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PurposeSince introducing the UK start-up loan (SUL) Scheme in 2012, 82,809 new start-ups have been supported with loans totalling £759m. Even during the Covid-19 crisis, new business start-ups supported by SUL did not abate. The authors ask whether the entrepreneurs starting businesses during the Covid-19 crisis were different from those becoming entrepreneurs before the pandemic. This paper aims to discuss the aforementioned question.Design/methodology/approachThe authors model the differences between pre-Covid-19 business start-ups and Covid-19 start-ups. The administrative data obtained from the UK Government Department for Business, Energy and Industrial Strategy (BEIS) represent information about individual loan records for 82,798 individuals and total lending of £759m between 2012 and 2021. The probit regression model with dependent variable coded one if the start occurred after February 2020 and zero between 2012 and February 2020, was estimated.FindingsThe study’s findings show that both groups of entrepreneurs differ in many facets. The new Covid-19 entrepreneurs are older, more likely to have a graduate-level education and are significantly more likely to make this transition from full-time waged employment or inactivity. Furthermore, they are more likely to set up in manufacturing industries at the business level than their pre-Covid-19 counterparts who favoured service sectors. Finally, their initial lending to support the start-up is much higher.Originality/valueThis study provides value for the policymakers responsible for the administration of the SUL scheme, and it also contributes to the body of knowledge on the effects of the global Covid-19 pandemic.

The UK has had a commitment to loan guarantee schemes since 1981 when it introduced the Small Firms Loan Guarantee (SFLG) scheme to address access to debt finance issues for smaller firms. Over the last 40 years, its support has been unwavering, and in the Covid-19 crisis, it once again turned to loan guarantees as a means of supporting smaller firms through the crisis-induced slump in trading activities. Of its three core Covid-19 guarantee schemes, the Bounce Back Loan (BBL) scheme was the most numerous with 1,531,095 loans issued amounting to a total of £46.5bn in lending. The BBL scheme provided a 100% capital guarantee on loans between £2,000 and £50,000, and firms were allowed to borrow up to 25% of their trading income, with a fixed interest rate of 2.5% of which the first years interest was paid by the government to the lending bank. Our findings suggest that the government losses may range between £7bn and £12bn depending on the underlying assumptions; however, we estimate Covid-19 guarantee schemes may have protected 118,639 businesses and 1,117,849 jobs. Looking to the future, we suggest that a new loan guarantee is justified that more resembles the former SFLG than the restrictive Enterprise Finance Guarantee (EFG) as more than one million small businesses will be heavily indebted and unable to borrow to invest in future growth opportunities. This would support the ‘levelling-up’ agenda and help prevent a post-Covid-19 low investment–low growth scenario.

The economic consequences of COVID-19 were severe with restricted economic activity generating a liquidity crisis for many firms. To address the systemic impact of this liquidity shock, governments around the world rapidly introduced a range of loan guarantee schemes. In the UK, more than 1 million businesses accessed these schemes. Using a novel, comprehensive dataset, this paper explores the regional distribution of access to these schemes and how this was mediated by regional differences in lending institution. Our results show that while the schemes were national and unaligned with regional policy, access favoured firms in poorer regions, and regional differences in lending institutions had a significant influence on the nature of lending.

The scale of the UK government's response to the Covid-19 crisis after the first lockdown in March 2020 was unprecedented. For the business sector, two financing schemes were particularly relevant: the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). Both were designed to support the capitalization of businesses through this difficult trading period. In this paper, we use data covering the first two quarters of the Covid-19 crisis to explore the dynamics of small and medium-sized enterprise (SME) financing and in particular the role of government support schemes. Our findings show that 92.1% of all debt funds provided in this period were backed by the UK government, which compares to less than 5% under normal circumstances. We find that the demand, supply and government share of SME lending increased from Covid-19 quarter 1 (April–June 2020) to quarter 2 (July–September 2020), that micro and small businesses had the highest demand for loans, and that better-performing firms were more likely to receive loans. Further, in a world where more loan requests than ever were granted, the government share of this pool of loans had a different risk profile than the small pool of non-government-backed loans.

