Journal of Small Business and Enterprise Development

ISSN: 1462-6004

Article publication date: 11 November 2014



Matlay, H. (2014), "Editorial", Journal of Small Business and Enterprise Development, Vol. 21 No. 4. https://doi.org/10.1108/JSBED-10-2014-0159



Emerald Group Publishing Limited


Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 21, Issue 4.

Continuing with my reflection on the topic of the recession, there have been some interesting reports published recently in the mass media, about economic recovery and the role of small businesses in rejuvenating industry and commerce. Importantly, the contribution of the small business sector to economic recovery and growth is recognised by government representatives, both in the UK and elsewhere in industrially developed and developing countries. It appears, however, that after the initial surge, output in the manufacturing and service sectors has slowed down and it is unevenly distributed across geographical areas. Even strong growth-oriented economies, such as France, Germany, Finland and the Netherlands have experienced short periods of economic decline since recovery began. Notably, Italy has recently fallen back into negative growth over three consecutive months. Small businesses are acknowledged to lead in the recovery effort and their success is strongly linked to a nation's socio-economic and political stability. Surprisingly, however, to a large extent, smaller firms continue to suffer from the aftermath of prolonged recessionary conditions.

The difficulty that some people might encounter upon reading various reports in the populist media is one that involves the credibility and validation of such news. Personally, I tend to read economic news with due caution and, when possible, in conjunction with relevant academic and research papers. To some extent, various sources of entrepreneurship and small business knowledge tend to complement each other. The process of knowledge acquisition, validation and management is notoriously difficult and relies significantly upon a user's existing knowledge structure and related skills of discovery, interpretation and application. There are, however, time-related differences that can affect all aspects appertaining to individual, team or organisational knowledge management. Information that appears in the populist or mass media tends to be timely and more relevant to the focus and readership that it serves. In contrast, research articles that are published in refereed journals tend to be more accurate, empirically rigorous and subject to expert scrutiny and/or validation. Access barriers can significantly restrict or curtail the availability of valuable knowledge in small business and enterprise development.

Nevertheless, one should remember, for example, that warning about the economy “heating up” and the likely or imminent failure of institutional and bank lending first appeared in the UK and US mass media, from where it rapidly spread across the world. Some observers argue that there was ample warning given in order to regulate the activities of financial institutions and banks. Given local and regional differences, it is disputable to what extent direct and indirect government action could have succeeded in preventing or mitigating the negative outcome of one of the most destructive depression that affected the world economy in modern times. Some business strategists, while acknowledging the devastating effect of the recent depression, claim that many lessons were learnt and relevant legislation put in place to ensure that it would not happen again. Such claims can be problematic from a number of perspectives: first, rescue packages and related legislation were mostly reactive in nature and of relatively short-term impact; second, as the financial crises and consequent economic depression unfolded, there was an obvious need for continued government intervention and support; and third, the financial and banking community was both reluctant and slow to accept responsibility and act for the best interest of their clients, including small businesses. In particular, lending to small firms lagged significantly behind demands for support from both owner/managers and government representatives. Moreover, new and more pressing challenges soon replaced concerns that focused upon economic depression with anxieties about maximising economic recovery and growth. Consequently, there was not enough time to analyse causes and related outcome as well as put in place proactive rather than reactive legislation and long-term strategies which would ensure that private individuals and the business community will be protected in the future.

As noted in previous JSBED editorials, small businesses were particularly affected by the financial crisis and ensuing economic depression. While there were some winners amongst them, most small firms suffered from the effects of the “credit crunch” as well as the rapid fall in demand for their products and services. The negative “domino effect” was felt by owner/manager, both locally and internationally, forcing most small firms to reduce output and some to stop trading altogether. In the UK, since the economic crisis began in 2008, small businesses had to contend with sharp rises in energy, fuel and material costs that resulted in higher than average rates of inflation. In addition, increased reporting and regulation as well as high business disruption levels have added to the burden carried by small business owner/managers. Extreme weather condition and the rapid rise in cybercrime also contributed to decreased levels of turnover and profit margins. Although some progress has been achieved in reducing inflation to more reasonable levels and increasing lending to smaller firms, there remains a great deal of scope for government agencies to remove most, if not all barriers to recovery and growth in this important sector of the economy.

Researchers and educators interested in entrepreneurship and small business related topics are in a good position to make a significant and empirically rigorous contribution to economic recovery and growth. In the UK, research and related dissemination in this area tends to lag behind output originating in continental Europe, North America, China and Australasia. I acknowledge that prolonged recessionary conditions in the UK have affected higher education institutions in general and the availability of research funding in particular. I also know how difficult it is to maintain high levels of research activity under challenging funding policies and related budgetary restriction. We, as a community of knowledge, need to rise to the challenge of delivering more quality research with fewer resources, until the economy recovers and the small business community regains the confidence to grow and excel. There is no doubt in my mind that the UK small business sector is crucial to the success of post-depression recovery and growth. It comprises close to five million enterprises, amounting to over 99 per cent of the country's economically active units. Small businesses contribute approximately £3.5 billion per annum to the UK economy and provide full- and part-time employment for over 20 million individuals. An innovative, dynamic and well-supported small business sector can ensure a fast recovery and long-lasting economic growth as well as contribute significantly to national competitiveness in international markets.

The fourth and final issue in Volume 21 comprises ten papers which, individually and collectively, evidence the diversity of interests and themes addressed by authors, as well as the variety of empirical approaches involved in their research. I would like to express my gratitude to authors, referees, external advisors, members of the JSBED Editorial Board and the production team at Emerald Publishing Group for all their hard work, commitment and continuous support.

Harry Matlay

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