK from being ``almost an enterprise laboratory'' over a thirty-year period. They argue that policy has gone through four phases. In the first of these, from the 1930s to the 1970s, there was effectively no small business support. Instead, the creation of large business and, in some cases, nationalisation were the main focus. The second phase, encompassing the 1980s, focused on increasing the number of small enterprises; the third applied in the 1990s, concentrating on quality; and the fourth phase concerned a balance of increasing competitiveness and also increasing start-ups. The latter component was especially now directed at groups such as women, who were under represented among the entrepreneurial population. A case could always have been made for leaving industrial restructuring to the market. However, most politicians like to be seen to be doing something and some believe they can make a difference, hence the large expenditures already itemised. A case could also have been made for focusing any support on the firms and localities where bangs for bucks were likely to be maximised. There are two main problems with such an approach. One is that politicians and the civil servants are not very good at picking winners. A second is that MPs all want a slice of the cake for their constituency. As a result, most small firm support has been nonspecific and, to the extent that it has been discriminatory, has favoured deprived localities and deprived individuals. The authors focus on the experiences of small businesses in Teesside, comparing companies set up in 1981 with others set up in 1991 and 2001. It is argued that this is a sensible test case because the area went from being economically prosperous in the 1970s to being enormously disadvantaged by the end of the study period. By then, it had the lowest rate of new business start-ups in the UK. Sensibly, the authors are not content with an analysis of Teesside alone. Rather, they compare a sample of firms from two other areas over the same time periods. These are Shropshire, a much more rural county and a middle-ranking area in terms of entrepreneurship, and Buckinghamshire, advantageously located near London and, not surprisingly, one of the best performing in terms of both start-ups and economic performance. The work is scholarly and informative with an excellent review of the literature and a detailed analysis of interviews with a large sample of key managers in the three locations. Much of the latter is based on probit, logit, and tobit models aimed at predicting the reasons for good or bad performance. Interestingly, the authors' `audit of new business' is considered from the perspective of four groups, these being entrepreneurs, finance providers, researchers and students, and public policy makers.
190
Reviews
The authors begin with entrepreneurs, and there seem to be no simple rules that may be applied by entrepreneurs which will, in all circumstances, ensure the success of their business. Rather, chance is crucial and business can easily be overwhelmed by it. Even so, a modicum of postcompulsory education seems to be helpful but having a degree or better does not. Moreover, it does not appear sensible to set up businesses that largely compete on price or in low growth sectors, areas which are already strongly provided for. Finally, lack of demand in the first year of operation is, unsurprisingly, a hindrance. Finance provision is argued to have improved over the three decades so much so that, arguably, there was ``too much finance on offer to new business''. There is then no evidence of market failure. This conclusion applies as much to Teesside as anywhere else and yet over a quarter of new business there received public financial assistance to start up. This was a much higher figure than that for the two other areas. Sadly, being in receipt of public funds did not seem to improve performance. Indeed the authors are ``unpersuaded that taxpayers money should be used on the scale that it has been in the past to provide financial support for new businesses, even in a low enterprise area such as Teesside.'' From a research perspective, the fact that luck seems to be crucial needs to be acknowledged. So does the fact that failed entrepreneurs do not seem to learn the lesson of failure and that many policy interventions seem to be misguided. More new businesses may or may not increase economic welfare and those that do not seem more likely to be concentrated in areas such as Teesside. From a research perspective, the fact that luck seems to be crucial needs to be acknowledged. So does the fact that failed entrepreneurs do not seem to learn the lesson of failure and that many policy interventions seem to be misguided. More new businesses may or may not increase economic welfare and those that do not seem more likely to be concentrated in areas such as Teesside. These lessons are obviously important for the policy makers themselves. On the positive side, business formation rates are much higher in the UK than they were in the past and now rank tenth out of twenty-three OECD countries. Only some of this may be due to policy. In any event, there are two strong negative aspects. One is value for money, a problem in itself perhaps but also one compounded by what the authors call `flip flop' policies and too many agencies operating in the business support sector. A second aspect is that over thirty years of small firms policy (plus other regional and urban interventions) have failed to solve the problem of Teesside and a myriad of similar locations. The authors end the book by suggesting how policy might be refocused. One idea is to encourage immigration from outside the local areas to combat the fact that businesses set up by individuals classifying themselves as born and bred on Teesside do worse than the rest. They consider that the University of Teesside could have an important role in attracting in overseas students and that central government could provide more funds both to help it do so and to provide the extra business premises in which the students can subsequently set up their businesses. This is not the most convincing part of the book and a more cynical conclusion would be that events have moved on and that attempts to buck the market would simply be throwing good money after bad. Overall, however, this is a very valuable addition to the literature on small firms, one that would save research students and academics a lot of hard slog and one that deserves to be widely read. At »55.00 list price, however, it may be one to get through the library. Peter Gripaios Plymouth Business School, Cookworthy Building, Drake Circus, Plymouth PL4 8AA, England Books received All books received by the journal for possible review are now listed on the Environment and Planning website: http://www.envplan.com/abstract.cgi?id=cbooks. All books for review should be sent to the publishers marked for the attention of the reviews editor. Inclusion in the list of books received does not imply or preclude a full review. The opinions given in these reviews are those of the reviewer alone and do not necessarily represent the views of the editors or publishers.
