Targeting for Growth: A critical Examination

Professor David Smallbone, Kingston University
Professor Claire Massey, Massey University

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Introduction: This paper aims to contribute to the debate about targeting policy support on SMEs with growth potential. The approach combines a critical examination of key literature and targeting practices,  combined  with  analysis  of the growth characteristics and performance of a longitudinal panel of SMEs in New Zealand during the period 2007-9 to explore a number of targeting issues.  Key questions considered include why target for growth? How can targeting for growth be best operationalised? Is it time for a more radical approach?

In the current economic circumstances, governments throughout the world are restating the need to encourage and assist new and established businesses to reach their growth potential. In the UK, for example, according to the new Minister for Business, Innovation and Skills, this involves narrowing the gap between the 70% of SME employers  who  aim to grow their businesses and the 20% who achieve it(http://interactive.bis.gov.uk/comment/growth/section-2/).  In New Zealand, the  policy focus  is  on  high  growth firms and those that are ‘export ready’.

The rest of the paper is divided into three main parts: firstly a discussion of some of the key targeting issues; secondly, a review of some key literature on SME growth from a targeting perspective; thirdly, empirical analysis of the growth performance of a panel of SMEs in New Zealand to bring out some of the practical issues involved in targeting. The concluding section of the paper includes implications for future policy.

Key words: targeting; growth; SME; public policy; New Zealand

2010, London

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