Editorial

Citation

Matlay, H. (2016), "Editorial", Journal of Small Business and Enterprise Development, Vol. 23 No. 3. https://doi.org/10.1108/JSBED-06-2016-0091

Editorial

Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 23, Issue 3.

It has become customary to incorporate in JSBED editorials a brief analysis of the latest economic developments to affect industrially developed and developing nations, as well as countries in transition. Early in my research on small businesses, I became aware of the intricate relationship that exists between local and global economic conditions. In this context, I noticed that cause and effect links become somewhat blurred and tend to lose their spatial associative relevance in favour of local, near and distant challenges and related solutions. For instance, much could be learnt from recurring economic downturns, such as cyclical “recessions” or “depressions”, during which governments are forced to consider a range of options and to implement best possible rescue measures. In practice, recovery policies can vary considerable, both at national and international level. While there is no certainty that these lessons would help governments to totally avoid economic turbulence, it is likely that the systemic knowledge and experience gained from dealing with past recessions could mitigate the intensity and magnitude of financial and social costs attributable to cyclical economic decline, stagnation and recovery.

It is widely acknowledged that each economic downturn is heralded by a slump in manufacturing demand and output, similar to that noticed during the second half of 2015 and the beginning of 2016. At first, it can remain unnoticed, mostly because at macroeconomic level, service industries and the growing housing “bubble” tend to absorb or mask the decline in manufacturing demand and output. Later, at microeconomic level, the worsening decline of manufacturing industries also impacts upon demand in services and housing stocks. Not surprisingly, some economic observers claim that recessionary conditions would follow inevitably and cannot be stopped by traditionally hesitant government intervention. Past experience has shown that, in times of negative growth, only drastic, and often punitive, economy-wide measures would succeed in restricting the catastrophic impact of long-lasting and far-reaching recessionary conditions.

Another explanation for the delay in noticing the onset of recession could be that the vast majority of firms operating in manufacturing industries are micro and small businesses and that the initial fall in demand remains largely localised and generally not worthy of publicity. Unfortunately, as the recession progresses, it is the bulk of smaller firms, their owner/managers and workforce that bear the brunt of business failure and loss of livelihood. It is only at this stage that smaller businesses become “statistics” and newsworthy, in a negative and sometimes disparaging way. Paradoxically, however, during recovery stages, small firms are increasingly portrayed as leaders in, and drivers of, innovation and economic growth. The question whether economic observers and policy makers could, or indeed should, use manufacturing sector indicators in general and small business statistics in particular, as predictors of economic well-being have been raised previously, but answered only partially. There are many generic, as well as specific reasons why traditionally, smaller firms tend to be neglected by economic forecasters and policy makers, at least until they become first, a major problem during recession, and then, a dynamic force in driving the ensuing recovery. Despite representing about 99 per cent of all economically active units operating in the private sector of nations, their size and heterogeneity tend to hinder coherent representation at national and policy-making level. In addition, small firms tend to lack the financial and time resources that are necessary to devote to lobbying for coherent support, at policy-making level.

Personally, as an entrepreneur and researcher in small business and enterprise development, I genuinely believe that a competitive and growing small business sector is the prerequisite to a healthy and successful economy. It is widely acknowledged that entrepreneurs and small business owner/managers make a significant contribution to the development and stability of the socio-economic, cultural and political infrastructure of a nation. In the UK, for instance, recent data (which includes both actual and estimated annual figures) shows that numerically, smaller businesses dominate the economy: at the end of 2015, there were approximately 2.3 million micro businesses (0-9 employees) and 2.8 million small firms (10-49 employees). In comparison, at the same time there existed 3,800 medium-sized enterprises (50-249 employees) and 7,100 large organisations (250+ employees). Thus, micro and small businesses contributed to just over half of total employment and gross domestic product (GDP) in this country. The overall proportion of micro and small businesses and their contribution to the economy is mirrored across the industrially developed and developing world. As these statistics do not include unregistered and “under the radar” businesses operating in the “shadow economy”, the overall contribution of smaller firms is likely to be considerably larger.

This issue of JSBED comprises 15 papers, which deal with pertinent issues relating to entrepreneurship and small business development, in a variety of contextual and conceptual frameworks. Individually and collectively, these papers are indicative of the diversity of interests and themes addressed by our contributors, as well as the range of empirical approaches used in their research.

In my role as Editor of JSBED, I have been greatly assisted by the generous support of colleagues, collaborators, advisors and members of the editorial advisory board. A wide range of contributors, both from the UK and elsewhere, submit high-quality articles to our journal and providing refereeing support, constructive feedback and expert advice. I am very grateful to all our stakeholders for their contribution to JSBED, without which the growing success of our journal would not have been possible.