With over 5 million small businesses, is the UK becoming a nation of entrepreneurs and business owners? And if so, is this important?
In terms of GDP small businesses now employ over 12 million people (33%) and are often seen as the bedrock of an entrepreneurial economy. However, it’s not so much how many small businesses or entrepreneurs a nation has but how they behave. On policymakers’ minds is how do we support small businesses to grow and create new jobs?
The recent Sociology of Enterprise report by the Department for Business Innovation & Skills found:
- Spectrum of dispositions towards growth among small business owners reflecting demographics, family background, education, cultural norms and the scale and nature of international links;
- Dispositions these shape the mindsets of business owners;
- Different mindsets have different levels of ambition and different business behaviours;
- Owners disposed to growth are more likely to think and act strategically and more likely than others to engage in growth related behaviours.
The study proposed three disposition types: 1) growth-inclined, 2) growth-ambivalent and 3) growth-resistant. Significantly, there was a positive relationship between growth disposition and business performance and growth. For policymakers this could be very important and include:
- Understanding the dispositions of business owners can inform the targeting of business support;
- The research findings provide a positive commentary on aspects of current business support policy;
- It might be possible to promote improved small business performance by changing the dispositions of business owners;
- Interventions that create a ‘social space’ to support formal elements of business support can have a positive impact on growth disposition.
The five years of delivering the 10,000 Small Businesses programme in Yorkshire and the Humber certainly highlights the value of targeted support for growth-inclined entrepreneurs and creating ‘social space’ for growth.
The report could also be a myth-buster … “growth-inclined owners were more likely to have a university-level education”. Perhaps an enterprising society needs graduate entrepreneurs as well as college dropouts!
Professor Nigel Lockett
Professor of Enterprise at Leeds University Business School