A THEORETICAL FRAMEWORK FOR SMALL BUSINESS POLICY

A number of public policy issues have been discussed in this article, the most important of which are: 1. Small business would not need special consideration if our economy were basically a competitive one. 2. A large and growing segment of our economy has sufficient market and political power to make our economy basically non-competitive. 3. Small firms tend to provide price competition, to lead in the development of new products and processes, and to generate new innovations and new employment. 4. Government policy tends to create artificial economies of scale, giving an unwarranted advantage to the very large firm. As a first approximation, a policy of government neutrality on firms of varying size is needed. But, because of discriminations which already exist which favor large firms over small firms, special small business programs may be necessary to provide an equitable policy base. Unfortunately, programs designed to benefit all business, like the investment tax credit, tend to primarily benefit larger firms (Berney, 1979). This is the case for two reasons. First, there is a basic difference in production relationships: large firms tend to be more capital intensive and small firms more labor intensive. Second, the more complex a rule or regulation, the more costly it is for small business to use it. Consequently, even the employment tax credit, which should benefit the small firm is not used by them. Instead, it tends more to benefit the larger firm. Neutrality, as a governmental policy, would appear to demand different treatment for firms of varying size. As an example, the “regulatory flexibility” concept applies different standards to different sized firms so that the burden of regulation is more equitably distributed. The concept of encouraging or requiring financial institutions and other lenders to establish “dual prime rates” is a further example. Since small firms appear to have much higher debt to equity ratios and rely more heavily on shorter-term bank credit, they are more heavily burdened by a tight money policy which forces increases of interest rates. Thus, dual prime rates help to spread the burden of rising interest costs more equally. As many people prefer to work for themselves, equalizing the burden of government policy could only serve to increase the basic growth rate for small business, thus providing an easier start for entrepreneurs and would encourage a more rapid rate of economic growth. None of these discussions, however, argues that small business should be protected from failure. The more efficient firms will succeed and prosper, and the least efficient will not. Many currently successful entrepreneurs learn how to improve their production processes or managerial skills from their failures. What is being recommended as a first step is that government should concentrate on equalizing burdens and benefits in order to achieve true neutrality. If private economies of scale do indeed exist, new firms must grow to survive; what the government should not create are artificial economies of scale with public policy. A strong argument for further action can also be made: it appears that significant external benefits are produced by an economic system with a dynamic small business sector. Since these benefits go to society as a whole rather than entrepreneurs alone in the form of increased profits, a freely operating market without government assistance does not generate as many new small businesses as would be optimal for our society. To internalize the benefits that come from small business, governmental programs need to be devised to increase the rate of return on new, innovative small businesses. Should this happen, we could then anticipate increased rapid rates of innovation and technological change, more rapid rates of employment growth, expanded price competition in all sectors of the economy, and improved export capabilities, in short, true flexibility in our capitalistic system.     

CHANGES IN THE LOCATION OF EMPLOYMENT AND OWNERSHIP: EVIDENCE FROM CALIFORNIA*

ABSTRACT We use the National Establishment Time‐Series database to describe shifts in the geographic dispersion of employment and ownership of firms. Focusing on data on business establishments in California, and establishments anywhere in the United States that are owned by firms headquartered in California, we find shifts in the operations of businesses headquartered in California to other states. However, this shift has been offset by increased employment in the state by firms headquartered elsewhere, resulting in California's share of national employment holding quite constant. The evidence points to increasing geographic dispersion of firms' operations, especially in industries with lower communication costs.     

Sense of place and tourism business development

This study is to investigate the role of sense of place on residents' participation in tourism-related businesses. Emphasis was placed on understanding whether and how sense of place influenced people's decisions to operate a tourism-related business. Thus, this framework and the empirical validation presented are the result of triangulating quantitative survey data (n = 118) tourism business operators and follow-up with qualitative interviews (n = 72) respondents in Tai O, Hong Kong, the linkages between sense of place and small and medium business enterprises (SMTEs) were explored. The findings revealed that sense of place played an important role in encouraging move-out residents and their descendants to return and participate in a tourism-related business. Sense of place also influenced some people's decisions regarding the type of business they were involved in and the manner in which they operated their business. The findings suggested that operators of tourism-related businesses who have a strong sense of place, whether local residents or outsiders, can contribute to preserving a community's culture and for sustainable tourism development.     

