RAKE 2010 Research Projects

Social Enterprise: Bootstrapping as a Strategic Response to Recession

Dr Dilani Jayawarna, Mr Mike Bull and Dr Valerie Antcliffe of Manchester Metropolitan University 

Throughout the economic downturn and subsequent recovery, young SMEs struggle to survive. Many therefore seek to develop innovative and sustainable strategies of resource acquisition in order to outlive the recession. One such strategy is ‘bootstrapping’; the sharing of resources at little, subsidised or no financial cost to the business, in order to mitigate unnecessary outgoings.

While the impact of recession on SMEs is well- documented, the effect of recession on small social enterprises (SSEs) remains under-researched.   SSEs are primarily driven by social objectives. To survive, and to achieve their social objectives, SSEs need to generate surplus and remain economically sustainable, notwithstanding recessional dangers.

This pilot study will explore bootstrapping as a strategy for resource acquisition among SSEs in collaboration with SENW (Social Enterprise North West) and TW (Together Works – The Social Enterprise Network for Greater Manchester). The ‘social’ dimension of SSEs suggests that they may be able to draw on stocks of social capital (value inherent in network ties) and ethical capital (values, moral action) in order to cope during recession. Moreover, there may be a non-economic dimension to bootstrapping in SSEs, whereby the environmental costs of enterprise are reduced where resources are shared. We hypothesise that the nature of bootstrapping behaviour in social enterprises will be different from that of traditional SMEs.

The study’s exploratory design aims to develop a new and relevant research agenda within the social enterprise sector, which will stimulate knowledge transfer and exchange between academia, policy makers and social enterprises

On the Road to Recovery: a Longitudinal Analysis of Small Firm Survival and Growth Strategies in Post Recessionary Conditions

Professor David Smallbone, Dr John Kitching, Dr Mirela Xheneti and Eva Kasperova of Small Business Research Centre, Kingston University 

The study is concerned with the challenges and opportunities facing small firms as the economy moves out of recession, and the strategies used by owners and managers in response. The study builds on results of previous research undertaken by the authors focusing on the responses of small firms to economic downturn, which was reported in a prize-winning paper at the ISBE Conference in 2009. The 2009 study emphasised the variety of responses of small firms to recession but also their underlying resilience, which is associated with a high level of flexibility.

One of the key unanswered questions emerging from the previous study concerns the implications of the different forms of adaptation undertaken by firms in 2008-9 for their medium- and longer-term performance prospects. To what extent can SMEs sustain their resilience? To what extent do  the strategies previously adopted to survive the recession affect the scope for management action once the economy begins to pick up?.

One of the novel aspects of the project is the use of longitudinal case studies, which involves interviewing a group of firms that were previously interviewed in 2009. A longitudinal dimension offers considerable value added by enabling change over time in individual firms to be studied, as well as examples of learning behaviour and the effect of strategic choices on subsequent management decision making and business performance.  The purpose of the interviews is to obtain qualitative data on firms’ adjustment processes and to understand how and why firms adapt their behaviour in the ways they do, and with what consequences.

Making the transition from informal to formal enterprise: Barriers and policy solutions

Professor Colin Williams and Dr Sarah Nadin of Sheffield University and Aaron Barbour of Community Links 

The aim of this project is to improve understanding of the barriers that hinder enterprises from making the transition from the informal to the formal economy. To do this, firstly, evidence will be collected on the nature of the barriers that prevent informal enterprises from making the transition to the formal economy. This will involve desk-based research to synthesise the findings of previous studies conducted across the world, in conjunction with gathering qualitative primary data through face-to –face interviews with 20 in London operating partially or wholly in the informal economy.

Secondly, and having established a fuller understanding of the barriers to formalisation, two knowledge exchange seminars  involving high-level experts will be held to explore how these barriers might be tackled so as to encourage and support the formalisation of this entrepreneurial venturing. One will be UK-centred and comprise senior officials in the multiplicity of governement departments and agencies interested in tackling the informal economy (HMRC, GLA, DWP, HSE, HO, NAO, DCLG) and social partners (trade union and employer federation representatives).

The second knowledge exchange event will have an EU-wide focus, be hosted by Community Links in London and will involve: European Commission representatives from DG Employement, trade union, employer federation and ‘think tank’ representatives and academics. The outcome will be a better understanding of the barriers that prevent informal enterprises from legitimising and the policy options that public policy can pursue to smooth this transition.

An Analysis of UK Regional Development Agency Support on Company Value: Evidence from Yorkshire Forward

Professor Nick Wilson, Dr Ali Altanlar, Dr Iain Clacher and Mr Gianluca Veronesi of Leeds University  

The aim of this project is to analyse the impact of public sector support on SME growth and survival. The project analyses the probability of firm survival and identifies those firm characteristics that lead to the highest chance of growth and survival where support has been provided. Moreover, the project analyses the impact of both financial and non-financial support on firm value and also different combinations of support. Consequently we are able to identify optimal investments from the perspective of Yorkshire Forward and also optimal levels of support and the impact this has on company survival, growth and value.