Small Firms and Entrepreneurship

📖 The Scoop

The present analysis brings together a series of studies across a spectrum of selected countries in developed Western nations and Eastern Europe to identify the exact role of small firms, and how that role has evolved during the fifteen years preceding the publication of the book in mid-nineties. The studies included provide systematic evidence on the following issues: first, the role of small firms and the extent to which they account for economic activity, and how this varies across nations; second, how the role of small firms varies across sector and industries; third, whether the firm-size distribution has shifted towards or away from small businesses. Results emerging from the present studies indicate that a consistent shift away from large firms and towards small businesses has occurred within the manufacturing sector of all Western countries in the time period under discussion. In contrast, Eastern European countries had experienced a shift away from small enterprises. The major challenge for political and economic reform in Central and Eastern Europe that emerges from these analyses is how to create the strong entrepreneurial sector which exists in the West. Chapters 2 through 7 focus on the role of small firms in the economies of the United States and Western Europe (UK, West Germany, Netherlands, Portugal and Italy). Among the findings: New business formation in the 1980s in the United Kingdom had led to a significant increase in the number of businesses in the service sectors, but not nearly as much increase in manufacturing. Small firms in West Germany are not a source of dramatic job generation. The decrease in average firm size for the West German economy as a whole can more or less completely be explained by the change in sectoral composition. When the employment measure is used, no significant shift in the size of firms in the overall US economy between 1976 and 1986 is noticed. However, when the sales measure is used, a slight trend towards smaller firms can be identified. By contrast, within the manufacturing sector a pronounced shift away from large firms and towards small businesses had occurred. This trend is less apparent when the employment measure is used, but much stronger when the sales measure is applied Smaller firms have provided the bulk of employment in the Netherlands, and there has been a shift towards an increased importance of smaller-scale enterprises? In Portuguese manufacturing, entry barriers, namely economies of scale and product differentiation, had a negative impact on small-firm intensity, and small firms avoided export-oriented industries that are characterized by more intense competition. In the Italian economy there has been great turbulence among small firms. While small firms have persisted since the early 1950s, there has been recent growth, structural changes in the economy, and changes in relationship with large firms. Chapters 8 through 10 focus on Czechoslovakia, East Germany and Poland, respectively. The examination of the role of small firms in Czechoslovak manufacturing offers an alternative to the often fallacious description of firm behavior in the command economy as a strict government controlled hierarchical structure, through an analysis of Czechoslovak manufacturing firms within the context of the economic strategy based on the returns to scale paradigm. The enterprise structure of the past in East Germany has been changing rapidly; this study emphasizes which specific preconditions should be promoted in order to facilitate a vital entrepreneurial sector. A chapter on the implications of the Polish economic reform for small business adds to the discussion of the development of small business in Poland during the transformation from central planning to a market economy, using a sample of small businesses in the area around and including Gdansk. The final ch.

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