Matlay, H. (2014), "Editorial", Journal of Small Business and Enterprise Development, Vol. 21 No. 3. https://doi.org/10.1108/JSBED-07-2014-0113Download as .RIS
Emerald Group Publishing Limited
Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 21, Issue 3.
In my previous editorials, I have charted the beginning and progress of a recession that is now considered by many stakeholders to represent the worst depression in recent times and the most damaging global socio-economic upheaval since the Second World War ended in 1945. In addition, the underlying financial crisis that started in 2007 is widely acknowledged as the largest and most significant dislocation of private, corporate and institutional assets since the Great Depression of 1929. Not wishing to overextend myself and risk a comparison between the two “great depressions,” I will simply state that there are considerable similarities as well as differences between these two ruinous events. For those interested in the details of the two depressions, there is a well-established body of knowledge on the Great Depression of 1929-1939 and a growing mass of scholarly literature that is developing on the causes and impact of the global economic downturn that commenced in 2008. For the purpose of this editorial, we are mostly concerned with the position of small- and medium-sized enterprises (SMEs) and why some failed, others survived and a proportion even managed to grow during the latest global recession to hit industrially developed and developing nations as well as economies in transition.
The main difficulty in ascertaining the real extent to which SMEs failed, survived or grew during this period is not dissimilar to the reasons why it is problematic to follow the progress of this sector during recovery and growth cycles: most of the available statistics are either incomplete or out of date. In addition, definitional and size discrepancies often render cross-border comparisons inaccurate or less than meaningful. Nevertheless, such data as exists could be usefully employed to establish some trends which might at least indicate retrospectively the direction of, and causal links affecting, significant changes in the number of smaller, economically active businesses over a given period of time. To date, the emergent body of knowledge that seeks to evaluate changes in the global stock of SMEs during the 2008-2013 period is largely incomplete and occasionally contradictory. Similarly, the analyses of the characteristics and direction of the causal links that precipitated and later contributed to the decline in economic activity in this sector is also incomplete and contradictory. It appears that due to dramatically reduced liquidity and some high-profile institutional failures, banks across the industrially developed and developing world had severely decreased or, in some cases, totally curtailed their lending to SMEs. In turn, the rapidly diminishing credit supply negatively affected the purchasing power of both private and business customers, resulting in a marked decline in overall demand. These factors impacted adversely upon most, if not all, sectors of economic activity. A large number of smaller firms appear to have gone into liquidation or stopped trading during prolonged recessionary conditions, contributing considerably to widespread job losses and a resultant escalation in both youth and adult unemployment.
There is, however, evidence that some segments of the SME sector not only survived such adverse conditions, but actually managed to return superior results under negative economic growth affecting the demand for products and services in both national and international markets. Unfortunately, however, this evidence is based mostly upon qualitative research involving comparatively small samples of growth-oriented SMEs, clustered tightly around traditionally wealthy and socio-economically stable geographical areas. It is well known that only a relatively small proportion of SMEs adopt growth oriented strategies. Most smaller firms are content to remain stable over long periods of time and exhibit only marginal increases or decreases in turnover levels. There is a notable paucity of large, quantitative studies in this area as well as longitudinal research that chart absolute and relative changes in the national and global stock of SMEs or their economic output. We call for more empirically rigorous research in this important topic of academic endeavor, to help understand what caused such extreme decline in economic output. Future research should make a positive and valuable contribution to the growing debate on how the depression could have been avoided or its negative impact mitigated.
The current issue contains ten papers which, individually and cumulatively, evidence the diversity of research interests, themes and approaches as well as the wide range of empirical methods employed by authors. I would like to thank all the individuals who have contributed, directly or indirectly, to the completion and publication of this issue, including authors, referees, advisers and the production team at Emerald Group Publishing.
Harry Z. Matlay