In this commentary, we trace the economic and spatial consequences of the Covid-19 pandemic in terms of potential business failure and the associated job losses across the 100 largest cities and towns in the United Kingdom (UK). The article draws on UK survey data of 1500 firms of different size classes examining levels of firm-level precautionary savings. On business failure risk, we find a clear and unequal impact on poorer northern and peripheral urban areas of the UK, indicative of weak levels of regional resilience, but a more random distribution in terms of job losses. Micro firms and the largest firms are the greatest drivers of aggregate job losses. We argue that spatially blind enterprise policies are insufficient to tackle the crisis and better targeted regional policies will be paramount in the future to help mitigate the scarring effects of the Covid-19 pandemic in terms of firm failures and the attendant job losses. We conclude that Covid-19 has made the stated intention of the current government’s ambition to ‘level up’ the forgotten and left-behind towns and cities of the UK an even more distant policy objective than prior to the crisis.

It is well documented that the self-employed experience higher levels of happiness than waged employees even when their incomes are lower. Given the UK government’s asymmetric treatment of waged workers and the self-employed, we use a unique Covid-19 period data set which covers the months leading up to the March lockdown and the months just after to assess three aspects of the Covid-19 crisis on the self-employed: hours of work reductions, the associated income reductions and the effects of both on subjective well-being. Our findings show the large and disproportionate reductions in hours and income for the self-employed directly contributed to a deterioration in their levels of subjective well-being compared to waged workers. It appears that their resilience was broken when faced with the reality of dealing with rare events, particularly when the UK welfare support response was asymmetric and favouring waged employees.

The belief that more general capital constraints are exacerbated and magnified in innovative and technology-based firms has provided justification for policy intervention, across the range of equity and debt-based financial instruments. In this article, we tackle the question as to whether smaller innovative firms, both in and outside of high-tech industry sectors, do indeed face greater constraints when seeking to access capital from external markets. Our results show that both high-tech and innovation are important determinants of the firms’ demand for external finance, but these effects are more pronounced in equity markets than debt markets. On the supply side of capital markets, being in a high-tech industry sector was relatively unimportant from the point of view of financiers. Rather, being involved in innovative activity was associated with a greater incidence of absolute and partial rationing and also in terms of the general process of applying for finance being substantially more difficult. These findings were more acute for firms in high-tech industry sectors that were also engaged in innovative activity. Our findings also suggest that policy makers need greater clarity and nuance when developing policy responses around high-tech and broader innovation activity which, although they have significant overlap, should not be conflated.

As COVID-19 spreads across the globe, a common public policy response has been to enforce the temporary closure of non-essential business activity. In some countries, governments have underwritten a proportion of the wage income for staff forced to furlough or broadened their welfare systems to accommodate newly laid off workers or small business owners. While these actions are helpful, they do not explicitly address the lack of sales trading activity on business income and cash balances. In commentary, we identify what types of businesses have been increasing their cash holdings in the lead up to COVID-19 as an indication of what types of small and medium-sized enterprises (SMEs) are most at risk if the lockdown extends for a protracted period of time. We find that only 39% of the of businesses were bolstering their cash balances leading up to COVID-19 which suggests that 61% of businesses may run out of cash, including 8.6% that had no retained earnings whatsoever with micro firms at particular risk. The importance of precautionary saving for SMEs is critical to enhance resilience when Black Swan events occur. Postprint

This commentary explores the manner in which the current COVID-19 crisis is affecting key sources of entrepreneurial finance in the United Kingdom. We posit that the unique relational nature of entrepreneurial finance may make it highly susceptible to such a shock owing to the need for face-to-face interaction between investors and entrepreneurs. The article explores this conjecture by scrutinising a real-time data source of equity investments. Our findings suggest that the volume of new equity transactions in the United Kingdom has declined markedly since the outbreak of the COVID-19 pandemic. It appears that seed finance is the main type of entrepreneurial finance most acutely affected by the crisis, which typically goes to the most nascent entrepreneurial start-ups facing the greatest obstacles obtaining finance. Policy makers can utilise these real-time data sources to help inform their strategic policy interventions to assist the firms most affected by crisis events. Publisher PDF

