Enterprise and Small Business Principles
Large firm fragmentation
Another possible reason for the development in business ownership rates since the 1980s is that there has been a radical shift in the business practices of larger enterprises. Shutt and Whittington (1987), for instance, have argued that ‘the sector’s [small enterprise] rise does not represent an independent source of new employment but merely a transfer of employment from large units to small’ (p. 21). This claim is derived from three suggested economic changes to the large firm’s environment: producing innovative products became riskier; consumers and the macro-economy became more uncertain (e. g. increases in commodity prices, more fickle consumers); and it was increasingly difficult to control workers (e. g. increased wage demands, strikes). In response to these challenges, Shutt and Whittington (1987) contend that larger enterprises sought to vertically disintegrate by hiving off enterprise activities into subsidiaries or franchised operations. This idea is supported by Harrison (1994) who has argued that the seeming growth of small businesses is the result of a determined and concerted effort by multinational firms to increase their flexibility. Hence, Harrison cites a determination of many such firms to concentrate upon their ‘core competencies’ and, thereby, seek to transfer risk to smaller enterprises. Empirically, Rainnie (1991) provides support for such a view. He showed that large enterprises responded to change not by vertically disintegrating but drawing in smaller enterprises into sub-contracting relationships. Similar changes in employment contracts are evident in other industries: milk delivery (Boyle, 1994), hairdressing (Drucker et al., 1997) and book publishing (Stanworth and Stanworth, 1995).
