Editorial

Citation

Matlay, H. (2015), "Editorial", Journal of Small Business and Enterprise Development, Vol. 22 No. 3. https://doi.org/10.1108/JSBED-07-2015-0084

Editorial

Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 22, Issue 3.

In previous Editorials, I stated that there is a mood of optimism, amongst stakeholders, in relation to the much anticipated recovery from the most recent economic downturn. Prevalent, since early 2008, in most industrially developed and developing countries, the financial crises and resultant economic depression have impacted negatively upon the socio-economic and cultural infrastructure of nations across the world. Caught up in the most severe economic downturn since the Great Depression (1929-1939), national and regional survival strategies varied considerably, not only on how individual countries dealt with failing banks and other financial institutions, but also in the way that they prepared for economic recovery and growth. Generally, in the UK, as well as in much of Europe, banks were rescued with massive injections of taxpayers’ money. In addition, most European countries relied on austerity measures and cuts in public spending, in an attempt to reduce their rapidly expanding national debt. Elsewhere, however, banks were allowed to fail and some large and prestigious financial institutions disappeared from the financial scene. The government of Iceland, for example, allowed the country’s banks to fail, to the tune of US$85 billion, in both personal and corporate defaults. This gave sufficient justification for the prosecution, on charges of fraud, of a number of Icelandic bank executives. Their conviction and jail sentences, were meant to punish as well as deter from fraudulent activities. In contrast, in the USA, banks were bailed out and the institutions, not the executives, ordered to pay hefty fines. The UK Government’s prompt intervention saved the domestic banking sector and millions of private savers. Notably, however, no bank executives were charged or convicted of fraud or any other criminal activity relating to their blatant failure to safeguard their overexposed debt liabilities. Other European governments acted in similar manner to rescue their own financial institutions.

Evidence of the impact of the financial crisis upon small and medium sized businesses is scarce and often contradictory. Similarly, the overall effect of austerity measures, combined with large structural fiscal tightening, is yet to be established with any degree of accuracy. Claims and counter claims are made and estimates are hotly disputed, based mostly upon anecdotal evidence or partial statistics that are subject to revision and adjustment. Most European governments imposed various austerity measures as a solution to their country’s growing debt crises. Indeed, in some countries, such as Greece and Portugal, far reaching austerity measures were imposed from outside, as a condition of sovereign bailouts. The individual, organisational and national cost of such measures is notoriously difficult to estimate. Arguably, these measures have facilitated economic recovery and growth in some countries, including the UK, Germany and the USA. In other countries, such as Italy in Spain, austerity seemingly failed to deliver the expected, and indeed much hoped for, economic recovery and growth. The position of Greece remains critical and it raises concerns in regard to the cohesion, infrastructure and future of the European Union. More controversial is the situation of Iceland, where it is alleged that economic recovery and growth has been achieved without compromising long-standing welfare provision, including universal education and healthcare. Of course, not everybody agrees with this picture, and critics are quick to point out that Iceland’s “showcase” recovery was delivered through aggressive and intrusive government intervention as well as capital controls, which remain in place. Iceland’s sovereign debt remains high, and postponed bank liabilities raise it even further, to dangerous levels.

Most commentators agree that small businesses play an important role in a country’s economy, contributing significantly to its gross domestic product and gross value added. In addition, small firms are perceived as an important source of employment and job creation, both nationally and internationally. They also make substantial contributions to welfare and local community development as well as wealth creation. Thus, a healthy and expanding small business sector is deemed crucial to maintaining and developing socio-economic and cultural infrastructures, at local, national and international levels. In the UK, the financial and consequent economic downturn, had a negative impact upon the small business sector, in terms of drastically diminished access to finance and credit. Austerity measures, in general, and public spending cuts, in particular, greatly reduced demand for some products and services, with far reaching consequences for small business owner/managers, who found themselves affected at both personal and organisational level. Recovery and growth in the UK small business sector has been slow and often described as “fragile”. Nevertheless, optimism amongst small business owner/managers remains high and emergent data appear to confirm better than anticipated growth indicators for the UK economy. Internationally, statistics on small businesses offer a mixed picture on how well smaller firms are recovering from prolonged recessionary conditions. Many challenges, and in particular access to finance, persist. Clearly, more and better support is needed from governments, in both industrially developed and developing countries, to assist small businesses to recover, grow and achieve sustainable growth in a highly competitive and increasingly globalised market place.

This issue of JSBED comprises 11 papers, which deal with pertinent issues appertaining to entrepreneurship and small business development, in a variety of contexts and conceptual frameworks. Individually and collectively, these papers are indicative of the diversity of interests and themes addressed by our contributors as well as the range of empirical approaches used in their research.

I have been greatly assisted, in my role of Editor of JSBED, by the generous support of colleagues, collaborators, advisors and members of the editorial advisory board. A wide range of contributors, both from the UK and elsewhere, continue to submit high-quality articles to our journal, as well as providing refereeing support, constructive feedback and expert advice. I am very grateful to all our stakeholders for their contribution to JSBED, without whom the growing success of our journal could not have been made possible.

Harry Matlay