The impact of eBusiness on the City of London office market

The City of London is a major financial centre where the property market is heavily dependent on the space requirements of office occupiers. Technological change, however, is changing the way in which organisations conduct their business and is challenging the continued locational pull of the City. This research presents findings from a major survey of City occupiers carried out by The College research team during 2002. The research examines how the shape and form of the office property market in the City will be affected by process change in eBusiness and related technology over the next 5 years. The report, which includes an extensive literature review, examines the implications of increased homeworking and other trends for future office supply in the City. The research was funded by the Worshipful Company of Chartered Surveyors Trust (Toby Sutton Research Award), and part of the literature review by the Small Business Support Research Unit of DTI. It is essential reading for surveyors, planners, facilities managers and all those interested in the technology and property interface.

The use and impacts of bank support on UK small and medium-sized enterprises

This article examines an under-investigated area in relationship banking, i.e. the use of bank advice and support and its impacts on the financial conditions of small and medium-sized enterprises (SMEs). The findings indicate that the characteristics of businesses and entrepreneurs, among other factors, have determinant effects on the use of bank support by SMEs when they make financial decisions. SMEs can alleviate the severity of their financial problems significantly by using bank support more fully, through developing long-term relationships with banks as primary network partners. The article further recognises the value of advice from banks as a substitute for entrepreneurial human capital, especially when bankers use private information to determine the nature and level of financial and non-financial assistance that they are prepared to supply to their clients.

The determinants of online loan applications from small businesses

Purpose – The purpose of this paper is to examine both the characteristics of the business customers and the types of venture which make use of online loan applications. Despite the growth in the use of technology in banking and the advent of online banking, little research has been conducted on the factors underlying online loan application behaviour amongst business banking customers. Design/methodology/approach – A multivariate analysis is conducted on a USA dataset to empirically test the hypotheses derived in this paper. The empirical evidence is drawn from the US Survey of Small Business Finances, which contains 3,561 sample ventures, representing 5.3 million small businesses in the USA. Findings – The paper finds that online loan behaviour is largely determined by the characteristics of the entrepreneur, rather than that of the venture. It is also found that factors that trust, evident in the length of the relationship between the applicants and their primary lender, is important. Moderating these effects is further evidence that suggests the number of lenders and distance between lenders and applicants has a marked effect on online loan behaviour. Originality/value – This paper identifies the factors determining small business online loan application behaviour. This is important because the nature of online loan behaviour is changing the existing relationships between banks and customers. Whilst online loan applications afford banks the opportunity to substantially reduce costs, the danger is that long term relationships with customers are harder to cement.

What matters in business incubation? A literature review and a suggestion for situated theorising

Purpose – The purpose of this paper is twofold: first, to provide a critical assessment of the literature on business incubation effectiveness and second, to submit a situated theoretical perspective on how business incubation management can provide an environment that supports the development of incubatee entrepreneurs and their businesses. Design/methodology/approach – The paper provides a narrative critical assessment of the literature on business incubation effectiveness. Definitional issues, performance aspects and approaches to establishing critical success factors in business incubation are discussed. Business incubation management is identified as an overarching factor for theorising on business incubation effectiveness. Findings – The literature on business incubation effectiveness suffers from several deficiencies, including definitional incongruence, descriptive accounts, fragmentation and lack of strong conceptual grounding. Notwithstanding the growth of research on this domain, understanding of how entrepreneurs and their businesses develop within the business incubator environment remains limited. Given the importance of relational, intangible factors in business incubation and the critical role of business incubation management in orchestrating and optimising such factors, it is suggested that theorising efforts would benefit from a situated perspective. Originality/value – The identification of specific shortcomings in the literature on business incubation highlights the need for more systematic efforts towards theory building. It is suggested that focusing on the role of business incubation management from a situated learning theory perspective can lend itself to a more profound understanding of the development process of incubatee entrepreneurs and their firms. Theoretical propositions are offered to this effect, as well as avenues for future research.

Imitation, entrepreneurship and the informal/formal economy nexus: an African perspective

This paper explores a segmentation of micro and small enterprises (MSEs) in developing countries within the formal/informal economy nexus that has wide-ranging implications for the targeting of base-of-the-pyramid initiatives and entrepreneurship theory. This proposed segmentation emerges from the analysis of a sample of Kenyan MSEs utilising current and prior business models; the antecedent influences shaping the business model; barriers to entry associated with knowledge, capital and skills; the degree of innovation or imitation evident in the business model linked to the nature of opportunity recognition; and their relationship with the formal institutional business environment.

