Enterprise, Entrepreneurship and Small Business

Simon Down

• Publisher: SAGE Publications Ltd
• Year: 2010
• Print ISBN: 9781412910125, 9781412908849
• eBook ISBN: 9781446242575
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Unternehmertum

`A thoughtful and reflective account of "enterprise", offering meaningful and contextualized knowledge to students at all levels, written in a style that is as engaging as it is informative – and peppered with unobtrusive dry wit? - Professor Sara Carter, OBE, Hunter Centre for Entrepreneurship, University of Strathclyde

Enterprise, Entrepreneurship and Small Business is an exciting new text for all students of business. Broad and inquisitive in its intellectual outlook, this provocative but accessible textbook covers core themes and topics in the study of enterprise, as well as looking at subjects that are often ignored, from criminal entrepreneurs and the demise of Enron, to ?entre-tainment? and ethnic and indigenous entrepreneurship.

Along the way, the reader will find an interactive exploration not only of the processes of entrepreneuring, of managing small enterprises, or of the implications of working in an entrepreneurial corporation - he or she will also be challenged to consider enterprise in its social, economic, political and moral contexts. This textbook moves beyond the narrow, prescriptive focus on the ?how? employed by other textbooks, and places equal emphasis on the ?why? - all the time considering the role of enterprise, entrepreneurship and small business in the world we live in.

Supported by lively case studies, real-life examples and a concept guide of key terms, this text is ideal for undergraduate and postgraduate students on any course with an emphasis on enterprise and entrepreneurship.

Part I

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Studying Enterprise, Entrepreneurship and Small Business

The book is split into three main parts. Part II looks ‘inside’ the enterprise (Chapters 3–8). Part III focuses more on the ‘outside’, the broader context in which enterprising activity takes place (Chapters 9–11). Chapter 12 concludes the book. However, this part – Part I – comprises Chapters 1 and 2 and introduces the topic. The first chapter provides an intellectual overview of the major themes and topics we will look at throughout the book. Chapter 2 provides a map to studying enterprise, and explains the sort of tools – theories, methods, concepts, and so on – we will use.

1

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Introduction

Overview

This chapter has the following objectives:

• To explain the need for a contextualised appreciation of enterprise, entrepreneurship and small business.
• To demonstrate the growing contemporary importance of enterprise through a brief historical analysis of its development.
• To introduce competing perspectives explaining the rise of enterprise, entrepreneurship and small business.
• To explain the orientation, content and plan of the book.

Why ‘Enterprise’?

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Enterprise is becoming more and more an important part of our experience of life and work. Many students will find themselves, one way or another, having to ‘create’ their own jobs after graduation. Even within large organisations employees are increasingly being asked to work in entrepreneurial ways. Governments, corporations, even churches and universities all clamour to sing the praises of the enterprising spirit. My own university has ‘entrepreneurs in residence’ and ‘professors of practice’ that also run successful business ventures. You may even be taking a course where you are running your own business as part of your degree. Entrepreneurs like Richard Branson are seen as world heroes by many. Television shows make minor celebrities of minor entrepreneurs: putting aspiring innovators and chancers and their business ideas through the mill of questions and tests, for the voyeuristic pleasure of the viewer to see who has won, lost or made a fool of themselves. It seems that everyone has plans to be his or her own boss someday. Enterprise is everywhere.

If this is the first time you have studied enterprise, entrepreneurship or small business studies you won’t know how different this book is from other textbooks that have come before. It’s straightforward, thought-provoking and broad in its intellectual outlook. Most enterprise or entrepreneurship texts are huge and heavy bricks of books, with an emphasis on facts and advice about how to run a business. This book is about enterprising people, the enterprising things they do, and the environment in which it all takes place: we are studying business, not learning how to run one.

This book could have been called an Introduction to Small Business Studies or Entrepreneurship Studies. The choice of the word Enterprise in the main title, and as the organising principle of the book, is for a good reason. As will become apparent there are a lot of different, sometimes contradictory, behaviours and forms of activity that can be described as enterprising. The study of enterprise encompasses the criminal and corporate, as well as the classical small business entrepreneur. It comprises of entrepreneurship, small business, micro-business, the self-employed and all manner of contexts in which these are found. Even whole organisations can be described as operating in an enterprising manner. In Chapter 2 we will learn that this breadth of meaning can cause a lot of debate and disagreement about what we really should be studying and researching under the banner of ‘enterprise’. These thorny definitional and boundary issues can wait until later. What should be noted now is that the common factor between the classical entrepreneur, the criminal wheeler-dealer and the entrepreneurially-minded corporate financier is a go-getting, can-do attitude. They all share an ethos – a distinctive and habitual way of thinking and doing – about the role of the individual in the world, and the way to get on in it. It is looking at enterprise as a moral outlook that provides an occasional but uniting theme running through this text.

