Entrepreneurship in Europe: The Social Processes 9781315712925, 9781138889361

Citation preview

Routledge Revivals

Entrepreneurship in Europe

The changing character of the economies in Eastern and Western Europe are leading more people to start their own businesses. This volume, first published in 1987, highlights the trends developing over the closing decades of the twentieth century. Although business startup requires financial and marketing skills, it also demands important physchological and sociological inputs. On the basis of detailed accounts of the relevant social processes, this volume describes the varied experiences of entrepreneurship as they are emerging among various groups in both Eastern and Western Europe including the unemployed, women, ethnic minorities and others. This book will be of interest to students of business studies and sociology.

This page intentionally left blank

Entrepreneurship in Europe The Social Processes

Edited by Robert Goffee and Richard Scase

First published in 1987 by Croom Helm Ltd This edition first published in 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 1987 R. Goffee and R. Scase The rights of Robert Goffee and Richard Scase to be identified as editors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Publisher’s Note The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent. Disclaimer The publisher has made every effort to trace copyright holders and welcomes correspondence from those they have been unable to contact. A Library of Congress record exists under LC control number: 87015425 ISBN 13: 978-1-138-88936-1 (hbk) ISBN 13: 978-1-315-71292-5 (ebk)

Entrepreneurship in Europe The Social Processes

Edited by Robert Goffee and Richard Scase

CROOM HELM London • New York • Sydney

© 1987 R. Goffee and R. Scase Croom Helm Publishers Ltd, Provident House, Burrell Row, Beckenham, Kent BR3 1AT Croom Helm Australia, 44-50 Waterloo Road, North Ryde, 2113, New South Wales Published in the USA by Croom Helm in association with Methuen, Inc. 29 West 35th Street, NY 10001 British Library Cataloguing in Publication Data Entrepreneurship in Europe. — (Social analysis). 1. Entrepreneur — History — 20th century 2. Businessmen — Europe — History — 20th century I. Goffee, Robert II. Scase, Richard III. Series 338'.04'094 HC240 0-7099-3849-7

Library of Congress Cataloging-in-Publication Data Entrepreneurship in Europe. (Social analysis) Includes index. 1. Small business—Europe. 2. Entrepreneurship— Europe. I. Goffee, Robert. II. Scase, Richard. III. Series. HD2346.E9E57 1987 338'.04'094 87-15425 ISBN 0-7099-3849-7

Printed and bound in Great Britain by Billing & Sons Limited, Worcester.

Contents Notes on Contributors Preface 1. Introduction Richard Scase and Robert Goffee 2. The Development of Small Firms, the Traditional Family and Agrarian Patterns in Italy Julia Bamford 3. Trends in Small Business Start-up in West Germany Heinz Klandt 4. Small Business and Social Mobility in France Nonna Mayer 5. Patterns of Business Proprietorship among Women in Britain Robert Goffee and Richard Scase 6. Ethnic Entrepreneurs in Britain and Europe Robin Ward 7. Ethnic Enterprise in the Netherlands: the Surinamese of Amsterdam Jeremy Boissevain and Hanneke Grotenbreg 8. Entrepreneurship in a Corporatist State: the Case of Sweden Bengt Johannisson 9. Independent Economic Activity under State Socialism: is there a Petite Bourgeoisie in Eastern Europe? Howard H. Davis 10. The Social Analysis of Small Business: Some Emerging Themes James Curran and Roger Burrows Index

1

12 26 39 60 83

105 131

144

164 192

Notes on Contributors Julia Bamford is a Lecturer in Economics at the University of Siena having previously taught at the University of Rome. She has written and researched extensively on sociological aspects of small businesses in Italy. Jeremy Boissevain is Professor of Social Anthropology at the Univer­ sity of Amsterdam. He is the author of over 40 articles and several books including Saints and Fireworks (Holt, Rinehart and Winston, 1965) and Friends o f Friends (Basil Blackwell, 1974). He is currently undertaking research at the University of Malta. Roger Burrows is Lecturer in Sociology at the North East London Polytechnic. His research interests and publications focus on theoretical approaches to the analysis of small businesses and the petite bourgeoisie. James C urran is Reader in Industrial Sociology and Director of the Small Business Research Unit at Kingston Polytechnic. He has under­ taken research on small businesses over many years and has published widely. His books include, with John Stanworth, Management Moti­ vation in the Smaller Business (Gower, 1973) and, as editor with John Stanworth and David Watkins, The Survival o f the Small Firm, Vols 1 and 2 (Gower, 1986). Howard H. Davis is Lecturer in Sociology at the University of Kent at Canterbury. Between 1983 and 1985 he was Director of the Church of Scotland Society, Religion and Technology Project. His publica­ tions include Beyond Class Images (Croom Helm, 1980), with the Glasgow University Media Group, Really Bad News (Writer and Readers, 1983), and, with Richard Scase, Western Capitalism and State Socialism (Blackwell, 1985). Robert Goffee is Lecturer in Organisational Behaviour at the London Business School having previously held posts at the Universities of Bath, Kent and Surrey. He is the author, with Richard Scase, of several articles and books including The Real World o f the Small Business Owner, 2nd Edition (Croom Helm, 1987), The Entrepreneurial Middle Class (Croom Helm, 1982) and Women in Charge (Allen and Unwin, 1985). Hanneke Grotenbreg is contract research co-ordinator of the Anthropological-Sociological Centre, University of Amsterdam.

This page intentionally left blank

NOTES ON CONTRIBUTORS

She is currently investigating patterns of inter-ethnic marriage among migrants in Holland. She has published various articles on ethnic entrepreneurs in both Dutch and English-speaking journals. Bengt Johannisson is Director of the Centre for Small Business Development at Vaxjo University. In addition to his small business teaching he has researched various aspects of entrepreneurship in Sweden and published several articles. Heinz Klandt is a member of the Planning Seminar at the University of Cologne. He has been engaged on several research projects examining the characteristics of entrepreneurs and various aspects of small business start-up. His publications include Aktivat und Erfolg des Untemehmungsgrunders (The Activities and Achievements of New Business Owners) (Eul Verlag, 1984). Nonna Mayer is Research Associate at the Centre d’etude de la vie politique frangaise contemporaine, Fondation nationale des sciences politique. Her publications include several articles on social mobility among small business owners and, more recently, La Boutique contre la gauche (The Shop against the Left) (Presses de la Fondation Nationale des Sciences Politiques, 1986). Richard Scase is Professor of Sociology at the University of Kent at Canterbury. He is the author of Social Democracy in Capitalist Society (Croom Helm, 1977) and co-author (with Robert Goffee) of The Entrepreneurial Middle Class (Croom Helm, 1980); Women in Charge (Allen and Unwin, 1985); and The Real World o f the Small Business Owner, 2nd Edition (Croom Helm, 1987); and (with Howard Davis) of Western Capitalism and State Socialism (Blackwell, 1985). He is also the editor of Readings in the Swedish Class Structure (Pergamon Press, 1976); Industrial Society; Class, Cleavage and Con­ trol (Allen and Unwin, 1977) and The State in Western Europe (Croom Helm, 1980). Robin W ard is Principal Lecturer in Corporate Strategy at Trent Polytechnic and formerly Director of the Ethnic Business Research Unit at the University of Aston. His publications include numerous articles on ethnic business and, as editor, Ethnic Communities in Business (Cambridge University Press, 1984) and Race and Residence in Britain (ESRC, RUER, 1984). He has also recently edited a special issue on ethnic enterprise of the International Small Business Journal (vol. 4, 1986).

Preface This book is derived from a symposium on ‘Small Business Proprietor­ ship and Socio-Economic Change in Europe’, held at the London Business School in September 1985. We are grateful to the British Council and the London Business School for their financial support. We would also like to thank Rosina Mitha, of the British Council, for her help in arranging the meeting and Howard H. Davis for assistance in translation of Chapters 3 and 4. R.G. R.S.

This page intentionally left blank

1 Introduction Richard Scase and Robert Goffee

For many commentators this is the era of the entrepreneur. After years of neglect, those who start and manage their own businesses are viewed as popular heroes (Hertz, 1986). They are seen as risk-takers and innovators who reject the relative security of employment in large organisations to create wealth and accumulate capital. Indeed, accord­ ing to many, the economic recovery of the European economies is largely dependent upon their ambitions and efforts. This is in sharp contrast to the 1960s and 1970s when small entrepreneurial ventures were normally regarded as inefficient and unproductive. Economists, politicians and planners were generally agreed that the creation of large-scale business units was necessary, if only in order to achieve efficiencies of scale. Small businesses, on the other hand, were seen as being incapable of taking full advantage of developments in ‘new’ technology and sophisticated management techniques (Scase and Goffee, 1987). Consequently, the governments of Western Europe in the 1960s and 1970s all tended to pursue similar policies. They encouraged close partnerships between privately-owned, large-scale corporations and state agencies in order to facilitate economic growth (Scase, 1980). At the same time, they encouraged corporate mergers to further the development of large-scale units of administration and production (Strinati, 1982). Thus, during this period, the post-war recovery of West Germany was commonly regarded as a model which affirmed the need for close collaboration between private industry and the state if economic success was to be achieved (Hirsch, 1980). It was, then, on the basis of such assumptions that ‘structural rationalisation’ and state ‘planning’ lead to the development of large-scale corporations, often to the detriment of small and medium-sized firms (Hannah and Kay, 1977). 1

INTRODUCTION

The success of such policies varied between different European countries. They appeared to achieve most in West Germany and Sweden while in Britain, Italy and France the results were less impressive (Scase, 1980). In Britain, corporatist policies brought about the rationalisation of many heavy manufacturing industries but they failed to stimulate the growth of highly competitive, ‘hi-tech’ com­ panies. In France and Italy, national economic planning was hindered by political forces representing traditional small-scale manufacturing and farming interests. But even in Sweden and West Germany where corporatist planning processes were most firmly established, there were some striking contrasts. Whereas in Sweden, corporatism developed in collaboration with an influential labour movement (Stephens, 1979), in West Germany, it was imposed in its absence (Hirsch, 1980). However, throughout the whole of Europe, programmes of indus­ trial reorganisation created many unintended outcomes such as poor industrial relations and heightened levels of socio-political tension. By the late 1960s, there was widespread social disorder in a number of European countries, especially in the large cities where the results of state planning were vividly expressed in the alienating conditions under which increasing numbers of people were being forced to work and live. More generally, there was a growing feeling that ‘personal freedom’ was being destroyed as people perceived they were becom­ ing increasingly subordinated to the dictates of strong national states. As a consequence, protest movements emerged both on the political ‘left’ and the ‘right’ as expressions of reaction against bigness, en­ vironmental pollution, anonymity and alienation (Boissevain, 1981). For some the solution lay in the destruction of capitalism and its supercedence by socialism (Mandel, 1972). But for others, who iden­ tified similar endemic problems in East European socialism, these problems could best be resolved by re-establishing the ideals of classical capitalism (Brittan, 1973; Friedman, 1977; Hayek, 1960). In the 1980s, therefore, people who start and manage their own businesses are seen in a more favourable light. Governments which once regarded them as inefficient now view the small business sector as a central plank in programmes for regenerating stagnating economies (Bannock, 1981). Thus, policies now promote ideals of entrepreneurship as cures for a variety of problems ranging from persisting high unemployment and low economic growth, to the destruction of ‘traditional’ values surrounding work, family and per­ sonal relationships (Scase and Goffee, 1987). Wherever they are in Western Europe, those who aspire to self-employment and entre­ 2

INTRODUCTION

preneurship are praised by governments and offered a variety of finan­ cial and fiscal inducements (Storey (ed.), 1983). One of the major reasons for this is the assumption that small firms generate jobs (Ban­ nock, 1981). Despite the recent growth of hi-tech enterprises (Rothwell, 1986), the overwhelming majority of small businesses are labour-intensive and concentrated in the personal service sectors of the various Euro­ pean economies (Boissevain, 1981). By contrast, large corporations are becoming more capital-intensive as they invest in industrial robots, office technology and non-human methods of administration and pro­ duction (Handy, 1984; Robertson, 1985). At the same time, they are ‘exporting’ their labour-intensive activities to low wage, Third World countries (Davis and Scase, 1985). Equally, highly competitive markets and tighter profit margins are forcing many of these com­ panies to reduce overheads and labour costs, often through large-scale redundancy schemes. Thus, as the countries of Western Europe con­ tinue to experience recession, governments are turning to small businesses as the means for creating jobs and reducing unemploy­ ment. Indeed, policies designed to encourage business start-up are likely to become increasingly popular as a widespread process of de­ industrialisation restricts job creation opportunities to labour-intensive personal service sectors (Robertson, 1985). But the appeal of small businesses is not simply about jobs; some governments see them as a means for avoiding the ‘alleged’ industrial relations problems of larger firms; especially those of absenteeism, low morale, poor quality production and industrial disputes (Rainnie and Scott, 1986). It seems to be the case that although large numbers of small businesses tend to be characterised by low wages, few fringe benefits and poor working conditions, many of the problems of larger firms may be avoided. Small business proprietors can, through staff selection and close supervision ‘incorporate’ employees who subscribe to the goals of their businesses and perceive that their self-interests are better protected by their employers than by trade unions (Scase and Goffee, 1982). This, of course, is attractive to the ‘rightist’ governments of Western Europe who are keen to re-establish tradi­ tional forms of employer and managerial authority. The relative ac­ quiescence of small firm workers is, in this context, preferable to the militancy of unionised industrial workers who, in the late 1960s and early 1970s, were able to obtain considerable concessions from their employers; particularly in France, Italy and Britain (Glynn and Sutcliffe, 1972). The growing attraction of small businesses also reflects certain 3

INTRODUCTION

ideological and political shifts within various European countries (Bechhofer and Elliott, 1985). There has emerged, in the reaction to 1960s’ corporatism, a ‘new individualism’ which places a premium on ‘self-reliance’ rather than state support or, as some would have it, ‘interference’. Accordingly, the more rightist governments in Western Europe are encouraging entrepreneurship as part of a con­ certed attempt to foster personal independence. In their view, small business owners demonstrate what can be achieved if people are prepared to seize opportunities and make the necessary self-sacrifices. In this way, entrepreneurial achievement can be seen to legitimate the established social order if only because it confirms that apparent ‘openness’ of modern societies and the extent to which market forces reward personal achievement and effort (Mayer, 1975). According to those on the political right, then, the under-qualified and disad­ vantaged need not be condemned to economic hardship; on the con­ trary, they can achieve success through the development of their various entrepreneurial skills. The responsibility of governments, then, is to encourage business start-up by fostering an entrepreneurial ideology which minimises the need to be dependent upon institutional and welfare support systems. There are, then, a number of reasons why governments are encouraging their small business sectors. They see them as providing solutions to the growing problem of unemployment and the persisting difficulties of managing and controlling labour in large-scale organisa­ tions. At the same time, the growth of entrepreneurship helps to foster ideologies of self-reliance so that national states can more easily withdraw from the provision of various social and welfare services and thereby reduce public expenditure. But there are further reasons why small-scale proprietorship is increasing in the countries of Western Europe. Over the past decade, as the West European economies have grown more affluent, people have become more concerned about obtaining higher levels of personal satisfaction in their jobs (Scase and Goffee, 1986). At the same time, changes in educational systems, family relationships and the widespread adoption of ‘democratic’ ideals have led to a re-appraisal of traditional forms of authority in the home, the workplace and the wider society. Employees now demand greater autonomy in their working lives and often try to resist managerial attempts to impose tighter forms of control (Edwards, 1979). Furthermore technological changes have given managers in large-scale corporations opportunities to monitor closely the quality and quantity of employees’ performance, both on the shopfloor and 4

INTRODUCTION

in offices (Braverman, 1974). If then, on the one hand, changes in the broader ideological and cultural fabric of Western European coun­ tries have heightened peoples’ expectations of independence and selffulfillment, on the other, developments in technology and manage­ ment practices have brought about tighter forms of employee con­ trol. Despite attempts to redesign work tasks in order to cope with these contradictions — particularly in the more ‘advanced’ countries of Western Europe — many of those working in large-scale corpora­ tions are unable to achieve much self-fulfillment or job satisfaction (Kelly, 1982). This is particularly the case for technical and lower managerial staff who are frequently frustrated because of the ways in which their jobs are tightly monitored and controlled by others (Scase and Goffee, 1986). For these employees, business proprietorship has a special appeal. It offers the promise of work according to self-imposed criteria of quality and quantity of performance. If there are ‘controls’, they are those associated with the need to ‘break even’ financially by produc­ ing goods and services that will attract sufficient numbers of customers. Beyond the point of financial viability, however, there are greater opportunities for proprietors to develop personally prefer­ red work and life-styles; certainly by comparison with those available to most employees of large-scale corporations (Scase and Goffee, 1987). Business start-up, then, allows people to ‘buy’ independence and to fulfil their ambitions for job satisfaction. Although most pro­ prietors work long hours they are, nonetheless, free from the managerial control of others. Indeed, many see their businesses as extensions of their own personalities; by contrast, most employees feel constrained at work and are forced to shape their personalities according to the needs of their employers’ businesses. Entrepreneur­ ship, then, offers an exit for managers and other highly-qualified staff who feel ‘trapped’ within the middle echelons of large organisations and who wish to more fully utilise their personal talents and skills. If, however, these are trends common to most countries in Western Europe it would be wrong to suggest that there are no differences between them in the extent to which they offer opportunities for business start-up. Clearly, there are contrasts which are the outcome of variations in historical, political and socio-economic circumstances (Davis and Scase, 1985). Most importantly, the structure and com­ position of capital varies significantly, such that in some West Euro­ pean countries, industrial resources are more highly concentrated than in others (Bannock, 1981). Equally, within each of the European economies, there are sectors with high levels of capital concentration

INTRODUCTION

while others are characterised by a preponderance of labour-intensive small firms. Generally, the former conditions persist in the petrochemical, electrical, iron and steel, and vehicle production indus­ tries (Utton, 1970). By contrast, small firms predominate in those sec­ tors which produce personal services, specialised technical products, craft-based commodities, and luxury consumer goods (Scase and Goffee, 1982). Within manufacturing itself, there are striking differ­ ences between countries in the role of small businesses. Their importance is greater, for example, in Italy (47 per cent) than in Britain (23 per cent), while in West Germany and France more than one third of all manufacturing enterprises have less than 200 employees (Boissevain, 1981). Although it is difficult to account for these differences, one possible explanation is the operation of the sub-contracting system. Whereas in some countries, the growth of industry has led to ‘in house’ integrated work processes in others, sub-contracting has remained a persisting feature of the industrialisation process (Littler, 1982). Possibilities for small business start-up in different countries are also shaped by the role of national states and by the influence of organised labour movements. In those countries where the state has been controlled largely by Liberal-Democratic or Conservative regimes, there are often fewer laws regulating employment, labour relations, health and safety standards at work and, more generally, there is far less state intervention in the economy (Davis and Scase, 1985). Such conditions are generally favourable to business start-up. But in other countries, such as those in Scandinavia, where there are influential working-class movements, the state has been ‘captured’ by social democratic governments and these have passed laws designed to improve the wages, working conditions, welfare and legal rights of employees (Korpi, 1983). Such measures have often increased the ‘costs’ of business ownership so that these are heightened barriers for those wishing to become business proprietors. It is not surpris­ ing, therefore, that the rate of start-up is lower in Sweden than in Britain. In Britain there is no national minimum wage, fewer state controls over the use of small business premises, and a flourishing ‘black’ or ‘cash’ economy within which employers hire, on a short­ term basis, staff who are often without the protection of employee legislation and trade union membership (Hurtsfield, 1980). Indeed, differences in the role of the state in the various European countries help to account for variations in the significance of the ‘informal’, ‘black’ or ‘cash’ economies. In Britain, Italy and France, for example, governments have failed — by comparison to those in Scandinavia — to establish effective employment and industrial legislation, and 6

