The Role of Entrepreneurship and Small Enterprise in Regeneration
Dr Julia Rouse
Manchester Metropolitan University Business School
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Back to Basics: What is Entrepreneurship and Small Business?• Entrepreneurship – a process of identifying,
developing and exploiting market opportunity.• Small business – a bundle of resources oriented to
competitive advantage.Finance and physical goods (financial/physical capital)Knowledge and skills (human capital)Capacity to draw value out of networks (social capital)
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A Resource-Based View of the Entrepreneurship Process
• Entrepreneurship is the mobilisation of resources to identify, develop and exploit market opportunity.
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Why Regenerate Via Entrepreneurship and Small Business?
• Innovation – small businesses mobilise resources efficiently to create competitive market offerings or social solutions.
• Job creation – most new jobs come from growing small businesses and self-employment is a solution (or stop-gap) for some.
• Some residents are motivated to be business owners.
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Motivations, Resources and Life Course in the NES Programme• Reluctant entrepreneurs - working class young people with few
prospects. • Convenience entrepreneurs – young working class white mothers. • Economically driven entrepreneurs – educated young fathers.• Social entrepreneurs – older and educated.• Learning and earning entrepreneurs – mid-life educated men.• Prestige and control entrepreneurs – older educated fathers with
childcare responsibilities.
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Wealth Warning: Problems with using enterprise as a route to regeneration• Most small businesses don’t grow.. and picking the
‘gazelles’ is tough because growth is discontinuous and complex.
• While enterprise programmes are very successful in moving the disadvantaged into self-employment, medium term outcomes are disappointing.
• A concentration of poor quality businesses may harm local area development.
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Focus On: Enterprise Programmes• Transition to start-up is consistently very high.• Capital resources are low
– NES: Despite grants (£3.5k): mean = £11,837 (17% of UK mean); median = £5,825 (39% of UK median).
– Commonly graduates, but lack work and business experience.– ‘Poor’ networks; little support to bridge into relevant networks.
• Most common outcome: chronic trading in poorly performing business that do not generate a living wage.– NES: At mean 29 months – mean turnover = £18k; mean drawings = £3,600.– Continual borrowing via friends/family, credit cards and overdrafts.– Stress can erode family finance and cohesion and mental health.– Individual failure: “it is my fault” or “I’ll learn and do better next time”.
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How Motivations, Resources and Life Course Affect Business Outcomes: NES1. Reluctant entrepreneurs – low investment, low value strategies, low/no growth.2. Convenience entrepreneurs – low investment (particularly time), short-term
commitment, slow growth. 3. Economically driven entrepreneurs – market-orientated strategies, low
commitment to learning, moderate growth.4. Social entrepreneurs –.high time commitment, low value strategies, low/no
growth5. Learning and earning entrepreneurs – balanced investment, high learning, niche
strategies, high growth.6. Prestige and control entrepreneurs – low time investment, higher value
strategies, moderate growth.
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Some ask: is enterprise inclusion policy “symbolic politics”?
• Motivated to create social justice or social mobility but hiding from deep underlying inequalities of opportunity?
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Policy Options
Enabling the Mobilisation of Resources Around Opportunity To Aid Regeneration
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Option 1: Focus support on the most resourced individuals/businesses
May create more high potential businesses and so create employment/innovation.
• Although the rich may not be motivated to apply resources efficiently (source: BHPS analysis)• Possible target: people with work-based skills, motivation/ capacity to invest time and pursue growth and financial capital to invest.Excludes the most disadvantaged from entrepreneurship.
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Option 2: Promote better quality start-ups by the disadvantaged(i) Raise capacity to pursue better quality
opportunities• Employ enterprise learning and networks to identify and
select better quality opportunities at start-up and during trading.
• Ease access /capability in public sector procurement.• Explicitly raise awareness of higher potential v. low
value/crowded markets.
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Option 2 (cont’d): Promote better quality start-ups by the disadvantaged(ii) Increase control of resources• Financial capital• Human capital• Social capital
Life course journey to enterprise supported by multiple joined-up services.
Pool resources via partnerships, social enterprise etc.
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Option 2 (cont’d): Promote better quality start-ups by the disadvantaged(iii) Use enterprise learning and networking to increase
skill in mobilising resources around opportunity• Embed competitive habits and routines.
– e.g. to succeed in public sector procurement.• Competitive behaviour is market situated.
– Bridge into specialist knowledge via industry specific mentoring/training.
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Who are ‘Disadvantaged Entrepreneurs’?
Differences between ethnic groups, men/women and by age may not be present in disadvantaged areas.
Dominant process may be a class effectpoor inter-generational transmission of capital
resources and poor local exposure to good opportunities).
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Option 3: Manage the route out of poorly performing businesses owned by the disadvantaged• Let the market sort success/failure.• Risks to manage: financial, emotional/health, social.
– Disrupt chronically grey market / poorly performing businesses.
– Mentor from ‘failure’ into a learning experience – including support to build a career via employment and to create a positive narrative for family cohesion.
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Women Entrepreneurs• Occupational segregation – concentration in low value,
poorly rewarded markets.• Gender practice – being entrepreneurial not related to
being “womanly”; lack of confidence.• Division of domestic labour – housework and care
responsibilities limit when and where business can be done.
• Control of resources – less wealth to investment, less business/management experience, network exclusion.
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Focus on: Childcare Barrier• For some: start-up motivation = care and trade flexibly.
– But not all business models are flexible (e.g. retail).• Loss of family care rights and some benefits v. employment.• Childcare unaffordable at start-up/
– Enterprise programmes offer little support, do Tax Credits?– Quality of care may be eroded.
• Need for care/ability to pay is unpredictable.• Friends/family support is unreliable.QUESTION: how to create quality part-time self-employment?Friday, November 25, 2011 18
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Focus on: BME Entrepreneurs
• Super-diversity – variation across ethnicities, between sexes and over generations of migration.
• Valuing ethnic capital – e.g. internationalisation.• Supporting ‘break-out’ – to draw in opportunities,
resources and customers from other communities.• Respect flight to education and the professions?• Entrepreneurship empowering for certain women
constrained by culture/heavy domestic responsibilities?
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Thank You
Questions?
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