The “Fairness Paradox” and “Small-Firm Growth Resistance Strategies”

The purpose of this paper is to examine and explore why “Small-Businesses” resist employing outside the immediate family and investigate the employee as an outsider and entrepreneurial resource.

The authors review the literature on barriers to small-business growth concentrating on key empirical and theoretical studies. The authors use empirical data from the Federation of Small Business in which informants commented on growth and employing outside the family.

The findings suggest that small business owners adopt a polemical stance, arguing that a barrage of employment regulations deters them from employing outsiders because doing so brings trouble in terms of costs such as insurance, taxes, paperwork, leave (maternity and paternity) entitlement, etc. They argue that employing from inside the family or ones peer group is much cheaper, convenient and less hassle. This ignores the entrepreneurial employee as a potential ingredient of growth and points to a paradox whereby the very values and emotions characterized by fairness of which of “smallness” and “familialness” is composed compound the issues of discrimination central to the debate.

The paper offer important insights for growth issues among small businesses and challenge the contemporary equilibrium in terms of small “family-orientated” business philosophy relating to employment practices. Ideologically, the entrepreneur is an “outsider” fighting the establishment, yet paradoxically, in a small-business context s/he becomes the establishment by employing outsiders. This results in the fairness vs unfairness paradox.

The paper contributes to the existing knowledge and understanding on growth issues among small businesses by illuminating a paradoxical insider vs outsider tension.