INTRODUCTION

to provide adequate state-funded health and welfare services. Fur­ ther, they have failed to prevent dramatic increases in unemployment over the past decade. As a result, those who are unemployed or on low incomes are often forced to ‘get by’ and ‘to make ends meet’ by trading in the black economy (Gerry, 1985). This can provide op­ portunities for them to determine whether there are viable markets for their goods and services before they decide whether or not to establish legitimate or ‘proper’ enterprises. As such, the black economy in these countries constitutes a seedbed for business start­ up. Similar opportunities are relatively restricted in those countries where the state monitors and regulates economic activity in a more rigorous fashion. We have, then, briefly reviewed some of the factors accounting for the growing popularity of entrepreneurship and small business ownership in Europe. At the same time, we have suggested that national differences in the industrialisation process, the role of the state and the relative strength of trade unionism can lead to signifi­ cant variations in the extent of small business activity. Against this background, the following chapters, in their different ways, discuss the diverse forms of entrepreneurship in contemporary Europe. Thus, as Bamford discusses (Chapter 2), small business trading in certain parts of Italy has been strongly shaped by a range of historical fac­ tors associated with land ownership, types of farming and family rela­ tionships. From these, social networks have evolved which provide the basis for local systems of sub-contracting. The production of goods, then, is not according to a division of labour in large factories, but as a result of contractual and trust relationships among small business owners in local areas. But as Bamford suggests, neither their products nor their technologies may be regarded as traditional since they use some of the more advanced forms of ‘high’ technology to produce electronic and computer-based goods for export to interna­ tional markets. Of course, developments in ‘new’ technology have created market niches for entrepreneurs in many of the European economies. Indeed, the hope of many governments is that highly-trained scientists and technologists will use their skills for these purposes; Klandt (Chapter 3) argues that such a pattern is emerging in West Germany. But what kinds of people opt for proprietorship? Is there an ‘entrepreneurial personality’? Historians and social psychologists have long been pre­ occupied with this question and Klandt reviews recent evidence for West Germany. Although no clear ‘personality type’ emerges, it appears that patterns of child rearing, maternal deprivation, experi­ 7

INTRODUCTION

ences of social marginality and other such factors may, in some cases, lead to high achievement needs which, under certain conditions, ex­ press themselves in entrepreneurial activities of one kind or another. Obviously, entrepreneurship is shaped by a variety of sociological and psychological factors. Their interplay is well illustrated by the structural and ideological conditions of the different countries of Western Europe. However, some of the more traditional factors that have encouraged people to start their own businesses should not be overlooked. Historically, entrepreneurship in Western countries has enabled those who are disadvantaged in one way or another, to achieve material and personal success (Pollins, 1984). If ‘success’ for most people is through career mobility in large-scale organisations, entre­ preneurship offers alternative routes for those who, without academic, professional or technical qualifications are excluded from meritocratic achievement. This is one of the themes of Mayer (Chapter 4) in which she discusses how the ownership of small workshops and retail outlets in France provides opportunities for upward social mobility. There are, of course, many groups which encounter particular problems in the labour market. This is the case for members of different ethnic minorities as well as for women. Indeed, there appear to be com­ mon patterns in Europe as illustrated by Boissevain and Grotenbreg, Goffee and Scase, and Ward (Chapters 7,5 and 6). Throughout Western Europe, women occupy positions of subordination in the labour market (Eurostat, 1981). Very few enjoy positions of responsibility and auth­ ority in either privately-owned or state-owned corporations. Business start-up, then, offers them a means whereby they can achieve personal success by avoiding many of the career barriers they would face in large-scale organisations. At the same time, as Goffee and Scase sug­ gest, entrepreneurship offers financial opportunities for those who, for one reason or another, are either unemployed or who are only able to obtain part-time, low-paid jobs. If, then, women can be regarded as possessing the characteristics of a minority group — for example, deprivation, subordination and labour market ‘stigma’ — it is likely that in the face of declining job opportunities, increasing numbers of them will either choose or be forced into entrepreneurial ventures. This already seems to be the case in the United States and similar patterns are emerging in Western Europe; particularly in Britain, Holland and West Germany (Donckels and Meijer (eds.), 1986). Most members of ethnic groups in Western Europe are also con­ centrated in the low-paid, less skilled jobs and are vulnerable to high unemployment (Castles et al, 1984). In the face of continuing prejudice and discrimination few can expect to achieve personal success within 8

INTRODUCTION

conventional institutional structures. As a result, many are confronted with stark choices between deprivation and earning a living through self-employment and small business proprietorship. Boissevain and Grotenbreg and Ward suggest that ethnic entrepreneurs are often aided by trading within social networks which not only provide profitmaking opportunities but also important sources of funding and advice. Such businesses, almost inevitably, remain small although some are able to ‘break out’ and establish broader patterns of trading. The finan­ cial successes which they achieve often confirm the ideology of opportunity that is emphasised in capitalist society and, as such, these entrepreneurs are held as role models for others by governments wishing to cope with alleged ‘minority’ problems (Jones and McEvoy, 1986). In the end, the opportunities to pursue these personal success strategies are shaped by the policies of political regimes and, through them, of state institutions. Johannisson suggests (Chapter 8) that cor­ poratism in Sweden has tended to reduce the chances available for entrepreneurship. However, with increasing unemployment there are now a number of policies which are trying to respond to local entrepreneurial initiatives. Indeed, Swedish corporatism seems to have generated demands for greater personal autonomy which can be viewed as personal statements of protest. Entrepreneurship in Sweden, then, as in Eastern Europe, may be interpreted as a deviant act. This theme is taken up by Davis (Chapter 9) who discusses the function of small businesses in different state socialist countries. Despite the predominance of state ownership, he shows there are a variety of forces which, although different in nature to those in the West, are conducive to the continuing reproduction of small-scale independent economic enterprises. The contributions to this book, then, illustrate different facets of entrepreneurship in Europe. In the final chapter, Curran and Bur­ rows review the general direction in which social research is pro­ ceeding. Despite the recent accumulation of empirical data much of it remains, as they point out, theoretically uninformed. In particular, there continue to be great difficulties in determining conceptual schema which are able to cope with the diversity of experiences represented by those who, in one form or another, engage themselves in profitmaking entrepreneurial ventures. In this book, however, we are more concerned to present descriptive accounts of the social processes whereby entrepreneurship expresses itself in a variety of forms in con­ temporary Europe.

9

INTRODUCTION

REFERENCES Bannock, G. (1981) The Economics o f Small Firms: Return from the Wilderness, Basil Blackwell, Oxford. Bechhofer, F. and Elliott, B. (1985) ‘The Petite Bourgeoisie in Late Capitalism’, Annual Review o f Sociology, volume II. Boissevain, J. (1981) Small Entrepreneurs in Changing Europe: Towards a Research Agenda, European Centre for Work and Society, Maastricht. Braverman, H. (1974) Labour and Monopoly Capital, Monthly Review Press, London. Brittan, S. (1973) Capitalism and the Permissive Society, Macmillan, London. Castles, S., Booth, H. and Wallace, T. (1984) Here for Good: Western Europe's New Ethnic Minorities, Pluto Press, London. Davis, H. and Scase, R. (1985) Western Capitalism and State Socialism, Basil Blackwell, Oxford. Donckels, R. and Meijer, J. (eds.) (1986) Women in Small Business; Focus on Europe, Van Gorcum, Assen. Edwards, R. (1979) Contested Terrain: The Transformation o f Work in the Twentieth Century, Heinemann, London. Eurostat (1981) Economic and Social Position o f Women in the Community, EEC, Luxembourg. Friedman, M. (1977) From Galbraith to Economic Freedom, Institute of Economic Affairs, London. Gerry, C. (1985) ‘The Working Class and Small Enterprises in the UK Reces­ sion’ in Redcliffe, N. and Mingione, E. (eds.) Beyond Employment, Basil Blackwell, Oxford. Glynn, A. and Sutcliffe, B. (1972) British Capitalism, Workers and the Profit Squeeze, Penguin Books, Harmondsworth. Handy, C. (1984) The Future o f Work, Basil Blackwell, Oxford. Hannah, L. and Kay, J.A. (1977) Concentration in Modem Industry, Mac­ millan, London. Hayek, F. (1960) The Constitution o f Liberty, Routledge, London. Hertz, L. (1986) The Business Amazons, Andre Deutsch, London. Hirsch, J. (1980) ‘Developments in the Political System of Western Germany Since 1945’ in Scase, R. (ed.), The State in Western Europe, Croom Helm, London. Hurstfield, J. (1980) ‘Part-time pittance’, Low Pay Review, No. 1. Jones, T. and McEvoy, D. (1986) ‘Ethnic Enterprise: The Popular Image in Curran, J., Stanworth, J. and Watkins, D., The Survival o f the Small Firm, Gower, Aldershot, Vol. I. Kelly, J. (1982) ‘Economic and Structural Analysis of Job Redesign’ in Kelly, J. and Clegg, C. (eds.), Autonomy and Control at the Workplace, Croom Helm, London. Korpi, W. (1983) The Democratic Class Stmggle, Routledge and Kegan Paul, London. Littler, C. (1982) The Development o f the Labour Process in Capitalist Societies, Heinemann, London. Mandel, E. (1972) Marxist Economic Theory, Merlin Press, London. Mayer, A.J. (1975) ‘The Lower Middle Class as Historical Problem’,

10

INTRODUCTION

Journal o f Modem History, Vol. 47. Pollins, H. (1984) ‘The Development of Jewish Business in the United Kingdom’ in Ward, R. and Jenkins, R. (eds.), Ethnic Communities in Business, Cambridge University Press, Cambridge. Rainnie, A. and Scott, M. (1986) ‘Industrial Relations in the Small Firm’ in Curran, J., Stanworth, J. and Watkins, D. (eds.), The Survival o f the Small Firm, Gower, Aldershot, Vol. 2. Robertson, J. (1985) Future Work, Gower, Aldershot. Rothwell, R. (1986) ‘The Role of Small Firms in Technological Innovation’, in Curran, J., Stanworth, J. and Watkins, D. (eds.), The Survival o f the Small Firm, Gower, Aldershot, Vol. 2. Scase R., (1980) (ed.) ‘Introduction’ in Scase, R. (ed.), The State in Western Europe, Croom Helm, London. Scase, R. and Goffee, R. (1982) The Entrepreneurial Middle Class, Croom Helm, London. (1986) ‘Why Managers Turn Entrepreneur’, in Management Today, August. (1987) The Real World o f the Small Business Owner, 2nd edn, Croom Helm, London. Stephens, J. (1979) The Transition from Capitalism to Socialism, Macmillan, London. Storey, D. (ed.) (1983) The Small Firm: An International Survey, Croom Helm, London. Strinati, D. (1982) Capitalism, the State and Industrial Relations, Croom Helm, London. Utton, M. (1970) Industrial Concentration, Penguin Books, Harmondsworth.

11

2 The Development of Small Firms, the Traditional Family and Agrarian Patterns in Italy Julia Bamford

The small firm economy in Italy has developed to a degree unknown, as yet, in other twentieth-century Western economies. To maintain, as Sabel and Piore do (1985), that this lends weight to evidence of a new industrial revolution, may be over-optimistic, but its import­ ance in Italy is increasingly evident. The latest census figures, for example, show that in a working population of 20 million, there are roughly the same number of self-declared entrepreneurs as workers in large industrial firms. In 1984 alone, over 100,000 new firms were registered. Table 2.1 gives an overall picture of Italian manufactur­ ing employment and the relative importance of small firms within it. This vitality has been given an additional boost by the develop­ ment of new technologies whose costs put them within the reach of small firms and whose versatility is well suited to short production runs. This has meant the choice of technology available to both small and large firms is virtually the same; a very different picture from a few years ago, when small firms were relegated to using ‘backward’ or ‘mature’ technological systems. Changes in market structures, shifts in demand for non-standardised goods, moves from long-run to shortrun production methods, and changes in the attitudes of labour organisations have transformed the role of the small firm. However, Italy’s experiences are not simply questions of changes in technology and markets but indications of how social, historical and cultural fac­ tors influence the small firm sector’s capacity to grow. The growth in the number of small firms in Italy is characterised by a considerable degree of self-reliance and independence from such agencies as the government, banks and local authorities. This, in many ways, has been a strength rather than a weakness. While the state has done little to foster small business growth, it has also been lax in exacting taxes and payments of national insurance contributions 12

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

Table 2.1: Distribution of employees in manufacturing firms according to size Manufacturing sector

Percentage distribution of employees in enterprises with the following numbers of employees: 1 1 -1 0 0

1 0 1 -5 0 0

5 0 1 -1 ,5 0 0

Above 1,500

Total

0.2 0.2 0.2

100.0 100.0 100.0

—

Food and Tobacco Textiles Clothing Leather, Skins and Footwear Furniture and Wood Metallurgic Non-electrical Machinery and Carpentry Electrical Machinery and Precision Instruments Road Vehicles Other Forms of Transportation Non-metalliferous Minerals Chemicals Oil and Coal Derivates Paper and Paper Products Printing and Publishing Other Manufacturing

87.1 81.9 81.8

11.6 16.2 16.8

1.1 1.7 1.2

86.0 92.1 78.0

13.4 7.6 17.5

0.6 0.3 2.7

1.8

100.0 100.0 100.0

83.2

14.7

1.7

0.4

100.0

81.4 72.8

14.4 20.7

2.9 4.9

1.3 1.6

100.0 100.0

67.2

17.3

7.3

8.2

100.0

87.6 74.6

11.1 20.6

0.9 3.9

0.4 0.9

100.0 100.0

59.7

19.4

16.4

4.5

100.0

83.5

13.3

2.5

0.7

100.0

85.3

12.9

1.3

0.5

100.0

84.2

14.4

1.2

0.2

100.0

TOTAL

83.9

13.9

1.7

0.5

100.0

Adapted from: Mediocredito Centrale (1982)

from small businesses (Bagnasco and Messori, 1974). Recent legisla­ tion has tightened the restrictions on small businesses but there is little doubt that the absence of government interference has encouraged start-ups. Italy, a latecomer to industrialisation, has had a pattern of industrial development which, essentially, has entailed the coopera­ tion of government, the banks and large firms. Although local and regional governments have recently become more involved in small business growth, this is meagre compared with the activities of many other European governments. Over the past 15 years, a great deal of research has been done 13

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

in Italy on the development of small firms, mostly by economists.1 Initial interpretations have changed as the significance of the small firm sector has come to be more fully understood (Fua, 1981; Fua and Zacchia, 1983). In the 1970s, economists regarded this sector as an outcome of Italy’s late industrialisation and small firms were often seen to be filling niches left by large companies. The existence of small firms was also explained by the ‘de-centralising’ production policies of many large businesses whereby they attempted to avoid legal restrictions on the employment of labour and the increasing bargaining strength of trade unions (Berger and Piore, 1980 and Brusco, 1975). However, this view has changed as a result of more recent research which suggests that the persistence of a strong small business sector is not the result of these ‘de-centralisation’ policies and that small business ties with large firms are, in many cases, non­ existent (Goglio, 1982). Small firms, it is seen, develop complex net­ works of reciprocal relationships among themselves which often involve increasing specialisation and division of labour between businesses. Such networks of firms similar to those described by M arshall2 use economies of scale which are external to the single units of production but internal to the ‘industrial districts’ in which they are located. The innovative capacities and the flexibility of small firms, along with changes in technology and the growth of demand for non-standardised products accounts for their success. Political scientists have also examined the growth of small firms, their interest stemming from the presence of both ‘red’ Communist and Christian Democrat controlled local and regional governments in the small firm areas of Italy. Comparison of these two distinctive political sub-cultures and their relationship with the small firm have shown striking similarities. Contradictions such as the high percentage of Communist party voters among small firm entrepreneurs in ‘red’ areas have been examined, as have the interesting divergencies in economic policy at local and national levels.3 These policy dif­ ferences include ignoring the non-implementation of a variety of laws regarding, among others, safety at work, laying off workers during recessions and environmental pollution. The strength of ‘neo-localism’ over ‘neo-corporatism’ and the contradictory co-existence of the two has often been seen as a peculiarity of the Italian system. The major regions of small business growth in Italy are those with traditional family and community structures and with a high level of rural-urban interpenetration. Such structures have not been eroded as in other areas of Italy by large-scale industrialisation and migra­ tion. In their study of small firms, Italian sociologists, especially 14

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

Bagnasco, have been struck by this concentration in specific geographical areas. Consequently, they have examined the characteristics peculiar to these areas which would seem to favour their development. Among the social characteristics identified, are the importance of family structures, agricultural organisations, and forms of rural-urban settlement. The regions in which small firms are most concentrated have been called the ‘Terza Italia’ (third Italy). These include central Italy (Emilia Romagna, Tuscany, Umbria and the Marche) and the north-east (Veneto, Friuli, and Trentino). This ‘Terza Italia’ is distinguished from the so-called ‘industrial triangle’, de-limited by the cities of Turin, Genoa and Milan, an area of much earlier industrialisation and where most of Italy’s large-scale industry is situated. It is also different from the under-developed south where agriculture is still the predominant source of employment. In the ‘Terza Italia’, small units of production are the most common and around 80 per cent of those employed in industry are concentrated in units of less than 200 employees. The average size of firm is below ten employees. Traditional economic indicators such as rate of growth of production, investment, productivity and employment all show greater dynamism in this area and the rapid decline in the importance of agriculture as a form of employment underlines the profound changes that it has undergone. In the Val d‘Elsa in Tuscany, agriculture employed 70 per cent of the working population in 1951, but by 1981, a mere 10 per cent were employed in this sector (Bagnasco and Triglia, 1984). Modena in Emilia Romagna was the seventeenth richest province in Italy in 1970 but the second richest by 1979. However, a more tangible sign of increasing affluence is that the array of luxury shops found on New York’s Fifth Avenue can now been seen in many of the small and medium-size towns of the ‘Terza Italia’! Small firm development in this region has been in such traditional sectors as textiles, clothing, shoes, furniture and leather goods. But machine tools, industrial robots, optical instruments and other technologically advanced sectors are becoming increasingly important. Furthermore, even in the traditional sectors the use of numerically controlled machinery — for example, in the textile industry — has made the terms ‘traditional’ or ‘mature’ in referring to the technology, totally meaningless. These small firms tend to be located in ‘industrial districts’ which specialise in the production of a limited range of goods.4 These industrial districts are characterised by the organisa­ tion of service centres on a cooperative basis. They provide such services as marketing, information on product and technological 15

