The roles and importance of formal and informal sources of business support in young firms : evidence from the UK’s 2008 Federation of Small Business Survey

Objectives This research explores the relationship between young firms, their growth orientation-intention and a range of relationships which can be seen to provide business support. Prior-work Research indicates that networks impact the firm’s ability to secure resources (Sirmon and Hitt 2003; Liao and Welsch. 2004; Hanlon and Saunders 2007). Networks have been evaluated in a number of ways ranging from simple counts to characteristics of their composition (Davidsson and Honig 2003), strength of relationships (Granovetter 1973) and network diversity (Carter et al 2003). By providing access to resources and knowledge (from start-up assistance and raising capital, (e.g. Smallbone et al, 2003), networks may assist in enabling continued persistence during those times where firms may experience resource constraints owing to firm growth (Baker and Nelson 2005). Approach The data used in this research was generated in the 2008 UK Federation of Small Businesses (FSB) survey. Over 1,000 of the firms responding were found to fall into the category of “young”, ((defined as firms under 4 years old). Firms were considered the unit of analysis with the entrepreneur being the chief spokesperson for the firm. Preliminary data analysis considered key demographic characteristics and industry classifications, comparing the FSB data with that of the UK government’s own (BERR) Small Business Surveys of 2007 and 2008, to establish some degree of representativeness of the respondents. The analysis then examined networks with varying potential ability to provide support for young firms, the networks measured in terms of number, diversity, characteristic and strength in its relationship to young firm growth orientation. The diversity of business-support-related relationships ranged from friends and family, through professional services, customers and suppliers, and government business services, to trade associations and informal business networks. The characteristics of these formal and informal sources of support for new businesses are examined across a range of business support-type activities for new firms. The number of relationships and types of business support are also explored. Finally, the strength of these relationships is examined by analysis of the source of business support, type of business support, and links to the growth orientation-intention of the firm, after controlling for a number of key variables related to firm and industry status and owner characteristics. Results Preliminary analysis of the data by means of univariate analysis showed that average number of sources of advice was around 2.5 (from a potential total of 6). In terms of the diversity of relationships, universities had by far the smallest percentage of firms receiving beneficial advice from them. Government business services were beneficially used by 40% of young firms, the other relationship types being around the 50-55% mark. In terms of characteristics of the advice, the average number of areas in which benefit was achieved was around 5.5 of a maximum of 15. Start-up advice has by far the highest percentage of firms obtaining beneficial advice, with increasing sales, improving contacts and improving confidence being the other categories at or around the 50% mark. Other market-focused areas where benefits were also received were in the areas of new markets, existing product improvements and new product improvements, where around 40% of the young responding firms obtained benefit. Regression techniques evaluating the strength of these relationships in terms of the links between business support (by source of support, type of support, and range of support) and firm growth orientation-intention focus highlighted a number of significant relationships, even after controlling for a range of other explanatory variables identified in the literature. Specifically, there was found to be a positive relationship between receiving business advice generally (regardless of type or source) and growth orientation. This relationship was seen to be stronger, however, when looking at the number of types of beneficial advice received, and stronger again for the number of sources of this advice. In terms of individual sources of advice, customers and suppliers had the strongest relationship with growth, with Government business services also found to be significant. Combining these two sources was also seen to increase the strength of the relationship between these two sources of advice and growth orientation. In considering areas of support, growth was most strongly positively related to advice that benefited the development of new products and services, and also business confidence, but was negatively related to advice linked to business recovery. Finally, amalgamating the 4 key types and sources of advice to examine the impact of combinations of these types and sources of advice also improved the strength of the relationship. Implications The findings will assist in the understanding of young firms in general and growth more specifically, particularly the role and importance of specific sources, types and combinations of business support used more extensively by new young growth-oriented firms. Value This research may assist in processes designed to allow entrepreneurs to make better decisions; educators and support organizations to develop better advice and assistance, and Governments design better conditions for the creation of new growth-oriented businesses.

