Use and Perception of Small Business Support Schemes: A Network Perspective

Abstract

Small businesses are at the heart of the UK economy generating more than half of output and employing more than 60% of the workforce. It is well established that small business owners rely on their personal networks for essential backing especially during the emergent phase, but not clear why greater use is not made of other sources of available support, including public sector support. This thesis goes to the core of this question by viewing small businesses in the context of support networks.
Research interest in the small business sector has grown concomitantly with the proliferation of small businesses over the last 20 years. However, research into the small business sector has been overshadowed by a pre-occupation with the study of large businesses. This is because large businesses are easy to identify and may be considered as rational economic entities operating in a classical economic framework. In contrast, the motivations of the owners of small businesses are more closely linked to lifestyle choices than simply pecuniary reward. As such, it is more appropriate to think of them as essentially socio-economic entities. This realisation has ramifications for the way in which small firms should be studied and, in particular implies that the model of classical economics is inappropriate. Accordingly, this research adopts the economic sociology model, wherein small firms are seen as embedded in social networks which provide support vital for their survival. Researching the support environment of small forms from the perspective of network theory, a cornerstone of economic sociology, constitutes an original line of enquiry in this field.
It is a relatively straightforward task to identify key support providers. However, it is much more difficult to assess their value to small firms. This research is aimed at improving the understanding of the support environment of small firms including the use made of different providers and what small businesses think of them.
This research involved the construction and completion of a large scale survey of UK businesses using a novel on-line design. The findings of the empirical study reveal that small firms make extensive use of an inner circle of support providers and that they find the proliferation of products available from other sources confusing and frustrating. Despite recent initiatives to simplify public sector support services
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including grouping products under the banner of “Solutions for Business,” small firms continue to favour use of their close personal networks over government schemes.
The application of network theory to inform this research has produced a number of valuable new insights. Notably, the findings of this research have been used to suggest a number of policy changes for the delivery of public sector support schemes and ultimately the radical re-envisioning of the entire business support structure such that the responsibility for Business Link is ultimately transferred into private ownership.