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

innovation, and the organisation of such routine payments as wages and social security contributions on behalf of member firms (Brusco, 1982). These industrial districts are characterised by specialisation within productive processes which are distributed among small firms in specific geographical areas rather than according to a division of functions within large firms. At the same time, the small and mediumsize towns which are fairly evenly scattered over the ‘Terza Italia’ have widely disseminated commercial and financial functions. The concentration of small firms in this area, then, raises some interesting questions. Why has it become so conducive to the growth of small businesses? Sociologists have stressed three major factors: the large number of complex (extended and multiple) family systems; a particular tradition of agricultural production, in particular sharecropping; and the persistence of local communities within a very par­ ticular and inter-related rural-urban system. These factors have been a characteristic of the ‘Terza Italia’ since at least the Middle Ages and demonstrate how they, together with more strictly economic fac­ tors, have enabled the small-scale business sector to grow. Sociologists such as Smelser (1959) have identified the origins of the nuclear family in the Industrial Revolution, while Laslett (1969, 1977) has amassed evidence to show that in many parts of Europe the nuclear family was the most common family form from at least the fourteenth century.5 Historians have claimed, using evidence from Florence, that the modem family, along with many other modem institutions, was born in Renaissance Italy (Goldthwaite, 1968). However, evidence to the contrary has been put forward to show that the complex Italian family of the Middle Ages was not destroyed during this period but that it continued to persist as a strong and cohesive form of social organisation (Berengo, 1965). Thus, the most striking feature of the Italian family in the ‘Terza Italia’ is the very high percentage of complex family forms that has persisted since the fourteenth century. Of course, the composition of families changes as they pass through various stages in the developmental cycle (Goody, 1958); they can be nuclear in one phase and extended in another. Barbagli (1984) has used the census material for the years 1881 to 1911 for the small town of San Giovanni in Persiceto in Emilia Romagna to trace the changing family structure of heads of household. San Giovanni in Persiceto is a town near Bologna which, during the years in question, numbered 15,000 inhabitants, 62 per cent of whom were employed in agriculture, a lower than average figure for the region at that time. Barbagli found that the type of family tended to change as the head of household became older. Until he was 40 16

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

years of age, the family was usually nuclear (55 to 70 per cent of all families), rarely multiple (10 per cent) and more frequently extended (10 to 20 per cent). From the age of 50, the possibility that he would become the head of a multiple family, with a married son and daughter, increased steadily. In its last stage in the developmental cycle, when the head of household was over 50 years old, the family tended to become either extended or multiple (47 per cent) rather than nuclear (39 per cent). Using individuals rather than legal families as the units of analysis, complex forms of cohabitation become more frequent. Thus, examining the figures for San Giovanni in Persiceto, we find that although complex families in 1911 made up 30 per cent of all families, 47 per cent of the population lived in families of this type. At any given time, then, roughly one-half of the population was living in complex families and, if we examine individuals during the developmental cycle of their families, it is clear that the majority of the population in this region of Italy lived in a complex family form at some stage during their lifetime. However, we must also look at the situation in the more recent past and in other areas of the country. One of the more interesting features of family structures in Italy is the geographical distribution of the nuclear family in areas which are diametrically opposed in their level of industrialisation. In the so-called industrial triangle — Lombardy, Piedmont and Liguria — the percentage of nuclear families is much higher than in the ‘Terza Italia’. In 1951, for instance, when Italian industrialisation was concentrated in this ‘triangle’, 64.6 per cent of the population lived in nuclear families while in the south where agriculture was still the principal form of employment, we find, con­ trary to all expectations, that the proportion of nuclear families was the highest in Italy at 74.3 per cent. Taking the three regions together in terms of their relative proportions living in complex families we find that in the ‘Terza Italia’ they account for 50 per cent of the popula­ tion, for 27 per cent in the north-west (the industrial triangle) and 20 per cent in the south. In order to account for these geographical differences in the incidence of nuclear and complex family structures, we have to look at the varying forms of agricultural organisation. Sociologists have tended to link complex family structures to one particular form of agricultural organisation; namely, share-cropping (mezzadria). Recently, this has been extended to other forms of agriculture mainly because it has become clear from research findings in Italy that although share-cropping is most frequently associated with complex family forms this is not always the case. If we examine forms of 17

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

agricultural production, a clear picture emerges of how these influence family structures. Share-cropping in Italy was not only a contract between landowners and peasant farmers, but also contractually involved whole domestic groups. Landowners were willing to give farms to share-croppers and their families only if they felt the number of ‘hands’ in the families were adequate to work the farms concerned. Thus, heads of households acted as representatives of their families to the outside world. Although the length and terms of the contracts varied over the centuries and from area to area, the most common form was that in which land, farmhouses, outbuildings and sometimes seed were provided by the landowners while the labour, tools and animals were provided by the peasant farmers. All the produce, including milk, eggs and chickens were divided equally between land­ owners and peasants. In order to obtain maximum productivity, the landowner or his agent, exercised strict and total control over the life of the entire share-cropping family. Some contracts went as far as to prohibit any member of the family from leaving home for more than three days without the landowner’s explicit consent. The landlord’s most pressing concern was to preserve the farming family in such a form as to be suitable to the land which it worked. Conse­ quently, it was necessary to obtain the landlord’s consent before any member of the family could get married. If the family was reduced in size for any reason, then they could be transferred to a smaller farm. The bracciante or paid agricultural worker had a quite different relationship with the land he worked and with the landowner. He, as an individual, sold his labour on the market in return for a daily wage, His relationship with the land he worked and with his employer was transient and often discontinuous. He usually lived in the town which could be some distance from his place of work and he rarely worked for the same landowner for more than a few weeks at a time. The bracciante is the only type of agricultural worker to be found in the south of Italy and, unlike the share-cropper who always lived where he worked, he lived in the town. Until very recently, the main squares of the towns of the south were filled at dawn with agricultural workers wanting to sell their labour for the day. The boaro or tenant farmer also had an annual contract which fixed his salary and his duties, while the land and house were provided by the landowner. As in the case of the share-cropper, the contract in­ corporated the whole family with the landowner exercising maximum control over all activities of the family. Towards the end of the nine­ teenth century and with increasing impetus in the twentieth, land­ owners began to neglect their agricultural holdings in favour of 18

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

more lucrative investments in industry. This meant they were more willing to sell off pieces of land or to rent on a more impersonal basis than previously. Some share-cropping contracts persisted, however, until the 1960s. If we examine these various types of agricultural worker in relation to data on family composition, it is clear the differences are between the daily wage earning agricultural workers (braccianti) and the rest. In Ferrara in Emilia Romagna, where all types are represented, 45 to 60 per cent of salaried agricultural workers are members of nuclear familes, 10 per cent of share-croppers and 10 to 20 per cent of tenant farmers. The above account suggests how the whole family of the share-cropper was involved in the work process and how a nuclear family would normally have had insufficient numbers to run farms. In terms of the geographical distribution of the various forms of agricultural organisation, the south almost exclusively had salaried agricultural workers (braccianti) while the ‘Terza Italia’ had a majority of share-croppers or tenant farmers. Thus, from this brief discussion, it is clear that the area of Italy which has a high proportion of small businesses is also characterised by a complex family composition and a tradition of share-cropping in agriculture (Paci, 1982). Other forms of agricultural organisation are present in this area which also favour the existence of complex family structures. However, while not discounting their importance in accounting for the development of small firms, we shall focus upon share-cropping because it was the most common form of agricultural organisation in the ‘Terza Italia’. In the share-cropping family, there is often evidence of an entre­ preneurial spirit and the capacity for hard work which can be the key to the success of many small firms. As a result, the transition from a share-cropping agricultural economy to a small firm economy in the ‘Terza Italia’ has been both smooth and rapid.6 The share­ cropper had to exercise entrepreneurial skills in his daily struggle with the landlord which, in bad years, could be a matter of material survival. He would have to use all his wiles in order to hide a few eggs, some wheat or an extra bottle of olive oil from being shared with the landowner. To save and to accumulate, he would have to make careful calculations and acquire an acquisitive mentality. He was accustomed to contracts which had to be respected, to selling his products in the market, and to dealing with banks and artisans when he required their services. The complex family, as we have seen, was intimately linked with share-cropping but how did this favour the growth of the small firm? Primarily because the share-cropper 19

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

exercised his entrepreneurial skills; in the first instance, within his own family. He had to assign each member of the family tasks which could be complex and numerous due to the variety of crops grown, animals raised, and the need to produce clothes, mend tools and under­ take jobs that demand both skills and flexibility. The family head was recognised as the ‘boss’ by other members of the household, the land­ owner and the community as a whole.7 His wife also played an important role in the organisation of the other female members of the household in terms of their tasks in the house and on the farm. Since the Second World War, the share-cropper has been able to improve his economic position vis a vis the landowner and many have bought their own farms. This has often left them financially more vulnerable than before, and because increasing mechanisation has reduced manpower needs, the practice of part-time farming has begun to develop. Many of those who have left the land have left their families to look after the farms while they have found work as artisans in the nearly small towns. In doing this, they take a crucial step towards small firm entrepreneurship since as artisans, they acquire the skills necessary to set up on their own. They are prepared to accept low wages and the uncertainties of employment because they have the backing of their families who continue to earn revenues on their farms. During the 1960s, the era of Italy’s ‘economic miracle’, there was a continuous increase in the opportunities available in non-agricultural employment, both in artisan workshops and in industry. Thus, by the end of the decade, the attraction was no longer the farm but the fac­ tory with priority given to income from industrial employment. Consequently, the older members of the family were left to look after the land, concentrating on production for family consumption. The interim experience as an employee is very important for the potential small firm entrepreneur. Research by Bagnasco and Trigilia (1984) among small firm owners in the Val d’Elsa suggests that 66 per cent of self-employed artisans and 42 per cent of small employers had previously been dependent workers. During the last stage in the process of social mobility from share-croppers to entrepreneur when money has been saved and technical experience acquired, the posses­ sion of land can be crucial because it provides collateral for loans and offers a cushion on which to fall in periods of financial difficulty. As can be seen from the foregoing discussion, the process has been gradual with its roots in socio-historial conditions which changed slowly until the 1950s and since then have been changing more rapidly. This has enabled industrialisation to occur without creating funda­ mental social dislocations, largely because the family and the local 20

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

community have been instrumental in bringing about change. The incidence of various social problems, for instance, are low in the ‘Terza Italia’ and although the numbers of complex families have diminished, they are still much higher than in other parts of the coun­ try. The persistence of family influences can be seen at all stages of business start-up and often, for example, the savings of all family members will be put together to provide the initial capital. In the Val d’Elsa, 22 per cent of all small industrial firms and 25 per cent of artisan businesses were financed with the help of kin. Furthermore, 40 per cent of these entrepreneurs had relatives who worked for them. The informal pressures of the traditional community are also still very much alive in the ‘Terza Italia’, reinforcing the operation of the ‘industrial district’ which is based on networks of informal relations and high trust. These industrial districts consist of towns or groups of villages which specialise in the production of one or more goods. In Prato — the oldest and best known industrial district in Italy — there is specialisation in textiles; in Carpi, it is knitwear; in Poggibonsi, furniture; and in Reggio Emilia, it is farm machinery. Often the industrial district is organised around a dominant firm and many sub-contractors. Such firms often organise the breakdown of the pro­ duction process into various stages and parts and then sub-contract out most of these to the surrounding artisan businesses. The ‘parent’ firm usually undertakes the final assembly of the finished product and then sells it on the market without resort to middlemen. Thus, it can be seen that industrial districts perform the same functions as large factories. Generally, the different stages of production are undertaken by firms each of which have less than 15 employees. The technology used by firms in industrial districts varies greatly according to the nature of the products and the age of firms. Table 2.2 shows for the region of Tuscany the enormous increase in employment in very small businesses using advanced technology. Most of these firms are to be found grouped together in specific industrial districts and their capacity to innovate, both in their products and technology, depends very much upon their physical and social proximity. Italy is the world’s third largest producer of industrial robots and yet the firms making them are, with a few exceptions, all small. Almost 30 per cent of them have less than 50 employees. Almost all of them rely on large numbers of artisan workshops for producing the components. The artisans who make these are highly skilled and use the latest technology available. In the highly integrated communities which make up the industrial districts, knowledge about new techniques of production soon becomes well known. Credit is often arranged through local banks with the artisan 21

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

trade associations acting as guarantors. Machinery is often purchased using hire purchase arrangements organised by the machine tool manufacturers. Table 2.2: Percentage change in numbers of employees in establish­ ments using different 'types' of technology in Tuscany Size of firm

Advanced 1971 1981

Intermediate 1971 1981

Traditional 1971 1981

Total 1971 1981

0 -9 1 0 -1 9 2 0 -4 9 5 0 -9 9 1 0 0 -1 9 9 2 0 0 -4 9 9 5 0 0 -1 ,0 0 0 Over 1,000

+ 95.9 + 44 .8 + 58.8 + 51.3 + 1.2 + 8.0 + 29.8 - 5.3

+ 51.8 + 77.2 + 40 .9 + 46 .9 - 0.3 + 4.5 - 2.1 + 16.2

+ 25.7 + 4 3 .6 + 8.6 + 0.2 - 1 6 .2 - 1 4 .6 - 3 4 .5 + 13.4

+ 28.1 + 45 .8 + 12.2 + 6.6 - 1 2 .5 - 9.5 - 1 1 .8 + 8.3

TOTAL

+ 16.6

+ 2 4.0

+ 13.1

+ 14.7

Adapted from: Centro Studi Confindustria (1984)

Industrial districts grow almost by imitation with the labour force developing skills and specialisations as a result of ‘learning by doing’ and aided by their past experience in mending and repairing farm tools and machinery. If complex production processes are sub-divided and dispersed among many autonomous firms, there is a need for finely tuned coordination and mutual trust. Sometimes, small firms produc­ ing industrial robots organise their production processes in such ways that the final assembly necessitates each component arriving at specific times on specific days.8 Consequently, the production and final assembly of high technology products is undertaken according to blueprints agreed between parent firms and sub-contractors. The sub­ contractors do not usually work exclusively for a single parent firm but, instead, undertake production for a number of such businesses. The system requires coordination and trust and a detailed knowledge of the local area and the talents of its inhabitants. It is based on a reservoir of skilled sub-contractors who can be relied upon to manufac­ ture components according to the standards of precision required. It also demands that sub-contractors keep to their deadlines. Since industrial districts normally coincide with local communities, social pressures to conform to deadlines and to produce to specific stan­ dards are strong. These pressures force ‘parent firms’ not to exploit their sub-contractors. Thus, the networks of social relations operating within industrial districts are based on assumptions that each member will not try to take advantage of the other while, at the same time, 22

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

they are competing with each other in the market. Networks of sub­ contractors guarantee ‘parent firms’ greater elasticity, flexible specialisation and reduced production costs. Elasticity in production requires diffused know-how, easy communication between firms, adaptable technology and the availability of different specialists within localities. Most of the complex organisation involved in the day-today working of industrial districts is carried out informally. Local bars, for example, are places where most of the sub-contracting is organised over drinks and games of cards. Even innovations can be stimulated by these informal contacts. Brusco (1982) cites the example of an entrepreneur who describes to a friend in a local bar a machine tool which would be useful in his factory. The following week an artisan appears with a machine which fulfills all of the entrepreneur’s requirements. The artisan had overheard the conversation, probably deliberately loud, and had developed a prototype for the entrepreneur. The small firm areas which have been described are constantly changing. In this chapter, I have tried to describe the social dimen­ sions of a process which cannot be explained solely in economic terms. That the small firm economy should develop principally in the ‘Terza Italia’ rather than elsewhere can only be understood by the peculiar social structure of the area. Thus, the smooth transfer from sharecropping agriculture to small firm industrialisation has been able to occur because of the significance of the complex family form. This pattern of industrialisation has taken place without the mass transfer of populations, in an area of long-standing urban traditions with strong links with the surrounding countryside. These towns have been historically independent and, as a result, their non-reliance on cen­ tral government assistance has created traditions of local problem solv­ ing. Economic development in these areas, therefore, has not been simply a question of determining the right policy mix but rather an outcome of the social structure and the historical background of the ‘Terza Italia’.

NO TES

1. The literature on the small business economy in Italy is vast and grow­ ing at a constant rate. One of the few observers to recognise the potential of the small business in the Italian social context without being carried away by an excess of enthusiasm was Becattini (1978). 2. Marshall’s description of industrial districts, in Sheffield making steel and cutlery and in south Lancashire making textiles, and their external econ­ omies has many features in common with the industrial district in Italy today. 23

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

‘When an industry has thus chosen a locality for itself it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighbourhood to one another. The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously. Good work is rightly appreciated, inventions and improvements in machinery, in processes and the general organisation of the business have their merits promptly discussed: if one man starts with an idea, it is taken up by others and combined with suggestions of their own; and thus it becomes a source of new ideas’. (1961, p. 225) 3. Trigilia has analysed the politics of two small business areas in two studies, one of a ‘red’ (Communist) town, Colie Val d’Elsa, and the other ‘white’ (Christian Democrat) Treviso. He shows that at a local level both parties tend to protect local interests regardless of their ideology. 4. The application of the term ‘industrial district’ to the Italian situation was first advanced by Becattini (1978). 5. Le Play first put forward the idea that the transformation of the family from complex to nuclear had been induced by industrialisation and urbanisa­ tion and this was largely accepted until Laslett (1969, 1971) demonstrated that according to historical records this was not true. However, in trying to show that the nuclear family existed well before the Industrial Revolution he extended what was true for northern Europe to areas of southern Europe where neo-local residence was rare, the proportion of complex families high and the age difference between husband and wife greater. Laslett (1972,1977) has since modified this to account for the complex family forms in some areas of southern Europe. 6. This transition took place very rapidly, within one generation at the very most. 7. The leadership qualities of the head of the share-cropping family were emphasised by Fascist propaganda (Paci, 1982). 8. A Piacenza firm producing industrial robots had imitated the ‘just in time’ system from Fiat; they had seen it when installing automatic paint spray­ ing robots. Fiat had learned of the system from the Japanese.

