The Role of Entrepreneurship and Small Enterprise in ......The Role of Entrepreneurship and Small Enterprise in Regeneration Dr Julia Rouse Manchester Metropolitan University Business

The Role of Entrepreneurship and Small Enterprise in Regeneration

Dr Julia Rouse

Manchester Metropolitan University Business School

Friday, November 25, 2011 1

Manchester City Council Overview and Scrutiny Task and Finish Group_______________________________________________________________________________________________________________________

Item 1C 1 December 2011

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)

A Resource-Based View of the Entrepreneurship Process

• Entrepreneurship is the mobilisation of resources to identify, develop and exploit market opportunity.

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.

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.

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.

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”.

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.

Some ask: is enterprise inclusion policy “symbolic politics”?

• Motivated to create social justice or social mobility but hiding from deep underlying inequalities of opportunity?

Policy Options

Enabling the Mobilisation of Resources Around Opportunity To Aid Regeneration

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.

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.

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.

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.

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).

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.

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.

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

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?

Thank You

Questions?

The Role of Entrepreneurship and Small Enterprise in ......The Role of Entrepreneurship and Small Enterprise in Regeneration Dr Julia Rouse Manchester Metropolitan University Business

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