Small Business and Entrepreneurship, 2nd ed.

Citation

Freel, M.S. (1998), "Small Business and Entrepreneurship, 2nd ed.", International Journal of Entrepreneurial Behavior & Research, Vol. 4 No. 1, pp. 71-74. https://doi.org/10.1108/ijebr.1998.4.1.71.1

The second edition of Burns and Dewhurst’s Small Business and Entrepreneurship joins an increasing and welcome bank of dedicated small business and entrepreneurship textbooks. This book, however, begins with the rare, yet reasonable premise that “...no one person can ever claim to be an expert in all the areas [of entrepreneurship]”. The consequence is a series of chapters intended to cover the full subject area, which draw upon the individual “expertise” of a coterie of distinguished academics, with the aim of providing a comprehensive and authoritative “why to” course text. No level is explicitly stated and it is assumed that the book is intended as both an undergraduate and postgraduate resource.

Chapter 1, by Paul Burns, provides a standard introduction to the changing role of small firms in the economy. The chapter comprises mostly background information regarding small firm definitions, differentiating characteristics, population industry disaggregation, start‐up and failure rates and likely future trends.

Chapter 2, by Sue Birley deals with start‐up. Adopting a process view Professor Birley traces the start‐up event from the “trigger” point, through the characteristics of the entrepreneur (family, background, age and experience), to the start‐up event itself (accessing resources, aims and objectives, markets, etc.). The chapter also highlights common pitfalls and suggests appropriate strategies.

Chapter 3, by Paul Burns and Jean Harrison, addresses the issue of growth. The chapter focuses predominantly on the characteristics of the individual and the growth firm, relatively neglecting the process of growth. The Churchill and Lewis (1983) and Greiner (1972) stage models are discussed briefly towards the end of the chapter, if only to highlight their inherent flaws.

Chapter 4, by David Storey and Nigel Sykes, is entitled “Uncertainty, Innovation and Management”. Correspondingly, the discussion addresses the sources of uncertainty for small firms (market, customer and aspirational) and Schumpeter’s five classes of innovation (good/service, process, market, supply and organisational). The chapter then focuses on the implications of uncertainty and innovation for small firms and the development of appropriate management within this context.

Chapter 5, “The Entrepreneur”, by Jim Dewhurst provides an introduction to the role of psychological testing, principally psychometrics, in assessing entrepreneurial inclination and aptitude. The subsequent discussion details characteristics and traits which are assumed to be quintessentially entrepreneurial and briefly suggests policy implications following from these.

Chapter 6, by Martin Binks and Christine Ennew, provides comprehensive coverage of the principal sources of funding available to the bulk of small firms (equity, debt, leasing and factoring), the underlying trends in service provision (e.g. overdraft funding versus term loans) and the assumed system flaws (banking relationships, information asymmetries and service gaps). Drawing on the authors’ own research, the chapter is placed in a strong empirical context and emphasises the importance of access to information for all parties in the funding process.

Chapter 7, by Gordon Murray, deals with formal venture capital. An introduction to the history and function of the Venture Capital industry is placed in the wider context of, recession enforced, structural change and appropriate small firm financial structures. The chapter delineates the types (“captives”, “semi‐captives” and independents) and range (seed, start‐up, expansion, and Management Buy‐Outs/Buy‐Ins) of venture capital companies, their prevalence and the underlying trends thereof. The process of application, appraisal and funding is itself discussed

Chapter 8, by Colin Barrow, is an introduction to the concept of business format franchising and the increasing role it plays in “self‐employment”. A brief, but fairly inclusive, discussion of the benefits and shortcoming, both to franchisor and the franchisee, follows before underlining the inferred mutual dependence which is the nature of the financing relationship. The author concludes with a short anecdote illustrating the potential of franchising for business development (for the franchisor).

Chapter 9, by Paul Burns, is a thorough detailing of the business planning process and its importance to small firm owner managers. The chapter deals with the minutiae of format, the principal components and the underlying rationale for their inclusion in the planning process. The importance of effective business plans to providers of external funding (VCs, banks, Business Angels, etc.) is heavily stressed.

The final chapter, Chapter 10 by Jim Dewhurst, is entitled “Small Firms Policy in Europe”. A brief discussion on comparative accounting techniques and financial structures precedes a more general discussion on, for example, differing business attitudes, take‐over practices and the role of language. The chapter concludes with a short section on comparative training expenditures and the importance of education and skills in achieving and sustaining comparative advantage.