REFERENCES Bagnasco, A. and Messori, M. (1974) Tenderize delVeconomia periferica (Tendencies in the peripheral economy), Editoriale Valentino, Turin. Bagnasco, A. (1977) Tre Italie. La Problematica territoriale dello sviluppo italiano (The three Italies. The territorial problem of Italian development), II Mulino, Bologna. Bagnasco, A. and Trigilia, C. (eds.) (1984) Societa e politica nelle aree di piccola impresa. II Caso della Valdelsa (Society and politics in the small firm areas. The case of the Valdelsa), I.R.P.E.T., Florence. Barbagli, M. (1984) Sotto lo stesso tetto. Mutamento della famiglia in italia dal XV al XX secolo (Under the same roof. Changes in the family in Italy from the fifteenth to the twentieth century), II Mulino, Bologna. Berengo, M. (1965) Nobili e mercanti nella lucca del cinquecento (Nobles and Merchants in fifteenth-century Lucca), Einaudi, Turin. 24

THE DEVELOPMENT OF SMALL FIRMS IN ITALY

Becattini, G. (1978) T he Development of Light Industry in Tuscany: an In­ terpretation’, Economic Notes, nos. 2-3. Berger, S. and Piore, M.J. (1980) Dualism and Discontinuity in Industrial Societies, Cambridge University Press, Cambridge. Brusco, S. (1975) ‘Economie di scala e livello tecnologico nelle piccole imprese’ (Economies of scale and the technological level of small firms), in Graziani, A. (ed.) Crisi e ristrutturazzione nelTeconomia Italiana (Crisis and restructuring in the Italian economy), Einaudi, Turin. (1982) T he Emilian Model: productive decentralization and social integration’, Cambridge Journal o f Economics, Vol. 6. Centro Studi Confmdustria (December 1984) Settimo Rapporto sulVlndustria Italiana (Seventh Report on Italian Industry), Rome. Fua, G. (1981) Problemi dello sviluppo tardivo in Europa (Problems of late development in Europe), II Mulino, Bologna. Fua, G. and Zacchia, C. (eds.) (1983) Industrializzazione senza Fratture (In­ dustrialisation without traumas), II Mulino, Bologna. Goglio, S. (ed.) (1982) Italia: centri eperiferie (Italy: centres and peripheries), Franco Angeli, Milan. Goldthwaite, R. (1968) Private Wealth in Renaissance Florence, Princeton University Press, Princeton. Goody, J. (1958) The Developmental Cycle in Domestic Groups, Cambridge University Press, Cambridge. Laslett, P. (1969) ‘Size and Structure of Household in England since the Sixteenth Century’, Population Studies, Vol. 223. (1971) The World We Have Lost, Methuen, London. (1977) Family Life and Illicit Love in Earlier Generations, Cambridge University Press, Cambridge. Laslett, P. and Wall, R. (eds.) (1972) Household and Family in Past Time, Cambridge University Press, Cambridge. Marshall, A. (1961) Principles o f Economics, Macmillan, London. Mediocredito Centrale (1982) Indagine sulle Imprese Manifatturiere (Investi­ gation of manufacturing industry), Vol. 1, Rome. Paci, M. (1982) La Struttura Sociale Italiana (Italian Social Structure), II Mulino, Bologna. (1980) Famiglia e Mercato di Lavoro in un Economia Periferica (Family and Labour Market in a peripheral economy), Franco Angeli, Milan. Sabel, C. (1982) Work and Politics, Cambridge University Press, Cambridge. Sabel, C. and Piore, M.J. (1985) The New Industrial Divide, Basic Books, New York. Smelser, N. (1959) Social Change in the Industrial Revolution, University of Chicago Press, Chicago.

25

3 Trends in Small Business Start-up in West Germany Heinz Klandt

INTRODUCTION In recent years there has been a rapid growth in studies of entrepreneurs and small businesses in West Germany. The data base for research is therefore considerably better than it was a few years ago (Szyperski and Klandt, 1981b), although it is still far from satisfac­ tory. A major issue in the current debate about start-ups is their effect on employment. In particular, there is an expectation that new ‘hitech’ businesses will stimulate social and economic change, improve Germany’s competitive position and create more long-term employ­ ment. Contemporary debate commonly refers to well-known examples in the United States, including Route 128 and Silicon Valley. In Ger­ many, however, there have been relatively few sources for detailed empirical comparison (Szyperski and Klandt, 1980; 1981a). This chapter sets out some of the general features of business start-up in West Germany and then concentrates on the significance of technologically and socially innovative start-ups. A number of macroand micro-social influences on start-up activity are then reviewed before a concluding discussion of factors determining business success.

PATTERN OF BUSINESS START-UP AND RELATED TRENDS IN EMPLOYMENT IN THE LAST 20 YEARS In West Germany today there are no comprehensive statistics on the number of existing firms, nor any corresponding figures for the annual change in the overall pattern. Nevertheless, regional figures indicate a significant increase in business start-ups between 1975 and 1984 such that the ‘stock’ of businesses was noticeably expanded.1 26

SMALL BUSINESS START-UP IN WEST GERMANY

The effects on employment have been considerable. Hunsdiek (1985) estimates, for example, that in the North Rhine-Westfalia region in 1984 new business registrations created between 279,000 and 372,000 jobs. Extrapolating to West Germany as a whole, this suggests a total of approximately one million new jobs during the year.2 It is difficult to assess the relative significance of new ‘hi-tech’ businesses within this total. Definitions of ‘hi-tech’ vary and it is not always easy to assess the independence of new enterprises. In 1975 Arthur D. Little made a comparative study of Great Britain, West Germany and the United States in order to identify such businesses. In West Germany, according to the survey, only 1,200 of these firms were founded in the previous 25 years, but the validity of this figure is questionable. More recently, Theobald (1985) attempted to estimate the total number of technology-based start-ups using entries in the companies register. The results of her investigation suggest that in 1983 there were 230 such start-ups in a range of industrial sectors including computing, communications, lasers, robotics and elec­ tronics. Looking at start-ups in 1979, it is possible to estimate that betweeen 11.7 per cent and 24.5 per cent failed or left the market during the five years up to 1984 (Theobald, 1985, p. 19). Overall, between 1973 and 1984, 2,000 technology-based business start-ups produced between 31,000 and 40,000 jobs (Theobald, 1985, p. 20). Another kind of small business which has grown in popularity over recent years is the ‘alternative’ small-scale cooperative enterprise which has its origins in the student movement of the 1960s and the new ideas of ecology, peace and womens liberation which began to develop at that time. The basis of ‘alternative’ thinking can be found in the work of Eric Fromm, E.F. Schumacher, the Club of Rome, Herbert Gruhl and Ivan Illich. In its basic philosophy the movement embraces the following ideas: — solidarity rather than competition — being rather than having — no growth or qualitative growth rather than quantitative growth — soft technologies rather than the classical ‘hard’ technologies — sufficiency rather than consumerism — pursuit of satisfaction rather than maximum profit — small rather than large organisational units — personal contact rather than anonymous institutions — collective self-determination rather than impersonal hierarchies — anarchy and self-sufficiency rather than consumer dependency — self-programmed learning rather than formalised occupational 27

SMALL BUSINESS START-UP IN WEST GERMANY

training (professionalisation) — multi-faceted work situations rather than detailed division of labour — new concepts of role rather than traditional role stereotypes — integration of work, leisure and domestic life rather than the separation of these spheres As yet there is little in the way of empirical survey material on the actual demographic structure and values of the heterogeneous groups which make up the ‘alternative’ movement. However, one recent study shows that compared with other sections of the popula­ tion, the movement involves a larger proportion of men than women and that those who regard themselves as members tend to be relatively young, most being under 40, and to have better than average educa­ tion and academic qualifications (Meindl, 1983, p. 90). Estimates of the number of ‘alternative’ businesses vary significantly according to definition. One recent study (Wirtschaftwoche, 1985, pp. 19-22) indicated that there were between 6,000 and 35,000 alternative profitmaking business projects in the Federal Republic involving between 80,000 and 600,000 active participants.

F A C T O R S IN F LU E N C IN G STA R T -U P A C T IV IT Y

As in other Western European economies, the West German Govern­ ment — and to some extent larger businesses — impose conditions which restrict opportunities for new business formation. Thus, although in principle any resident in the Federal Republic can start a business at any time, there are, in practice, a number of legal restric­ tions. For example, there are barriers to market entry in terms of qualifications: anyone who wishes to set up in business as a skilled tradesman must have the relevant master’s certificate or employ someone who has. Or there may be geographical restrictions: for instance, chimney sweeps have a local area monopoly. There are, in fact, a large number of laws concerning, for example, planning permission, environmental protection and levels of local competition which create obstacles to market entry (Piitz, 1982). On the other hand, the state has taken steps in recent years to increase the number of business start-ups through measures designed to support potential entrepreneurs and to compensate for barriers to market entry. Typical measures relate to the provision of informa­ tion and finance as well as infrastructural support services. Thus the 28

SMALL BUSINESS START-UP IN WEST GERMANY

state ensures a flow of advice and consultation to entrepreneurs either directly or indirectly as well as practical support through start-up spon­ sorship. It has also boosted the programme of start-up seminars offered by chambers of industry and commerce. The most important interventionary measures are financial; comprising mainly capital subsidies and security for loans. There are also other forms of subsidy; for ex­ ample, there is a state fund which can dispense capital resources on very favourable terms in the event of insolvency. There is too, a federal loan office for small businesses which also allows repayments to be postponed for the first two years as a form of relief. Finally, the state provides, at a regional level, subsidised micro-infrastructural facilities in small business centres. These initiatives are directed especially towards innovative start-ups which often require a range of special supporting services. But what kind of people are most likely to take advantage of these measures? A number of empirically based observations about the per­ sonal characteristics and social background of entrepreneurs can be made on the basis of studies conducted by the business start-up group at the University of Cologne.3 (Figure 3.1 gives a schematic view of the relevant variables in these studies and serves as a frame of reference for analysis of the literature and other empirical investigations.) It is clear from a large number of studies in other countries as well as West Germany that business start-up is often motivated by the desire to achieve and to succeed (Klandt, 1980). Entrepreneurs look for situa­ tions in which they can demonstrate their own abilities through competition with others. They set themselves difficult but achievable targets and prefer situations which give them a direct return for their efforts. Thus, although money and profit are important measures of the quality of individual activities they are not the sole object. Research also shows that those who start businesses have an orientation towards risk which is in the middle range and avoid situations over which they have no appreciable control or where outcomes are decided by chance or external forces. Thus, they are neither particularly shy of taking risks nor do they actively seek them out (Klandt, 1984, pp. 167-173). Finally, the data indicate that entrepreneurs are characterised in motivational terms by a relatively strong need for independence and for personal self-development (Klandt, 1984, pp. 148 and 153-8).4 Linked with the need for achievement is a tendency for entre­ preneurs to exhibit an ‘internal locus of control’; a belief that the out­ come of a particular situation is less the result of chance than per­ sonal influence. Thus, the setting up and further development of business enterprises is often regarded not as a matter of chance, fate 29

Physiological characteristics Morphological characteristics

PHYSICAL

Private sphere: support from family members Occup. sphere: own business Financial sphere: projected needs, returns

AFTER START-UP

OTHER

SOCIAL

Private sphere: support from family members Occup. sphere: employment/unemployment Financial sphere: disposable resources etc.

DURING START-UP

— climatic zone — geographical region — etc.

MACRO-SOCIAL & WIDER CONTEXT — economic environment , — non-economic environment

Private sphere: family background Occup. sphere: education and experience

BEFORE START-UP

MICRO-SOCIAL CONTEXT

Dynamic characteristics Abilities Temperament traits Role characteristics

PSYCHOLOGICAL

PERSONAL ATTRIBUTES OF (POTENTIAL) ENTREPRENEURS

Figure 3.1: Frame of reference for factors influencing start-up activities and start-up success

— setting up process — continuation

START-UP ACTIVITY

enterprise-related individual-related — economic — non-economic

SUCCESS IN BUSINESS

SMALL BUSINESS START-UP IN WEST GERMANY

or third party activity such as business fluctuations and competition, but rather as something which is essentially within the individual’s own power to influence (Zoihsel, 1975, pp. 277, 280 ff).5 Using the 16PF matrix developed by Cattell, research data indicate that those who start businesses are relatively willing to take initiatives (H) and capable of enthusing themselves (F). They also tend to exhibit a high degree of individualism (M) but rather less discipline (Q3) — at least as measured by the test — than the average for the popula­ tion. Finally, the founders of new businesses are also found to have relatively dominant personalities (E) (Klandt, 1984, p. 195).6 Dimen­ sions which can be measured using standard psychological intelligence tests seem rather less useful for describing contrasts between entre­ preneurs and others; one of the findings of our research is that there is no significant difference between the two in terms of reasoning factors (16PF Factor B). Individual propensity to start a business does appear to be influ­ enced, however, by gender and stage in the life-cycle. Thus, various studies show that about three out of four entrepreneurs are men, although there are recent indications of an increase in female activity (Klandt, 1984, p. 216).7 Studies in the Federal Republic and elsewhere also reveal a typical life-style or career path, at least among male entrepreneurs, in which start-up activities have a particular place. Liles (1974) shows that the concentration of business start-up activities at a certain stage in the life-cycle is part of a general tendency to ‘start up’ in other areas such as the family and the home. Sometimes com­ mitments of this sort can make the founding of a business less likely; however, on the other hand, the accumulation of experience and improvement in financial position which occurs over time can increase the possibility of start-up. The result of these two tendencies is, therefore, a concentration of start-up activity in the mid-thirties phase of the life-cycle (Klandt, 1984, pp. 213-24).8 In addition to these characteristics there are other contextual features which are common to many of those who start their own businesses (Klandt, 1984a, pp. 230-89). Thus, home background often has a considerable influence on the decision to set up on one’s own. Certainly, a larger proportion of business founders come from business-owning families than would be expected from chance (Klandt, 1984, pp. 236-41a).9 Further, a Protestant upbringing — not just a Calvinist one, as Max Weber’s thesis would have it — is more likely to lead to independent business activity than a Catholic upbringing (Klandt, 1984, pp. 242-6).10 Our investigations also enable a comparison to be made between 31

SMALL BUSINESS START-UP IN WEST GERMANY

the educational backgrounds of founder-owners and others. Gener­ ally, owners tend to have better school and vocational training than other employees. But comparing their educational attainment with managerial employees at a similar level, the former tend to have fewer secondary, further or higher qualifications than the latter (Klandt, 1984, pp. 247-59).11 In addition, although some American authors (e.g. Shapero, 1971) have suggested that the typical small entrepreneur is ‘negatively displaced’ (through, for example, job loss), the evidence from West Germany is that founder-owners are ‘positively displaced’ (through, for example, inheritance of wealth) and they exhibit rela­ tively high levels of life and work satisfaction compared with other groups (Klandt, 1984, pp. 275-86; 315-19).12 Finally, in contrast to the results of some studies (see, for example, Mayer, Chapter 4) it seems evident that smaller organisations in Ger­ many generate fewer independent business-owners, in relation to their number of employees, than large organisations (i.e. those with 100 or more employees).13 However, the propensity to start a business in the Federal Republic is enhanced by contact as an employee with the kinds of products and services which could later form the basis of an independent enterprise.14 A summary of these factors influencing pro­ pensity to start-up, as well as business success, is presented in Table 3.1.

F A C T O R S IN F LU E N C IN G T H E SU CCESS O F N E W E N T E R P R IS E S

The empirical analysis of factors influencing business success is as under-developed in West Germany as it is elsewhere. Many studies are flawed because they concentrate solely upon successful businesses or, alternatively, involve only examples of failure. The concept of ‘success’ used here refers to the actual annual turnover achieved by a new small business. Elsewhere we have used other types of opera­ tional definition, including measures of subjective goal attainment, but these are excluded from present consideration (Klandt, 1984, pp. 88-109). Our studies show that among new business-owners, those with the highest achievement motivation tend to have the greatest success (Klandt, 1984, p. 151).15 We can find no evidence, however, of a correlation between success and the desire for independence. Fur­ ther, there is a negative correlation between success and the desire for a favourable working environment; the more successful entre­ preneurs are less inclined to value work without stress, a relaxed and participative atmosphere and possibilities for freedom within working 32

SMALL BUSINESS START-UP IN WEST GERMANY

Table 3.1: Summary of factors influencing business start-up and success Factors

Compared with rest of population, small business owners are

Significance for the success of a business

Achievement motive Risk orientation

high average

Desire for independence Concern for quality of work environment

high average

relevant ( + ) relevant (not linear) correlation not relevant relevant (—)

Locus of 16PF-E: " -F: " -G: " -H: " -M : " -0 : " Q2: " Q3:

internal high high low high high average average very low

relevant ( + ) not relevant not relevant relevant ( + ) not relevant relevant ( + ) relevant ( —) not relevant

16PF-B: Intel), reasoning Gender Age group

average men predominate mid-30s

not relevant not relevant not relevant

Father with own business Protestant upbringing Level of education Occupational experience Attitude of spouse to self-employment Positive displacement

more frequent more frequent higher more more positive

may be relevant not relevant not relevant relevant ( + ) may be relevant

control Tendency to dominate Ability to enthuse Conscientiousness Social initiative Individualism Self Confidence Self-sufficiency Discipline

_

more frequent upwards Work satisfaction prior to start-up higher higher General contentment prior to start-up Size of previous employer more likely over 100 employees Similarity of products/clients more frequent of previous employer

not relevant

Complementarity of team

relevant ( + )

-

relevant ( + ) relevant ( + ) not relevant relevant ( + )

time. (Klandt, 1984, pp. 180-2). It is also possible to make certain distinctions between the character traits of entrepreneurs who are either more or less successful (Klandt, 1984a, pp. 200-3). Those who start new businesses, as we have 33

SMALL BUSINESS START-UP IN WEST GERMANY

discussed, tend to be more dominant (E) than average and those who are most successful tend to display this characteristic to a greater degree than those who are less successful. Similarly, a high degree of initiative (H) seems to be positively correlated with success. In addition, and perhaps not surprisingly, self-confidence (O) appears to be positively correlated with business success. It is interesting to note that the less successful entrepreneurs tend to have relatively high scores on the self-sufficiency (Q2) scale. The more successful group does not have a particularly low score but it is close to the average for the general population, whereas the score for the less successful is well above the norm (Klandt, 1984, p. 201). A high degree of self-sufficiency is important for the generation of creative ideas; on the other hand it seems that this must not be so highly developed that the connection between ideas and action is broken. With regard to intelligence, there appears to be no significant correlation with business success. This should come as no surprise since standard psychological tests are not good predictors generally of occupational success. The attributes measured are not always rele­ vant to the problems which are found in everyday work situations and where the context is the formation of a new enterprise such tests are even less likely to be appropriate. Business problems tend to be opaque, complex, interrelated, unstructured and uncertain and they often demand the definition of goals and an active search for inform­ ation. This kind of intelligence is not easily measured using conven­ tional tests. Thus, in the ‘real world’, intelligence test scores appear to be far less important in determining success than occupational experience gained in relevant types of business (Klandt, 1984, p. 258). As far as the influence of gender is concerned, although women tend to be less active in the formation of their own business, once they have started out they seem just as likely to be successful as their male colleagues (Klandt, 1984). Measures of family and religious background also fail to distinguish successful entrepreneurs; those with a father in business or who have had a Protestant upbringing cannot expect to be any more successful than others. Satisfaction in life and work, however, which are found to be factors influencing business start-up, are also both positively correlated with subsequent success (Klandt, 1984a, pp. 290, 314).16 Experience with previous employers also appears to be significant for business success at a later stage. If entrepreneurs are able to supply similar products or services to similar customers as their previous employer then they have a greater chance of success than if there is no such possibility (Klandt, 1984, p. 290). 34

SMALL BUSINESS START-UP IN WEST GERMANY

The structure of the new business organisation represents a further set of factors which influence early development and prospects of suc­ cess. In cases where a new business has a complex purpose and design it is particularly important that members of the founding team com­ plement each other in terms of their education and experience. For example, if a new business is based on a complex engineering technology, and especially if this is rapidly changing, the lone entrepreneur runs the risk of being overwhelmed by the double requirement to continue developing the technology and to take care of marketing and other aspects of management. It is, therefore, not surprising that the few empirical data which are available show that business start-ups which involve teams tend to have a better chance of success (Klandt and Kirschbaum, 1987). In particular, the match between the qualification and interests of the members of the found­ ing group appears to be crucial.

