Thursday, November 15, 2007


The Organisation and Performance of Minority Firms

(This is an extract from the forthcoming book, `British Caribbean Enterprises’)

The minority firms sector contributes about £32 billion per year to the UK economy. This figure has been used repeatedly by public, private and independent sources to measure economic performance, although there is no reliable information and data to suggest how this sector is organised and how various sectors and segments perform across the 12 Regions, more so their impact on the regional economy in the UK as a whole.

Since early 2007, RDAs were mandated to take control of Business Link, the `one-stop type shop’ set up by the Tory administration in the 1990s, following on the heels of the Training and Enterprise Councils (TECs) which were subsequently replaced by the Learning Skills Councils (LSCs) in 2000 by the Labour government. Merely changing the guard or sentry without transforming the system is a lesson in tinkering management, to say the least. The fact that little is known by the public about the overall organisation and performance of minority firms in the UK in the 21st century is an indictment on a system that boasts loudly about its democratic credentials such as fairness, equality, tolerance and so forth.

Since the 1971 ground-breaking Bolton Report on small firms, there have been a plethora of reviews and enquiries on problems and issues affecting the UK’s SME sector. From the early 1980s when there was civil unrest in English inner-cities because of unemployment, deprivation and exclusion affecting sections of the black community, to the present, a proliferation of studies has been done on minority firms within the context framework of immigration, race and discrimination. Very little formal evidence has been produced to show firstly, where key firm sectors are located and the segments therein; secondly, the differences between firms in London, the Southeast and other parts of England and Wales; and thirdly, very little has been done, until recently, on the contribution social enterprises make to the economy. Again too, a bit of statistics exist in this respect, with little by way of case studies. The reason given, social enterprise is a relatively new area of study, yet this trend has evolved since the early part of the last century in Britain and Europe.

Why Organisation?

The organisation of firms is of particular interest to society, since consumers especially, can make informed choices as to the type of firms they ought to engage with in terms of products and services. If the information is unavailable, it is difficult for consumers to make the right choice. While company advertisements can help in this process, the fact that large companies receive unfettered media coverage, it is only fair that SMEs should also be granted similar concessions. This of course is an area of controversy, bordering on commercial necessity versus size and composition.

On a broader level, policy-makers can make a better `quality’ judgement on resource efficiency in terms of budgetary allocation to key districts and regions where there is evidence of underperforming firms or those at risk of closure. The organisation of firms includes existing management and staffing levels, the structure of the organisation and the relationship with industry alliances, consumers, public institutions and other agencies involved in the distribution and supply chain process.

Evaluating the organisation of SMEs is also critical towards understanding their` case histories’ and being able to diagnose problems-areas more effectively. The desire to stereotype or create `myths’ about firms on the basis of colour, ethnicity and or/diversity, therefore becomes less of an issue. This approach is even more applicable when authorities are trying to raise the profile of minorities in the eyes of cynics, some of whom consider settler-communities as either a `negative’ competition or a drain on the public purse even in light of migrants’ contribution to the British economy.

Performance Route

The performance of minority firms is critical to local and regional economic planning. In almost every region, there are pockets of businesses that remain unsupported even though statutory agencies located in these areas to render technical assistance and enterprise support. A survey conducted by this author, supported by a Midlands Counties’ university, showed that more than 60% of all minority businesses had no access to mainstream support. Many were managing businesses on their own, with piecemeal support from accountants, solicitors, family and friends. For example, Caribbean businesses have a market share performance of approximately 11% per annum and only a small fraction of owners have accessed genuine support to enhance growth and expansion.

For the past five or so years, the Small Business Service has been carrying out an annual survey of the SMEs. The information contained in these reviews is limited to the number of firms, selected segments (with no segments included), estimated turnover and other basis data. It is often difficult to know the number of firms in each of the 12 UK Regions. There are no performance ratios in relation to industry sector markets, purchasing power of consumers and generally measurements (qualitative and quantitative) showing the effect of minority firms on regional economies in the country.

In addition, there are usually no case studies to support the evidence presented. The survey appears to be a simplified version of number-crunching rather than a rigorous attempt to examine and analyse the organisation and performance of minority firms on a sector-by-sector basis. The survey excludes the estimated total value of each minority firm by ethnic origin. This information is essential because it enables public institutions in particular, to have a balanced picture on the state of minority firms (at any given time). Moreover, it helps greatly, medium and long-term planning, thereby preventing politicians making uninformed disclosures, or worst making empty promises.

The Process

The time is right for intensifying the evaluation of all sectors of the SME in the UK. In recent years, Britain has slipped from fourth to nearly the 12th position in the OECD Group of Countries. To regain its competitive advantage, the country will have to not only to place wealth creation as a priority, but monitor the players involved in this process. All three political parties have excluded definitively, the importance of evaluating the organisation and performance of minority firms which make –up a substantial portion of the GDP, let alone employment, new technology and innovation, along with stability and prosperous neighbourhoods.

· Every region should develop a proper database of firms operating in wards and districts;

· Existing Intelligence Observatories should be updated to reflect current population indices and performing outputs across cultural and ethnic diversity;

· Adopting a sector-based approach is vital since this can trap information that may appear to be problematic;

· The use of community expertise is also important – the training of lay researchers is a useful way of supplementing untrained staff;

· Co-ordinating research activities with central government, universities and other documentation centres are crucial; and

· Annual evaluation and study sessions with sections of the minority community are also appropriate means to obtain best results.

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