Housing supply in Australia : the impact of the availability of development finance

Before the Global Financial Crisis many providers of finance had growth mandates and actively pursued development finance deals as a way of gaining higher returns on funds with regular capital turnover and re-investment possible. This was able to be achieved through high gearing and low presales in a strong market. As asset prices fell, loan covenants breached and memories of the 1990’s returned, banks rapidly adjusted their risk appetite via retraction of gearing and expansion of presale requirements. Early signs of loosening in bank credit policy are emerging, however parties seeking development finance are faced with a severely reduced number of institutions from which to source funding. The few institutions that are lending are filtering out only the best credit risks by way of constrictive credit conditions including: low loan to value ratios, the corresponding requirement to contribute high levels of equity, lack of support in non-prime locations and the requirement for only borrowers with well established track records. In this risk averse and capital constrained environment, the ability of developers to proceed with real estate developments is still being constrained by their inability to obtain project finance. This paper will examine the pre and post GFC development finance environment. It will identify the key lending criteria relevant to real estate development finance and will detail the related changes to credit policies over this period. The associated impact to real estate development projects will be presented, highlighting the significant constraint to supply that the inability to obtain finance poses.

The significance of owner participation in a successful detached housing development in Malaysia: A literature review

The detached housing scheme is a unique and exclusive segment of the residential property market in Malaysia. Generally, the product is expensive and for many Malaysians who can afford them, owning a detached house is a once in a lifetime opportunity. In spite of this, most of the owners fail to fully comprehend the specific need of this type of housing scheme, increasing the risk of it being a problematic project. Unlike other types of pre-designed ‘mass housing’ schemes, the detached housing scheme may be built specifically to cater the needs and demands of its owner. Therefore, maximum owner participation is vital as the development progresses to guarantee the success of the project. In addition, due to it’s unique design the house would have to individually comply with the requirements and regulations of relevant authorities. Failure of owner to recognise this will result in delays, fines and penalties, disputes and ultimately cost overruns. These circumstances highlight the need for a model to guide the owner through the entire development process of a detached house. Therefore, this research aims to develop a model for a successful detached housing development in Malaysia through maximising owner participation during it’s various development stages. To achieve this, questionnaire surveys and case studies methods shall be employed to acquire the detached housing owners’ experiences in developing their detached houses in Malaysia. Relevant statistical tools shall be applied to analyse the responses. The results gained from this study shall be synthesised into a model of successful detached housing development for the reference of future detached housing owners in Malaysia.

Affordable housing solutions : affordable housing providers’ perspective

Accessibility to housing for low to moderate income groups in Australia has experienced a severe decline since 2002. On the supply side, the public sector has been reducing its commitment to the direct provision of public housing. Despite strong demand for affordable housing, limited supply has been generated by non-government housing providers. This paper identifies and discusses some current affordable housing solutions which have been developed by non-government housing providers to ameliorate the problem. This study utilises case studies generated from nineteen housing providers during in-depth interviews in South East Queensland in 2007-2008. The case studies are classified into four categories which relate to the nature of their product: affordable rental housing, mixed housing, affordable housing for people with special needs and low cost home ownership. Each category is discussed on the basis of the characteristics typical of that organisation of housing provider, their partnership arrangements and main target market. In addition, the special design and facilities required for people with special needs which include high care accommodation and aged care are highlighted. Finally, this study recommends offering a continuum of solutions to affordable housing for low income people by means of a rent-to-buy scheme.

Affordable housing solutions : affordable housing providers’ perspective

Accessibility to housing for low to moderate income groups in Australia has been experiencing a severe decline since 2002. On the supply side, the public sector has been reducing its commitment to the direct provision of public housing. Despite strong demand for affordable housing, limited supply has been generated by nongovernment housing providers. This paper identifies and discusses some current affordable housing solutions to ameliorate the problem which have been developed by non-government housing providers. This study utilises case studies generated from nineteen housing providers during indepth interviews in South East Queensland in 2007-2008. The case studies are classified into four categories which relate to the nature of their product: affordable rental housing, mixed housing, affordable housing for people with special needs and low cost home ownership. Each category is discussed on the basis of the characteristics typical of that organisation of housing provider, their partnership arrangements and main target market. In addition, the special design and facilities required for people with special needs which include high care accommodation and aged care are highlighted. Finally, this study recommends offering a continuum of solutions to affordable housing for low income people by means of a rent-to-buy scheme.