CONCLUSIONS

The small business revival in West Germany has been accompanied by a growth in research studies of business start-up and growth. These have thrown some light upon the significance of small-scale enterprise as a source of employment and, in particular, upon the emergence of two different types of ‘innovative’ businesses: ‘hi-tech’ firms and ‘alter­ native’ co-operatives. In addition, data from the University of Col­ ogne projects have helped to identify a number of personal and social characteristics of those people who start businesses. Some of these characteristics, as we have shown, may be significantly correlated with business success. But in each of these areas there is a need for further research in order to test tentative correlations in both quantitative and qualitative terms and to systematically explore culturally influenced variations which are likely across different Western economies.

NOTES 1. During this period, for example, the stock of firms in the North RhineWestfalia region (which accounts for over one quarter of the national gross domestic product) increased from 433,000 to 530,000. 2. Research at the University of Cologne indicates that Hunsdiek may have seriously under-estimated the employment effects of new business entries (and exits). 3. A full description of the methodology and results of these statistics can be found in Klandt (1984). 35

SMALL BUSINESS START-UP IN WEST GERMANY

4. Measured by a summary scale (Klandt, 1984, p. 148). The arithmetic means for actual entrepreneurs was x = 16.4 compared with two groups of social-science students with x = 15.2 and x = 14.4 respectively; p 0.05. Other studies in German-speaking countries find indications of a strong desire for independence among founders of small business (Klandt, 1984, p. 155). 5. Using a version of Rotter’s locus of control scale Zoihsel found a value for the general population of x = 4.5; for university assistants and students, x = 8.5; but for a group of entrepreneurs a value of x = 14.9. 6. The extended version A of the experimental German translation was used. The arithmetic means for the group of actual entrepreneurs was found to be: (E)x = 7.1; (F)x = 7.1; (G)x = 4.1; (H)x = 7.0; (M)x = 6.6; (Q3)x = 4.2. 7. Szyperski, Klandt and Nathusius (1979) found that for the period 1973 to 1975 in the region of North Rhine-Westfalia 72.5 per cent of founders of new independent businesses were men and 27.5 per cent were women. In a more recent study of business registrations in North Rhine-Westfalia the figure for female entrepreneurs was found to be about 33 per cent (Clemens and Friede, 1986, p. 42). 8. See also Szyperski, Klandt and Nathusius, 1979, p. 9. There are indi­ cations that this average age has fallen in recent years (Clemens and Friede, 1986, p. 39). 9. For actual entrepreneurs it was found that 29.3 per cent had businessowning fathers and 16.1 per cent had business-owning mothers. According to estimates based on official statistics the expected values were approximately 18.7 per cent for business-owning fathers and 7.6 per cent for mothers. 10. Expected values for religious upbringing derived from official statistics were 51.2 per cent for Protestants and 45.2 per cent for Catholics; the empirical results for actual entrepreneurs were 56.7 per cent and 33 per cent respectively. 11. Among the employed population in the Federal Republic in 1980, 11.3 per cent had advanced secondary (Abitur) or comparable levels of attainment, whereas the figure for the sample under discussion is 53.3 per cent (Klandt, 1984a, p. 254). A similar relationship holds between the figures for post­ secondary qualification (66.9 per cent of an external control group and 90.6 per cent of the entrepreneurs). 12. A comparison between potential and actual.entrepreneurs reveals a highly significant correlation between upward mobility and business start-up activity (r = 0.37 and rho = 0.39; Klandt, 1984, p. 318). Mobility or displace­ ment was defined in terms of a nine-item index corresponding to Shapero’s approach (Klandt, 1984, p. 391). Work satisfaction prior to start-up was measured using the Fischer-Luck (1972) scale which gave a value for the control population of x = 25 and a value for the group of actual entrepreneurs of x = 31.4, p < 0 .0 1 (Klandt, 1984, p. 282). 13. Using official employment statistics the probability of working for an employer with up to 100 employees was 47.8 per cent; the figure for actual entrepreneurs in the sample who came from these employers was 42.9 per cent (Klandt, 1984, p. 282). 14. The comparison between potential and actual entrepreneurs in terms of start-up activity gives rise to a significant correlation with customer resemblance (r = 0.22; rho = 0.23); the relationship is weaker in the case 36

SMALL BUSINESS START-UP IN WEST GERMANY

of product resemblance (r = 0.17; p 0.05; rho = 0.15 n.s.; Klandt, 1984, p. 282). 15. The discussion in this section is based upon a study of 37 new businesses and 49 cases which include new businesses formed by a change of ownership (Klandt, 1984, p. 68). 16. Work satisfaction was measured using the Fischer-Luck scale and also using Neuberger’s Kunin-Item. A corresponding Kunin-Item was used to measure life-satisfaction. Both measures relate to the period prior to start-up (Klandt, 1984, pp. 273, 290).

REFERENCES Clemens, R. and Friede, C. (1986) Existenzgriindungen in der Bundesrepublik, Deutschland (Small business start-ups in the BRD), IFM Schriften Nr. 8NF, Poeschel, Stuttgart. Hunsdiek, D. (1985) Beschaftigungspolitische Wirkungen von UntemehmensgrUndungen und -aufgaben. IFM (Effects of enterprise starts and closures on employment policies), Materialien Nr. 28, Bonn. Klandt, H. (1980) ‘Die Person des Untemehmungsgriinders als Determinante des Griindungserfolgs’ (Personal attributes of new business owners as a determinant of success), in Betriebswirtschaftliche Forschung und Praxis, No. 4, pp. 321-35. (1984) Aktivitat und Erfolg des Untemehmungsgriinders. Eine empirische Analyse unter Einbeziehung des mikrosozialen Umfeldes (The activities and achievements of new business owners: an empirical analysis concern­ ing the micro-social context), Bergisch Gladbach, Eul Verlag. Klandt, H. and Kirschbaum, G. (eds.) (1987) Griindungsbedingungen und Griindungsstrategien junger Software und Systemhauser (Conditions and strategies for start-up in software and systems), Gesellschaft fur Mathematik und Datenverarbeitung GMD St. Augustin. Liles, P. (1974) New Business Ventures and the Entrepreneur, Homewood, Illinois. Meindl, U. (1983) ‘Alternative Gruppen: Konsumverhalten/Kommunikation: Zielgruppenlegende’ (Alternative groups, cooperation/communication: the elusive goals), Absatzwirtschaft No. 3, pp. 88-90. Piitz, P. (1982) ‘Hemnisse und Hilfen fur Unternehmensgriindungen’ (Help and hindrances for those starting a business), in Piitz, P. and Meyerhofer, W. (eds.) Hemnisse und Hilfen fur Unternehmensgriindungen, Institut fur Wirtschaftspolitik an der Universitat zu Koln, Koln. Shapero, A. (November 1975) ‘The Displaced, Uncomfortable Entrepreneur’, Psychology Today, pp. 83-8, 133. Szyperski, N. and Klandt, H. (1981a) Wissenschaftlich-technische Mitarbeiter von Forschungs-und Entwicklungseinrichtungen als potentielle Spin-ojfGriinder. Eine empirische Studie zu den Entstehungsfaktoren von innovativen Untemehmungsgriindungen im Lande Nordrhein-Westfalen (Scientific-technical workers from research and development establishments as potential founders of spin-off businesses. An empirical study of the factors involved in the foundation of innovative enterprises

37

SMALL BUSINESS START-UP IN WEST GERMANY

in North-Rhine Westfalia), Opladen. (1981b) ‘The Empirical Research on Entrepreneurship in the Federal Republic of Germany’, in Vesper, K.H. (ed.) Frontiers o f Entrepreneur­ ship Research, Proceedings of the 1981 Conference on Entrepreneurship at Babson College, Wellesley. (1980) ‘Bedingungen fur innovative Untemehmungsgriindungen. Aspekte und Ergebnisse einer Untersuchung iiber potentielle Spin-off-Griinder im Raume Aachen, Bonn, Diisseldorf, Koln’ (Conditions for innovative start­ ups. Results and reflections on an investigation of potential spin-off business owners in Aachen, Diisseldorf and Cologne), in Betriebswirtschaftliche Forschung und Praxis, No. 4, pp. 354-69. (1984) ‘An Empirical Analysis of Venture-Management Activities by German Industrial Firms’ in Homaday J.A. (ed.) Frontiers o f Entre­ preneurship Research, 1984, Wellesley. Theobald, M. (1985) ‘Die mogliche beschaftigungspolitische Bedeutung technologie-orientierter Unternehmensgriindungen’ (The potential significance for employment policies of technology-oriented business start­ ups). Paper presented at Seminar: Beschaftigung, Unternehmensgrosse und Regionalentwicklung, June 1985 im Wissenschaftszentrum, Berlin. Wirtschaftswoche (ed.) (1985) ‘Bedeutsame Alternative’ (Significant altern­ atives), in Wirtschaftswoche, No. 33. Zoihsel, V. (November 1975) Der Grundungsprozess technischer Untemehmungen, Analyse und Losungsansatze (The start-up process in technical firms; analysis and interpretation), unpublished doctoral thesis, Graz.

38

4 Small Business and Social Mobility in France Nonna Mayer

In social terms, the lower middle class is valued for being the shock absorber that helps brake the eruptions of the underlying strata. A buffer between capital and labour or between landlord and peasant, it also serves as a bridge and mediator between them. Moreover, the petite bourgeoisie is the pre-eminent channel for social mobility: skilled manual workers can and do move into it from below, while from within its bulging ranks it raises its own spiralists to higher rungs on the in­ come and status ladder. This lower middle class also serves as a net that cushions the fall of the skidders and the superannuated of both the higher middle class and the grande bourgeoisie. (Mayer, 1975, p. 432)

Almost a century ago Engels claimed that the growth of large-scale capitalist production would eliminate small-scale independent owner­ ship in agriculture, craft production and commerce as surely ‘as a train runs over a pushcart’ (1970, p. 472). Today, however, the predic­ tion remains unfulfilled. In France, for example, 16 per cent of the economically active population are classified as ‘independent’.1 The small business sector is not disappearing; it is being steadily replen­ ished from the lower strata of wage-earners, for whom it represents an important channel of upward social mobility. On the basis of a study of small shopkeepers and artisans, this chapter assesses motives for business start-up and distinguishes distinct channels of social mobility within the French occupational order. In addition, a number of social and political implications of these mobility patterns are discussed. According to the most recent (1982) census, small shopkeepers and artisans, together with their ‘unpaid family helpers’, number one and a half million people or approximately 6 per cent of the working population of France.

39

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

B E IN G Y O U R O W N ‘BO SS’

Why do people set up small businesses? In order to work ‘on their own account’ according to the evidence of a survey of two groups of small shopkeepers in Paris carried out in the 1970s (Mayer, 1986, Ch. 4). Detailed life-histories constructed during the course of this research indicate that once the decision to start up is taken the actual choice of business is almost secondary. The primary motivation is a desire for independence; a wish to ‘be your own boss’. Whatever the occupational background there is considerable hostility towards the idea of working for an employer; life as an employee in an office or factory is a prospect which fills most with horror. Those who have experienced it vow never to return, others refuse even to consider it. The following comments are illustrative: You’ve got to realise that I find factory work just awful, it’s really dreadful. You get people who do nothing else, but I just couldn’t . . . I . . . suppose if I really had to I’d do it like everybody else, but . . . I’m very independent, this is a job where you’re free to think for yourself. (Woman, aged 60, confectionery shop.) Interviewer: ‘Can you tell me what it means to you, to be a small shopkeeper?’ Freedom, not being forced to work hours that someone else makes you do. Being able to take an hour off when you want, really — if you want to take a whole day off, you just take it. (Woman, aged 45 years, butcher’s shop.) Basically, we chose freedom, so we don’t have to take orders from anyone. (Man, aged 36 years, hide and leather shop.) Associated with this freedom is the possibility of ‘making a go’ of something. Typically, wage-eamers in routine manual, clerical and service occupations are required to passively follow orders. But some seek an alternative which gives them greater scope for individual initiative and self-expression. Whether it involves establishing something new or simply taking over an existing concern, their businesses become an extension of their ‘selves’. As two shopkeepers remarked: Well, I suppose the reason I became a small trader was because 40

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

I just didn’t fit in — you know — in the other places where I was working. Anyway, I found that the people I was working with at this place were just not doing things the way they should be done. So I said to myself, ‘OK, I’m going to take my destiny into my own hands and set up on my own . . . with all the risks involved’. I know there are risks, it’s a struggle, there are problems. But you just have to face up to them. (Man, aged 40 years, men’s clothes shop.) I couldn’t see myself selling . . . I don’t know, perfume . . . or meat or flowers . . . well perhaps flowers . . . but not really that sort of thing. So I was attracted to the idea of a bookshop or stationers, and the wooden toys my husband was keen on; that’s how it started. We put our ideas together, what we wanted, and there it was. We tried to make something of it. (Woman, aged 38 years, stationery shop.) In addition to independence there are, of course, the attractions of financial gain. People who work for themselves are able to retain any financial surplus; they are not ‘making profits for someone else’! As a result, they are more prepared to work ‘day and night’ because they personally expect to enjoy the benefits. But above all, they aspire to social improvement for themselves and their families. Their ambi­ tion is to rise above the condition of low income employment: to earn more, to secure ‘a better life’, to give their children opportunities for study which they were denied. These aspirations give them a sense of superiority over routine manual and white collar workers who are ‘resigned to their lot’. Asked about her sense of belonging to a social class, an ironmonger replied: ‘I would put myself above the worker, you have to keep trying to move up. ’ Others made comments (author italics) of the following kind: I was working for a boss in the footwear business, the same thing, but working for someone else. So when I wanted to . . . set up on my own, I was wanting to . . . move up a bit. (Woman, aged 41 years, footwear shop.) We did have a bit of money set aside . . a bit o f ambition, the will to get on, to be a bit better off than when we were kids, so that ours could have a bit more, it is always the feeling we’d like to have but . . . that’s it! (Woman, aged 45 years, cafe.)

41

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

An unskilled worker on the assembly line at Renault is a machine. There’s no way he can earn more. With a trader, the more he works, the more he earns, the more he achieves, the farther he climbs up the social scale! (Man, aged 40 years, fur shop.) Evidence from other surveys shows that these attitudes are widely held in France. Half the population regards ‘being one’s own boss’ as an ideal of success and one employee in three wishes to set up in business.2 The origins of these attitudes lie deep in French history. Even under the Ancien regime, journeymen’s associations claimed master status as a right based on qualification and experience in opposition to the masters who saw it as a privilege restricted to their sons or those with money (Kuczynski, 1967). By the end of the eight­ eenth century some journeymen had set up on their own, illegally, by-passing the guild regulations. The French Revolution established this right and enshrined the ideal of a nation of free and equal small property owners. The influence of radicalism was also important, with its dream of establishing democracy through the abolition of wage labour and the declared aim, in the words of Gambetta, that ‘the land, the capital and the tools of labour should be given to those who owned nothing prior to the Revolution’.3 The hopes of the early theorists of socialism also rested on associations of producers. Thus, the foun­ dations of small-scale ownership were established in the French Republic. Today, the attractions of independence are stronger among manual workers than other strata of the French population, although less so among older workers, resigned to the condition of wage labour, workers in large firms, inclined towards collective strategies of resistance, or the lowest paid and least educated assembly workers. It is essentially among the young, skilled workers in small firms that the attractions are most strongly felt. Among this group there is a majority who hope one day to establish their own business.4 But how many, in the present circumstances, make their dream come true?

SMALL SHOPKEEPERS AND ARTISANS The FQP (Formation-Qualification Professionelle) surveys carried out by the Institut National de la Statistique et des Etudes Economiques (INSEE) make it possible to answer, at least in part, the question as to how many start their own business. Based on large, representative samples of the French population, the surveys provide information 42

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

on the occupational activities of respondents at the time of the survey and five years before, as well as details of education and social background.5 The INSEE Occupational Code identifies seven categories of employee (SI to S7) and six categories of independent owner (II to 16) arranged hierarchically according to their average level of income and education. (See Appendix at the end of this chapter.) On the basis of these data it is possible to assess, over a period of nearly 20 years (1959-64, 1965-70, 1972-7), how many employees started their own enterprises and the type of businesses which they established. Between 1972 and 1977 approximately 3 per cent of all employees (365,830) became independent; a similar proportion was found in the two earlier surveys. Table 4:1 shows the occupational origins and business destinations of those who became independent during this period. Table 4.1: Occupation of wage earners becoming independent (per cent) \

Destinations (1977)

\ \

\ OriginsX (1972) \

ProBig fessionals business

Top management 39 Middle management 11 Office clerks 10 Sales assistants 1 Skilled workers — Unskilled workers — Agricultural labourers — All occupational categories

6

Small Artisans Farmers shop­ keepers

27 24 6 7 6 6 2

15 40 54 79 23 33 2

9

38

Total

38 5

9 8 18 7 3 23 92

(29,147) (46,172) (36,619) (59,065) (109,125) (66,787) (18,415)

33

14

(365,830)

10 17 13 6

Several types of mobility can be distinguished. The majority of top managers became owners of larger businesses or entered the indepen­ dent liberal professions (66 per cent). Most of the manual workers became self-employed artisans, especially those who were skilled tradesmen (68 per cent). Office employees and sales assistants tended to become small shopkeepers (54 and 79 per cent respectively). Almost all of the agricultural labourers (92 per cent) became independent farmers. Perhaps not surprisingly, then, there is a close relationship between employment experience and type of business which is 43

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

established. Manual workers tend not to become doctors or lawyers and executives rarely go into shopkeeping; instead, they tend to remain in the same sector of activity where they can make use of previous training and qualifications. This pattern is particularly noticeable in the building, hotel and catering and retail industries (Mayer, 1977; Bertaux, 1983). The majority of those who were small shopkeepers or selfemployed artisans at the time of the 1977 survey were engaged in the same activity five years earlier (82 per cent and 74 per cent respect­ ively). As Table 4.2 shows, the newcomers were, for the most part, from manual working-class (S5-S7) or lower middle-class (S3-S4) backgrounds. Mobility paths differ significantly according to sex and type of business. Women in employment are less likely than men to be in manual occupations and more likely to be in subordinate posi­ tions in the occupational structure. As a result ‘new’ female shopkeepers are more often former office workers or shop assistants (61 per cent compared with 27 per cent of male shopkeepers), while ‘new’ male shopkeepers are more often former manual workers (40 per cent compared with 13 per cent of female shopkeepers). The latter are also more likely to have been employed as managers (17 per cent versus 9 per cent). Table 4.2: Occupational origins of mobiles becoming artisans and small shopkeepers (1972-7) (per cent) Destinations (1977)

OriginsX (1972) \ Farmers Big business, professionals Top and middle management Clerks, sales assistants Manual workers Total

Shop­ keepers . (Male)

Shop­ keepers (Female)

Artisans (all)

Shop­ keepers (all)

Artisans (all)

2

7

2

2

2

15

11

6

17

7

17

9

9

15

8

27

61

7

36

3

40

13

76

30

82

(100,143) (66,016) (128,154) (142,947) (125,792) (Family helpers included) (Family helpers excluded)

Among the self-employed artisans, only 3 per cent of the newcomers are women. Generally the pattern of recruitment is quite 44

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

different from the shopkeepers in that most come from manual backgrounds. Of course, some manual workers may be prevented from entering retailing as a result of the higher requirements for start-up capital. Shopkeepers often have to purchase the ‘goodwill’ of existing business and this varies according to the location of the shop, turn­ over and clientele. With a cafe, for example, the value of the good­ will may be between 400 and 700 times the daily takings and can be as much as 500 to 1,000 times in Paris (Ferbos, 1968). In contrast, an artisan needs only to purchase his tools and possibly rent a workshop or small office. There are, then, two distinct channels of mobility; one which leads manual workers towards self-employment in skilled trades and another which leads office and service workers into shopkeeping. But in both cases they emerge from predominantly working-class backgrounds and relatively low-paid employment. To them, owning a small business amounts to a legitimate form of social ‘promotion’.