清代前期账局、放账铺研究--以五种账局、放账铺清单的解读为中心

清代前期不但有资本规模较大,主要针对商号及官员放贷的大账局,也有资本规模较小,可能针对小商人、小手工业者甚至地主农民放贷的放账铺。至少从乾隆年间开始,账局、放账铺已经比较普遍地运用合伙制的方式筹措资本。账局的重要业务之一就是对官员放京债,这种放贷利率高、数额大,但风险也甚高。与此同时,账局也开始大规模地对商号商人放贷,每家较大型的账局至少可能对三十至五十家以上的商号放贷,放贷数额常到一千两以上,最少也有一百两。这种放贷,直至道光年间还很兴盛。账局、放账铺已经具有了商业银行的功能,但是否够得上商业银行,还须进一步探讨。     

The Role of Personal Factors in the Location Decision of Software Services Start-up Firms

This paper explores the factors which influence the business location decisions of start-ups, focusing in particular on the role of personal factors. Established explanations of industry location emphasize proximity to firms in the same or related industries and proximity to a wider set of business services, though recent research suggests that personal factors may play an important role in explanations of industry location—particularly in technology-enabled sectors. A survey of 97 new firms, founded between 2008 and 2012, in the Irish software services sector, shows that the business location decision is influenced by the personal motivation of entrepreneurs to attain a desired quality of life, and that this outweighs economic factors such as proximity to firms within the same or related industries, proximity to a broader set of supporting business services, infrastructure or the availability of government support schemes. Personal factors are particularly important to firms located outside the Dublin metropolitan area and to home-based businesses. This has important policy implications for national and regional governments seeking to encourage entrepreneurship in technology-enabled service sectors.     

The Location and Concentration of Businesses in Britain: Business Clusters, Business Services, Market Coverage and Local Economic Development

An important debate has recently developed around the significance of business clusters for the development of the economy. This paper assesses the extent to which concentrated clusters of businesses exist in Britain, using the fine spatial mesh of postcode districts. It identifies the major clusters using a development of the methodology to define local labour market areas. The paper demonstrates the high degree of localization and uneven development of businesses in Britain. It also shows that business service firms are even more highly localized and clustered than other businesses. Moreover, the larger the business centre, the more localized and clustered the firms. The pattern suggests that there is a strong influence of increasing returns of scale, and that, as well as local clusters, much of the British economy is covered by one metacluster. Implications from these results are drawn for the likely future development of the economy, the location of business service suppliers in order to develop their market coverage, and local economic development policy.     

革命与生意——以辛亥革命时期的上海为例

From 1911 to 1913, in big streets and small lanes, in famous parks and thriving stores, and in tea houses and grand restaurants located in such cities as Shanghai, Nanjing, Beijing and Wuchang, numerous business opportunities were born out of the Revolution of 1911. By using the political giants and military leaders around Shanghai, business firms skillfully dealt with the difficulties of the continually changing political situation and managed to keep their businesses afloat, succeeding in their response to the consumption demands of the public. It can be argued that the Revolution of 1911 played a distinct role in the development of businesses in Shanghai during that time. __________ Translated by Zhong Chen from Shilin 史林 (Historical Review), 2008, (3): 137–150     

Dimensions of proximity in knowledge-based networks: The cases of investment banking and automobile design

The competitiveness of firms and regions is increasingly dependent on their capabilities to organise knowledge processes that unfold between different knowledge providers. In this article it is argued that this knowledge management in networks is a cognitive process that uses different dimensions of proximity. As much of the knowledge required is 'tacit' in character, 'embedded' social interaction becomes crucial. There are, however, conflicts of interest in business networks. The organisation of knowledge processes thus becomes a complex governance task that depends to a large extent on the characteristics of the learning processes of the sectors involved. This paper offers some empirical evidence from the service sector with the case of M&A activities and from the manufacturing sector with the case of automobile design.     

FIRM SIZES AND ECONOMIC DEVELOPMENT: ESTIMATING LONG‐TERM EFFECTS ON U.S. COUNTY GROWTH, 1990–2000

This paper investigates the role of the business size distribution on income and employment growth in U.S. counties from 1990 to 2000. We measure the business size distribution as the share of employees across nine establishment size categories that range from microfirms (one to four employees) to large firms (1,000+ employees) and using three indices similar to a Gini coefficient. Results show that the business size distribution has a significant impact on county‐level growth patterns. Employment shares in small firms increase employment growth, but decrease income growth. One possible conclusion suggests policies emphasizing small firms and entrepreneurship during times of high unemployment.     

