15 Enterprise support in deprived urban neighbourhoods
Some challenges and lessons for government intervention
Abstract
Government intervention has increasingly identified deprived communities as a key focus for enterprise support. This chapter examines attitudes and perceptions to enterprise support in a deprived community in the UK city of Leeds. A survey of 142 entrepreneurs and potential entrepreneurs, and 18 follow-up in-depth interviews with entrepreneurs, were conducted with people living in the study area. The survey examined the entrepreneurial activity of members of the community, and usage of enterprise support. The chapter finds that certain forms of enterprise support in deprived communities may actually discourage entrepreneurship. Also, where entrepreneurial ventures are supported they tend to operate in activities relating to generic trades with low entry barriers, with many enterprises having little actual or perceived requirement for external support, as it was likely that these would have been established with or without support. Increased investment in the supply of enterprise support may not lead to increased levels of entrepreneurship. Support which aims to engage with people who have never considered starting a business, or do not have the skills required to launch and grow a venture, is unlikely to be cost-effective given their low growth potential.
Introduction
Entrepreneurship is frequently recognized as a crucial element in fostering economic development and growth at national, regional and local levels (Wennekers and Thurik, 1999; Reynolds et al., 1999, 2000, 2001; Audretsch et al., 2006; Carree and Thurik, 2006; Romer, 2007; Michael and Pearce, 2009). This has led to a wide range of public policies being enacted to harness entrepreneurship (Mole and Bramley, 2006; Huggins and Williams, 2009). As Mole and Bramley (2006: 905) state, while policy makers around the world ‘are concerned with similar issues and objectives, [they] make very different choices in the way they design policies’.
This chapter focuses on enterprise support in the UK, which has seen a great deal of policy intervention in recent years (Blackburn and Ram, 2006; North and Syrett, 2006, 2008a, 2008b; Devins, 2009; Huggins and Williams, 2009). In particular, harnessing entrepreneurship in deprived areas is seen as being a key element in enhancing economic development through job creation and increased productivity, as well as ensuring heightened social inclusion (Blackburn and Ram, 2006; Welter et al., 2008; Huggins and Williams, 2009). Yet the challenges of supporting new business ventures are particularly acute in deprived areas (Greene et al., 2004, 2007; Usher and Devins, 2006). Deprived communities have low levels of entrepreneurship (Department for Business, Enterprise and Regulatory Reform, 2005; HM Treasury, 2008), which are often stubborn and persistent (Chatterton and Bradley, 2000; BERR, 2005; HM Treasury, 2008). The aim of this chapter is to examine support for business start-ups in a deprived community in the city of Leeds, UK, and to provide lessons for policy development. The chapter investigates whether enterprise support in deprived communities is effective, as well as whether or not the focus should be on more traditional forms of economic development such as job creation programmes. In doing so, the chapter provides implications for policy makers, which is particularly pertinent given that the Conservative-Liberal Democrat coalition government, elected in 2010, has stated that they will continue to aim to actively foster entrepreneurship, for example through the Local Enterprise Partnerships (LEPs). LEPs are being formed in part to replace the Regional Development Agencies set up by the previous Labour Government and will be joint local authority-business bodies to promote local economic development (HM Government, 2010a). LEPs will act as a mechanism to continue to equip start-ups in deprived areas with the support and mentoring to match their needs (HM Government, 2010b).
In the next section of this chapter literature on the aims and strategies of publicly funded enterprise support in deprived communities is discussed. Reviewing policy literature in this area reveals an emphasis on the quantity of support, rather than quality of outcomes, which presents challenges for effective policy making. The following section presents a conceptual framework for examining enterprise support in deprived communities. The results section reports the findings of a survey with entrepreneurs and potential entrepreneurs, and follow-up in-depth interviews with entrepreneurs operating in deprived areas of Leeds. The survey and in-depth interviews explore the types of businesses set up, sources of help and advice, and the use of publicly funded advice and support. The results highlight the challenges of enterprise support, with businesses that receive support tending not to impact on local employment or productivity. Furthermore, it is found that, despite the policy investments made, take-up of support is low. The chapter then reflects on the findings, particularly in the context of future policy development, and is followed by some concluding remarks.