A CHANNEL OF SOCIAL MOBILITY? In order to interpret the significance of the INSEE survey data for patterns of social mobility it is necessary to explore a number of issues. First, there is the relative popularity of small business proprietorship for routine office, service and manual workers. Although the lower class character of recruitment to artisanal and shopkeeping businesses cannot be denied, this must be compared with recruitment to other socio-occupational categories during the same period to confirm that the proportion of manual (S5-S7) and lower middle-class workers (S3-S4) is, in fact, greater than elsewhere. It should be remembered that these two categories represented 63 per cent of the total active French population according to the 1975 census. Second, there is the distinction between small business-owners and their ‘helpers’. ‘Family helpers’, who assist another member of the family in their business without being formally employed, represented 6 per cent of entries into the category of self-employed artisans and 29 per cent of entries into small shopkeeping during the period between 1972 and 1977. These were virtually all women (91 per cent and 100 per cent respectively) — typically wives who have left their previous employment or sometimes daughters helping out on an occasional basis. Third, there is the distinction between occupational and social mobility. Any consideration of the latter must take into account 45

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

family and cultural background. How many of those who set up in business are the children of manual, clerical or service workers? How many are children of shopkeepers or artisans, well placed to benefit from their parents’ experience or even to take over their business? Elsewhere Roger Girod (1971) has demonstrated that a process of ‘counter-mobility’ can often take a person back to their point of origin without ‘genuine’ downward or upward mobility. It is therefore necessary to closely consider how many new start-ups in artisanal or shopkeeping businesses actually involve upward social mobility. Finally, there is the question of what becomes of these ‘new’ pro­ prietors. How many continue to work for themselves, and for how long? How many are destined to give up, fail or return to employ­ ment? And how many will use their businesses as a springboard for further social mobility? The first of these issues can be addressed by comparing the previous occupation of entrants into shopkeeping and artisanal businesses with those of entrants into the other occupational categories. In 1977 manual, clerical and sales workers (S3-S7) represented only 48 per cent of entrants in farming, 32 per cent in higher management, 16 per cent in the professions and 13 per cent in medium- and largescale businesses. Only middle management included as many newcomers from these backgrounds as the artisans. The popularity of these small businesses among the strata of lower-level employees, then, does more than simply reflect their preponderance among the economically active population (Mayer, 1986, p. 43). In relation to the second issue, Table 4.2 shows that the exclusion of family helpers makes little difference to the overall results. A large majority of new proprietors who started a small business were in­ deed manual, clerical or sales workers in 1972 (66 per cent of small shopkeepers, 85 per cent of artisans). Family helpers — normally wives — were, at the time of the survey, virtually invisible in legal terms. Despite working on the same basis as their husbands and hav­ ing additional domestic responsibilities, wives had few fiscal, economic or social rights. Since they did not have their own income they had no entitlement to sickness or maternity benefits or a retire­ ment pension. In the event of business failure they had no right to unemployment benefits. If the marriage involved owning everything in common, which was generally the case, they risked losing everything. If the husband died, the business would not simply become theirs by right. As late as 1981 they were eligible neither to vote nor to stand for election to Chambers of Trade and Commerce. However, as a result of recent legal changes, spouses are now able to choose 46

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

between ‘collaborator’, ‘associate’ or ‘employee’ status (Catala, 1981; de Tulli, 1981) and the proportion of unpaid family helpers should gradually decline. In terms of the third issue, Table 4.3 shows the extent to which these new business-owners are socially mobile. It takes into account their type of business activity in 1977, their occupation in 1972 and their father’s occupation at the time when they left school. Occupa­ tions are grouped into two large categories in order to contrast working-class and lower middle-class occupations (S3-S7) with upper middle-class and upper-class occupations (SI, S2, 11-15). Those in agriculture have been sorted into one or other of the two categories according to the scale of their activity.6 Table 4.3: Father's occupation and occupational background of mobiles entering the categories of artisan and small shopkeeper between 1972 and 1977 (family helpers excluded) Occupation of father

Occupation in 1972

-

-

+ +

+ +

-

-

+ +

+ -

+

Business activity in 1977

%

small small small small

35 14 30 21

shopkeeper shopkeeper shopkeeper shopkeeper

artisan artisan artisan artisan

50 9 33 8

( - ) working class or lower middle-class occupation ( + ) upper middle or upper-class occupation

It is evident that a minority of ‘new’ small shopkeepers and artisans have family and occupational backgrounds in the upper middle and upper classes (21 per cent and 8 per cent respectively). For these, starting a business involves neither an increase in status or income. Approximately, one third (30 and 33 per cent respectively) are ‘counter-mobiles’. In 1972 they were manual, clerical or sales workers but they had been born into an upper middle- or upper-class milieu and this could have facilitated their becoming independent. In 1972, 14 per cent of small shopkeepers and 9 per cent of artisans had already become owners or achieved the ranks of middle or senior manage­ ment, although their fathers had been in manual or routine non-manual employment. Finally, 1 artisan in 2 (50 per cent) and 1 small shopkeeper in 3 (35 per cent) was born into a working-class family 47

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

and was in a working- or lower-class occupation in 1972. For them, business start-up more clearly constitutes social advancement. But in overall terms 1 small shopkeeper in 2 and 3 artisans in 5 are from lowerclass families and can correctly be described as upwardly mobile. The social and occupational background of these new owners also influences the type of business which they take over or set up. Former manual or routine non-manual employees are more likely to set up a very small business where they work on their own or with the help of their family, especially if they come from a lower-class family background. They are also inclined to set up their businesses in more ‘traditional’ sectors such as construction or food-related activities. The shopkeepers are grocers or cafe owners; the artisans are builders or decorators. These are businesses which are relatively easy to enter since they require modest amounts of start-up capital (CERC, 1974) but generally they are in decline. At the other extreme there are those from relatively affluent middle-class and upper middle-class families and occupational backgrounds who are much more likely to take on employees and to set themselves up in expanding areas of the service sector, such as clothes retailing and consumer electronics. There remains the question of what becomes of these ‘new’ owners. Although the data are not strictly longitudinal, the FQP surveys do allow us to reconstruct the mobility paths of respondents a posteriori on the basis of a single interview. We are thus able to tell how many of the economically active population who were small shopkeepers or artisans in 1972 remained so in 1977. In fact, 83 per cent of those who were artisans and 86 per cent of those who were small shopkeepers in 1972 were still there five years later. This is not to say that all those who left did so because of failure or bankruptcy. As Table 4.4 shows some left small businesses to enter larger businesses, becoming either owners (II, 12) or managers (SI, S2). Of course, the transition from ‘artisan’ to ‘big business proprietor’ may simply represent an increase from 5 to 6 employees, or from 2 to 3 employees in the transition from ‘small shopkeeper ’ to retailer (see Appendix at the end of this chapter). Also, some who became ‘managers’ may simply change to employee status in their own incorporated firms. Despite these qualifications it appears that some small businesses can be a seedbed for capitalist entrepreneurs. As Table 4.4 indicates, this pattern is most evident among male shopkeepers. But most former shopkeepers and artisans found jobs as manual workers or routine clerical and service workers. For those who dreamt of being their own boss these low-income and low-status jobs are 48

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

Table 4.4: Occupational destinies of mobiles leaving shopkeeping and artisanal businesses, 1972-7 (per cent) \

Origins \ l9 7 7 )

Shopkeepers (Male)

Shopkeepers (Female)

Artisans (All)

DestinX ations \ (1972) \ Farmers Big business, professionals Top and middle management Clerks, sales assistants Manual workers Total

5

2

2

24

13

21

16 24 31

4 60 21

12 8 57

(66,891)

(57,181) (73,086) (Family helpers included)

likely to be equated with downward mobility. The move to manual occupations is clearly more common among artisans than small shopkeepers. However, because of their technical skills and qualifica­ tions the artisans tend to be better placed than the shopkeepers to find skilled or supervisory employment often in small or medium-sized firms (Mayer, 1986, Ch. 2). More generally, those who work on their own or with family support and those whose fathers were manual or routine non-manual workers are more likely to become manual workers. Of the ‘movers’ with these two characteristics 40 per cent of small shopkeepers and 73 per cent of artisans became manual workers; compared with 11 and 29 per cent respectively of the ‘movers’ without any of these characteristics.

A C U RE FO R T H E CRISIS

It could be argued that the data we have used are distorted by the effects of the economic crisis in France, which began in 1974. Dur­ ing the period between the census of 1975 and 1982 there was a slight increase, from 14 to 16 per cent, in the proportion of independent workers in the active population. The decline of small shops slowed in pace and, for the first time since the Second World War, there was an increase in the number of artisans7 and of independent traders in the restaurant and food-related sectors (Trogan, 1984). But these patterns are not without precedent. Indeed, the industrial and com-

49

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

mercial concentration which was occurring at the end of the nineteenth century was interrupted by crisis to a greater extent in France than in other European countries (Mayer, 1980). The same mechanisms operated; firms reduced their labour force and workers with appropriate skills attempted to start a business. Self-employment, for the artisan even more than for the small shopkeeper, became a refuge against unemployment. Yet these trends do not affect the data used here, for they exclude all those who were unemployed either in 1972 or in 1977. Reviewing the three recent FQP surveys it seems that, for any fiveyear period, about 1 in 10 employees who leave their jobs become small shopkeepers or artisans. Another feature, as Table 4.5 shows, is that exchanges into and out of this small business sector are mainly with manual and routine non-manual occupations. The renewal of small business from the ranks of lower level employees therefore looks like a structural feature of French society which is largely unaffected by economic crisis. Table 4.5: Occupation of mobiles entering and leaving the categories of artisans and small shopkeepers (1959-64, 1965-70, 1972-7) (per cent) 1964

1970

1977

Small shopkeepers (Male)

Working/lower middle class Upper/upper middle class

75 25

68 32

66 34

Small shopkeepers (Female)

Working/lower middle class Upper/upper middle class

83 17

77 23

74 26

Artisans

Working/lower middle class Upper/upper middle class

75 25

81 19

83 17

Entries from:

1959

1965

1972

Small shopkeepers (Male)

Working/lower middle class Upper/upper middle class

57 43

54 46

55 45

Small shopkeepers (Female)

Working/lower middle class Upper/upper middle class

78 22

87 13

81 19

Artisans (All)

Working/lower middle class Upper/upper middle class

76 24

74 26

65 35

Departures to:

Yet from one survey to the next there are changes in the pattern of mobility. Among small shopkeepers of both sexes there is, after 1964, 50

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

an increase in the number of entrants from the middle and upper middle classes. This influx coincides with the appearance of new types of trade in furnishing, fashion clothing and health foods, where affluent con­ sumers are looking to purchase ‘distinctive’ and ‘tasteful’ goods (Bourdieu, 1979). Among artisans there is no parallel increase in the social class levels of recruitment; on the contrary, after 1964, this sector has a growing proportion of former manual and routine non-manual workers. However, after 1965, it is also the case that those who ceased to be artisans but remained active were more likely to find employment in upper class and upper middle-class occupations. Artisanal trading, therefore, seems increasingly to function as a channel of upward mobili­ ty giving members of the working class access to the middle classes. In sum the two types of small business which we have discussed each illustrate the functions which Amo Mayer attributes to the petite bourgeoisie. Artisanal self-employment is the preferred means of working class advancement: ‘Skilled manual workers can and do move into it from below, while from its bulging ranks it raises its own spiralists to higher rungs on the income and status ladder. ’ Shopkeep­ ing, on the other hand, is more likely to serve ‘as a net that cushions the fall of the skidders and the superannuated of both the higher middle class and the grande bourgeoisie’ (Mayer, 1975, p. 432).

A MEANS OF SOCIAL AND POLITICAL INTEGRATION? These different patterns of mobility are not without political conse­ quences. For more than a century the role of small business has been a subject for debate on both sides of the political divide. The right see the propertied middle classes as the mainstay of social and political stability in France. From Maurice Colrat to Leon Gingembre and Pierre Poujade the rhetoric is the same.8 It stands for small scale pro­ perty ownership as a key factor in social integration and advance­ ment (Lavau, Grunberg and Mayer, 1983). An extract from a speech by the leader of the UDCA (Union de Defense des Commercants et Artisans) illustrates some of the core themes in this rhetoric: Workers of France, the tools are yours, so take them up! Your dream, I know, is to have a small business, all your own. Selfemployment, small-scale production: that’s the way for the work­ ing class to move up . . . The real answer is for those in power — whose ‘legal’ acts of piracy fill the coffers of the Treasury, thanks to our hateful taxation system — to pay taxes like the rest of us. Then 51

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

we will have prices which mean that you too can go to a restaurant if you feel like it, be served in your turn and, along with your freedom, keep your pride in your work (Poujade, 1955, p. 235). On the other hand, for those on the Marxist left there are essentially only two classes which confront each other: the bourgeoisie who own the means of production and the exploited proletariat. The worker who starts a business changes class; he joins the category of exploiters and threatens working class solidarity. Interviews conducted in the 1970s among workers in Saint-Etienne reveal something of this attitude (Capdevielle and Mouriaux, 1983): I’ve had some really good mates, b u t. . . they moved up and then, well, that was it, really. The bloke who sets up on his own is the same thing. There are blokes like that who start a business and that’s it, finished . . . I suppose if I start a business one day, if I make it — I hope I do — but if I make i t . . . I’d be the same . . . I’d probably be the same. I would do my best to give a bloke his due, like, pay him more if he did a good job, but I reckon. . . I reckon I don’t even know if it would be possible. Because basically, once you’re boss, you’re boss, aren’t you? (Man, aged 40, building worker.) This cleavage has not always existed. Support for small-scale ownership was a theme of the radical and socialist left before it was taken up by the right. In the 1860s, Proudhon could still write: ‘Pro­ perty is the greatest revolutionary force and challenge to power that there is. ’ However, the development of capitalism and the emergence of large-scale industry brought workers who set their sights not on starting a shop or workshop but on the class struggle. This marked the beginning of the steady slide towards the right in the stratum of small property owners which had hitherto been within the left’s sphere of influence. Early social legislation set small-scale owners against their employees and against intervention by a state which was becom­ ing more powerful under the influence of the radicals. The same fac­ tors reinforced the solidarity of all independent business-owners, large as well as small, against the threat of ‘collectivism’. In 1936 the Popular Front formally broke their last ties with the left. Today one of the fundamental cleavages which divides the French electorate is between wage-eamers who mostly vote for the left and those who work for themselves who mostly vote for the right (Mayer and Schweisguth, 1986). A poll conducted the day following the parliamentary elections 52

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

provides some supporting evidence for this.9 This shows that the voting pattern of small shopkeepers varies according to their occupa­ tions on entering the labour market and the occupation of their parents. Small shopkeepers who were bom into working-class families vote less often for the left than workers as a whole, even if their first occupation was working class (47 per cent instead of 65 per cent). However, this proportion of left-wing voters remains well above that which is found among small shopkeepers as a whole (24 per cent). It is also relatively high (30 per cent) among the ‘counter-mobiles’ who were not born into a working-class family but whose first occupation was working class. Only those who were bom into the middle or upper classes and whose first job was in the same category voted distinctly less often for the left (8 per cent). It is probably simplistic, also, to view small scale ownership as a means of social and political integration. Setting up and running a business can generate considerable day-to-day frustrations and ten­ sions which may be expressed politically in various ways. These emerge clearly in interviews with small shopkeepers (Mayer, 1986). Most set up their own business with insufficient capital; they bor­ rowed from friends, relatives and suppliers. To repay these loans they have to ‘tighten their belts’ and ‘go without’. Work is almost unceas­ ing; 12 to 15 hours a day is not unusual, even on Sundays and during ‘holidays’. A butcher now working for himself after seven years as an employee described his work thus: Well, I have to say its been seven years of hardship for . . . since losing my father there’s been no-one to help me out, so I’ve gone without holidays, had to economise, save pennies here and there. I just had my Sunday afternoon rest, working from Monday to Sun­ day lunchtime, Sunday afternoon for sleeping, just so as to make it through. I’ve had to make sacrifices for seven years. (Man, aged 30, butcher’s shop.) Many are condemned to disappointment; indeed the story of unfulfilled expectations is a recurring theme in the interviews. Although they sought freedom they have become, as one man remarked, slaves to their work: Being a small shopkeeper is extremely hard now because . . . you have to put in the hours and really be available to your customers. And you have to put up with the customers! . . . But shopkeeping has always been a kind of slavery. It’s a prison without bars. Say 53

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

you’re on your own in the shop and you need the loo — well, you’re just stuck. You don’t know which way to turn! Where? When? Or you can leave the shop and they’ll steal from you, whether you’re there or not they lift everything! You’re a slave. The cir­ cumstances make you a slave: eighteen hours work a day, just imagine my family life! What there is of it! Three-quarters of the time I argue with my wife about not being there, the children com­ plain . . . the shop is open about eighteen hours a day . . . which means I’m out of the house for about nineteen hours, which leaves me only five hours . . . Do you think that’s normal? Do you really think that’s normal? Go on, you answer my question. (Man, aged 38 years, stationery shop.) Although they have no boss many feel that the state controls everything — their prices, margins, wages for their employees, even the colour of the paper used to wrap their produce! Their income is also lower than anticipated because of unforeseen state-imposed costs such as taxes, duties and social insurance: What’s left at the end of the day? Nothing, it’s not possible to save anything. We’re always reckoning: there’s that to pay next month, then there’s that, and that . . . the whole time! There’s the employer’s contribution to pay, health insurance, pension. There’s just no way we can save because . . . there’s not enough money left over . . . nothing at all in fact. (Woman, aged 45 years, florist shop.) Even the desire for improved social status may be frustrated. Some find that instead of gaining ‘respect’ they meet suspicion and criticism. As one woman confessed: The other day they told us a t . . . the meeting that when our children go to school, well, apparently they are ashamed to tell their friends what their father does . . .yes, simply because their father is a butcher. When they go to school they get asked: ‘What does your father do?’ Well, the little girl says: ‘My daddy is a butcher’. And that wrecks everything because they say: ‘A butcher, they rob you blind.’ (Woman, aged 26 years, butcher’s shop.) Bitterness often surfaces in the comparisons they make between their own circumstances and those of employees, who are assumed to have all the rights, and those of owners of larger businesses whose 54

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

privileges they envy. But most will never become ‘big’ businessowners and employment in an office or factory is regarded as a ‘fall from grace’. They are, then, trapped. As one woman commented: The only thing I regret is not having made something just like the others. I’d have a nice little income, I could go out at weekends like everyone else instead o f . . . you know, I’ve never had a single day’s holiday! Never! On Sunday afternoons, after lunch at 2.30, I just stay at home and then it’s Monday again . . . All I see is their nice cars and things. Yet here I stay, working like a mad­ woman, spending all my time in this shop and there’s nothing to show for it! . . . At my age I’m not going to . . . go and work in an office or anywhere else. In any case I . . . I wouldn’t be able to. What else is there for me to do? (Woman, aged 45 years, florist shop.) But there is little prospect of this resentment becoming a major political force. Shopkeepers themselves feel that while the left supports wageeamers and the right supports big business no-one defends the interests of small business. Their tendency to vote for the right, then, can often be interpreted as a vote against the left and, above all, against Com­ munism which is diametrically opposed to all the values which they hold dear (Mayer, 1986, Ch. 7). This is illustrated in the following statement: Me, I vote of course. I cherish my freedom of . . . how shall I say, of movement. As the people in Russia and all those countries are more or less free to move around, that sort of thing. We do tend, us shopkeepers, to vote . . . to vote for the right . . . Yet, if you ask whether I really believe in it or not . . . I’d have to say no! I’m neither for the left or the right, I’m not for anybody . . . I don’t have a political party. I don’t support Mitterand, I don’t support Marchais, I don’t support Giscard . . . or Ponia (Poniatowski). I don’t support Lecanuet, I don’t . . . I don’t really support anyone. If there’s one thing I’m for, it’s to be left alone. I do my job, I pay my taxes and that’s that. Political parties don’t really interest me at all because one is always cheated. (Man, aged 38 years, stationery shop.)

