Enterprise and Small Business Principles

Background

Attitudes towards entrepreneurship have changed considerably in the past 30 years. Gone are the days when the entrepreneur would be viewed as a ‘deviant’ individual on the margins of society. Today, individuals such as Richard Branson and Bill Gates are world renowned for their entrepreneurial prowess and are revered as role models that many would wish to emulate. In the same way that entrepreneurs have become an accepted part of everyday life, the influence of the small firm has also grown con­siderably. While this has been driven by various factors, such as the decline of large businesses, the development of an ‘enterprise culture’, market fragmentation and tech­nological development, the increasing regard for small firms has been fuelled by a widespread recognition of their crucial economic and social role.

Small firms are, perhaps, most valued for their contribution to employment cre­ation. While the abilities of an individual small firm to create a large number of jobs are restricted to a very few high growth ‘gazelles’, the sheer number of smaller enter­prises ensures that their collective contribution to employment generation is substan­tial. For example, in the European Union, large firms have experienced employment losses in nearly every member state, whilst employment by small firms has grown con­siderably. In addition to creating employment, small firms also play a variety of other roles. For example, while the economies of scale in production and distribution enable large firms to make a significant contribution to the economy, many of them could not survive without the existence of small companies, who sell most of the products made by large manufacturers direct as well as providing them with many of the services and supplies they require to run a competitive business. Small firms have also introduced many products and services to the consumer, especially in specialised markets that are too small for larger companies to consider worthwhile. Finally, small businesses also provide an outlet for entrepreneurial individuals, many of whom would have found it almost impossible to work for a large organisation.

1.1 The purpose of this book

The increased importance of entrepreneurship and the small firm sector has led to con­siderable growth in interest in entrepreneurs and the companies they establish and grow. Although the study of entrepreneurship originated in the work of eighteenth-century economists, such as Richard Cantillon, the field has grown considerably during the past 40 years to encompass disciplines as varied as sociology, psychology, management studies and anthropology. Indeed, the chapters within this book draw on various approaches to explain broad issues relating to the enterprise environment, entrepreneurial processes and individuals, and small business management. The field of entrepreneurship and small business studies has always been diverse, and this book is intended both to reflect this diversity and to present an overview of each of the key themes relating to enter­prise and small business.

Contemporary interest in the subject essentially dates from the early 1970s, when a number of critical events saw both a loss of confidence in large-scale industry and grow­ing popular and governmental interest in small businesses. Even before this period, however, there had been research analysing the small firms sector from historical, geo­graphical and socio-economic perspectives. What changed in the 1970s was both the volume of research undertaken and its direct role in influencing national economic policy. For the first time also, academics researching the field from within different disciplines formed associations, held international conferences to advance research in the area, and established a number of university-based centres focusing on the study of small business and entrepreneurship. These early initiatives have developed consider­ably. The modern field of entrepreneurship is recognised as a distinctive division within the Academy of Management, while the range of scholarly journals dedicated to the field has increased both in number and in specialisation. A further development has been seen in the growing number of university-based enterprise and small business research centres. Importantly, many of these centres have increasingly sought to dis­seminate their work within the mainstream university curricula by offering courses to undergraduate and postgraduate students. At the same time, there have been an increasing number of business schools around the world now offering small business and entrepreneurship as an integral element of business and management studies. While the US was an early leader in this area, Business Schools in Europe, the Middle East, Asia and Australasia have followed in developing courses in entrepreneurship and small business studies.

Despite these developments, entrepreneurship and small firms’ research is often described as a new and emerging research field. Clearly, this is no longer the case. As each of the contributions in this volume demonstrates, research undertaken over the past 40 years has led to substantial theoretical and methodological advances. The field is far from exhausted, however. Each chapter within this volume demonstrates the extent, and also the incompleteness, of our understanding of many issues surrounding the small business sector. The development of the subject has not been confined to research; it has also been seen in the teaching of small business studies. The growing trend to include small business studies as part of the mainstream university curricula reflects both popular interest in small firms and their importance in economic develop­ment. Like many management subjects, small business studies draws from a range of

disciplinary sources including, among others, economics, sociology, psychology, history and geography. We have tried to reflect the broad base of the subject in the breadth of the themes covered in this volume.

As the small business research field has grown and diversified over the past 30 years, so too has the number and content of small business courses taught in universities and colleges throughout the world. However, there is no single text book that encapsulates the range of small business themes in the depth required for undergraduate and post­graduate work. This book has been designed specifically to address the need for a single reference point for the growing number of students undertaking courses in small busi­ness and entrepreneurial studies. In determining the themes to be included in this book, guidance was taken from the syllabi of several university and college courses. Many of the initial small business courses taught in universities, such as the Graduate Enterprise Programme, were designed to encourage and enable students to actually start an enter­prise. Increasingly, however, courses are designed to provide students with a more comprehensive insight into the small business sector. This reflects both the broad pol­icy imperative to encourage students to start in business for themselves, and also the future careers of graduates who are increasingly likely to be employed within the small business sector or in occupations that directly or indirectly support the sector. Today, courses in small business studies are taught by a range of subject departments, includ­ing business and management, social sciences, arts and humanities. By including a broad range of themes in the required depth, we hope that this book will satisfy all students of the subject, irrespective of departmental affiliation.

This book contains 24 chapters from 31 contributors. Each contributing author was asked to present an overview of the specific body of work and explain how the field had developed over time. Even in such a large volume as this, not all issues can be explained in the depth which may be required, but we believe that each chapter amply fulfils the criteria of providing a strong starting point for students. One of the advantages of an edited collection of work is the ability to draw on acknowledged subject experts to pro­vide specialised accounts of their specific research areas. We would like to thank each contributor not only for their chapter contributions, but also for giving their time and enthusiasm so freely. This book represents a substantial body of knowledge which we hope will provide an excellent reference point for students, researchers and teachers alike.