This paper investigates the intertemporal dynamics of borrower discouragement. Using a cross-country panel of firms that were resurveyed across the waves of the Survey on Access to Finance of Enterprises, we find that the probability of transitioning into discouragement changes over the business cycle and across bank financing products: term loans and credit lines. Past credit experiences and firm-level risk indicators are important factors in explaining the probability of being discouraged over time. We also analyse the transitioning out of discouragement, and show that firm-level improvements in credit history and profit outlook drive the transitioning out of the discouragement state.

Access to inexpensive short-term credit from banks is vital for many small and medium enterprises (SMEs), which face liquidity problems because of an imbalance between cash outflows and receipt of ...

The most dynamic economies in the world are characterised by an entrepreneurial, innovation-driven business sector. And this requires firms to unburden themselves from bureaucratic constraints and become more agile and flexible. A key, and hitherto ignored, agent in this transformative process is the freelancer. Historically considered as displaced and disenfranchised workers, we argue that many freelancers are in fact highly skilled professionals who choose this form of work organisation. Further, their role in providing specialist expertise and knowledge to the firms they engage with is critical and mutually beneficial as it allows firms to adopt more flexible and agile business models capable of responding to a dynamic and rapidly changing business environment.

Despite the growing recognition that freelancers or temporary contract workers are increasingly being used by organisations to enable them to become more dynamic and innovative, there is a lack of research exploring the extent and manner in which freelancers create value-added and affect net job change for employees. Most analyses view freelancers as substitutes for employees who compete for the same work and so add little or no value-added over that already provided by employees. More recent perspectives portray freelancers as non-competing complementary providers of differentiated labour who help create jobs for employees by enabling businesses to become more agile and entrepreneurial. We explore this empirical agenda and find that freelancers are associated with sales growth in businesses and net job creation for core employees. In the process, we also discover that in order to establish these effects, firms must achieve a critical mass of freelancers in their workforce of a scale around 11% before a positive association emerges. This finding has central relevance for managers seeking to use freelance workforce intensity to enhance business performance. Moreover, while it has some intuitive appeal, this discovery requires further research to fully understand its cause and the process generating this outcome.

Freelance solo self-employed have played a transformative role in economies over the last two decades. They have grown in number in the labour market in most developed economies and enabled firms to use new business and workforce models. In this special issue, we present a selection of research which explains and provides new insights into this phenomenon. The research unearths new findings showing that freelance solo self-employed are increasingly highly educated and play a key role in driving innovation, entrepreneurship and job creation. How this interplays across dependent and independent self-employed in terms of well-being, earnings and enablement of women’s work-life objectives are then explored. The problems in labour market segments involving the informal economy as well as the problem of ‘false self-employment’ of masked employees are also explored. In sum, the papers highlight both the importance and diversity amongst the freelance workforce and the purposes for which they are engaged by firms.

In this paper we use a large UK survey of business angels (BAs) investing in two different publicly supported schemes to directly question the role that investment motivations play in shaping investors’ appetite for risk. We dive deeper into the relationship between investment reasons and risk taking, by exploring the potential for a moderating effect derived from BAs’ past experience (i.e. financial and entrepreneurial experience). Our analysis reveals that both investment reasons (for return and for passion) have substantial explanatory power in shaping angels’ risk attitude, but their effect is moderated by the investors’ prior experience. This key finding represents important empirical support for what has so far been anecdotal evidence concerning BAs’ appetite for risk when investing.