Assessing the awareness and importance of housing sustainability in Queensland

Sustainability has been a major factor and determinant of commercial property design, construction, retro-fitting and landlord and tenant requirements over the last decade, supported by the introduction of rating tools such as NABERS and GreenStar and the recently mandated Building Energy Efficiency Certificate (BEEC). However, the movement to sustainable and energy efficient housing has not been established for the same period, and although mandatory building regulations have been in place for new residential housing construction since 2004, the requirement to improve the sustainability and energy efficiency of housing constructed prior to 2004 has not been mandatory. Residential dwelling energy efficiency and rating schemes introduced in Australia over the past decade have included rating schemes such as BASIX, NatHERS, First rate, ACTHERS, and Building Code of Australia and these have applied to new dwelling construction. At both National and State level the use of energy efficiency schemes for existing residential dwellings has been voluntary and despite significant cash incentives have not always been successful or achieved widespread take-up. In 2010, the Queensland Government regulated that all homes offered for sale, whether a new or existing dwellings require the seller to provide a ―sustainability declaration‖ that provides details of the sustainability measures associated with the dwelling being sold. The purpose of this declaration being to inform buyers and increase community awareness of home sustainability features. This paper uses an extensive review of real estate marketing material, together with a comprehensive survey of real estate agents to analyse the current market compliance, awareness and acceptance of existing green housing regulations and the importance that residential property owners and purchasers place on energy efficient and sustainable housing. The findings indicate that there is still little community awareness or concern of sustainable housing features when making home purchase decisions.

Tracking the Brisbane residential property market : Post GFC

Prior to the GFC, Brisbane and Perth were experiencing the highest increases in median residential house prices, compared to the other major Australian cities, due to strong demand for both owner occupied and investment residential property. In both these cities, a major driver of this demand and subsequent increases in residential property prices was the strong resources sector. With the onset of the GFC in 2008, the resources and construction sectors in Queensland contracted significantly and this had both direct and indirect impacts on the Brisbane residential property market. However, this impact was not consistent across Brisbane residential property sectors. The affect on houses and units differed, as did the impact based on geographic location and suburb value. This paper tracks Brisbane residential property sales listings, sales and returns over the period February 2009 to July 2010 and provides an analysis of the residential market for 24 Brisbane suburbs. These suburbs cover main residential areas of Brisbane and are based on an equal number of low, medium and high socioeconomic areas of Brisbane. This assessment of socio-economic status for the suburbs is based on both median household income and median house price. The analysis will cover both free standing residential property and residential units/townhouses/villas. The results will show how each of these residential property sub markets have performed following the GFC.

An assessment of development funding for new housing post GFC in Queensland, Australia

Purpose: The purpose of this paper is to identify changes in bank lending criteria due to the GFC and to explore the associated impacts on new housing supply in Queensland, Australia. Design/methodology/approach: This research involves a survey of each of Australia’s big four banks, as well as two prominent arrangers of development finance. Data on key lending criteria was collected: Pre GFC, during the GFC, and GFC recovery stage. Findings: The GFC has resulted in a retraction of funds available for residential development. The few institutions lending are filtering out only the best credit risks by way of constrictive loan covenants including: low loan to value ratios, high cash equity requirements, regional “no go” zones, and demonstrated borrower track record. The ability of developers to proceed with new housing developments is being constrained by their inability to obtain sufficient finance. Research limitations/implications: This research uses survey data, together with an understanding of the project finance process to extrapolate impacts on the residential development industry across Queensland. No regional or sub-market analysis is included. Future research will include subsequent surveys to track any loosening of credit policies over time and sub-market sector analysis. Practical implications: The inability to obtain project finance is identified as a key constraint to new housing supply. This research will inform policy makers and provide important quantitative evidence of the importance of availability of development finance in the housing supply chain. Social implications: Queensland is facing a supply shortfall, which if not corrected, may lead to upward pressure on house prices and falling housing affordability. Originality/value: There is very little academic research on development funding. This research is unique in linking bank lending criteria to new housing supply and demonstrating the impact on the development industry.