晚明商人借贷的利息率与商业性借贷的发展

商人借贷利息率的高低对商业性借贷的发展有直接的影响。晚明商人借贷的利息率总体上以低于年息36％为多,这一利率既大大低于消费性借贷的利息率,又低于市场平均利息率,一般均在法定利息率的范围之内。虽然商人借贷的利息率相对较低,但在风险机制的作用下,放贷者向商人放贷的积极性不会受到减损。又由于利率较低,商人借贷通常有利可图,因而商业性借贷能够得到发展。     

Art and design as competitive advantage: A creative enterprise cluster in the Western United States

The creative enterprise cluster consists of companies that take their principal competitive advantage from a distinctive appearance, form, content, or sound that they embed or embody in their products or services. They include large numbers of micro-enterprises, freelancers, and design manufacturers, which loosely comprise a 'creative enterprise cluster'. The US state of Montana has such a cluster. It includes artisan firms, native American businesses, freelancers, and design manufacturers, many of which are included in government business databases. Montana's biodiversity, low population density, independent lifestyle, and cultural heritage have drawn large numbers of creative enterprises and entrepreneurs, which have led to support network of associations, cooperatives, galleries, suppliers, and educators. A study of the cluster for the Montana Governor's office(1) led to a number of recommendations that included recognizing recognition as economic development, increasing emphasis on arts and design in education, forming local and international marketing networks, establishing specialized business service centres, and matching artists with manufacturers. As a result, the state selected this cluster for further targeted support and development.     

High-Tech Firms’ Location Considerations within the Metropolitan Regions and the Impact of Their Development Stages

The determinants of firms' location choice have changed over time, in particular in the high-tech industry. Few studies that investigate the factors that influence firms' location decision distinguish between firms in their early stages of life cycle and more established high-tech firms. This study identifies the considerations prioritized by high-tech firms in both categories in the process of choosing a location within a metropolitan region for establishing or relocating their business. The intra-metropolitan competition for high-tech plants was examined using data gathered through field surveys of managers of such firms in the Tel-Aviv metropolitan region. The findings shed light on the importance ascribed to internal and external factors in the decision on location made by the firms' managers.     

Italy at War 1935–2005: Report on the 2005 ASMI Annual Conference,Edinburgh, 25–26 November

‘Addiopizzo’ (Goodbye protection money) is a grassroots anti-mafia movement based in Palermo that stresses the individual consumer's responsibility for maintaining the Sicilian mafia's pizzo system. If you purchase products from a business that pays the pizzo you are indirectly supporting the mafia. By encouraging Palermitans to buy from ‘pizzo-free’ businesses, Addiopizzo uses the purchasing power of the consumer to fight organised crime. The community of ‘pizzo-free’ businesses is small but steadily growing whilst the number of critical consumers pledging to buy their products appears to have peaked. This article aims to investigate the reasons why consumers may be reluctant to support ‘pizzo-free’ businesses by asking those who have already made public their decision to do so. Whilst critical consumers cannot fully explain why the majority of Palermo's citizens continue to tolerate the pizzo system their attitudes towards them do highlight differences that may help to account for wider non-participation in Addiopizzo's campaign.     

Predicting National and Regional Recessions Using Probit Modeling and Interest-Rate Spreads

Abstract This study extends the work of Estrella and Mishkin (1996 , 1998 ) to show that interest‐rate spreads and probit modeling can be used to predict recessions in many states as well as the nation. State recessions are defined as two or more consecutive quarters of declining real gross state product. The yield spread, SPREAD, is defined as the difference between the 10‐year Treasury bond rate and the three‐month Treasury bill rate. The national results are similar to those obtained by Estrella and Mishkin. Probit models are estimated for all 50 states using SPREAD and unemployment insurance claims, UI, as alternative explanatory variables. For 34 of the 50 states, SPREAD is significant at the 0.01 level as a predictor of state recessions. Much weaker results are obtained using UI. Simulations for the 1979–2001 period are used to compute loss functions for the national and state models at probability screens of 30, 40, 50, and 60 percent. The results demonstrate that probit models based on SPREAD can be useful in improving business and policy decisions in many states.     

BUSINESS AND THE NORDIC WELFARE STATES, 1890-1970

Social scientists have, since the 1990s, shown an increasing interest in the role of business actors in welfare state development, and these debates provide many opportunities for historians of the Nordic countries to contribute with their insights and findings. This special issue brings together six historical studies on the role of business in the development of the welfare states in the Nordic countries, including the role of firms as providers of company welfare as well as the activities of firms and of business interest groups to influence policies and public opinion. Two observations stand out. First, the contributions draw a picture of a gradual shift in this period from that of fundamental opposition, which often dominated up to the mid-20th century, to a more pragmatic approach of cooperation. Cooperation in policy-making co-existed with confrontation in public debate, in which business interest groups promoted alternatives to ‘big government’. Second, these studies underline the value of paying attention to what Reinhart Koselleck called ‘horizons of expectations’. These historical studies show how the vocabulary of the actors changed in this period, and how business interest groups not only influenced political decisions but also adapted their expectations to changes in the political context.     