In 2012, the UK government made the decision to offer loans to new entrepreneurs who were excluded from the credit market through the start-up loan (SUL) scheme. By 2021, loans totalling £759 million have been issued to 85,809 new start-ups. A disproportionate share of these SULs was issued to previously unemployed people to support their transition into self-employment. This paper questions whether those who started with the fewest resources achieved better or worse outcomes than those who started from a more beneficial position. Our findings show that previously unemployed start-ups had smaller loans and that they had a higher default hazard on their loans than entrants from waged employment, but more educated and older unemployed entrants survived longer. More generally, SULs to unemployed start-ups were cost-effective for the government in a loan portfolio sense, but once the benefits of supported entry into self-employment were fully accounted for, the overall contribution was very positive. This highlights the potential more comprehensive societal benefits of removing capital constraints by supporting the transition from unemployment to self-employment. Furthermore, we propose testing the effect of replacement start-up subsidies by soft loans in those countries, offering only direct grants, to increase the efficiency of public financial resources.

Business angels (BAs) - high net worth individuals who provide informal risk capital to firms - are seen as important providers of entrepreneurial finance. Theory and conventional wisdom suggest that the need for face-to-face interaction will ensure angels will have a strong predilection for local investments. We empirically test this assumption using a large representative survey of UK BAs. Our results show local bias is less common than previously thought with only one quarter of total investments made locally. However, we also show pronounced regional disparities, with investment activity dominated by BAs in London and Southern England. In these locations there is a stronger propensity for localised investment patterns mediated by the “thick” nature of the informal risk capital market. Together these trends further reinforce and exacerbate the disparities evident in the UK’s financial system. The findings make an important contribution to the literature and public policy debates on the uneven nature of financial markets for sources of entrepreneurial finance. Publisher PDF

Entry to export markets can stimulate business growth, yet remarkably few small- and medium-sized enterprises (SMEs) pursue export strategies. Using data gathered from the UK Small Business Surveys and a theoretical framework that combines principles from the resource-based view of the firm with notions of “investment readiness” and “managerial capacity,” we examine the empirical relationships between new product development (NPD) and new market entry (NME) capabilities on UK SMEs export decisions. Among other things, we find that there are contexts in which SMEs should develop these capabilities concurrently and others in which they should develop them independently to minimize added managerial complexity. Our results also indicate that in the absence of strong managerial capacity, SMEs should prioritize NME over NPD capabilities. Our findings produce several interesting theoretical and practical implications for SME exports.

Purpose The creation and distribution of human capital, often termed talent, has been recognised in economic geography as an important factor in the locational decisions of firms (Florida, 2002), and at a more general level as a key driver of economic growth (Romer, 1990). The purpose of this paper is to consider how talent is created and distributed across the cities of the UK and the key factors which are driving this spatial distribution. They also consider what the economic outcomes of these disparities are for cities. Design/methodology/approach The multivariate models can estimate the dynamic inter-relationships between human capital (talent), innovative capacity, and economic value added. These can be estimated, using talent as an example, in the form: human capital measurei =α0i+α1i innovative capacity +α2i quality of life + α3i labour market indicators + α4i economic indicators + α5i HEI indicators + β6i population demographics + β7i population + υi. Findings The first finding is that talent is unequally distributed across cities, with some having three times more highly educated workers than others. Talent concentration at the city level is associated with entrepreneurial activity, culture, the presence of a university, and to a lesser degree the housing market. This feeds into more knowledge-based industry, which is associated with higher gross value added. Research limitations/implications The research is limited in a practical sense by the fact that UK data at this level have only become available quite recently. Thus, it is only possible to capture talent flows and city growth in a relatively small window. But the prospects going forward will allow more detailed analysis at the city level of the relationship between talent flows and local economic growth. And additional insights could be considered relating to the on-going changes in the UK university system. Practical implications The question of whether universities are simply producers of talent or play a much broader and deeper role in the socio-economic landscape and outcomes of cities is an open one. This research has identified what the key drivers of city level economic growth and knowledge creation are, and sought to explain why some cities are capable of attracting and harnessing three times more talent than other cities. This has significant implications for the future development of UK cities and for those seeking to address these imbalances. Social implications Universities are a major economic agent in their own right, but they are increasingly being asked to play a wider role in local economic development. The authors’ evidence suggests that universities do play a wider role in the growth and development of cities, but that there are large discrepancies in the subsequent spatial distribution of the talent they create. And this has significant implications for those seeking to address these imbalances and promote a broader and less unequal economic landscape. Originality/value The authors explore how cities create economic value via a process whereby talent is attracted and then this stimulates knowledge-based industry activity. The originality relates to several key aspects of the work. First, the authors look at the stock of talent, and then the authors explore how “new” talent from universities is attracted by looking at graduate flows around the cities of the UK, differentiating between top-level graduates and less talented graduates. The authors then allow a wide variety of economic, cultural, and population factors to influence the locational decision of talented people. The results highlight the complexity of this decision.