Supporting entrepreneurship in deprived communities
Government policy makers recognize that an enterprising small business sector contributes to economic performance by creating and implementing novel ideas (Bennett, 2006; Huggins and Williams, 2009). This has led to government taking steps to actively support small business start-ups growth (Reynolds et al., 2001; HM Treasury, 2002; HM Treasury, 2008; Huggins and Williams, 2009). Policy makers see small businesses as facing particular challenges compared to large businesses, with market failures likely to be permanent unless steps are taken to address them (Huggins and Williams, 2009). Therefore, resources have been put into providing and/or funding free or subsidized advice services for small businesses (Johnson et al., 2007).
Greene et al. (2004, 2007) argue that policy makers have not learnt from previous lessons, as aiming to raise new firm formation rates in deprived areas where one in four new business starts are in motors, hairdressing or beauty will be unlikely to enhance substantively employment, productivity or the welfare of that area. It is argued that the net effect of such policies is that public money is used to encourage unemployed individuals to start a business in these sectors, but serves primarily to displace other unsubsidized traders in the locality with no obvious benefit either to the local consumer or to the economy in general (Storey, 1998; Armstrong et al., 2002; Leeming, 2002; Greene et al., 2004, 2007).
In the UK, localized areas of disadvantage are persistent (Chatterton and Bradley, 2000; BERR, 2005; North and Syrett, 2006). The government view is that this is due to three key issues: first, a weak economic base, with barriers to work for individuals, poor skills or connectivity, or factors discouraging business investment; second, poor housing and local environments and unstable communities, characterized by concentrations of poor vulnerable residents, high levels of disorder and antisocial behaviour, and poor physical connectivity with labour markets; and, third, poorly performing public services and support delivery to deprived areas (Cabinet Office, 2005; HM Treasury, 2007).
Deprived communities display low levels of enterprise, and the relationship between deprivation and entrepreneurship has been the subject of study for a number of years (Boraston et al., 1996; BERR, 2005; HM Treasury, 2008; Devins, 2009). Indeed, the government states that the business start-up rate in the 20 most deprived local authority areas is half the rate of the 20 most prosperous areas (HM Treasury, 2008). The gaps mean that a critical mass of businesses, which Porter (1995) states is vital to regenerating deprived areas, is not being established.
Initial programmes focused on deprived communities in the UK included the Phoenix Development Fund, which was launched in 1999 to support innovative projects in disadvantaged areas and within underrepresented groups, and Enterprise Areas, which consisted of support for the most deprived 15 per cent of wards or areas in England and Scotland, and the most deprived 42 per cent of wards in Wales and Northern Ireland (HM Treasury, 2003; Huggins and Williams, 2009).
In recent years, the key mechanism for providing support in deprived communities has been the Local Enterprise Growth Initiative (LEGI) (Convery, 2006; Huggins and Williams, 2009). LEGI aims to provide investment in deprived areas – such as the community studied in this chapter – to support locally developed proposals which stimulate economic activity and productivity through enterprise development (HM Treasury, 2005; HM Treasury, 2007). The programme further aims to: increase entrepreneurial activity among the population in deprived areas; support the sustainable growth and reduce the failure rate of locally-owned business in deprived areas; and to attract appropriate investment and franchising into deprived areas, and make use of local labour resources (HM Treasury, 2005). As such, the programme provides support, advice and financial backing to entrepreneurs and potential entrepreneurs in deprived communities (HM Treasury, 2005; Usher and Devins, 2006; Huggins and Williams, 2009).
Other scholars have suggested that policy makers with a remit for interventions in deprived communities need to consider the possibility that providing incentives to individuals who do not necessarily have the skills, knowledge or capacity to succeed as an entrepreneur may result in low quality entrepreneurship being fostered (Storey, 1998; Greene et al., 2004, 2007; Welter et al., 2008; Shane, 2009). Within deprived communities, residents are often viewed to be lacking in key entrepreneurial attributes and skills (Storey 1994; OECD, 2003; Taylor and Plummer, 2003; HM Treasury, 2005; Slack, 2005; Welter et al., 2008). However, the LEGI programme is targeting individuals who may not recognize entrepreneurial skills in themselves, or have not identified an opportunity, and have, therefore, not considered entrepreneurship.