As I suggested above, the enterprise ethos is currently very popular and common in many parts of the world today. It wasn’t always the case. Thirty years ago the Western nations thought the way to economic and social prosperity was through economies of scale and large organisations, where competitive pressures could be absorbed easily, and job security, and hence social stability, ensured. Weren’t small firms supposed to die out, as the economy became more efficiently organised in large organisations? Thirty years ago much of the world didn’t even have capitalist economies (communist China and Russia both had largely closed and planned economies). Thirty years ago it was rare for universities to have business schools, and where business was taught they did not offer courses in enterprise, entrepreneurship and small business. That you are now taking a course in enterprise reflects its perceived importance. This book will offer answers to why this is the case.

Economies of scale are the savings that organisations make because they can produce large numbers of things or provide services in the same standardised and repeated manner, using capital investment efficiently.

We will then need to have a small grasp of history to understand these changes. But there are many other subjects we’ll have to engage with to understand our topic. We shall look at business studies sub-disciplines such as entrepreneurship and small business studies for sure, but we will also learn about economics, psychology, sociology, and management and organisation theory, even philosophy. This is another of the differences of this textbook from others in the area. We will look at enterprise from a broad intellectual perspective. The boundaries between things are often where all the interesting stuff goes on. It’s the same with academic disciplines too.

Our text also emphasises the generic elements of the subject, downplaying the tendency for national and intellectual parochialism. Being British this has been hard for me sometimes. Like most people I see what goes on in my backyard as crucially important. But as my overseas friends remind me, the United Kingdom doesn’t have an empire anymore and isn’t the centre of the universe: we live in a global space. Whilst different nations have particular types of enterprising environments (governments have different tax laws and different approaches to enterprise support, for instance), the commonalities between nations are stronger and more relevant than the differences.

If this is a set textbook for your enterprise course, then it is because your professor, lecturer or tutor feels that the book covers the range of the topics in a way which is appropriate to the aims of your degree. But textbooks can’t do everything. This is not a book that will prove practically useful to working out how to run a business. There are hundreds, probably thousands, of books designed to do this. Hopefully you will also have an opportunity to take a course to see what running a business is like first hand. Maybe, like me (when I was younger I ran a very small independent music record label in London) you have already run your own business, or maybe you hope to do so.

If you have seen the value in getting a university education, you will no doubt see the value in studying enterprise in an academic way. It is not just entrepreneurs that the world needs. Many of you may build careers in IT, banks and other financial institutions, or in the public or voluntary sectors. In all of these careers understanding how enterprise works is important. The argument of this book is that enterprise is far more than simply the activity of entrepreneurs and small business owners. It is about the defining ethos or morality of our time. Understanding the implications, manifestations and context of enterprise is vital to being a knowledgeable and sophisticated worker citizen of the twenty-first century.

The place of enterprise in the twenty-first century

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The evidence is diverse, globally uneven and often contradictory, but that enterprise represents a significant and distinct facet of the developed world that in many ways is different from the past, is perhaps crushingly obvious. This section explores why this is the case and introduces some of the major themes covered in this book.

How about we start with a dictionary definition? Enterprise is: ‘an undertaking or new project, esp when bold or dangerous; readiness, initiative and daring in undertaking; a business concern’ (Chambers 1993: 561). We can see that in addition to its meaning a business entity – an enterprise – it also denotes an orientation: a way of doing things that is active, creative, positive, and occasionally dangerous. The words enterprise and enterprising can be ascribed to both individuals and collectives, such as organisations: both Bill Gates and Microsoft might be described as enterprising.

It is not surprising that we start with a dictionary definition. The language we use to explain ourselves is important. In the developed economies the processing of knowledge and information – words and numbers, and even more words and numbers – has become the main driver for economic and social change, replacing manufacturing and the primary industries which dominated the nineteenth and twentieth centuries. The importance of enterprise as a way of describing the character of these changes is essentially the point of this book.

One of its main themes is that amongst all the facts and statistics relating to the growth and importance of small entrepreneurial enterprises, or the facts and statistics showing that this growth and importance is over-emphasised, one central fact stands tall. What is definitely the case amongst all the hype and counter-hype, is that people everywhere talk and write about enterprise. This is interesting, and academics have for some time been researching why we talk and write so much about certain things and not other things. As it relates to enterprise the main location of these debates has been in a discussion of the ‘enterprise culture’ (C. Gray 1998).