This editorial introduces the papers addressing regional and spatial aspects relating to the demand for, and the supply of, finance for small and medium-sized enterprises (SMEs) and start-ups. Reflecting the breadth of financial instruments that are potentially available to SMEs and new ventures (e.g., business angel, bank credit and credit card financing), this special issue offers a combination of up-to-date studies that integrate the regional and spatial perspectives into the debate on SMEs and start-up financing. Overall, the papers contribute to an understanding of the mechanisms by which geography shapes access to finance for SMEs and new ventures, and the implications for local economic activity.

Loan guarantee schemes have existed since 1953 (in the US) and are widely used throughout the world to provide financial support to smaller firms by guaranteeing loans from commercial banks. The UK government has been an active supporter of loan guarantees since 1981, and has a long track record of modifying its scheme to reflect changing market conditions and the financing needs of its SME sector. Arguably the two most significant changes occurred in 2008 when the 5-Year Rule on eligibility was removed and in 2009 when the long-standing Small Firms Loan Guarantee Scheme was replaced by the Enterprise Finance Guarantee Scheme. We treat the removal of the 5-Year Rule as a natural policy experiment and empirically question whether, on economic grounds, this was a sensible policy. Our findings suggest that the 5-Year Rule was a better policy choice with regard to employment but had no impact on sales growth.

The UK Government introduced tax credits for SMEs to promote and support R&D in 2000. Since then the policy has become more generous in this respect, particularly since 2008. In this paper, we use the National Systems of Entrepreneurship as a conceptual framework in which to question whether SMEs take-up of tax credits has actually led to an increase in product, service, or process innovations. Our evidence suggests that (a) SME engagement with the policy is fairly randomly distributed across the sector, and (b) there is little additional product–service innovation to justify the expenditure in foregone taxes given the current distribution of credits, but (c) there is evidence of enhanced radical process innovations, particularly when combined with strong capability and planning at the firm level.

This paper examines the relationships between firm age and entrepreneurs experience on SME performance after the 2008/09 global financial crisis. We find that in general the crisis had a long-lasting scarring effect on the SME sector, but there is evidence of some recovery in performance. Interestingly, the well-established, and negative, firm age-growth relationship still holds, but entrepreneurial experience did not have any substantive effects on small business performance. Our findings suggest that the severity of the crisis meant that previous entrepreneur experiences had little value in this unique and uncertain environment. However, young firms still accounted for a disproportionately high share of growth, especially among the fastest growing firms.

High-technology firms per se are perceived to be more risky than other, more conventional, firms. It follows that financial institutions will take this into account when designing loan contracts, and that this will manifest itself in more costly debt. In this paper we empirically test whether the provision of a government loan guarantee fundamentally changes the way lenders price debt to high-tech firms. Further, we also examine whether there are differential loan price effects of a public guarantee depending on the nature of the firms themselves and the nature of the economic and innovation environment that surrounds them. Using a large UK dataset of 29,266 guarantee backed loans we find that there is a high-tech risk premium which is justified by higher default, but, in general, that this premium is altered significantly when a public guarantee is provided for all firms. Further, all these loan price effects differ on precise spatial economic and innovation attributes.