Westhead et al. (2004) state that, to be more effective, policies should focus on supporting those individuals with existing business experience and interests, as they have greater capacity to yield impacts on wealth and employment. If businesses are established by entrepreneurs who lack skills, knowledge and experience, this can impose a growth penalty on deprived areas caused by an increase in the quantity of new start-up businesses, but a fall in the overall quality (Carree et al., 2002; Greene et al., 2004, 2007). A potential hazard is that intervention can incentivize the least able (Shane, 2009). However, it is not always the ‘most able’ who become entrepreneurs, as entrepreneurs can be created when individuals have no meaningful alternatives (Lazear, 2005) or suffer from negative experiences (Friedman, 1986; Sherrarden et al., 2004). Consequently, interventions may need to identify start-ups with a low probability of growth and job generation, remove the incentives to start-up for those individuals, and instead encourage only high-growth, knowledge-intensive businesses (Shane, 2009).
Nevertheless, a key element of intervention is to increase the support available and increase the number of people using publicly funded advice. Take-up of government support services by businesses is low at the national level (Curran and Blackburn, 2000; Mole, 2002a; HM Treasury, 2008), and take-up of support is particularly low within deprived areas (Scott et al., 2005; Usher and Devins, 2006). While support services are available in deprived communities, their effectiveness can be limited by negative perceptions about who it is for, what is available, how much it costs and the bureaucracy involved (HM Treasury, 2005; Scott et al., 2005), and enterprise support agencies can experience difficulty in maintaining client relationships (Mole, 2002b; Usher and Devins, 2006).
In summary, the literature suggests that there is potential for enterprise support to impact on the entrepreneurial capacity of particular communities, as measured by new business generation. However, there is also the possibility that impacts will vary depending upon the type of communitywhere support is available, as cultures of entrepreneurship vary across population groups and areas (Williams, 2007a, 2007b). Table 15.1 illustrates the key propositions emerging from the literature review of entrepreneurship in deprived communities. In particular, the literature leads to four key questions which we seek to explore empirically in the remaining sections of this chapter.
The study area
The deprived community studied is located in the city of Leeds and covers the neighbourhoods of Chapeltown, Harehills, Beeston, Seacroft and West Leeds. Leeds, which has a population of over 772,000, is the largest centre of financial and business services outside London (Leeds City Council, 2009). The city has experienced strong economic growth in the last two decades. However, this growth has not benefitted all areas (Social Exclusion Unit, 2004; Leeds City Council, 2008, 2009). Indeed, the city has some of the highest concentrations of poverty in the UK (Leeds City Council, 2009). Approximately 20 per cent of the city's population live in areas that are ranked amongst the most deprived in the UK (Leeds City Council, 2004a). These areas have levels of unemployment which are more than double the city's average, as well as exhibiting stark inequalities in educational achievement, house prices, health and crime (Leeds City Council, 2004a, 2004b). Unsurprisingly, levels of business start-ups are also low, and furthermore the contribution of smaller firms to job creation within the poorer areas is below the average for the Leeds district and the region (Leeds City Council, 2006, 2007).
The neighbourhoods surveyed were those covered by the Leeds LEGI programme, and this therefore provides a suitable geographical focus for the research.