The investigation of design-build variants in the construction market of the People’s Republic of China

Design-Build (DB) system has been widely adopted overseas but it has not received the same popularity yet in the People’s Republic of China. The selection of design-build variant is regarded as one of the critical obstacles to the application of this alternative. This paper investigates categories of design-build variants in the construction market of China. The develop-and-construction, enhanced design-build, traditional-design-build and engineering procurement-construction (EPC) are the four current designbuild variants adopted by clients. Each of them is developed to meet a varying set of circumstances and has its own advantages and disadvantages. The develop-and-construction is mostly used in large, complex projects in housing industry and it will guarantee client’s great control over the project while still leave some design room for the contractor. The traditional-design-build and enhanced-design-build systems are mostly applied in projects that are comparatively simple, small-scale, and the DB contractors will have greater control of the projects. The EPC is the extension of pure design-build method and is widely adopted in the petrochemical, metallurgical and electronic fields because of the high-technique requirements and the necessity for one entity to control the design, construction, procurement and commissioning etc. Four corresponding design-build projects are also presented in this paper in order to better illustrate the operational process and provide the insight for understanding the design-build variants in Mainland China.

The implementation of sustainable housing through mutual benefits to key stakeholders

Among the Australian general public, there are increasing concerns about environmental issues. Accordingly, sustainability in the housing industry is also becoming a priority on the development agenda. However, putting the principles of ecological sustainability into practice within social and economic development requires intensive involvement of major stakeholders such as governments, developers, builders, consumers and a range of other professionals. Establishing a sustainable value entails asymmetric life-cycle returns, making it important for major stakeholders to appreciate the benefits of this new agenda not only for the individual businesses but also for other supply chain partners. This context warrants the study to promote collective benefits for key stakeholders by establishing a mutual-benefit framework for sustainable housing implementation. A research was carried out in the hope to establish a mutual-benefit framework by investigating challenges of achieving benefits (CABs) from sustainable housing development in a multi-stakeholder context. In the research work reported in this article, a comparative questionnaire study was first conducted among seven stakeholder groups in the Australian housing industry, to examine the importance and inter-relationships of CABs. In-depth interviews then furthered the survey findings with a focus on stakeholder diversity. The synthesized findings of the survey and interview study lead to the identification of 12 critical mutual-benefit factors and their mutual influence. Based on such a platform, a systematic framework is developed with the aid of Interpretive Structural Modelling (ISM), to identify the patterns of stakeholder benefit materialisation, suggest the priority of critical factors and provide related stakeholder-specific action guide for sustainable housing implementation.

Emergent innovation through the co-evolution of informal and formal media economies

Well-established distinctions between amateur and professional are blurring as the impact of social media, changes in cultural consumption, and crises in copyright industries’ business models are felt across society and economy. I call this the increasingly rapid co-evolution of the formal market and informal household sectors and analyse it through the concept of ‘social network markets’ – individual choices are made on the basis of other’s choices and such networked preferencing is enhanced by the growing ubiquity of social media platforms. This may allow us better to understand sources of disruption and innovation in audiovisual production and distribution in wealthy Western markets which are as significant as those posed by informal practices outside the West. I examine what is happening around the monetization and professionalization of online video (YouTube, for example) and the socialization of professional production strategies (transmedia, for example) as innovation from the margins.

