Enterprise and Small Business Principles
Defining and measuring the small business Francis Greene and Kevin Mole
This chapter begins by considering a sample of the definitions used by researchers and governments to describe smaller enterprises and shows that there is no single or uniform definition of smaller enterprises. It also examines the number of enterprises in the United Kingdom (UK), the European Union (EU) and internationally, and although there are measurement problems in calculating the number of smaller enterprises, this chapter demonstrates that smaller enterprises represent the overwhelming number of enterprises in any economy.
Empirical evidence suggests that in the UK, and internationally, there has been a general increase in the numbers of smaller enterprises since the 1980s and whilst most OECD (Organisation for Economic Cooperation and Development) countries follow this pattern, there are notable exceptions such as France, Japan and the US. In this context, the various reasons why smaller enterprises have ‘re-emerged’ since the 1980s are considered, including changes in the cost structure of industry, rapid technological development, innovation, an increase in the service economy, changes in the labour market and shifts in government policy, although none of these explanations provide in themselves the single explanation for the growth of smaller enterprises. Section 2.7 looks at the US and explores the dynamic contribution of entry and exit and the importance of fast-growth enterprises.