| Key propositions emerging from the literature | Key questions explored by this study | |
| (1) Business start-ups will be in trades with low entry barriers | What types of new venture creation emerge from enterprise support in deprived communities? | |
| (2) There is a low take-up of formal publicly funded support in deprived areas | What modes of enterprise support are utilized in deprived communities? | |
| (3) Entrepreneurs will access informal support to gain business advice and guidance | To what extent do deprived communities utilize enterprise support funded through government intervention or more informal sources? | |
| (4) Business start-ups may displace existing activity in the area | To what extent does enterprise support in deprived communities act as either a positive or negative stimulus on entrepreneurship as well as economic development and regeneration? |
Methods
In order to examine enterprise support mechanisms in a deprived community, a survey of entrepreneurs and potential entrepreneurs, and follow-up in-depth interviews with entrepreneurs, were conducted with people living in the study area. The survey examined the entrepreneurial activity of members of the community, who were asked what types of businesses they had set up or would expect to do so in future. The respondents were then asked what support they had obtained or would plan on obtaining if they were to set up a business. In order to select households for interview, a spatially stratified sampling technique was employed (Kitchen and Tate, 2001). For example, if there were 1,000 households in an area, the researcher called at every tenth household. If there was no response and/or an interview was refused, then the eleventh household was visited, then the ninth, twelfth, eighth and so on. This method provided a spatially stratified sample of each district. This approach ensures that a representative sample of entrepreneurs and potential entrepreneurs was obtained. The interviews were undertaken in the evenings to enable those currently engaged in operating a business, as well as those not currently active, to be interviewed. In total, 142 entrepreneurs and potential entrepreneurs were interviewed on a face-to-face basis.
Respondents who participated in the survey of residents were also contacted and asked to take part in a further in-depth interview to explore key issues further. In-depth interviews allow the entrepreneur to describe in detail what they do and how they operate (Gilmore and Carson, 2007). This allows the process of entrepreneurial decisions and perceptions to be examined, along with the contextual dimensions within which entrepreneurs operate, and can thus provide deep insights (Steyaert, 1997; Gilmore and Carson, 2007). A total of 18 in-depth interviews with current entrepreneurs identified by the initial survey were undertaken, with the interviews being audio-taped with the respondent's consent to allow them to be fully transcribed and analysed. The approach allowed key themes to emerge from the interviews rather than being imposed by the researcher. The interviews explored the types of businesses set up and the support, advice and guidance the entrepreneurs had received.
Results
Table 15.2 indicates the levels of entrepreneurship and potential entrepreneurship among those residents surveyed. Of the 142 residents interviewed, 20 per cent currently run a business, 4 per cent are currently setting a business up, 15 per cent expected to start a business in the next three years, while 62 per cent would consider doing so in future.
Table 15.3 shows the gender, age, ethnicity, educational level and employment status of those who are operating their own business, are in the process of starting up, would consider starting up or expect to start up in the next three years in the study area. Among those who currently operate their own businesses, the majority are male. Of those who currently run their own businesses, four are currently working full-time, while two work part-time, highlighting that they are yet
| Deprived community | ||
| I expect to start a business in the next three years | 15% (n =21) | |
| I am in the process of starting a business | 4% (n =6) | |
| I run my own business | 20% (n =29) | |
| I would consider starting a business in the future | 62% (n = 86) |
| Profile classification | Expect to start in next three years | In process of starting | I run my own business | I would consider starting |
| Gender | ||||
| Male | 11 | 6 | 20 | 52 |
| Female | 10 | 0 | 9 | 34 |
| Age | ||||
| 16–19 | 4 | 1 | 0 | 18 |
| 20–29 | 4 | 1 | 5 | 13 |
| 25–44 | 12 | 4 | 20 | 48 |
| 45–59 | 1 | 0 | 4 | 7 |
| Ethnicity | ||||
| White – British | 16 | 6 | 21 | 72 |
| BME | 5 | 0 | 7 | 12 |
| White – any other background | 0 | 0 | 1 | 2 |
| Highest educational level | ||||
| No qualifications | 10 | 4 | 17 | 39 |
| Level 1 | 2 | 0 | 0 | 7 |
| Level 2 | 2 | 1 | 3 | 15 |
| Level 3 | 2 | 0 | 2 | 5 |
| Level 4/5 | 3 | 0 | 3 | 8 |
| Other qualifications | 2 | 1 | 4 | 12 |
| Employment status | ||||
| Full-time employment | 8 | 4 | 4 | 28 |
| Part-time employment | 2 | 0 | 2 | 17 |
| Self-employed | 0 | 0 | 20 | 0 |
| Full-time education | 2 | 1 | 0 | 9 |
| Unemployed and available for work | 5 | 1 | 0 | 14 |
| Permanently sick/disabled | 1 | 0 | 2 | 8 |
| Looking after the home | 3 | 0 | 1 | 10 |
| Total | 21 | 6 | 29 | 86 |
to concentrate solely on their entrepreneurial ventures. Furthermore, 17 out of the 29 have no formal qualifications. Similarly, almost half of those who would consider setting up a business in the future have no qualifications (39 out of 86). The businesses which have been set up were found to be small: 18 are sole traders. The remaining 11 employed 2 or 3 members of staff, some on a part-time flexible basis.
