Bank market concentration, relationship banking and small business liquidity

This paper examines two contrasting interpretations of how bank market concentration (Market Power Hypothesis) and banking relationships (Information Hypothesis) affect three sources of small firm liquidity (cash, lines of credit and trade credit). Supportive of a market power interpretation, we find that in a highly concentrated banking market, small firms hold less cash, have less access to lines of credit, and are more likely to be financially constrained, use greater amounts of more expensive trade credit and face higher penalties for trade credit late payment. We also find support for the information hypothesis: relationship banking improves small business liquidity, particularly in a concentrated banking market, thereby mitigating the adverse effects of bank market concentration derived from market power. Our results are robust to different cash, lines of credit and trade credit measures and to alternative empirical approaches.

Small business collaboration through electronic marketplace

It is widely recognized that small businesses with less than 50 employees make significant contributions to the prosperity of local, regional, and national economies. They are a major source of job creation and a driving force of economic growth for developed countries like the USA (Headd, 2005; SBA, 2005), the UK (Dixon, Thompson, & McAllister, 2002; SBS, 2005), Europe (European Commission, 2003), and developing countries such as China (Bo, 2005). The economic potential is further strengthened when firms collaborate with each other; for example, formation of a supply chain, strategic alliances, or sharing of information and resources (Horvath, 2001; O’Donnell, Cilmore, Cummins, & Carson, 2001; MacGregor, 2004; Todeva & Knoke, 2005). Owing to heterogeneous aspects of small businesses, such as firm size and business sector, a single e-business solution is unlikely to be suitable for all firms (Dixon et al., 2002; Taylor & Murphy, 2004a); however, collaboration requires individual firms to adopt standardized, simplified solutions based on open architectures and data design (Horvath, 2001). The purpose of this article is to propose a conceptual e-business framework and a generic e-catalogue, which enables small businesses to collaborate through the creation of an e-marketplace. To assist with the task, analysis of data from 6,000 small businesses situated within a locality of Greater Manchester, England within the context of an e-business portal is incorporated within this study.

Firm size and competition: a comparison of the housebuilding industries in Australia, the UK and the USA

Housebuilding is frequently viewed as an industry full of small firms. However, large firms exist in many countries. Here, a comparative analysis is made of the housebuilding industries in Australia, Britain and the USA. Housebuilding output is found to be much higher in Australia and the USA than in Britain when measured on a per capita basis. At the same time, the degree of market concentration in Australia and the USA is relatively low but in Britain it is far greater, with a few firms having quite substantial market shares. Investigation of the size distribution of the top 100 or so firms ranked by output also shows that the decline in firm size from the largest downwards is more rapid in Britain than elsewhere. The exceptionalism of the British case is put down to two principal reasons. First, the close proximity of Britain’s regions enables housebuilders to diversify successfully across different markets. The gains from such diversification are best achieved by large firms, because they can gain scale benefits in any particular market segment. Second, land shortages induced by a restrictive planning system encourage firms to takeover each other as a quick and beneficial means of acquiring land. The institutional rules of planning also make it difficult for new entrants to come in at the bottom end of the size hierarchy. In this way, concentration grows and a handful of large producers emerge. These conditions do not hold in the other two countries, so their industries are less concentrated. Given the degree of rivalry between firms over land purchases and takeovers, it is difficult to envisage them behaving in a long-term collusive manner, so that competition in British housebuilding is probably not unduly compromised by the exceptional degree of firm concentration. Reforms to lower the restrictions, improve the slow responsiveness and reduce the uncertainties associated with British planning systems’ role in housing supply are likely to greatly improve the ability of new firms to enter housebuilding and all firms’ abilities to increase output in response to rising housing demand. Such reforms would also probably lower overall housebuilding firm concentration over time.

Good practice transfer within small construction specialist trade contractors

Government and institutionally-driven ‘good practice transfer’ initiatives are consistently presented as a means to enhance construction firm and industry performance. Two implicit tenets of these initiatives appear to be: knowledge embedded in good practice will transfer automatically; and, the potential of implementing good practice will be capitalised regardless of the context where it is to be used. The validity of these tenets is increasingly being questioned and, concurrently, more nuanced knowledge production understandings are being developed which recognise and incorporate context-specificity. This research contributes to this growing, more critical agenda by examining the actual benefits accrued from good practice transfer from the perspective of a small specialist trade contracting firm. A concept model for successful good practice transfer is developed from a single longitudinal case study within a small heating and plumbing firm. The concept model consists of five key variables: environment, strategy, people, technology, and organisation of work. The key findings challenge the implicit assumptions prevailing in the existing literature and support a contingency approach that argues successful good practice transfer is not just adopting and mechanistically inserting into the firm, but requires addressing ‘behavioural’ aspects. For successful good practice transfer, small specialist trade contracting firms need to develop and operationalise organisation slack, mechanisms for scanning external stimuli and absorbing knowledge. They also need to formulate and communicate client-driven external strategies; to motive and educate people at all levels; to possess internal or accessible complementary skills and knowledge; to have ‘soft focus’ immediate/mid-term benefits at a project level; and, to embed good practice in current work practices.

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.

Action learning: how learning transfers from entrepreneurs to small firms

The paper presents research with small and medium enterprise (SME) owners who have participated in a leadership development programme. The primary focus of the paper is on learning transfer and factors affecting it, arguing that entrepreneurs must engage in ‘action’ in order to ‘learn’ and that under certain conditions they may transfer learning to their firm. The paper draws on data from 19 focus groups undertaken from 2010 to 2012, involving 51 participants in the LEAD Wales programme. It considers the literatures exploring learning transfer and develops a conceptual framework, outlining four areas of focus for entrepreneurial learning. Utilising thematic analysis, it describes and evaluates what (actual facts and information) and how (techniques, styles of learning) participants transfer and what actions they take to improve the business and develop their people. The paper illustrates the complex mechanisms involved in this process and concludes that action learning is a method of facilitating entrepreneurial learning which is able to help address some of the problems of engagement, relevance and value that have been highlighted previously. The paper concludes that the efficacy of an entrepreneurial learning intervention in SMEs may depend on the effectiveness of learning transfer.