The missing pillar: the creativity theory of knowledge spillover entrepreneurship

Knowledge spillover theory of entrepreneurship and the prevailing theory of economic growth treat opportunities as endogenous and generally focus on opportunity recognition by entrepreneurs. New knowledge created endogenously results in knowledge spillovers enabling inventors and entrepreneurs to commercialize it. This article discusses that knowledge spillover entrepreneurship depends not only on ordinary human capital, but more importantly also on creativity embodied in creative individuals and diverse urban environments that attract creative classes. This might result in self-selection of creative individuals into entrepreneurship or enable entrepreneurs to recognize creativity and commercialize it. This creativity theory of knowledge spillover entrepreneurship is tested utilizing data on European cities.

Age and firm growth: evidence from three European countries

This article provides new insights into the dependence of firm growth on age along the entire distribution of growth rates, and conditional on survival. Using data from the European firms in a global economy survey, and adopting a quantile regression approach, we uncover evidence for a sample of French, Italian and Spanish manufacturing firms with more than ten employees in the period from 2001 to 2008. We find that: (1) young firms grow faster than old firms, especially in the highest growth quantiles; (2) young firms face the same probability of declining as their older counterparts; (3) results are robust to the inclusion of other firms’ characteristics such as labor productivity, capital intensity and the financial structure; (4) high growth is associated with younger chief executive officers and other attributes that capture the attitude of the firm toward growth and change. The effect of age on firm growth is rather similar across countries.

Asymmetric information, credit market condition, and entrepreneurial finance

The issue of imperfect information plays a much more important role in financing “informationally opaque” small businesses than in financing large companies.1 This chapter examines the asymmetric information issue in entrepreneurial finance from two perspectives: the effects of relationship lending and the impacts of credit market concentration on entrepreneurial financial behavior. These two perspectives are strongly linked to each other via the asymmetric information issue in entrepreneurial finance. Existing literature has recognized the important role played by relationship lending in alleviating the problem of asymmetric information. However, mixed empirical results have been reported. For example, it has been found that the development of relationship lending can improve the availability of finance for small businesses borrowers (Petersen and Rajan, 1994) and reduce the costs of finance (Berger and Udell, 1995). Meanwhile, with monopoly power, banks may extract rents, in terms of charging higher-than-market interest rates, from small businesscustomers who have very concentrated banking relationships (Ongena and Smith, 2001). In addition, both favorable and unfavorable effects of credit market concentration on financing small businesses have been acknowledged. Small business borrowers may have to pay a higher-than-market price on loans (Degryse and Ongena, 2005) and are more likely to be financially constrained (Cetorelli, 2004) than in competitive markets. On the other hand, empirical studies have shown that market concentration create a strong motive for lenders to invest in private information from small business customers, and therefore a concentrated market is more efficient in terms of private information acquisition (Han et al., 2009b). The objective of this chapter is to investigate, by reviewing existing literature, the role played by relationship lending and the effects of market concentration on financing entrepreneurial businesses that are supposed to be informationally opaque. In the first section we review literature on the important role played by asymmetric information in entrepreneurial finance from two perspectives: asymmetric information and relationship lending, and the theoretical modeling of asymmetric information. Then we examine the relationship between capital market conditions and entrepreneurial finance and attempt to answer two questions: Why is the capital market condition important for entrepreneurial finance? and What are the effects of capital market conditions on entrepreneurial financial behavior in terms of discouraged borrowers, cash holding, and the availability and costs of finance?

Are Good or Bad Borrowers Discouraged From Applying for Loans?

This paper takes the concept of a discouraged borrower originally formulated by Kon and Storey [Kon, Y., Storey, D.J., 2003. A theory of discouraged borrowers. Small Business Economics 21, 37–49] and examines whether discouragement is an efficient self-rationing mechanism. Using US data it finds riskier borrowers have higher probabilities of discouragement, which increase with longer financial relationships, suggesting discouragement is an efficient self-rationing mechanism. It also finds low risk borrowers are less likely to be discouraged in concentrated markets than in competitive markets and that, in concentrated markets, high risk borrowers are more likely to be discouraged the longer their financial relationships. We conclude discouragement is more efficient in concentrated, than in competitive, markets.