55

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

CONCLUSION The promise of independence and autonomy offered by small business proprietorship continues to appeal to many employees in contemporary France. For manual and routine office and service workers, in par­ ticular, artisanal and shopkeeping businesses offer a potential chan­ nel of social mobility. A small number ‘pass through’ on their way to running bigger businesses but many others, particularly those from working-class families, slip back into routinised operative, clerical and service occupations. Those who remain in business often experience economic hardship and social and political marginality. As in many other Western economies, then, the price of ‘freedom’ for small proprietors is high yet this seems unlikely to diminish its continuing appeal.

NOTES 1. Census of 1982. 2. The First poll was conducted for Vision and Planergy in six European countries using a sample of 6,833 persons. In France, the question: ‘Have you been tempted by or have you had the desire to set up your own business?’ (the question was not put to the self-employed) received the following response: 35 per cent said ‘yes’ and 59 per cent said ‘no’ compared with a European average of 29 and 66 per cent respectively. (Cf. Le Point, No. 228, January 1977.) The second poll was conducted for Selection du Reader’s Digest by the Institut Frangais de Demoscopie between 17 May and 28 May 1984 using a representative sample of 1,020 persons, aged 15 years and over. (Cf. Le Matin de Paris, 9 October 1984.) The question was: ‘Your idea of success is to be . . . ’: your own boss (52.4 per cent); top civil servant (9.5 per cent); artist or well-known author (6.7 per cent); scientist (5.2 per cent); chairman of a large company (4.8 per cent); film star or pop singer (4.1 per cent); airline pilot (2.8 per cent); trade union leader (1.3 per cent); government minister (0.9 per cent); no answer (12.3 per cent). 3. Speech of 16 October 1871 (Barral, 1968). 4. Estimates based upon re-analysis of the post-election survey conducted by SOFRES for the Centre d’etude de la vie politique frangaise contemporaine on the day after the 1978 parliamentary elections, using a representative sample of the French population listed in the electoral register. The sample consisted o f4,508 individuals (Capdevielle, Dupoirier, Schweisguth and Ysmal, 1981). The question was: ‘Would you personally like to have your own business?’ Of unskilled workers 40 per cent under 40 years old replied ‘yes’, as did 46 per cent of skilled workers and 48 per cent of supervisors. This proportion increases in inverse relationship to the size of the establish­ ment where they are employed (40 per cent in establishments with less than 56

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

10 employees, 37 per cent between 10 and 50 employees, 29 per cent between 50 and 5,000 employees and 21 per cent in establishments larger than this. 5. It should be noted that the samples used here exclude all those who were unemployed, in military service, retired or not economically active at either of the two dates. There is, of course, no information regarding changes in activity in the intervening period. The results are weighted and extrapolated to the French population as a whole and should therefore be treated with caution; they are sometimes based on several hundred or even a few dozen cases. 6. Since the survey makes it possible to distinguish between small, medium and large farmers in terms of their scale and type of business, we have grouped those whose fathers were ‘small’ farmers into ( - ) and those whose fathers were ‘medium’, ‘large’ or ‘indeterminate’ into (+). 7. Between the censuses of 1975 and 1982 there was a decrease of 5 per cent in the number of small independent retailers compared with a decrease of 11 per cent between 1968 and 1975. In the same period there was an in­ crease of 7 per cent in the number of artisans compared with a decrease of 14 per cent in the earlier period. 8. In 1907 Maurice Colrat founded the first Association franchise de defense des classes moyennes. In 1953 Pierre Poujade led a tax revolt by small shopkeepers and self-employed artisans. Leon Gingembre founded the Confed6ration generate des petites et moyennes entreprises in 1944. 9. CEVIPOF-SOFRES survey cited above (March 1978).

APPENDIX

INSEE Occupational Categories A. Independent workers II: Professionals in activities that require a high level of education. They include doctors, lawyers, architects, veterinary surgeons, as well as pharmacists. 12: Businessmen, who employ at least six persons. 13: Retailers and wholesalers, who employ at least three persons. 14: Small shopkeepers. INSEE includes in this category all shopowners with less than three employees. This includes not only shopkeepers in the narrow sense of the term, like grocers, but also such small-scale producers such as bakers, and the service business (hotels, cafes, restaurants, dry cleaners, shoe repairs, etc.). 15: Artisans with less than six employees, such as plumbers, locksmiths, carpenters, masons, as well as seamen and fishermen. 16: Farmers. B. Employees SI : Top management (university professors, engineers, higher civil servants included). 57

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

S2: Middle management (technicians, school teachers, social workers included). S3: Clerks (banking, insurance, business, civil service). S4: Sales and shop assistants (trades, transport, hotels and catering and other services). S5: Skilled workers, foremen. S6: Semi-skilled and unskilled workers. S7: Agricultural labourers.

REFERENCES Barral, P. (1968) Les fondateurs de la IHeme Republique (The founders of the Third Republic), Armand Colin, Paris. Bertaux, D. (1981) ‘Artisanal bakery in France: how it lives and why it sur­ vives’, in Bechhofer, F. and Elliott, B. (eds.) The Petite Bourgeoisie. Com­ parative studies o f the uneasy stratum, Macmillan, London. Bourdieu, P. (1979) La distinction. Critique sociale du jugement (Distinc­ tion. Social critic of judgement), Editions de Minuit, Paris. Capdevielle, J. and Mouriaux, R. (1983) L fouvrier conservateur (The con­ servative worker), Cahiers du laboratoire d’etudes et de recherches sociologiques sur la classe ouvriere, No. 6, Nantes. Capdevielle, J., Dupoirier, E., Schweisguth, E. and Ysmal, C. (1981) France de gauche, vote a droite (Leftist France votes for the Right), Presses de la Fondation Nationale des Sciences Politiques, Paris. Catala, N. (1981) ‘Activite professionnelle des femmes et evolution du droit’ (Professional activity of women and legal evolution), Revue Franqaise des affaires sociales, December, pp. 167-72. CERC (Centre d’etudes des revenus et des couts) (1974) Les benefices declares par les entrepreneurs individuels non agricoles (Profits declared by individual non-agricultural entrepreneurs), CERC No. 24, Paris. Engels, F. (1970) The Peasant Question in France and Germany, in Marx, K. and Engels, F., Selected Works, Vol. HI, Progress Publishers, Moscow. Ferbos, J. and Lacroix, G. (1968) Evaluation des fonds de commerce (Appraisement of goodwills), Actualites Juridiques, Paris. Girod, R. and Fricker, Y. (1971) Mobilite sequentielle (Sequential mobility), Revue Franqaise de Sociologie, 12 (1) pp. 3-18. INSEE (Institut National de la Statistique et des Etudes Economiques) (1968) Code des categories socio-professionnelles (Occupational Code), INSEE, Paris. r Kuczynski, J. (1967) Les origines de la classe ouvriere (The origins of the working class), Hachette, Paris. Lavau, G., Grunberg, G. and Mayer, N. (1983) Uuniverspolitique des classes moyennes (The political world of the middle classes), Presses de la Fon­ dation Nationale des Sciences Politiques, Paris. Mayer, A. (1975) ‘The lower middle class as historical problem’, Journal o f Modem History, 47(3) pp. 409-36. Mayer, N. (1977) ‘Une filiere de mobilite ouvriere: l’accession a la petite propriete artisanale et commerciale’ (A channel of mobility for the working 58

SMALL BUSINESS AND SOCIAL MOBILITY IN FRANCE

class: small artisans and commercial property), Revue franqaise de sociologie, 18(1): 25-47. (1980) ‘Un siecle devolution du petit commerce fran^ais’ (The evolu­ tion of French small shopkeepers over a century). Cooperation. Distribu­ tion. Consommation, 1 pp. 27-35. (1986) La boutique contre la gauche (The Shop against the Left), Presses de la Fondation Nationale des Sciences Politiques, Paris. Mayer, N. and Schweisguth E. (1986) ‘Classe, position sociale et vote’ (Class, social position and voting), in Gaxie, D., Explication du vote (Explana­ tion of voting), Presses de la Fondation Nationale des Sciences Politiques, Paris, pp. 263-90. Proudhon, P.J. (1866) Theorie de la propriete (A theory of property), Librairie Internationale, Paris. Poujade, P. (1955) J ’ai choisi le combat (I chose to fight), Societe generate des editions et publications, Saint-Cere. Trogan, P. (1984) ‘L’emploi dans les services: une croissance quelque peu ambigue’ (Employment in the sector of services: a somewhat ambiguous growth), Economie et statistique, 171-2, pp. 49-58. Tulli, P. de (1981) ‘La reforme des regimes matrimoniaux et le statut de cer­ tains conjoints non salaries’ (The reform of matrimonial laws and the rights of certain non-salaried spouses), Revue franqaise des affaires sociales, December, 195-203.

59

5 Patterns of Business Proprietorship among Women in Britain Robert Goffee and Richard Scase

INTRODUCTION Over recent years the position of women within Western economies has attracted considerable attention. In many ways this reflects their growing participation in the labour market and the success of the women’s movement in focusing attention upon gender-related inequalities. But despite recent debates, many issues remain unex­ plored. The actual working experiences of women, for example, have not been thoroughly investigated; as a result, discussions of women’s subordination have often been theoretically oriented and unsubstan­ tiated by empirical evidence. At the same time, an emphasis upon working women as employees has led to the neglect of those who are employers and who run their own businesses. While some anthro­ pologists have studied the position of women traders in non­ industrialised countries, there has been almost complete neglect of the contribution that women make to the formation and growth of businesses, particularly those of a small-scale, in the advanced capitalist societies. In view of the importance of small businesses as providers of employment, goods and services in the Western economies of the 1980s, this is a significant omission, particularly since women contribute to the process of business formation and growth in at least two major ways. First, married women often provide a variety of hidden and unpaid services to their husbands’ businesses during the crucial start-up period. As we have discussed elsewhere, without this largely unrecognised contribution, many male-owned enterprises would not get off the ground (Scase and Goffee, 1980, 1982, 1987). Selfemployed men, for instance, can be heavily dependent upon their wives’ efforts for undertaking a wide range of clerical and administra60

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

tive duties. Accordingly, these married women are often forced to give up their paid jobs and to abandon their careers in order to under­ write the efforts of their husbands. Further, because these men devote such a high proportion of their time and energy to their businesses, their wives are often compelled to cope single-handedly with domestic chores, including those of child-rearing and household budgeting. This is often with limited financial resources since these, too, may be stretched by the start-up requirements of the business. Unfortunately, within Britain there is little information about the specific dynamics involved in these processes. There is, for example, no systematic data on the nature of entrepreneurial families, the shaping of conjugal roles, and the ways in which business formation and growth are shaped by negotiations between husbands and wives. Within other Western Euro­ pean countries recent studies have indicated the significant role played by ‘contributing wives’ in male-owned and medium-sized enterprises (Maij-Weggen, 1985). In Holland, for example, one in three small businesses (defined as firms employing up to 100 people) requires the assistance of proprietors’ wives whose input averages 30 hours per week. Most of these women report that they combine their business commitments with family and domestic responsibilities; the resulting pressures lead to considerable frustrations and conflicts (Meijer,1985). There is, of course, a second and more direct way in which women contribute to the formation and growth of small businesses; that is, by starting their own enterprises. But again, little is known about the processes involved (Goffee and Scase, 1982; 1983a; Goffee, Scase and Pollack, 1981). Feminists, for instance, have shown limited interest if only because of a belief that business ownership sustains rather than challenges the economic system which leads to the subordination of women by men. Although there may be personal benefits derived from proprietorship these do not contribute, so it is argued, to an improvement in the general conditions experienced by most women; indeed, such strategies of ‘self-determination’ are regarded as contrary to collective ideals of ‘sisterhood’. Accord­ ingly, there has been little discussion of proprietorship as a possible avenue whereby women can overcome their subordination within the family, the workplace and in society as a whole. But this view may understate the radical potential of female proprietorship. First, setting up a small business does not necessarily constitute a personal reaffirmation of the principles of capital accumulation; on the con­ trary, it can represent an explicit rejection of the exploitative nature of the capitalist work process and labour market (Scase and Goffee, 1981). In this sense, then, business proprietorship may be seen as

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

a radical — albeit short-term and individualistic — response to subord­ ination. Secondly, even though some women business-owners are committed to the virtues of private ownership and profit, their roles as proprietors and as entrepreneurs can query the traditionally-defined, gender-based division of labour. Thus, women who both own and manage business enterprises — especially those in exclusively maledominated sectors of the economy — serve to undermine conventional and stereotypical notions of ‘a woman’s place’. Female proprietors such as these, therefore, have a symbolic importance which explicitly challenges popular conceptions of the position of women in society. Finally, proprietorship can enable some women to enjoy a degree of material independence and, in many circumstances, the opportunity to control the products of their own labour. Thus, they obtain finan­ cial autonomy from men which, in some instances, can provide material support for female solidarity. The manner in which gender-related experiences affect women who start their own businesses represents a particularly important issue in view of the fact that the economic conditions of the 1980s may be leading to an increase in the number of women embarking upon proprietorial careers. A number of factors are contributing to this trend but there are three of particular importance: those of high unemployment, job dissatisfaction, and the development of new technology. With high levels of long-term unemployment in various ‘female’ sectors of the economy, proprietorship is becoming an important means of employment for many women. Those who are economically marginalised because of the lack of opportunities for paid employ­ ment may have no option but to start their own businesses as a source of earnings. But even those who are gainfully employed may be increasingly attracted to entrepreneurship because of the experience of various forms of workplace deprivation. As a result of concentra­ tion in low-skilled and low-paid occupations, a considerable propor­ tion of women have little opportunity for meaningful job satisfaction. Even the small minority of those who are engaged in more econom­ ically and psychologically rewarding managerial and professional occupations are likely to encounter gender-related prejudices which can heighten their levels of stress and limit their career prospects (Cooper and Davidson, 1982). If, then, as various studies have shown, a dissatisfaction with paid employment can often encourage men to start their own businesses (MacKenzie, 1973; Bechhofer et al., 1974; Scase and Goffee, 1987), the office and shopfloor experiences of women could have similar effects (Goffee and Scase, 1982). Finally, 62

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

as recent experience in the United States suggests, the development of new micro-electronic technology of the sort that can be used in the home is offering new possibilities for the formation of small business among both men and women. (Interagency Committee on Women’s Business Enterprise, 1980.) With the relevant skills many women are now able to trade at home as the self-employed providers of a wide range of administrative, financial and technical services. In the late 1980s, then, an increasing number of women may start their own businesses (Boissevain, 1980; Donckels and Degadt, 1985). Because many will have been in either full-time or part-time paid employment, they will have often acquired skills which are useful for business start-up. In the service sector, for example, where most women are employed, practical skills can be just as important for start­ ing a small business as access to financial resources (Goffee and Scase, 1982; 1983b). Thus, a large proportion of small firms in the service sector begin on a limited scale, often utilising domestic premises and the proprietor’s own skills and the only finance required for such ven­ tures is obtained from bank overdrafts or from personal savings (Scase and Goffee, 1987). This trend has been encouraged by the growth of the ‘informal’ economy which, during economic recession, has provided a context within which women — as well as men — can, on a limited scale, ‘experiment’ with business proprietorship (Pahl, 1980). In Britain and other industrial countries, there has been a tendency to substitute the ‘informal’, the ‘household’ and the ‘cash’ production of goods and services for those produced within the ‘formal’ economy (Gershuny, 1978). It seems reasonable to expect, therefore, that as unemployment among women continues to grow, many will increasingly search for ways of earning a means of living through these ‘informal ’ and ‘cash’ patterns of trading. This, in turn, can provide a springboard for legitimate business start-up and the longer-term acquisition of entrepreneurial talents. In these ways, then, more women are likely to start their own businesses, even though they are likely to remain a small minority of all women. Of course, it must be emphasised, that a large number of self-employed women are only economically ‘independent’ in a formal sense; in reality they can be lowly-paid and easily expendable ‘out’ or ‘home’ workers who provide sub-contracting services for larger companies (Cragg and Dawson, 1981; Allen, 1983). Even so, there are a number of trends to suggest that women are more likely to start their own independent businesses now than in the past.

63

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

A STUDY OF FEMALE PROPRIETORS There are no comprehensive data on the number of women business owners in Britain; only the United States government has attempted systematically to collect quantitative data on women proprietors. (Interagency Task Force on Women Business Owners, 1978.) There are, however, in Britain official statistics on women classified as ‘employers’, ‘self-employed’ and those ‘working on their own account’. Unfortunately, there are major problems in interpreting these figures since it is almost impossible to distinguish between those who may be genuinely regarded as independent business proprietors and those who, classified as ‘self-employed’ are, in all but the legal sense, the employees and outworkers of others (Leighton, 1983). Bearing in mind this reservation, it is possible to obtain a general, albeit rudimentary, pattern. Thus it would appear that women who are classifed as either ‘employers’ or ‘self-employed’ make up only about 5 per cent of the total female labour force. Even so, their numbers have increased from around 300,000 in the 1950s to over 500,000 in the 1980s (Royal Commission on Income Distribution and Wealth, 1979, Table 2.11; Office of Population Censuses and Surveys, 1981). Between 1981 and 1983 the number of self-employed women in Bri­ tain increased by no less than 24 per cent; the equivalent figure for men was 2 per cent (Curran, 1986). But women still only constitute about 20 per cent of all those people officially classified as employers or self-employed (Eurostat, 1981, Tables 18.1, 29). The distribution of these female proprietors, as might be expected, reflects the broader gender-based segmentation of the labour market. Over three-quarters of all female employers and self-employed are to be found in the three official categories of ‘sales’, ‘services, sports and recreation’, and ‘professional and technical’ (Royal Commission on Income Distribution and Wealth, 1979, Table 2.13). Included within these broad categories are women who own businesses pro­ viding secretarial services; proprietors of retail outlets (including, for example, fashion shops, hairdressers, beauticians, and dry cleaners); owners of boarding houses, hotels, restaurants and cafes, and women running contract catering and cleaning businesses. The proprietors of enterprises offering technical and professional expertise in areas such as advertising, market research, public relations, accounting, financial and insurance services are also included, as well as the owners of publishing and literary agencies. In absolute numbers, there were, in 1975, 37,000 self-employed women engaged in the provision of ‘professional and technical services’ in Britain, 30,000 self-employed 64

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

female hairdressers and 53,000 self-employed women running hotels, snack bars and cafes. Outside these activities, all of which are normally regarded as falling within the service sector, there were very few women proprietors of manufacturing enterprises, although a strong tradition of craft production is maintained by self-employed women who are engaged in, for example, leather work, pottery, engraving, clothes production and interior household furnishing. But what are the experiences, attitudes and life-styles of these women? In order to investigate these we conducted loosely structured, tape-recorded interviews with 54 female proprietors between 1981 and 1983 (Goffee and Scase, 1985). We contacted them in non-random fashion, using personal recommendation, business directories and media publicity. The intention was to include women from the various ‘service’, ‘professional’ and ‘craft’ sectors of the economy where most female proprietors are concentrated. Consequently, interviews were conducted with those who were running businesses in, for example, various retail sectors, catering, cleaning, accommodation (guest houses), secretarial and clerical services, professional services (adver­ tising, market research, public relations), and craftwork (dressmaking, pottery, engraving). Most of these businesses were relatively smallscale with less than 20 employees and most had been established within the previous 20 years. However, a small number of proprietors running relatively large businesses were also included so that the final selection ranged the from home-based and self-employed to ownermanagers of international enterprises. All of them had founded or co-founded their businesses and, at the time of interview, were directly involved in the day-to-day management of them. Almost three-quarters were aged between 30 and 50 but only 28 were married or cohabiting when contacted. In all, 30 of the women had children. In conducting these interviews we did not attempt to achieve a representative sample; rather, the intention was to collect a detailed set of personal accounts which could help to illustrate the socio-economic processes associated with female proprietorship in a variety of contexts.

