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SBE Lect 3_ Part 2: Ch3.5- Ch4 (Why these changes? (Continued…
SBE Lect 3_ Part 2: Ch3.5- Ch4
Business perspective:
The situation before the 1970s
slide 6/32
What does the ‘U’-shaped pattern imply?
Possible interpretation:
Large manufacturers’ employment share increased because they were better able to take advantage of cost advantages (economies of scale)
But in 1970s some large UK manufacturers became increasingly uncompetitive leading to bankruptcy
◦ Are the small businesses doing so well or are the large ones doing so badly?
Stabilization after 1980?
Employment shares of small and medium-sized UK enterprises, 1980 – 2006
Even a decline of employment in medium-sized businesses
1/17/2019
Proxies for business population
Number of UK businesses and VAT stocks
1980 – 2006
“Jump” in 1980s
Why these changes?
Continued restructuring of the labour market: self- employment seen as a route out of unemployment --> Not clear if this is desirable from societal point of view
Macro-economic stability for much of the 1990s-2000s
Thatcher governments ideologically committed to the development of the ‘enterprise culture’
There was an expansion of the service economy: firm’s competitive advantage increasingly based on behavioural advantages (e.g. flexibility, speed) rather than costs (price)
Individual perspective:
What about the self-employment rate?
Percentage of UK labor force in self-employment, 1959 – 2007
“Jump” to new equilibrium?
see slides 8-9/32
Summary Chapter 3.4
Entrepreneurship rates
increased
since the 1970s (especially in 1980s)
Growth levelled off in 1990s
Move from the “managed” to the “entrepreneurial” economy (shifting focus from firm to entrepreneur)
What has changed?
ICT, mass production less important (customization), increased importance of the
service sector, political support
Younger people not more likely to be self-employed despite the development of an ‘enterprise culture’ --> Occupational vs. behavioural notion of entrepreneurship
Occupational vs. behavioral notion of entrepreneurship SLIDE 10/32: Is the following table in line with: “higher SME and self-employment rates do not imply higher shares of “entrepreneurial” individuals”