10 teaching cases have been inserted at the end of the book. The growth in small firm cases is commendable, with most new small firms/entrepreneurship textbooks incorporating case exercises (see for example Deakins, 1996 and Murphy, 1996). The cases presented here appear, on a single reading and prior to classroom exposure, to represent a valuable resource in themselves. There is a welcome spread of case lengths, level of detail, company ages, sectors and subject areas. Only a few of the cases suggest the need for significant prior business training.Whilst, as would be expected, all of the chapters are well written and authoritative, taken as a whole there are a number of omissions, contradictions and aberrations. In Chapter 1, for instance, time could have been spent explaining the causes of structural change which has led to prominence of small firms and small firm owner managers, both as economic drivers and as areas for academic study. As a further point of pedantry, given the exclusive use of VAT data during the discussion, caveats may have been offered regarding its coverage. Additionally, whilst the problems underlying financial and capital based definitions of SMEs were discussed, employee based definitions were offered without reserve.

Chapter 2 offers very little discussion of start‐up policy support, the pivotal “picking winners” debate, or the underlying trends in new venture creation and sustainability. These issues would appear central to any “why to” chapter concerned with start‐up. Perhaps consequently, this chapter has a “how to” feel as opposed to the intended “why to”. This criticism also holds for chapter 3 which, whilst strong on strategy, also reads like a “how to”.

Given the pedigree of the authors, chapter 4 is perhaps the most disappointing section of the book. Rather meandering, the chapter is marked by occasional, surprising statements and contradictions (see; “...many small firms operate in conditions of classic perfect competition” ‐ perfect knowledge of present and future states, perfect factor mobility, perfectly rational maximising actors...?, see also; “...small firms...are inevitably price takers in the classic tradition” (p. 76) contrasted with the latter discussion on Penrosean interstices). Overall the chapter appears a trifle slapdash.

Jim Dewhurst’s chapter concerning “The Entrepreneur” is a little disconcerting. Whilst ill qualified to criticise the use of psychometrics, I would be concerned about advocating their use in the context suggested (question 6 in the end of chapter exercises reads; “Assuming you are a bank official, write a report to your superior outlining how you would identify an entrepreneur from psychological tests”). The traits approach to entrepreneurship ignores the propensity for personal development and changing attitudes and motivations (Chell, et al., 1991).

Chapters 6 and 7 by Binks and Ennew and Murray are perhaps the strongest chapters in the book. Whilst little novel is said, the use of the authors’ own research lends a convincing air of authority. The one concern is, given the acknowledged marginality of venture capital for small and, in particular, early stage enterprises and the comparative potential for business angels to better address the “equity gap” (p. 138), little or no space was given over to discussion of this issue.

As mentioned, Paul Burns’ business planning chapter is very thorough, perhaps too much so. The chapter provides a clue as to why so many small firm owner managers are reluctant to plan. The planning process detailed here certainly appears time consuming and onerous. Whilst undoubtedly an excellent exercise for business students, consider the hard‐pressed owner manager of a micro‐firm, struggling to satisfy the innumerable tasks within his/her remit and unable to recruit additional managerial resource? The chapter also underlines the (mis)conception that business plans are only for bank managers. A less rigid planning process would surely be of considerable benefit, as a conceptual aid, to all small firms regardless of their current or future financial requirements.

The final chapter appears very much a tack‐on. Undoubtedly an important topic, it reads as a “how to operate in Europe” and, although well written, seems somewhat incongruous.

In summary, despite the individual points noted above, the book generally meets its aims and objectives. However, there is a tendency towards duplication and contradiction between the chapters (see for example; Ch. 1, p. 5 “Small firms are not homogenous. Each is different and has special characteristics” contrasted with Ch. 2, p. 20 “...very few businesses are unique”) and the result is a slightly disjointed whole. The book may have benefited from tighter editing or greater collaboration between the individual authors.

Whilst I would have no hesitation in placing this text on a “recommended reading” list it is unlikely that it would replace those texts already on the market as “essential reading”. For postgraduate courses the more inclusive, if somewhat dating, Storey (1994) remains the best available and, for less rigorous levels, the text is neither better nor worse than any number of textbooks currently available. What is gained through division of labour is partially lost in continuity.