Originating in the early 1980s this debate focused on the political response in the US and UK to the earlier economic and social problems of the 1970s, and the desire by politicians to create environments that would encourage people to take the economic initiative. Oil prices, inflation, interest rates and unemployment were all high in much of the West, and the resultant social instabilities created a mood for profound political change. The policies of Ronald Reagan in the US and Margaret Thatcher in the UK (Figure 1.1) were radical in many ways and sought to change the very purpose of government. The ethos of most post-Second World War Western governments had been to care for citizens, providing structures and environments to meet everyone’s needs as equally and fairly as possible. Some have called this period the ‘managed economy’ (Audretsch 2007: 7). Above all the state took a central role in organising many, if not most aspects of the nation, including nationalised industries. The problems of the 1970s were perceived as being caused by such a statist approach and the 1980s saw political programmes on both sides of the Atlantic which attempted to ‘roll back’ the state. These new political and moral outlooks saw society and the economy made up of individuals, not collectives. Government’s new role would be to enable and facilitate the freedom of the individual. In exchange for the protection of those rights, individuals would have to learn or be encouraged to be more self-dependent. They could no longer rely on the state for all their needs and direction. If the economies of nations were to be strong, individuals would need to be enterprising. A key policy element of this new direction was to re-regulate employment and corporate legislation in order to encourage more enterprising behaviour in the economy. As a result, it was hoped an entrepreneurial society (Audretsch 2007) would emerge.

Though the failure of the European communist states and the marketisation of communist China seemed to underline the fundamental error of state centralism, the extent to which both the original diagnosis of failure in the 1970s and the prescription of enterprise as the solution to the problems are true, remains debated to this day. The state has certainly not disappeared and remains central to the social and economic management of all nations. It is also true that economic activity is freer than it once was. But an enterprise culture, at least taken narrowly in the sense of people depending on themselves for work, is only partly the case, and not in the sense of the majority running their own small businesses. Large corporations still dominate economies, the majority of people in work are still employees, and governments in the US and the rest of the world still have a profound effect on business. It is however certainly the case that in terms of how people perceive and talk about work and the economy notions of enterprise dominate.

Figure 1.1 Margaret Thatcher (UK Prime Minister 1979–1990) and Ronald Reagan (US president 1981–1989)

Archives UPI/AFP/Getty Images

What though is the nature of the evidence for the rise of enterprise? Surely the facts and statistics will speak for themselves? If only it were that simple. A famous historian once wrote, ‘a fact is like a sack – it won’t stand up till you’ve put something in it’ (Carr 1972: 11). As you’ll know from watching or listening to the news, the same facts and statistics often get used to make different and opposing arguments. They are inert, and need effort to be of use. The same happens in research. So although many of the numbers produced regarding small firms, self-employment and levels of entrepreneurship show the increasing growth of small-scale economic activity and definite shifts in the composition and balance of the workforce and economic structure, the issues remain complex and contested. This is because statistics don’t seem to resolve debates on their own, and can be marshalled, presented and analysed in many ways. The bare facts still need to be interpreted and understood in relation to their social and economic contexts: you still need a theory; a point of view; a reason for explaining why something is morally or economically or socially or politically more or less important, better or worse.

An example of these complexities – and one which points to various debates of forthcoming chapters – can be seen in the story of research into job creation. Jobs – where they come from, why there are not enough and their changing characteristics – have been at the centre of many debates in the social sciences concerned with work and business. This is because they are often seen as indicators of a healthy economy and society.

Until the 1980s it was thought that large corporations and public organisations created most jobs. An influential study in the US by David Birch (1979) began a change to all that, and has spurred a continuing debate. His research into job creation in the 1970s concluded that small and medium sized enterprises (SMEs) created 80 per cent of the net new jobs. The significance of this is that if you see job growth as a good indicator, then clearly economic policies emphasising the support of larger corporations was misplaced. Similar research followed Birch’s study and eventually a new academic and political orthodoxy was established which also claimed to show that networks of smaller enterprises were a...

Table of contents

• Cover Page
• Title
• Copyright
• Dedication
• Contents
• Acknowledgements
• Reader’s guide and features of this text
• Part I Studying Enterprise, Entrepreneurship and Small Business
• Part II Inside Enterprise
• Part III Outside Enterprise
• References
• Index