In the wake of the 2008 financial crisis, there has been increased focus on access to finance for small and medium sized firms. Some evidence from before the crisis suggested that it was harder for innovative firms to access finance. Yet no research has considered the differential effect of the crisis on innovative firms. This paper addresses this gap using a dataset of over 10,000 UK SME employers. We find that innovative firms are more likely to be turned down for finance than other firms, and this worsened significantly in the crisis. However, regressions controlling for a host of firm characteristics show that the worsening in general credit conditions has been more pronounced for non-innovative firms with the exception of absolute credit rationing which still remains more severe for innovative firms. The results suggest that there are two issues in the financial system. First, we find evidence of a structural problem which restricts access to finance for innovative firms. Second, we show a cyclical problem has been caused by the financial crisis and impacted relatively more severely on non-innovative firms.

This article concerns rates of wage growth among women and minority groups and their impact on pay gaps. Specifically, it focuses on the pay progression of people with more than one disadvantaged identity, and on the impact of merit pay. Recent research indicates that pay gaps for people in more than one disadvantaged identity category are wider than those with a single-disadvantaged identity. It is not known whether these gaps are closing, at what rate, and whether all groups are affected equally; nor is it known whether merit pay alleviates or exacerbates existing pay gaps. In addressing these issues, the analysis draws on longitudinal payroll data from a large UK-based organization. Results show that pay gaps are closing; however, the rate of convergence is slow relative to the size of existing pay disparities, and slowest of all for people with disabilities. When the effect of merit pay is isolated, it is found to have a small positive effect in reducing pay gaps, and this effect is generally larger for dual/multiple-disadvantaged groups. These findings run counter to the well-established critique of merit pay in relation to equality outcomes. The implications of this are discussed, and an agenda for research and practice is set out. © 2015 Wiley Periodicals, Inc.

Support for small businesses is often delivered separately for urban and rural areas, based on the idea that the barriers to business growth differ geographically. Yet firms in rural and urban areas will also differ in their characteristics, and these may be more important influences on firm growth than location. In this paper we test whether firms in urban, semirurals, and rural areas perceive each of eight obstacles to their success differently, based on a large sample of UK SMEs. After controlling for selection effects, rural and semirural firms are more likely to perceive regulation as a problem while rural firms are more likely to see the economy as an obstacle to success. We also find some evidence that skills shortages may be more acute for rural firms, once selection effects are controlled for. The results provide only limited support for geographically differentiated policy for small businesses. Keywords: SMEs, barriers to growth, enterpreneurship, rural enterprise

This article examines whether men in female-dominated areas of work are disproportionately drawn from disadvantaged groups – specifically in relation to minority ethnicity and disability. Whilst there is a developing literature on the experiences of men in female-dominated work much less is known about who they are. Using intersectionality as a framework, it is theorised that men with disadvantaged identities may be less able to realise their gender advantage and avoid – or move out of – low-level and part-time feminised work. These expectations are tested with a quantitative analysis of personnel records for a large organisation with a workforce across the UK (n = 1,114,308). Analysis is based in consecutive years of data collection in the decade to 2006. Statistical analysis based on chi square tests show that not only are men with disadvantaged identities disproportionally more likely than other men to be found in female-dominated low-status work, but that they are relatively more likely to be so than are their female counterparts. Men from ethnic minorities, but not those with a disability, are also disproportionately more likely to be found in feminised part-time work. Both men from ethnic minorities and men with disabilities are disproportionally less likely than other men to ride the glass escalator to higher-level work. The article concludes that the intersectional effects of gender, ethnicity and disability sort disadvantaged men into lower-level and part-time work alongside women, and considers the implications for the study of men in female-dominated occupations, and of intersectionalities.

•The gender gap in Old Europe has diminished significantly and is estimated to be as low as 6–7%.•The gender gap in New Europe remains large and could be as high as four times that in Old Europe.•The propensity to become self-employed increases in age past the common retirement age of 65.•The education structure of the self-employed is such that the lowest and highest educated both prefer self-employment.•Political and economic turmoil takes a generation to work its way through the system, but it is associated with higher rates of self-employment.

