Why and how do policy-makers and practitioners intervene to encourage new firm formation and development?
Intervention to encourage the growth of new firms is extremely common in the modern economy. The two main groups that intervene are policy makers and practitioners. A policy maker is defined as “a person responsible for or involved in formulating policies, especially in politics “ (Oxford University Dictionary 2013) in the case of firms formation this would usually be a government body local, regional or national or supra national in the case of the European Union. These people intervene generally for broad economic or macroeconomic reasons. Practitioners are defined as “one who practices something, especially an occupation, profession, or technique“ (American Heritage Dictionary 2000) in this context most likely a businessman of some kind. These professionals intervene for local economic or microeconomics reasons. Policy makers and practitioners often intervene to promote the creation and growth of new firms in the economy. Their reasons for doing are usually quite different but the results are often similar.
Policy makers wield huge influence when it comes to intervention in new firm creation and growth. Policy makers often put into place macro economic policies that seek to overcome attitudinal, resource, operational and strategic barriers to the formation of new firms. (Storey 1994) New firms represent a large portion of the new jobs created each year and therefore politicians are incentivized to make sure new firms are formed. In the past 17 years 63 percent of new jobs have come from small businesses in the United States. (SBA Office of Advocacy 2009) New firms are often closed within 5 years with only a third surviv...
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...y expand their sales base by having smaller businesses sell their products where it would be economical unfeasible for them to set up a branch. Practitioners such as bankers can provide support in the form of soft money to new businesses such as partial grants which do not have to be paid off until the business reached a certain size or level of profitability. (Disabilitymeansbusiness.com 2013)
In conclusion, policy makers and practitioners often try to assist in the formation of new firms but do not always succeed. Many firms fail despite all the assistance however the important factor is that the government continues to promote their creation so that new jobs and industries can be created. (Storey 1994) Both policy makers and practitioners need to ensure a level playing field so that the economy can grow, develop and compete with other economies around the world.
New businesses will take longer to thrive with the United States falling economy. The faltering job market and the deepening slump in housing threaten to hurt consumer spending. Consumers are becoming more conscious of their spending and therefore using cash to pay for smaller necessary purchases. The cost of entertainment and other presumed luxuries may be pushed to the background by most families, when having to choose whether to pay for a bill or treat the family out. Thriving businesses will understand the need to provide a service or product at affordable prices.
According to the U.S. Census Bureau, nearly forty-seven percent of all businesses employ fewer than ten employees. Small business is a vitally imperative to our nation’s well-being. Small business is responsible for creating the majority of our new jobs, employing nearly half of the American’s private workforce, and providing half of our country’s private non-farm gross domestic product (SBA 2009). Regardless of your politics, since President Barack Obama took office in 2008, an immense degree of emphasis has been placed on small business. Some of the emphasis has been positive while other parts have been negative.
In the article, "Strategies for Enhancing Small-Business Owners' Success" by Susan Turner and Al Endres, it is claimed that there is no specific reason as to why small businesses are failing in today's America. They believe, however that two factors can cause the demise of small businesses. These factors are small business financing and the marketing plans associated with those businesses. Small business owners are finding it increasingly hard to acquire funds to start up and help maintain a foothold in the business world. The authors state that this is due to the rising risks of propositions for investors and acknowledge that small businesses have to resort to using their own resources such as their own funds and bootstrap financing. Another
We need to get back on track with this again. Entrepreneurs are very important in our society as they promote job growth. 80% of all businesses fail and a large reason why is due to large corporations. The government needs to promote a more entrepreneur friendly economy. A small business lifestyle less based on large corporations. There could also be restrictions on large corporations so that small businesses are at least given a chance to thrive in the economy without dangerous
Governments can inspire both the creation of wealth in an economy and entrepreneurship within that economy as well. Using different policies, they can provide incentives for entrepreneurs to start businesses, such as lowered taxes, private ownership, and less risk/corruption while starting a business. This inspiration leads to growth in an economy and a positive increase in entrepreneurship.
Although small businesses do not make a lot of major deals with large investors, most small businesses create profit revenue greater than large corporations. Small business creators are very brave considering only ten percent of small businesses survive. Unfortunately, some communities do not support local small businesses; they only support the large brand name and force small businesses to die out. Since small businesses will not have a name brand known around the world, many people from communities will not support them because they are not known on a national scale. “This, in turn will affect the local economy and drive capital out of their local economy. On average, for every one hundred dollars spent in an economy, if spent on a
The primary to be considered is efficiency so that firms should concentrate on what they do best and leave others to markets. There are some specific reasons to support firms buying from competitors.
Government policy environment – a desire to reduce unemployment and make the economy attractive to inward investment as a source of employment and long-term growth
The market economy is advancing at an astonishing speed in present-day society. Business, which is divided into large, medium and small business, has become a primary symbol of the development of market economy. Entrepreneurship is defined as "the process, brought about by individuals, of identifying new opportunities and converting them into marketable products or services"(Schaper and Volery 2007, 4), and it is often related to small business. This essay will argue that the level of entrepreneurship in Australia is higher, compared to other affluent nations. Then it will move on to explain what factors can motivate individuals to conduct entrepreneurial activities. Finally, it will outline that there is no significant evidence that small enterprises are beneficial to the economy.
With globalization & liberalization opening up economies and shaping the world as one global village, competition has been on the rise & it is becoming harder day by day for firms to survive & flourish in this competitive environment. And for surviving in such an environment, where many companies go bankrupt any day, achieving business growth is a necessity, not an option. And for achieving growth companies have to diversify to multiple markets & multiple businesses, in order hedge their risks & keep growing & while doing so they have to be very quick, otherwise competition takes over the market & rest is history.
MNCs via developed nations around the world usually are becoming more and more curious on this “fortune at the Bottom in the Pyramid” when Prahalad (2004) has described it. The Bottom in the Chart represents innovative current market chances pertaining to MNCs and also the prospects for bringing about your alleviation involving poverty. BOP approaches are therefore useful pertaining to MNCs not really only for their own likely fiscal comes back but the cultural influence in which they cook through providing usage of a new product, services and even job opportunities to low-income populations. As a result, BOP approaches complete but not only provide fiscal chances but also bring various other advantages towards MNC such as enthusiasm involving hr as well as improved brand image.
Ana Maria Romero-Martinez, Angeles Montoro-Sanchez (2008). How clusters can encourage entrepreneurship and venture creation Reasons and advantages, Int Entrep Manag J, (4) 315-329.
Job creation is a multi-faceted issue but one thing is for certain: new businesses create new jobs. In fact, economist Carl Schramm says, “The data, frequently used in studies by the Kauffman Foundation, show that all net new job creation in America comes from companies less than five years old!” (Forbes). Th...
Entrepreneurs create new businesses, and new businesses in turn create jobs, strengthening competition, and may even increase productivity through technological change. Increases in levels of entrepreneurship will result to an increase in economic growth (Nolan, 2003).Entrepreneurs by starting or setting up their businesses, will help with local development by locating less developed areas. The growth of industries and businesses in these areas leads to infrastructure improvements, such as better roads and stable electricity. Every business that is located in a less developed area will create opportunities that will improve the living conditions of people residing in that particular area (Nolan, 2003).
It is argued that government makes poor economic managers. Political pressures rather than sound economic and business sense motivate them (Pettinger, 2011). These illegal pressures can be reduced to a great extent in the hands of private owners.