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An Assessment of the Small-Firm Debate in the United States

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  • N Ettlinger

    (Department of Geography, 1036 Derby Hall, 154 North Oval Mall, Ohio State University, Columbus, OH 43210-1361, USA)

Abstract

In this article I critically assess the ongoing debate regarding the role of small to medium-sized firms (SMEs) in economic development, and take the position that these firms are critical elements of local development and political economy. My discussion encompasses research findings from a variety of national contexts, but the general focus is on the United States. I dispute neither that large firms are important agents of change and wield tremendous power nor that SMEs may be problematic regarding either corporate competitiveness or social welfare. The stance adopted here is that questions are misguided because they focus on firm size as an independent variable to explain job generation or firm performance. Following a critical overview of data-related and analytical issues, I argue that problems as well as tactics conventionally associated with large firms may also characterize SMEs as they develop strategies to cope with new pressures in the global economy. Corporate culture, including the culture of both labor and management, as well as ability and willingness of labour and management to collaborate and implement new strategies, condition firm behavior and affect competitiveness, irrespective of firm size. Substantial variation in context (national as well as subnational) also affects firm behavior and prompts reevaluation and empirical substantiation of conventional assumptions about firm size that have governed the debate. Some SMEs may contribute to local economic development through a variety of processes. However, sanguine views about SME competitiveness must be tempered by the understanding that corporate welfare commonly occurs at the expense of worker welfare. This latter problem is considered inherent in the traditional Anglo-American Taylorist approach to production, irrespective of firm size. General policy guidelines are offered to integrate goals of production and consumption so that policies to develop corporate and worker welfare reinforce rather than counteract one another.

Suggested Citation

  • N Ettlinger, 1997. "An Assessment of the Small-Firm Debate in the United States," Environment and Planning A, , vol. 29(3), pages 419-442, March.
    • Handle: RePEc:sae:envira:v:29:y:1997:i:3:p:419-442
    DOI: 10.1068/a290419
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    References listed on IDEAS

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    1. Ettlinger, Nancy & Tufford, Michelle, 1996. "Evaluating Small Firm Performance in Local Context: A Case Study of Manufacturers in Columbus, Ohio," Small Business Economics, Springer, vol. 8(2), pages 139-157, April.
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    3. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, December.
    4. Hammer, Michael & Champy, James, 1993. "Reengineering the corporation: A manifesto for business revolution," Business Horizons, Elsevier, vol. 36(5), pages 90-91.
    5. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, December.
    6. Helper, Susan, 1991. "Strategy and Irreversibility in Supplier Relations: The Case of the U.S. Automobile Industry," Business History Review, Cambridge University Press, vol. 65(4), pages 781-824, January.
    7. Markusen, Ann & Hall, Peter & Campbell, Scott & Deitrick, Sabina, 1991. "The Rise of the Gunbelt: The Military Remapping of Industrial America," OUP Catalogue, Oxford University Press, number 9780195066487, Decembrie.
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    Cited by:

    1. Edward Feser, 2004. "Agglomeration, Enterprise Size, and Productivity," Working Papers 04-15, Center for Economic Studies, U.S. Census Bureau.
    2. Yoke-Tong Chew & Henry Wai-Chung Yeung, 2001. "The SME Advantage: Adding Local Touch to Foreign Transnational Corporations in Singapore," Regional Studies, Taylor & Francis Journals, vol. 35(5), pages 431-448.

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