Showing a little enterprise

Understanding the Small Business Sector
November 24, 1995

This book arose out of the Economic and Social Research Council's large-scale research programme on the small business carried out between 1989 and 1992 for which the author was programme coordinator. But it is fortunately not a laundry list of the projects completed for the initiative. Rather, David J. Storey uses the book to offer a critical overview of the state of knowledge on most aspects of the small enterprise in Britain. It refers in detail to the various research projects in the initiative but also draws on much other research from the United Kingdom and abroad. What pulls the book together is Storey's own clear and distinctive views based on a long involvement in small business research and an extensive knowledge of the literature.

The approach is highly systematic. There are chapters on the problems of defining the small business and small business statistics; the birth, death and growth patterns of small businesses; employment in the small firm; finance; and public policy towards the small firm. The book is particularly strong where the author has himself been a major contributor to research on a topic.

One of the strongest chapters is on public policy. This is an impressively argued and highly critical analysis of government policy since 1979. Storey argues that government policy on the small business has been unclear and inconsistent, resulting in a "patchwork quilt" of measures with no clear aims. Following from these weaknesses, any assessment of outcomes is extremely difficult. He concludes that a radical rethink is needed if government is to achieve positive economic benefits from its attentions to the UK's growing and increasingly significant small-business sector.

The discussion of small business and finance is also well presented and, given the attention the topic is attracting (particularly the relations between the clearing banks and small enterprises), highly topical. However, Storey avoids the common tendency to see the clearing banks as villains who are failing to serve the needs of small businesses. Instead, he provides a cool appraisal of the relations and concludes that there is no evidence of market failure or of a need for government intervention. At the same time, he also suggests how relations between small businesses and external sources of finance need to change. This, he argues, will require changes in both small business owner behaviour and in the ways the high street banks deal with them.

The book is not, of course, devoid of weaknesses. While the coverage is wide, there are gaps. For example, the examination of the links between the small business sector and the wider economy is rather piecemeal with no detailed discussion of recent major arguments such as the industrial districts thesis. In recent years the shift in small business research has been away from positivist, quantitative-based research towards a greater emphasis on qualitative research. For many, Storey's approach will be seen as rather too closely allied to the earlier approach. This is not to say that the qualitative dimension is neglected but the discussion is more at home with hypotheses and their quantitative evaluation than with interpretative analyses.

What the book provides, therefore, is an admirably clear discussion of most of the major issues in contemporary academic small business research together with an excellent introduction to the research that made up ESRC's initiative on the small enterprise.

James Curran is Midland Bank professor of small business studies and director, Small Business Research Centre, Kingston University.

Understanding the Small Business Sector

Author - David J. Storey
ISBN - 0 415 09626 X and 10038 0
Publisher - Routledge
Price - £45.00 and 16.99
Pages - 355

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