Do Manufacturing Firms Profit from Intraregional Innovation Linkages? An Empirical Based Answer

Nowadays, inter-firm linkages in the form of regional networks are seen as growth-promoting and important prerequisites for successful innovation activities in firms. Beginning with this hypothesis, the paper sets out to answer the question, whether manufacturing businesses with strong intraregional ties are more successful with respect to growth rates and innovative activities than those firms with little connection to their region. From a survey carried out in 10 European regions, the results verify that in spite of numerous network relationships on the national and international level small businesses are most likely to cooperate with others in their vicinity. In addition, the more knowledge-intensive innovation activities of businesses are, the more important is the relevance of spatial proximity in particular and networking in general.     

Rural business programs and business performance: The impact of the USDA's Business and Industry (B&I) Guaranteed Loan Program

The USDA's Rural Development (RD) has implemented several loan and grant programs to support businesses located in rural areas and the Business and Industry (B&I) Guaranteed Loan Program is the largest among them. The focus of the present study is to estimate the impact of B&I program participation and the amount of loans received on the probability of survival and employment growth of recipient businesses over the period of 1990–2013. Using administrative data on B&I loans from RD and business‐level data from the National Establishment Time‐Series (NETS), we utilize a matched difference‐in‐difference estimation strategy to assess the impact of the B&I program on establishment‐level outcomes. We find that the receipt of a B&I loan helps recipient businesses to reduce the risk of failure and grow slightly faster, compared with a similar control group of businesses. We also test if the impacts vary with the loan size and find that while increasing the size of loans has an increasing effect to reduce the risk of failure, it shows no statistically significant effect on employment growth.     

The Sharing of Knowledge to Gain a Competitive Advantage by Small Businesses in Africa: Some critical comments

The application of knowledge management methods by small businesses in Africa can contribute to the continent's growth rate. Africa's wealth lies in its human resources, and in its indigenous knowledge. Investing in the intellectual development of African people, and preserving their indigenous knowledge is an important route towards sustainable development. If small African businesses learn to apply knowledge management methods — particularly the SECI model in order to preserve and use their indigenous knowledge in their local markets, they will indeed reach new horizons of competitive advantage and market profitability.     

The Development of Geographical Specialization of Venture Capital

Many regions have realized that access to capital is an important prerequisite for establishment and growth of businesses, and have therefore focused policies to ensure an adequate supply of risk capital. The growth of the venture capital industry in the 1990s put pressure on venture capital firms (VCFs) to act more strategically. Many VCFs have thus specialized along one or more dimensions: certain industries, stages of development of the firm, or geographical areas. A theoretical dichotomy is developed in this paper to explain regionally focused venture capital. A competence-based theoretical view sees increased competition in the industry as promoting the growth of geographical specialization, while, according to financial theory, it would lead to diversification in order to spread risk. The empirical analysis illustrates the development in the average distance between VCFs and their Danish portfolio firms. All venture capital investments are included. Findings suggest that the process of geographical specialization follows an inverted V-shaped curve. This is interpreted in light of the developments in competition and in the competencies in the market. VCFs search broadly for investment opportunities in the first phase of the emergence of the venture capital industry, but when competition increases they tend to confine themselves to investments within a closer geographical distance. The implications of these findings are important both for funds-of-funds, regional governments, and VCFs.     

DO CAPITAL TAX INCENTIVES ATTRACT NEW BUSINESSES? EVIDENCE ACROSS INDUSTRIES FROM THE NEW MARKETS TAX CREDIT

In this paper, we examine how government policy affects the sorting of industries across jurisdictions using the New Markets Tax Credit (NMTC) program. When estimating the impact of the tax credit on business activity, there are likely to be unobservable local characteristics that are correlated with business location decisions that would cause OLS estimates to be biased. To control for this endogenous selection, we use a plausibly exogenous eligibility cutoff and compare census tracts that are just eligible for the NMTC program to those that are just ineligible. Using data from the Dun and Bradstreet MarketPlace Files, we find that eligibility for the NMTC program caused industries to sort across eligible and noneligible tracts. In particular, we find that there is an increase in retail employment, both among new businesses and existing businesses, and an increase in manufacturing employment at existing businesses in tracts that were eligible for the program. However, we find negative effects on employment at new firms in the wholesale and transportation industries, and decreases in the number of new firms in FIRE and services. Policy makers should be cognizant of these results, as the implications of the sorting across industries on local areas must be considered to design effective policy.