The “additional costs” of being peripheral: developing a contextual understanding of micro-business growth constraints

Abstract

Purpose

Despite their economic significance, empirical evidence on the growth constraints facing micro-businesses as an important subset of small and medium enterprises remains scarce. At the same time, little consideration has hitherto been given to the context in which entrepreneurial activity occurs. The purpose of this paper is to develop an empirically informed contextual understanding of micro-business growth, beyond firm-level constraints.

Design/methodology/approach

The paper draws on 50 in-depth interviews with stakeholders and micro-business owner–manager entrepreneurs (OMEs henceforth) in a peripheral post-industrial place (PPIP henceforth).

Findings

The paper shows that, beyond firm-level constraints generated by their OME-centric nature, there are “additional costs” for micro-businesses operating in PPIPs, specifically limited access to higher-skilled labour, a more challenging, “closed” business environment and negative outward perceptions stemming from place stigmatisation. All of these “additional costs” can serve to stymie OMEs' growth ambition.

Research limitations/implications

The paper is based on a limited number of interviews conducted in one region in England. However, the contextualisation of the findings through a focus on PPIPs provides valuable insights and enables analytical generalisation.

Originality/value

The article develops a context-sensitive model of micro-business growth constraints, one that goes beyond the constraints inherent in the nature of micro-businesses and is sensitive to their local (socio-institutional) operating context. The implications serve to advance both how enterprise in the periphery is theorised and how it is addressed by policymakers and business intermediaries to support the growth of micro-businesses.

Citation

Gherhes, C., Vorley, T. and Brooks, C. (2021), "The “additional costs” of being peripheral: developing a contextual understanding of micro-business growth constraints", Journal of Small Business and Enterprise Development, Vol. 28 No. 1, pp. 59-84. https://doi.org/10.1108/JSBED-03-2019-0091