SMALL BUSINESS AS REGIONAL EMPLOYMENT GENERATOR

Traditionally, the engine of local and regional economic development and employment growth has been perceived to be investment in new or expanded large-scale industrial or commercial facilities. Indeed, that is the basis upon which the greater part of local development efforts still rely. In recent years, however, an alternative view has been put forward and widely accepted. This view sees small business as a key element in economic development, and, especially, in the generation of new employment. While not without its critics, this conception of small business as a principal source of dynamism in local and regional economies suggests the need for careful assessment of the role and nature of small business. Such an assessment has thus far been based largely on statistical analysis of the employment-generating effects of small business. The intent of this paper is to complement that work with a grounded picture of small business as revealed in case interviews with a limited number of firms. But before discussing the results of the survey, it is useful to recapitulate the status of investigations into the role of small business in the aggregate.

In the United States, research on the employment effects of small business is largely associated with the work of David Birch. Birch's initial study (1979) was based on a very large data file of firms collected by Dun and Bradstreet, a credit rating organization.