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Growth and profitability of small and medium-sized enterprises: Some Welsh evidence

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Author Info
James Foreman-Peck
Gerry Makepeace
Brian Morgan

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Abstract

Foreman-Peck J., Makepeace G. and Morgan B. (2006) Growth and profitability of small and medium-sized enterprises: some Welsh evidence, Regional Studies 40, 307--319. Policy-makers throughout the Organization for Economic Co-operation and Development (OECD) are keen to promote the development of small and medium-sized enterprises (SMEs) by a wide variety of means. The present study of over 1600 Welsh SMEs casts doubt on the effectiveness of doing so by grants, by encouraging trade associations, by pursuing current initiatives in training or by stimulating innovation as defined by SME management. On the other hand, it finds that support for selective Information Technology investment and for marketing planning could be beneficial. Additional results that might be addressed by policy are short-termism by older managers -- preferring current to future profits more than younger managers -- signs that fixed costs of tax compliance bear substantially more heavily on the profitability of smaller SMEs, and evidence for a substantial partnership and sole trader 'risk premium’ between SMEs, suggesting considerable entrepreneurial risk aversion. Small and medium-sized enterprises (SMEs) Growth Profitability Policy Risk Time preference Foreman-Peck J., Makepeace G. and Morgan B. (2006) Growth and profitability of small and medium-sized enterprises: some Welsh evidence, Regional Studies 40, 307--319. Policy-makers throughout the Organization for Economic Co-operation and Development (OECD) are keen to promote the development of small and medium-sized enterprises (SMEs) by a wide variety of means. The present study of over 1600 Welsh SMEs casts doubt on the effectiveness of doing so by grants, by encouraging trade associations, by pursuing current initiatives in training or by stimulating innovation as defined by SME management. On the other hand, it finds that support for selective Information Technology investment and for marketing planning could be beneficial. Additional results that might be addressed by policy are short-termism by older managers -- preferring current to future profits more than younger managers -- signs that fixed costs of tax compliance bear substantially more heavily on the profitability of smaller SMEs, and evidence for a substantial partnership and sole trader 'risk premium’ between SMEs, suggesting considerable entrepreneurial risk aversion. Petites et Moyennes Entreprises (PME) Croissance Rentabilité Politique Risques Pé riodicité Foreman-Peck J., Makepeace G. and Morgan B. (2006) Growth and profitability of small and medium-sized enterprises: some Welsh evidence, Regional Studies 40, 307--319. Policy-makers throughout the Organization for Economic Co-operation and Development (OECD) are keen to promote the development of small and medium-sized enterprises (SMEs) by a wide variety of means. The present study of over 1600 Welsh SMEs casts doubt on the effectiveness of doing so by grants, by encouraging trade associations, by pursuing current initiatives in training or by stimulating innovation as defined by SME management. On the other hand, it finds that support for selective Information Technology investment and for marketing planning could be beneficial. Additional results that might be addressed by policy are short-termism by older managers -- preferring current to future profits more than younger managers -- signs that fixed costs of tax compliance bear substantially more heavily on the profitability of smaller SMEs, and evidence for a substantial partnership and sole trader 'risk premium’ between SMEs, suggesting considerable entrepreneurial risk aversion. Small and medium-sized enterprises (SMEs)  Wachstum Rentabilität Politik Risiko Ungeduld Foreman-Peck J., Makepeace G. and Morgan B. (2006) Growth and profitability of small and medium-sized enterprises: some Welsh evidence, Regional Studies 40, 307--319. Policy-makers throughout the Organization for Economic Co-operation and Development (OECD) are keen to promote the development of small and medium-sized enterprises (SMEs) by a wide variety of means. The present study of over 1600 Welsh SMEs casts doubt on the effectiveness of doing so by grants, by encouraging trade associations, by pursuing current initiatives in training or by stimulating innovation as defined by SME management. On the other hand, it finds that support for selective Information Technology investment and for marketing planning could be beneficial. Additional results that might be addressed by policy are short-termism by older managers -- preferring current to future profits more than younger managers -- signs that fixed costs of tax compliance bear substantially more heavily on the profitability of smaller SMEs, and evidence for a substantial partnership and sole trader 'risk premium’ between SMEs, suggesting considerable entrepreneurial risk aversion. Pymes Crecimiento Rentabilidad Política Riesgo Pr eferencia de tiempo

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Article provided by Taylor and Francis Journals in its journal Regional Studies.

Volume (Year): 40 (2006)
Issue (Month): 4 (June)
Pages: 307-320
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Handle: RePEc:taf:regstd:v:40:y:2006:i:4:p:307-320

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  1. Andrés RodrÍguez-Pose* & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor and Francis Journals, vol. 38(1), pages 97-113, February. [Downloadable!] (restricted)
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  2. Reid, Gavin C & Smith, Julia A, 2000. " What Makes a New Business Start-Up Successful?," Small Business Economics, Springer, vol. 14(3), pages 165-82, May. [Downloadable!] (restricted)
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  3. Bolton, Patrick & Dewatripont, Mathias, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 809-39, November. [Downloadable!] (restricted)
  4. Mark Casson Nigel W Adeson, 1998. "Communication Costs and the Boundaries of the Firm," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(1), pages 5-27, February. [Downloadable!] (restricted)
  5. Clive Lawson, Edward Lorenz, 1999. "Collective Learning, Tacit Knowledge and Regional Innovative Capacity," Regional Studies, Taylor and Francis Journals, vol. 33(4), pages 305-317, June. [Downloadable!] (restricted)
  6. Gary Gillespie, Peter G. McGregor, J. Kim Swales, Ya Ping Yin, 2001. "The Displacement and Multiplier Effects of Regional Selective Assistance: A Computable General Equilibrium Analysis," Regional Studies, Taylor and Francis Journals, vol. 35(2), pages 125-139, April. [Downloadable!] (restricted)
  7. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March. [Downloadable!] (restricted)
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  8. Monojit Chatterji & Paul T. Seaman & Larry D. Singell Jr., 2003. "A test of the signalling hypothesis," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 191-215, April.
  9. Leland, Hayne E, 1972. "Theory of the Firm Facing Uncertain Demand," American Economic Review, American Economic Association, vol. 62(3), pages 278-91, June. [Downloadable!] (restricted)
  10. J Kitching & R Blackburn, 1999. "Management training and networking in small and medium-sized enterprises in three European regions: implications for business support," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 17(5), pages 621-635, October. [Downloadable!] (restricted)
  11. Smith, Julia A, 1999. " The Behaviour and Performance of Young Micro Firms: Evidence from Businesses in Scotland," Small Business Economics, Springer, vol. 13(3), pages 185-200, November. [Downloadable!] (restricted)
  12. Levy, Margi & Powell, Philip & Yetton, Philip, 2002. " The Dynamics of SME Information Systems," Small Business Economics, Springer, vol. 19(4), pages 341-54, December. [Downloadable!] (restricted)
  13. Ann Hansford & John Hasseldine & Carole Howorth, 2003. "Factors affecting the costs of UK VAT compliance for small and medium-sized enterprises," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 21(4), pages 479-492, August. [Downloadable!] (restricted)
  14. Peter Nijkamp, 2003. "Entrepreneurship in a Modern Network Economy," Regional Studies, Taylor and Francis Journals, vol. 37(4), pages 395-405, January. [Downloadable!] (restricted)
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