Understanding the small business sector

Citation

Jones, O. (2007), "Understanding the small business sector", International Journal of Entrepreneurial Behavior & Research, Vol. 13 No. 6. https://doi.org/10.1108/ijebr.2007.16013faa.001

Understanding the small business sector

A key objective of the research community is to improve our understanding of entrepreneurship and smaller organizations. In this issue we have three very different papers which deal with topics that are important to managers, policy-makers and academics. In the first paper, Gapp and Fisher attempt to develop a better understanding of the previously unconsidered link between team development and product and service innovation. This research not only explores a significant research gap but also provides the impetus for developing an “action research model” of direct practical use in service and manufacturing sectors. To this end a conceptual framework is presented by the authors in order to demonstrate how organizational innovation is underpinned by the development of intrapreneurial teams. This is achieved over three phases with a certain level of knowledge attainment and results indicating the onset of the next phase. The process begins with the creation and establishment of an effective intrapreneurial team. The next phase involves taking a knowledge-based approach towards innovation, with initial intrapreneurial activity commencing on the service component, and then moving on to the product component. Finally, there is an evaluation of the entire cycle to establish the degree of knowledge development that has taken place over the course of the innovation process. Applying the action research model in practice revealed that effective intrapreneurial teams lead to improvements in service provision and therefore in new product development allowing an examination of teams’ progress through the different stages of innovation.

Williams examines issues related to small businesses and the informal economy. Most previous work on this topic has used “indirect measurement methods […] proxy indicators […] or small-scale household surveys of particular localities”. Therefore, his analysis of business opinion on the prevalence and impact of the informal economy places greater emphasis on more direct methods and is based on a Small Business Service survey of 7,505 small enterprises. Having established that the informal economy refers to the paid production and sale of goods and services which are unregistered and hidden from the state, it is important to have a clearer idea about its size and distribution so that it can be tackled appropriately. The results of his work reveal that 14 per cent of UK businesses claim negative repercussions due to the existence of an informal economy. Businesses also assert that on average 8 per cent of trade in their sectors is conducted on an informal basis with land transport, construction, education, motor vehicle trade, and hotels/restaurants identified as the most commonly affected industries. Moreover, informal working practices are not only more prevalent amongst business start-ups, but these enterprises are also the most disadvantaged. Finally, business opinion also perceives informal work as a greater problem in peripheral rural regions. This particular piece of research is important in establishing the potential impact informal work has on the economy and in turn the encouraging recommendations that address the issue. Nevertheless, Williams suggests that future surveys should develop a “finer-grained” understanding of the prevalence and impact of the informal economy by testing the feasibility of questions related to the amount and nature of such work.

Finally, Cameron examines the nurture and support provided by farmers’ markets to new business start-ups by considering the views of both market managers and new stallholders in New Zealand. This primarily qualitative piece of research is grounded in an increasingly important area of study – rural entrepreneurship and enterprise. This highlights how rural small businesses are using product diversification and innovative marketing to combat economic reforms, reduced government subsidies, changes in global food production and distribution and the resultant lower margins. Another important reason that justifies this piece of research is the emerging interest in regeneration of farmers’ markets because of increasing demand for quality agricultural produce primarily by affluent nations. Cameron specifically examines the role of farmers’ markets in New Zealand not only as business incubators providing inexpensive support to new entrepreneurs but also as “safety nets” creating niche markets for small businesses; both functions contribute positively towards the survival of start-ups. However, an interesting difference highlighted by this research is how farmers’ markets have different benefits for different agricultural goods. That is, they served as incubators for value-added products and as safety nets for primary produce.

Oswald Jones