A critical regionalist approach to housing design in Vietnam : socio-environmental organisation of living spaces in pre- and post-reform houses

Vietnam has a unique culture which is revealed in the way that people have built and designed their traditional housing. Vietnamese dwellings reflect occupants’ activities in their everyday lives, while adapting to tropical climatic conditions impacted by seasoning monsoons. It is said that these characteristics of Vietnamese dwellings have remained unchanged until the economic reform in 1986, when Vietnam experienced an accelerated development based on the market-oriented economy. New housing types, including modern shop-houses, detached houses, and apartments, have been designed in many places, especially satisfying dwellers’ new lifestyles in Vietnamese cities. The contemporary housing, which has been mostly designed by architects, has reflected rules of spatial organisation so that occupants’ social activities are carried out. However, contemporary housing spaces seem unsustainable in relation to socio-cultural values because they has been influenced by globalism that advocates the use of homogeneous spatial patterns, modern technologies, materials and construction methods. This study investigates the rules of spaces in Vietnamese houses that were built before and after the reform to define the socio-cultural implications in Vietnamese housing design. Firstly, it describes occupants’ views of their current dwellings in terms of indoor comfort conditions and social activities in spaces. Then, it examines the use of spaces in pre-reform Vietnamese housing through occupants’ activities and material applications. Finally, it discusses the organisation of spaces in both pre- and post-reform housing to understand how Vietnamese housing has been designed for occupants to live, act, work, and conduct traditional activities. Understanding spatial organisation is a way to identify characteristics of the lived spaces of the occupants created from the conceived space, which is designed by designers. The characteristics of the housing spaces will inform the designers the way to design future Vietnamese housing in response to cultural contexts. The study applied an abductive approach for the investigation of housing spaces. It used a conceptual framework in relation to Henri Lefebvre’s (1991) theory to understand space as the main factor constituting the language of design, and the principles of semiotics to examine spatial structure in housing as a language used in the everyday life. The study involved a door-knocking survey to 350 households in four regional cities of Vietnam for interpretation of occupancy conditions and levels of occupants’ comfort. A statistical analysis was applied to interpret the survey data. The study also required a process of data selection and collection of fourteen cases of housing in three main climatic regions of the country for analysing spatial organisation and housing characteristics. The study found that there has been a shift in the relationship of spaces from the pre- to post-reform Vietnamese housing. It also indentified that the space for guest welcoming and family activity has been the central space of the Vietnamese housing. Based on the relationships of the central space with the others, theoretical models were proposed for three types of contemporary Vietnamese housing. The models will be significant in adapting to Vietnamese conditions to achieve socioenvironmental characteristics for housing design because it was developed from the occupants’ requirements for their social activities. Another contribution of the study is the use of methodological concepts to understand the language of living spaces. Further work will be needed to test future Vietnamese housing designs from the applications of the models.

A framework of promoting stakeholder mutual benefits for sustainable housing implementation

Strong regulatory pressure and rising public awareness on environmental issues will continue to influence the market demand for sustainable housing for years to come. Despite this potential, the voluntary uptake rate of sustainable practices is not as high as expected within the new built housing industry. This is in contrast to the influx of emerging building technologies, new materials and innovative designs as showcased in office buildings and exemplar homes worldwide. One of the possible reasons for this under-performance is that key stakeholders such as developers, builders and consumers do not fully understand and appreciate the related challenges, risks and opportunities of pursuing sustainability. Therefore, in their professional and business activities, they may not be able to see the tangible and mutual benefits that sustainable housing may bring. This research investigates the multiple challenges to achieving benefits (CABs) from sustainable housing development, and links these factors to the characteristics of key stakeholders in the housing supply chain. It begins with a comparative survey study among seven stakeholder groups in the Australian housing industry, in order to examine the importance and interrelationships of CABs. In-depth interviews then further explore the survey findings with a focus on stakeholder diversity, which leads to the identification of 12 critical mutual-benefit factors and their interrelationship. Based on such a platform, a mutual-benefit framework is developed with the aid of Interpretive Structure Modelling, to identify the patterns of stakeholder benefit materialisation, suggest the priority of critical factors and provide related stakeholder-specific action guidelines for sustainable housing implementation. The study concludes with a case study of two real-life housing projects to test the application of the mutual-benefit framework for improvement. This framework will lead to a shared value of sustainability among stakeholders and improved stakeholder collaboration, which in turn help to break the "circle of blame" for the current under-performance of sustainable housing implementation.