The respondents who were currently running a business or would consider starting up were asked what type of venture they have established/would establish in terms of sector (Table 15.4). The majority of businesses or potential businesses appear to be in trades with low entry barriers, with 74 per cent in services industries. Such industries tend to have finite and highly localized demand, and as such will be unlikely to enhance substantively local employment or productivity (Storey, 1998; Greene et al., 2004, 2007). As Shane (2009) states, the typical entrepreneur chooses business sectors which are the easiest to enter, rather than the ones that provide the best start-up opportunities. The in-depth interviews with entrepreneurs also find ease of entry to be a key consideration amongst the entrepreneurs when developing their business ideas. For example:
I wanted to start something that I could do from home and get going with. I knew a bit about [ICT] because of my work experience, so I could get going with it pretty quickly.
(Self-employed male ICT consultant)
I thought it would be easy to start as there wasn't a lot of costs involved. I just needed to advertise myself and then I could get going. I had the equipment I needed anyway because I did photography as a hobby.
(Self-employed male photographer)
The survey explored what respondents considered to be the key sources support when planning/setting up a business (Table 15.5). Overall, 28 per cent of residents said that they would not know where to go for support. This may reflect the challenges that enterprise support has in penetrating deprived communities, and difficulties support agencies face in developing client relationships (Usher and Devins, 2006; Mole, 2002b).
The most commonly cited form of support was friends and/or family (33 per cent), while only 7 per cent of respondents said that they would use Business Link, the main public sector enterprise support provider, or other forms of publicly funded support (Table 15.5). This is common to other studies which have shown that friends and family are often used by entrepreneurs and potential entrepreneurs to provide informal help, advice and support (HM Treasury, 2005; Atkinson et al., 2006; DTI, 2007). Also, only 19 per cent would go to a bank or other financial institution for help and support. Support from friends and family is often used by entrepreneurs and potential entrepreneurs to provide informal help, advice and guidance (Robson and Bennett, 2000; Hjalmarsson and Johansson, 2003; Mole and Keogh, 2009).
Respondents who have set up a business, are in the process of doing so, expect to do so or are thinking of setting one up, were asked if they have accessed any formal enterprise support. Table 15.6 shows that only 15 per cent
| Deprived community | ||
| Primary (SIC 1–14) | 0% | |
| Manufacturing (SIC 15–37) | 0% | |
| Construction (SIC 45) | 14% | |
| Transport, Retail and Distribution (SIC 50–64) | 5% | |
| Services/Other (SIC 40–41; 65–93) | 74% | |
| Don't know | 7% |
| Deprived community | ||
| Formal | ||
| Bank/financial institutions | 19% | |
| Business Link | 7% | |
| Consultant | 3% | |
| Accountant | 2% | |
| Solicitor | 1% | |
| Chamber of Commerce | 1% | |
| Informal | ||
| Friends/family | 33% | |
| Personal research (e.g. internet, library) | 16% | |
| Don't know | 28% |
have accessed any formal enterprise support. Of those who had accessed enterprise support, seven had used a bank, six had used Business Link, five had used private sector businesses and three had used other local government funded services. As these results show, use of enterprise support is low, particularly in comparison with surveys which include more prosperous communities (Bennett, 2008), indicating that in these deprived communities the take-up of government support services by entrepreneurs is low, which, according to policy makers, is seen to result in businesses ‘missing out on advice that leads to them having a better chance of starting up or failing to exploit their growth potential’ (HM Treasury, 2008: 35).
