Editorial

Citation

Matlay, H. (2009), "Editorial", Journal of Small Business and Enterprise Development, Vol. 16 No. 4. https://doi.org/10.1108/jsbed.2009.27116daa.001

Editorial

Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 16, Issue 4

Much of the business world, including industrially developed and developing nations, is currently experiencing difficult economic conditions, which can generically be described as “recessionary”. Not so long ago, entrepreneurship in general and small businesses in particular was perceived by governments, economists and industrialists as panacea for declining or flagging economic output. Furthermore, in an effort to revitalise declining sectors of their domestic economies, government sources called repeatedly for an increase in the supply of better trained and/or educated entrepreneurs. Despite worsening recessionary conditions, the same sources, backed by independent observers and financial experts, confidently forecast that entrepreneurs and small business owner/managers will be at the forefront of economic recovery and growth. Most academics, however, would argue that business survival and growth are dependent upon complex socio-economic and political factors and that related output measures often vary considerably across time and sectoral dimensions. Thus, in any period of time, economic output – as a measure of sectoral activity – can exhibit both positive and negative growth and vary significantly across geographical factors, such as local or regional opportunities, business support and entrepreneurial conglomeration. It would be, therefore, both unwise and unproductive to rely on simplistic representations of complex business environments and/or build economic forecasts upon single dimension measurements.

In this context, it might be useful to note that financial measurements of growth are usually calculated by taking into account variations in gross domestic product (GDP). In practice, GDP represents a cumulative measure of the total economic activity in a given country. Negative financial growth, as currently reported across the world, represents a relative decline in total economic activity. Importantly, cumulative negative growth can account for both increases and decreases in industrial output. By convention, a “recession” is formally announced after two successive quarters of negative financial growth within a twelve months period. Most national economies have recorded variations in economic output throughout 2007 and 2008, but the current recession was only formally acknowledged in 2009. In the UK, government sources estimated output growth to continue during 2008 at an average rate of 1.75 per cent to 2.25 per cent. Over the same period, the Bank of England and the Confederation of British Industry (CBI) have repeatedly warned the public about impending recessionary conditions. In January 2009, the Office for National Statistics (ONS) published data, which confirmed a decline in the UK GDP of 0.6 per cent in the third quarter and 1.5 per cent in the fourth quarter of 2008. It is worth noting that by the time these statistics were made available in the public domain, the UK economy has been languishing in recession since July 2008. Any hopes for a rapid recovery during the first quarter of 2009 were undermined by recent data that showed a 2.5 per cent overall decline in this period across the wider Euro Zone economy.

Unfortunately, a large proportion of the information available on the current recession originates from uncorroborated reports in mass media and television programmes as well as on equally unreliable anecdotal evidence. Furthermore, there is a marked paucity of empirically rigorous research on how small and medium-sized enterprises (SMEs) are coping with the “credit crunch” that still plagues the small business sector of the UK economy, despite massive government inspired financial “injections” into the domestic banking sector. To further complicate matters, the global “Swine Flu” pandemic threatens to cripple the SME sector, which is dominated by micro-businesses that employ fewer than ten individuals. Despite these negative aspects and serious threats, a growing proportion of SME owner/managers in the UK and elsewhere continue to survive and even excel under prevailing recessionary conditions. It falls upon the academic community to rally in support of small businesses, by undertaking and disseminating empirically rigorous research that is relevant to the survival, recovery and growth of this crucial sector of the economy.

The fourth and final issue in volume 16 of JSBED comprises ten seminal articles, which, individually and cumulatively, make a valuable contribution to the specialist body of literature on small business and enterprise development. In the first paper Hutchinson, Fleck and Lloyd-Reason investigate the barriers to internationalization experienced and perceived by small retailers in the UK. Their work highlights a number of internal and external barriers to internationalization as well as an overall negative experience of government support in assisting smaller retailers to overcome such obstacles. In the second article, Walsh and Lipinski examine marketing in SMEs, its role as a driver of competitive advantage and its importance to the firm. The authors found that the marketing function is not as well developed in SMEs or as influential as it is in larger corporations. It appears that two factors, the type of market and firm orientation, tend to facilitate marketing influence within a smaller firm. In the third article, Andersson and Tell set out to investigate pertinent aspects of the relationship between the manager and growth in smaller firms, through a critical review of relevant articles published over a 25-year period, from 1980 to 2006. The authors have identified three key relationships between small business growth and:

1. 1.

   managerial traits and characteristics;

2. 2.

   managerial intentions; and

3. 3.

   managerial behaviour or roles.

In the next paper, Venturelli and Gualandri critically review relevant approaches to the assessment of the equity gap and develop a demand-side model, which allows accurate prediction of future demand for equity. Through the application of an original model to a sample of Italian small firms, the authors found that the degree of innovation cannot be considered as the main discriminating factor relating to the differences in equity requirement per unit of marginal sale. Their analysis revealed the important role played by the firm’s year of foundation. Silver and Vegholm set out to analyse the banks’ ability to meet the needs of their SME customers. The authors found that three main factors can account for the banks’ difficulty in adapting to their SME customers:

1. 1.

   a lack of communication and contact in the interaction process;

2. 2.

   a lack of individual banker knowledge and competence of in relation to the specific needs of smaller businesses; and

3. 3.

   the centralised and standardised systems that prevails in banking organisations.

In the sixth article, Franco and Haase explore the reason why an entrepreneur’s learning process is fundamental in the quest for new business ventures. Through focused observations, the authors derive a new definition of the entrepreneur as a learner, and synthesize a conceptual model of entrepreneurial learning. In the next paper, Woods and Dennis investigate how universities could better prepare their graduates for jobs in small firms and help them communicate more successfully with smaller employers. The authors suggest that universities need to work much harder in convincing smaller firms to employ graduates, particularly when the owner manager is the key decision maker in the employment process. Gary Bosworth sets out to explore the impact of educated “in-migrants” who establish new businesses in rural areas. He found that better educated in-migrants own higher levels of human capital and tend to increase the levels of both human and social capital within local economies. In the ninth article Thassanabanjong, Miller and Marchant set out to profile investment in, and approaches to, training in Thai SMEs. It emerges that SME owner/managers in Thailand do not invest a great deal of time or money in training and prefer informal and unstructured on-the-job provision. In the final contribution, Harris and Rae explore the characteristics and impact of “gifted amateurs” who maximise the potential of Web 2.0 technologies in order to grow their businesses in a creative and cost effective manner. The authors found that gifted amateurs compete effectively against larger organisations through the use blogging, networking and search engine optimisation techniques.

As it is customary at the end of a volume, I would like to thank all the contributors, referees and expert advisors for their time, commitment and help. In particular, I am grateful to Ruth Heppenstall and Andrew G. Smith for their flexible approach and commitment to improving our journal. The Editorial Board and I look forward with excitement and anticipation to the opportunities and challenges of the next volume (17, 2010) of JSBED.

Harry Matlay