Construction Prices : the Market Effect

Teachers of construction economics and estimating have for a long time recognised that there is more to construction pricing than detailed calculation of costs (to the contractor). We always get to the point where we have to say "of course, experience or familiarity of the market is very important and this needs judgement, intuition, etc". Quite how important is the matter in construction pricing is not known and we tend to trivialise its effect. If judgement of the market has a minimal effect, little harm would be done, but if it is really important then some quite serious consequences arise which go well beyond the teaching environment. Major areas of concern for the quantity surveyor are in cost modelling and cost planning - neither of which pay any significant attention to the market effect. There are currently two schools of thought about the market effect issue. The first school is prepared to ignore possible effects until more is known. This may be called the pragmatic school. The second school exists solely to criticise the first school. We will call this the antagonistic school. Neither the pragmatic nor the antagonistic schools seem to be particularly keen to resolve the issue one way or the other. The founder and leader of the antagonistic school is Brian Fine whose paper in 1974 is still the basic text on the subject, and in which he coined the term 'socially acceptable' price to describe what we now recognise as the market effect. Mr Fine's argument was then, and is since, that the uncertainty surrounding the contractors' costing and cost estimating process is such that the uncertainty surrounding the contractors' cost that it logically leads to a market-orientated pricing approach. Very little factual evidence, however, seems to be available to support these arguments in any conclusive manner. A further, and more important point for the pragmatic school, is that, even if the market effect is as important as Mr Fine believes, there are no indications of how it can be measured, evaluated or predicted. Since 1974 evidence has been accumulating which tends to reinforce the antagonists' view. A review of the literature covering both contractors' and designers' estimates found many references to the use of value judgements in construction pricing (Ashworth & Skitmore, 1985), which supports the antagonistic view in implying the existence of uncertainty overload. The most convincing evidence emerged quite by accident in some research we recently completed with practicing quantity surveyors in estimating accuracy (Skitmore, 1985). In addition to demonstrating that individual quantity surveyors and certain types of buildings had significant effect on estimating accuracy, one surprise result was that only a very small amount of information was used by the most expert surveyors for relatively very accurate estimates. Only the type and size of building, it seemed, was really relevant in determining accuracy. More detailed information about the buildings' specification, and even a sight to the drawings, did not significantly improve their accuracy level. This seemed to offer clear evidence that the constructional aspects of the project were largely irrelevant and that the expert surveyors were somehow tuning in to the market price of the building. The obvious next step is to feed our expert surveyors with more relevant 'market' information in order to assess its effect. The problem with this is that our experts do not seem able to verbalise their requirements in this respect - a common occurrence in research of this nature. The lack of research into the nature of market effects on prices also means the literature provides little of benefit. Hence the need for this study. It was felt that a clearer picture of the nature of construction markets would be obtained in an environment where free enterprise was a truly ideological force. For this reason, the United States of America was chosen for the next stage of our investigations. Several people were interviewed in an informal and unstructured manner to elicit their views on the action of market forces on construction prices. Although a small number of people were involved, they were thought to be reasonably representative of knowledge in construction pricing. They were also very well able to articulate their views. Our initial reaction to the interviews was that our USA subjects held very close views to those held in the UK. However, detailed analysis revealed the existence of remarkably clear and consistent insights that would not have been obtained in the UK. Further evidence was also obtained from literature relating to the subject and some of the interviewees very kindly expanded on their views in later postal correspondence. We have now analysed all the evidence received and, although a great deal is of an anecdotal nature, we feel that our findings enable at least the basic nature of the subject to be understood and that the factors and their interrelationships can now be examined more formally in relation to construction price levels. I must express my gratitude to the Royal Institution of Chartered Surveyors' Educational Trust and the University of Salford's Department of Civil Engineering for collectively funding this study. My sincere thanks also go to our American participants who freely gave their time and valuable knowledge to us in our enquiries. Finally, I must record my thanks to Tim and Anne for their remarkable ability to produce an intelligible typescript from my unintelligible writing.