The in-depth interviews with entrepreneurs further explored the use of enterprise support in greater length. The interviews found that few of the respondents had accessed formal enterprise support. Only two of the respondents had spoken to Business Link and two had accessed LEGI programme support to gain advice about starting up, and another respondent had attended a Business Link seminar, while no other entrepreneurs had used government funded support services. Although a barrier associated with a lack of take-up of support is a lack of information regarding its availability (Mole and Keogh, 2009), the interviews found that, among those entrepreneurs who had not accessed support, respondents were
| Deprived community | ||
| Yes, I have accessed formal enterprise support | 15% (n = 21) | |
| No, I have not accessed formal enterprise support | 71% (n = 101) | |
| Don't know | 14% (n = 20) |
aware that it was available. However, for many there was a view that it was not required:
I knew it was there but I didn't think I needed it. My business is on a pretty small scale and I knew what I wanted to do so I didn't feel like I needed other peoples' input.
(Self-employed male artist)
I didn't think they would be able to help me really. I didn't think they would know any more about my area of business than me … I needed help doing a business plan but I got that from a friend.
(Self-employed male photographer)
I just thought that they would tell me things I already knew … I talked to friends and family about my business and got advice from them, and I didn't see the benefit of getting any more.
(Self-employed female fashion designer)
These views suggest, at least in some cases, enterprise support advisers are offering provision which is potentially too ‘generic’ and ‘holistic’ (Mole and Bramley, 2006). The views of the entrepreneurs interviewed show that, because of the perceived generic advice on offer, they may seek out private sector advice or no advice at all, rather than receive generic support. The indepth interviews found that, through their own experiences, the majority of respondents had gained knowledge of the industry they were entering into and further considered that they did not require any specific support, advice or guidance regarding their business concept or plans. Invariably, where support was needed, it was accessed informally through family, friends and acquaintances. Therefore, while programmes such as LEGI aim to increase the take up of business by providing more intense and concentrated support, it may not be appropriate or perceived as required by the people it is aiming to assist.
Five respondents who had accessed some form of support stated that they did gain advice about establishing their businesses, but that contact with support services had not continued once their venture had launched, as they considered they did not require it. Two respondents stated that they had enquired about the possibility of receiving a grant, but that this was not pursued. One of the two stated that they had asked Business Link about grants and were told they were available but only for businesses in certain sectors, which the respondent did not then follow up, while the other stated:
I asked about grants but tied into getting it was ongoing advice and mentoring which I didn't really want … I just didn't think it would be worthwhile. In the end, I thought that because the grant wasn't for a lot of money it wasn't worth it.
(Self-employed female physiotherapist)
Four respondents had spoken to a bank for advice about setting up their business. However, these individuals often stated that they spoke to their banks at an advanced stage in the development of their entrepreneurial idea, and therefore did not pursue advice about their plans. Rather, banks were often used once business plans had been fully developed to simply set up business accounts and discuss practicalities such as cash-flow and overdraft facilities. Because of the size of the entrepreneurial ventures, respondents did not require significant investment and so stated that they did not need to discuss plans or discuss investment with their bank. Therefore, while Slack (2005) states that entrepreneurs in deprived communities may find it difficult to convince traditional sources of funding that their idea is sound because of a lack of proven business skills, such difficulties were not experienced by the respondents.
In addition to stating that on account of the size of their business they did not require significant funding, the interviews highlighted that entrepreneurs often considered they were being ‘realistic’ about what they could achieve through their business, and that such realism was not always present in other potential entrepreneurs' business plans; for example:
You've got to be realistic about your plans. You can't just think that you will build up a big business overnight, but sometimes people can get carried away … People can saddle themselves with lots of debt that they struggle with later. I think it needs to be discouraged really.
(Self-employed male business consultant)
If it is a good idea and you have a good business plan then you can raise money and get support. I think there are probably too many bad companies or people with bad ideas looking for money and not getting it and a lack of finance is used as an excuse for not starting up.
(Self-employed male electrician)
Discussion
Overall, the results suggest that certain forms of enterprise support in deprived communities may in fact have a role to play in discouraging entrepreneur-ship. Consequently, enterprise support policy must aim to highlight the risks associated with entrepreneurship so that businesses with low growth potential and little prospect of enhancing the local economy are not necessarily supported (Greene et al., 2004, 2007). Within deprived communities, it appears that entrepreneurial ventures tend to be small and in trades with low entry barriers. Such ventures will tend to have finite and highly localized demand and will be unlikely to substantively enhance employment or productivity (Storey, 1998; Greene et al., 2004). For the majority of these businesses, demand for the services was limited to the local area, and, as MacDonald (1996) finds, where this occurs the market can be filled with ‘similar businesses run by similar people with similar motivations in similar ways’ and as such the local economy cannot support ‘another freelance photographer, another mobile hairdresser, another keen graphic designer’ (1996: 444).