Loan guarantee schemes are used in many countries to provide financial support to small firms by guaranteeing loans from commercial banks, but questions remain about whether public intervention in private credit markets to support entrepreneurial firms is justified. This paper examines whether the UK Small Firms Loan Guarantee Scheme (SFLG) provides value-for-money to the UK tax payer, presenting a regression based performance approach which then feeds into a formal cost–benefit analysis. Specifically, we consider whether firm performance post-investment is such that it justifies the governments’ presence in the lending market and the costs associated with it. Our findings suggest that entrepreneurial firms that are able to access new finance through SFLG achieve superior performance in the form of improved sales, job creation and exports and that this justifies public intervention in private credit markets.

This paper makes the case that the current single-axis approach to the diagnosis and remedy of pay discrimination is inadequate in the case of multiple disadvantage. While a good deal is known about pay gaps, particularly those affecting women, less is known about those affecting people in other disadvantaged groups and those in more than one such group. This analysis of multiple years of pay data, n = 513,000, from a large UK-based company shows that people with more than one disadvantaged identity suffer a significantly greater pay penalty than those with a single disadvantage. The data also suggest that penalties associated with multiple disadvantage exponentially increase. In other words, disadvantages seem to interact to the detriment of people at ‘intersections'. The paper considers the implications for policies aimed at reducing pay inequalities. These currently take a single-axis approach and may be misdirected.

The availability of credit to entrepreneurs with good investment opportunities is an important facilitator of economic growth. Under normal economic conditions, most entrepreneurs who requested loans receive them. In a global financial crisis, popular opinion is that banks are severely restricting lending to smaller businesses. This assumes that low levels of investment are caused by supply-side restrictions in the credit market. Little is said about potential changes in the demand for credit and how it is influenced by entrepreneurs’ perceptions about supply-side restrictions. One particularly interesting, and under-researched, group of small businesses is that who have potentially good investment opportunities, but are discouraged from applying for external funding as they fear rejection. In this study, we question whether these entrepreneurs were correct in their assumptions. We find that levels of discouragement are quite low in general at 2.7 % of the total smaller business population. Further analysis implies that 55.6 % of discouraged borrowers would have got loans had they applied.

Purpose The purpose of this paper is to investigate how entrepreneurs demand for external finance changed as the economy continued to be mired in its third and fourth years of the global financial crisis (GFC) and whether or not external finance has become more difficult to access as the recession progressed. Design/methodology/approach Using a large-scale survey data on over 30,000 UK small- and medium-sized enterprises between July 2011 and March 2013, the authors estimate a series of conditional probit models to empirically test the determinants of the supply of, and demand for external finance. Findings Older firms and those with a higher risk rating, and a record of financial delinquency, were more likely to have a demand for external finance. The opposite was true for women-led businesses and firms with positive profits. In general finance was more readily available to older firms post-GFC, but banks were very unwilling to advance money to firms with a high-risk rating or a record of any financial delinquency. It is estimated that a maximum of 42,000 smaller firms were denied credit, which was significantly lower than the peak of 119,000 during the financial crisis. Originality/value This paper provides timely evidence that adds to the general understanding of what really happens in the market for small business financing three to five years into an economic downturn and in the early post-GFC period, from both a demand and supply perspective. This will enable the authors to consider what the potential impacts of credit rationing on the small business sector are and also identify areas where government action might be appropriate.

This article uses empirical evidence from the UK to consider how demand for external finance changed as the economy entered recession and whether external finance became more difficult for entrepreneurs to access as the recession progressed. It finds that larger firms and those experiencing declines in sales were more likely to maintain or increase their demand for external finance. The opposite was true for women-led businesses. Generally, finance was more readily available to larger and older firms throughout the recession. At its peak 119,000 (10% of the total stock) smaller firms were denied credit in a three-month period.

