SMALL BUSINESS CONTRIBUTION TO UK ECONOMY

Small Business Contribution to UK Economy

Table of Content

Introduction3

Small Business Contribution to UK Economy3

Market Orientation6

Methodology of the Study8

The Sample and Data Collection8

Construct9

Analysis, Interpretation and Results10

Validity14

Identification of the Main Factors/Dimensions15

Conclusions and Managerial Implications15

References18

Appendices24

Small Business Contribution to UK Economy

Introduction

Small and medium sized enterprises (SMEs) are the backbone of Britain. Napoleon is said to have once remarked that the British are 'a nation of shopkeepers'. He was right in as much as Britain is a nation of small and medium sized enterprises. According to the Department for Business, Enterprise & Regulatory Reform (BERR)'s Enterprise Directorate Analytical Unit, in 2007, the UK economy is 99% SMEs. So out of a total of 4.8m UK businesses, less than 1% were large corporations (i.e. over 250 employees). In terms of UK turnover and Gross Domestic Product (GDP) UK SMEs account for 1.48trillion sterling (British Pounds). Despite being only half the story and half the picture, large UK Corporations dominate the skyline, the news and the economy. Business news daily is full of stories about BP, Barclays, M&S, British Gas, BT, and the UK Government. There is a strong political focus on the UK Public sector, which is responsible for up to 1/3rd of UK's economy.

Small Business Contribution to UK Economy

In recent years, the subject of market orientation has received a great deal of attention from marketing scholars who have developed, tested and refined market orientation scales for measuring the degree of market orientation that organisations exhibit (see amongst others, Kohli and Jaworski, 1990; Narver and Slater, 1990; Hart and Diamantopoulos, 1993; Hooley et al., 1998). Whilst the combination of changing market conditions has increased interest in the subject, it is surprising to realise that, despite the fact that in the UK some 95 per cent of firms are considered to be small business (Marketing Business Magazine, 1998, p. 10), there is little research on market orientation within the small business sector in the UK (Harris, 1998; McLarty, 1998). Supporting this assertion, McLarty (1998) stated that: “ … there is scant empirical evidence however on the part that marketing plays in SME research … ”. On the other hand, over the years, there has been increased related work published on diverse topics such as: “the role of the small firm in the UK economy” and “the future of the small firm in the UK economy” etc. (see Curran et al., 1993; Blackburn, 1996; Curran, 1996; Jarvis, 1996).

There is a general agreement in the literature that a market oriented firm is one in which all employees are committed to the continuous creation of superior value for the customer (Narver and Slater, 1990; Kohli and Jaworski, 1990; Deshpande et al., 1993; Day, 1994; Narver et al., 1998). In general, researchers agree that a market orientation encompasses three key behavioral components (i.e. “customer orientation”, “competitor orientation”, and “interfunctional co-ordination”) (Narver and Slater, 1990, cited in Narver et al., 1998; Kohli and Jaworski, 1990).

While to date, researchers have found congruence between market orientation and the performance of ...