LARGE FIRMS OR SMALL FIRMS

Large Firms or Small Firms

Large Firms or Small Firms

Introduction

Developing a group of diverse and competitive small and medium enterprises (SMEs) is a central theme towards achieving sustainable economic growth. In UK, SMEs are crucial to the economic growth process and play an important role in the country's overall production network. Some advanced economies have succeeded because SMEs form a fundamental part of the economy, comprising over 98% of total establishments and contributing to over 65% of employment as well as over 50% of the gross domestic product (Dill 2007 pp.60-70). Although the numbers might be lower in UK, SMEs have the potential to contribute substantially to the economy and can provide a strong foundation for the growth of new industries as well as strengthening existing ones, for UK's future development. Therefore, this essay expounds the role and significance of small and medium sized enterprises and demonstrates contributions to economy and society in UK.

Discussion

Small businesses are the backbone of the UK economy. Nearly 25 million small businesses employ more than half of the entire private work force in UK. Over the last decade, small businesses have been an economic juggernaut for our national economy. In those years, small businesses created 75 percent of all new jobs, developed over 50 percent of new technologies and innovations, generated over half of private GDP, and provided the stable economic and social base essential to our towns and communities(Dill 2007 pp.60-70).

Very few of us are aware of the contribution small businesses make to the UK economy. According to the Small Business Administration, in 1988, the United Kingdom had approximately 19 million businesses. Of those, 15.7 million were operated as sole proprietorships - the businesses that traditionally train the work force by employing young people in their first jobs and women returning to the work force in local or part-time jobs.

Of the remaining 3.3 million corporations and partnerships, a full 99.8% employ fewer than 500 people and are classified as small businesses for Small Business Administration programs. And of the 10.5 million jobs created in the private sector between 1980 and 1986, 6.6 million (or 63.5%) were created by small business.

Since people who own and operate their own business take "pride" in their work, it is common for their quality and efficiency to be much higher. In many cases small businesses are known for providing their customers personalized and customized, high-quality products and services (Stiglitz 2006 pp. 149-164).

Just compare a "temp help" in a big company with an independent home-business owner. If a temporary is hired for 40 hours per week, he or she may not give the customer-company 40 hours in production. Part of those 40 hours is spent on orientation, gathering office supplies, getting the computer turned on and paper loaded, etc.) This breaks down the actual time spent working and producing for the company to about 25 hours, with 15 hours lost per week through no fault of your (or their) own (Stiglitz 2006 ...