Policies to stimulate enterprise in deprived areas typically attempt to remove the specific obstacles faced by firms in deprived locations. Yet there is little evidence that firms in deprived areas actually perceive different problems to those in more affluent places. Alternatively, different types of firms may locate in deprived places. This article uses a sample of 7670 English SMEs to investigate this issue. It asks two questions: Do firms in deprived areas perceive different barriers to success than other firms? And is this because of their location (a ‘place’ effect) or other characteristics (a ‘firm’ effect)? We find only limited evidence that ‘place’ effects are in operation: of nine potential obstacles only a lack of access to finance is significant, controlling for other firm characteristics. However, this finding may be important given that firms in deprived areas are equally likely to be growth orientated.

This paper uses a unique, longitudinal data set of UK and German new technology-based firms (NTBFs) to investigate the determinants of internationalization and firm survival. Specifically, it tests the influence of absorptive capacity, inter-firm specific relationships and international exposure on survival. Its key findings are that high absorptive capacity increases survival probabilities; specific customer–supplier relationships enhance survival; and the greater the firm’s exposure to internationalization activity, the higher its subsequent chance of survival. Thus, the paper provides evidence that young firms are more likely to survive when they pursue an internationalization strategy based on resource consolidation.

It is a widely held perception, although empirically contentious, that credit rationing is an important phenomenon in the UK small business sector. In response to this perception the UK government initiated a loan guarantee scheme (SFLGS) in 1981. In this paper we use a unique dataset comprised of small firms facing a very real, and binding, credit constraint, to question whether a corrective scheme such as the SFLGS has, in practice, alleviated such constraints by promoting access to debt finance for small credit constrained firms. The results broadly support the view that the SFLGS has fulfilled its primary objective.

We investigate the determinants of the number of outside directorships held by chief executive officers (CEOs) of small, unquoted companies. CEOs of growth-oriented firm's hold more outside directorships, as do CEOs of more complex firms. This reflects the need to acquire external resources and develop internal human capital. Synergy effects were also evident in particular industries. On balance there was little evidence of perquisite consumption and some evidence that boards do have a disciplining role.

This essay critically examines twenty-two studies designed to measure the competitiveness of cities and city-regions. We suggest that while this research may show statistical correlations between different dimensions of competitiveness, there is little in the way of causation. More fundamentally, our main point is to question the utility of such studies. Regional disparities in terms of wealth and living standards are well known; simply recasting the spatial scale to the city or the city-region does not change the underlying fundamentals of regional performance.

This paper examines the different theories that have been developed in economics and innovation management to explain the causal chain of events through which entrepreneurs can deliver more innovation and ultimately higher growth for the benefits of the regional and national economies and identifies the key firm-based factors that lead to survival and long term development of high technology firms. It determines the extent of the entrepreneurial activities and possible factors that constrain or assist the growth process of these firms. It then draws upon the key predictions of the core theories of entrepreneurship and innovation to formulate a model for measuring the characteristics of entrepreneurial hi-tech firms, characteristics of innovating firms, and innovation and firm growth dynamics. The model is developed to explain these key building blocks that might lead to enhanced prior economic growth and the patterns and dynamics observed in a developing country context.

Despite the importance of high technology firms to the global economy, relatively little is known about factors contributing to these firms’ long-run growth. We examine these factors using a unique longitudinal dataset combining two waves of detailed surveys of 345 UK high tech firms with performance data from UK official datasets. Overall we conclude that the early strategic decisions made by firms have long-run impacts on their subsequent growth, and we suggest that policy measures targeted at shortfalls faced by these firms may have positive long-term consequences.

This article uses UK data to consider how small and medium-sized enterprises (SMEs)1 coped during the recent financial crisis. This is important, as SMEs are major contributors to job creation, but are vulnerable to falling demand. It finds that 4 in 10 SMEs experienced a fall in employment during the recession, and 5 in 10 experienced a fall in sales. Within 12 months of the recession, three-quarters of entrepreneurs had a desire to grow. This suggests that while the immediate effects of recession are severe, entrepreneurs recover quite quickly. Importantly, the analysis found that recessionary growth is hugely concentrated among entrepreneurs with the highest human capital.