Seeking to raise new firm formation rates in deprived communities through new business starts in generic trades seems unlikely to enhance substantively the employment, productivity or welfare of that area. Indeed, as Shane (2009) states, this may be bad public policy and, as Blackburn and Ram (2006) state, the ‘policy “fad” of uncritically advocating that small firms and entrepreneurship are a key route for individual and societal economic and social salvation' should be avoided (2006: 85). This clearly presents a challenge to policy makers wishing to harness entrepreneurship in deprived communities, as supporting such ventures may simply displace existing entrepreneurial activity in the area (Greene et al., 2004, 2007). Unsubsidized and/or unsupported traders may be pushed out, resulting in little or no positive impact on the local economy.
A more realistic approach to enterprise support is required, which supports those businesses that have the potential to positively impact on the employment or productivity of an area. In fact, in some cases guidance not to start may be the most appropriate course of action (Atherton, 2006). This may assist in moving enterprise support away from an ‘any business will do’ attitude, and towards a greater focus on businesses with growth potential (Huggins and Williams, 2009). Such approaches would mean a move away from the traditional mindset of enterprise support provision which has sought to reach as many existing and potential entrepreneurs as possible, such as that encapsulated by the LEGI programme's desire to support ‘pre-pre-pre’ start-ups, defined as people who have not considered starting a business (Leeds City Council, 2007).
Historically, government funded enterprise support has not penetrated deprived communities (HM Treasury, 2005; Scott et al., 2005). The research presented in this chapter further finds that the use of formal enterprise support services in deprived communities is low. Also, the use of support services in deprived communities can be limited by negative perceptions regarding who it is for, availability and bureaucracy (HM Treasury, 2005; Scott et al., 2005). Turok and Raco (2000) state that public sector support tends to standardize advice to a greater extent than does the private sector. However, such advice may not adequately meet the specific needs of entrepreneurs (Turok and Raco, 2000; Mole and Bramley, 2006) and may not lead to fast growth among the businesses who gain advice/support (Mole, 2000). The views of the entrepreneurs in the deprived community show that, because of the perceived generic nature of the advice on offer, they may seek out private sector advice or no advice at all, rather than receive generic formal support. Therefore, if enterprise support policy interventions are to succeed in penetrating deprived communities, greater understanding of the sources and usage of formal/informal advice is required.
Conclusion
Entrepreneurship has come to be seen as a key method for improving economic development in deprived communities. This has led to a plethora of policies being enacted to support entrepreneurs and the advocacy of all forms of entrepreneur-ship, whatever its nature, as being inherently good. In other words, the lack of take-up of enterprise support has traditionally been viewed as a supply side problem, with the solution being to invest more in providing support which reaches more people in deprived communities. Yet, support may not actually be required, or at least perceived to be required, by the people it aims to assist. The evidence presented in this chapter suggests that the businesses generated in deprived communities have little actual or perceived requirement for funding and/or specialist advice. Indeed, it is likely that these businesses will be established anyway, and their economic potential is likely to remain relatively fixed, with or without support. Therefore, increased investment in the supply of enterprise support may not lead to increased levels of entrepreneurship.
Clearly, supporting business start-ups in deprived communities is not a magic bullet for transforming areas with high levels of unemployment and social exclusion. If the aim of public sector enterprise support in deprived areas is to improve economic development through increasing the number of start-ups, then enterprise support needs to move away from an ‘any business will do’ attitude. Support which aims to engage with people who have never considered starting a business, or do not have the skills required to launch and grow a venture, is unlikely to be cost-effective given the low growth potential. With the change in government in the UK, and change in economic development governance structures, in particular the abolition of the Regional Development Agencies and introduction of LEPs, the nature of enterprise support in deprived areas may also change. Nevertheless, the challenge to develop and implement appropriate policies remains as acute as ever.
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