TYPES OF FEMALE ENTREPRENEUR The interview data indicate that there is no single experience of pro­ prietorship. Motivations for start-up and the consequences of business ownership vary considerably. What, then, are the factors accounting for this variation? Obviously, there are a range of influences shaping the start-up process and subsequent business outcomes. The age, 65

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

education, family background and occupational experience of pro­ prietors are important and, for women in particular, marital status and domestic commitments seem to be significant. Further, business opportunities within different market sectors, capital requirements, level of technology and other such factors affect the conditions for the formation and growth of small business. But, on the basis of our interviews, we would suggest that the experience of business pro­ prietorship among women is also highly influenced by two sets of factors: first, their attachment to entrepreneurial ideals, and second, the extent to which they are prepared to accept conventionally-defined male-female relationships. By attachment to entrepreneurial ideals we are referring to a set of attitudes characterised by the following features: first, a belief in economic self-advancement; second, an adherence to individualism in terms of ‘self-help’, ‘personal responsibility’ and ‘self-reliance’; finally, strong support for the work ethic with profits and high living standards seen as just rewards for those who have made the necessary personal effort and sacrifices. The extent to which women proprietors are attached to these ideals varies considerably. While some are highly committed to profit-making, others prefer security and to exercise their technical, craft and professional skills — often by foregoing higher profit margins. Such variations, we argue, have important im­ plications for the ways in which they run their businesses. By acceptance of conventionally defined gender roles we refer to the extent to which women accept their subordination to men. Although some may resent this, others regard this as both ‘morally’ and ‘naturally’ correct (Bell and Newby, 1976). Because of their subordination, therefore, the social position of most women is deter­ mined by the men with whom, either by marriage or by the couple relationship, they are personally attached. Consequently, their economic circumstances and life-styles are acquired through men and they thereby acquire a ‘derived’ personal identity (Finch, 1983). Thus, as far as female proprietors are concerned, there are important varia­ tions among them in the degree to which they are prepared to accept this. As a result this will affect their commitment to business growth and the priority they attach to their enterprises compared with other facets of their lives. If, then, the attachment to entrepreneurial ideals and the accept­ ance of conventionally defined gender roles affects the behaviour of business women, it is possible to describe them in a typology. The four types we identify in Figure 5.1 are inevitably tentative and must be regarded as simplifications if only because few individuals fit neatly 66

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

Figure 5.1: Types of female entrepreneur Attachment to conventional gender roles

Attachment to entrepreneurial ideals

High Low

High

Low

Conventional (1) Domestic (2)

Innovative (3) Radical (4)

into any one of the four categories; indeed, as a result of their business experiences, some proprietors may shift from one category to another. Nevertheless, it is useful for describing different patterns of female proprietorship and highlights the inadequacy of discussions which assume there is but one type of businesswoman. Below we draw out the contrasts between these four.

Conventional Conventional business-owners are those who are both highly com­ mitted to entrepreneurial ideals and to conventional notions about gender roles. They are probably more numerous than any of the others. This is largely because they tend to create ventures in those sectors of economy where there are high concentrations of women employees and, often, women managers. Many of these businesswomen have acquired some of the necessary trading and technical skills for start­ up as a result of their earlier experiences as employees. Indeed, as long as a high proportion of women employees are confined to various unskilled retail, clerical and service occupations, opportunity for the start-up of, for example, women-owned secretarial agencies, guest houses, fashion boutiques, hairdressing salons and office cleaning businesses will continue. Although, in common with the majority of both businessmen and women, the quest for personal autonomy is an important motive for start-up, the typical driving force for these women is the need to acquire earnings in a manner compatible with their domestic obliga­ tions. How far does this form of proprietorship enable women to over­ come their subordination? Our evidence suggests hardly at all for three major reasons. First, conventional entrepreneurs tend to be married 67

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

with children at the time of start-up, with the effect that their businesses are merely attached to a set of family relationships which many feminists regard as the major source of women’s subordination. As such, their businesses are normally regarded as supplementary sources of income for meeting different family needs. As one of them explained: In my case I’ve always had to run the business and family together. When we ran the kennels we lived on the premises and it’s the same in this shop. The house and the business are together — you can’t separate the two things. You are living with them together . . . I never got away from the domesticity and the business activi­ ty certainly wasn’t a way of escape. I didn’t think ‘Oh, poor me, I’m only a housewife’, because from a very early age I’ve always combined my housewife role with the business . . . I’ve always had my work and my house interacting. Second, conventional business ownership rarely leads to a fundamental restructuring of conjugal roles . Women tend to retain their domestic duties despite their business responsibilities, and the help which they receive from their husbands in either sphere is highly limited. Con­ sequently, any gains that proprietorship offers for personal working autonomy must be offset against the excessive demands and tensions which result from the need to balance business with family com­ mitments. Some of the problems were described as follows: The business has got to the stage where my husband has slightly clamped down. He often says he’d prefer it if I didn’t work in the evenings. But it’s trying to balance the children and the job and my household duties . . . every mum who works feels semi-guilty about the fact that they ought to be spending every living, waking hour with their children. I feel I’ve done the very best I can . . . although I sometimes wonder. Third, conventional businesswomen, who are often trading in those sectors where female employees are concentrated, help to preserve prevailing notions that certain occupational pursuits can be legitimately regarded as ‘women’s work’. One woman, for example, made the following comment. In my business, the asset is that I’m in the right business for a woman. It’s a woman’s business — it’s not really a man’s business. 68

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

In my business I don’t think women have any liabilities. But then in a business where men are the dominant sex, I think women would have a lot of liabilities . . . it’s all according to the kind of business you’re in. Indeed, as employers conventional businesswomen often rely heavily on relatively cheap and disposable part-time women workers and thereby sustain the secondary labour market position of most female employees. While, then, a small number of successful conventional businesswomen may expand their enterprises to the extent that these can no longer be regarded as secondary or additional to their domestic roles and a further minority may become radicalised by their business experiences of male prejudice, our evidence indicates that the majority maintain their ventures within a set of personal relationships which reinforces rather than challenges their own and other women’s subordination.

Domestic Domestic business-owners are those who have only a limited com­ mitment to entrepreneurial ideals but who are strongly attached to the traditional female role. As with conventional businesswomen, they tend to engage in activities which are normally regarded as ‘women’s work’. In our study these included, for example, dressmakers, pot­ tery producers, flower arrangers, china repairers and interior fur­ nishers. However, their motivations for start-up differ significantly from those of the conventional proprietors. Economic needs, for in­ stance, are not a primary consideration because in most cases, domestic traders are married to managerial and professional employees whose salaries allow a relatively comfortable ‘middle-class’ standard of living. Instead, the search for self-fulfilment and personal expres­ sion are paramount to the extent that they frequently regard their work as a craft or hobby rather than as a business pursuit. The practice of a craft, then, allows them to exercise creative skills and talents which would not otherwise be expressed within the domestic sphere. It also gives them a degree of personal autonomy but this is characteristically within the constraints stipulated by existing mar­ riage and family relationships. The following comments from two of the women illustrate these points: I was asked to do it originally for a charity bazaar and then the 69

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

following year I decided to do it for myself because I rather enjoyed doing it . . . and partly because my husband was away a great deal, my sons were away at boarding school and I needed something to keep myself occupied . . . It also fits in with the garden and the fact that I want to travel with my husband on business . . . As a person I always have to have a project in front of me. I have to have something that I must do. Without that I might not be a very pleasant person to live with . . . But I look at my business as coming third. Both my husband and son are much more impor­ tant to me than doing the dried flowers. Although it seems at times that they impinge they don’t in fact. I would always drop the business for either . . . Even if I was doing some other kind of business it would be the same. I would always make the family number one. The business basically meets a need for me to find a medium to express myself as a person — an individual. . . My husband always encouraged me. He realised the benefit to me, of making me into much more of a whole person . . . The business has been a great asset. It’s given me a sense of my own value. And given them (my husband and children) a sense of my value, which I think is very important. So we’re not dependent in a subversive way upon each other . . . Of course, the children are away from home now and my husband is often away all the day up in London, and in the evenings as well. So I really now run my life fairly inde­ pendently. But when the family are at home certainly that’s when I make sure I am free for them. Thus, although through trading such women are able to avoid total ‘incorporation’ into their husbands’ careers and to develop more independent or ‘non-vicarious’ personal identities, their business activities rarely challenge the paramount priority which they attach to the needs of their husbands and children. Indeed, many of them are aware of the potential risks should their businesses become too demanding and because of this, they deliberately choose to restrict the scale of their trading activities. As one woman explained: I have a battle keeping it small and keeping it within the family because I know I could actually make it quite a big business and that would destroy the marriage part of it. It’s a very fine line you walk along there . . . You suddenly know you could be out there doing as much as the man in your life. And the man in your life 70

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

doesn’t like that, however much he might say otherwise . . . I’ve got to think hard of my husband because it definitely affects him if I’m earning more. He loves me earning, he loves me working, but he doesn’t like to feel that I could actually look after myself. I can see that being quite a problem. They do like you to be depen­ dent upon them. Of course, as long as they are married to husbands who are earning relatively high salaries they can afford to forego business opportunities in the interests of other family members. Indeed, their dependence on the financial backup and managerial skills of their husbands serves to encourage the view that, ultimately, their business activities are secondary to other family relationships. The following comment was not unusual. I am as I am because I am supported by my husband . . . I think that certainly the biggest strength is the support of my husband and family, and not having to look over my shoulder all the time wondering where the next penny is coming from. That, obviously, has to play a major part for the business. Domestic proprietors, then, are frequently embedded within a set of relationships which sustains women’s subordination. Their businesses give them opportunities for promoting their self-esteem and enable them to cope with, rather than to challenge, other facets of middleclass married life. Sometimes, however, the nature of their enterprises can be altered by the loss of their husbands’ earnings. This may oc­ cur because of divorce or marital break-up but in other instances it can happen through husbands becoming redundant or deciding to drop out of careers. In the latter circumstance, the wife’s business can be drastically restructured in order to incorporate new needs. In par­ ticular, four changes in the nature of their businesses can be highlighted. First, it ceases to be a secondary activity and becomes the primary source of income. Second, it no longer functions as a separate and independent work sphere for wives; instead husbands take a more active role in day-to-day trading activities. Third, the business is organised on a more rational basis with a growing pre­ occupation with cash flow and trading profitability. Finally, such enterprises become geared to growth with greater attention devoted to market trends and potential business opportunities. In this process, domestic proprietors are transformed into co-proprietors of family businesses but whether or not this better equips them to alter their 71

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

domestic relationships remains an open question. On the one hand, it provides opportunities for the renegotiation of the domestic divi­ sion of labour and a reassessment of the worth of women’s work activities. But on the other it can allow husbands to take over the overall business management and relegate their wives to subsidiary, task-related roles which are compatible with existing domestic duties. In our view, the latter is more likely to occur; without management experience or business training, domestic traders are often ill-equipped to achieve a more egalitarian partnership with their husbands. Perhaps more importantly, few of them would want such a relationship; many of the women we interviewed regarded traditional gender roles as ‘natural’ and ‘complementary’. In sum, these women, either alone or in partnership with their husbands, are unlikely to seriously challenge the patriarchal nature of family relationships within or beyond the domestic sphere.

Innovative Innovative proprietors, by contrast, have explicitly rejected conven­ tional gender relationships and are highly committed to entrepreneurial ideals of personal achievement through business success. These women often trade with technical skills acquired within the educational and occupational system rather than by fulfilling traditional female roles. In our survey they tended to run businesses in the post-war growth areas of graduate female employment: market research, advert­ ising and public relations. Many have previously encountered obstacles in their careers in large-scale organisations and are determined to over­ come these through business proprietorship. Indeed, it is their pre­ occupation with individual self-advancement through business growth which leads them to neglect other interests. So much of their personal identity becomes locked into their businesses that there is often little scope for personal and family relationships. As one woman explained: I always want to go and do the next thing. There’s always another ladder to climb . . . that’s what life is all about. . . There’s always another challenge, another thing to do. Money is part of it . . . but I get my biggest kick out of my career, and that’s what I always want to be free enough to pursue . . . I work all the time. I have no other life. Most weekends I work without a break all day Satur­ day, all day Sunday, you grow in to it. I’m not married and I live alone . . . If I got married, I wouldn’t be able to put in so much 72

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

time . . . In my head there is always another ladder to climb. A man once said to me ‘You’re the only woman I’ve met who had a spirit of adventure.’ That’s exactly it. Ambition seems to be a dirty word to women, but for me it’s not. Thus, in our study only a minority of these women were married and even those with families gave overwhelming priority to their business interests. As such, they do manage to avoid the domestic subordina­ tion which is typically experienced by most domestic and conven­ tional businesswomen. However, the interview evidence indicates a number of personal consequences experienced by women who take this route. First, innovative entrepreneurs achieve their success through malestipulated criteria of business and personal conduct. Many are quite prepared to emphasise their ‘feminine charms’ — as valued by men — if it helps them in their business interests. At the same time, they recognise the need to act ‘tough’ in a male fashion, often acknowledg­ ing their own lack of ‘male aggression’ as a major personal failing in the way they run their own enterprises. For example: You can certainly use your feminine charm. I’ve never been very good with the feminine wiles, if I were, I would probably have married a millionaire. But feminine charm counts for a lot. It’s always easier for a woman to get to see a man with a job than for a man . . . In order to be taken seriously you’ve got to be tougher than you would normally. You’ve got to be really firm — particularly as I don’t look fierce. You’ve got to let them know that you mean business. That I find difficult to do. I’d far rather use the gentle approach, but maybe that’s wrong . . . If you’re going to be a woman in business you’ve got to be a certain type of person. You’ve got to be pretty strong and pretty tough to be able to cope. Second, and despite the differences which they see between men and women, they minimise the importance of gender as an influence upon individual life-chances. In their view, women can best pursue their interests by personal effort, ability and self-help rather than by collective organisation or by positive discriminatory measures by the state. For them, the majority of women fail not because of gender disadvantage but because they simply do not try hard enough. Thus: I don’t like too much distinction between men and women . . . 73

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

The opportunities are there for women just as much as they are for men. I think women make too much of it really. You should just get on with it and try to ignore it. The more women point to the differences, the more it’s obvious that there’s a difference . . . I don’t like to see people pushing women’s causes because that just draws attention to it and makes people think that they are dif­ ferent — inferior. The way for women to gain acceptance is just to get on with it and show them that you can be as good as a man. Finally, their almost total immersion in their businesses can alienate them in their personal lives from both men and women. Our inter­ views indicate that they often become socially marginal with little in common with either women or men whose behaviour they are keen to emulate. One woman made the following comment: I think very often that men are very much afraid of the woman executive . . . I can talk to people but I don’t think the relationship goes further than that — you know? It’s a long time since I tried it but I think that if I wanted to get romantically involved with somebody, it might be very difficult to get over the barrier of ‘Oh my god! She’s got a business of her own.’ They recognise your independence, that you’re not going to lean over and say, ‘Please help me.’ Most men feel they want heirs and dependants, don’t they? . . . Men look for an element of dependence . . . when it’s missing and you’re meeting on equal terms, it’s difficult for them to cope with . . . Yet, I don’t feel unfeminine . . . But I think it would be very hard for me now to be interested in trivia. I see women on the train reading things like Woman’s Realm . . . I ’m not really interested in what goes on in women’s magazines. I don’t think I’m very interested in the gossiping about families and what my grandchild did and what my daughter did, and all the rest of it. From a feminist perspective, then, innovative entrepreneurs do not change the system; they beat it by joining it. Their business success is often won by adopting male values and by minimising their gender identity. In this process, they lose sympathy with the problems of other women and yet they are not always fully accepted as equals by their male colleagues. Nevertheless, it is undeniable that these businesswomen achieve a level of material independence and personal autonomy which few other women are able to enjoy. Further, they experience a sense of self-fulfilment which they would rarely experi­ ence within the male-dominated world of employment. In the longer 74

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

term, an increase in the number of these businesswomen may reduce the personal costs which they encounter, if only because of the greater availability of role models and an enhanced potential for networking and creating mutual support systems (Cooper, 1983). In view of the difficulties which many face in the pursuit of managerial careers, it is highly likely that increasing numbers of highly qualified women will turn to entrepreneurship as an alternative means for achieving material and personal success. This may represent the most popular and successful individual strategy for combating gender subordina­ tion; certainly, in terms of the prevailing values within most contem­ porary Western societies.

Radical • Radical proprietors have a low commitment to both entrepreneurial ideals and to conventional female roles. We describe such proprietors as radical since they usually regard themselves as members of the feminist movement and their businesses as a collective means for improving the position of women in society. However, the link between business ownership and feminism is complex. For some, involvement in the women’s movement encourages business start-up since this is regarded as a means whereby women can achieve, in­ dividually and collectively, a greater degree of self-determination. For others, by contrast, direct experience of male-imposed career blockages within conventional work organisations leads to the con­ sideration of business ownership as an alternative. In this sense, there are similarities with the innovators, but while the latter compete with men according to male-defined ‘rules of the game’, the radicals regard their business ventures as part of a broader collective struggle to over­ come, and eventually alter, these rules. Consequently, their businesses are not geared primarily to profit-making and any surplus which is generated is regarded as a resource which can be used to further the interests of women. The intention is to create a social and economic environment within which an alternative life-style can be pursued while at the same time, providing services needed by other women. If suc­ cessful, they ‘create a space’ which is largely free from men’s influence both in and beyond the sphere of paid work. Three women described their motives in the following way: It is very important to mention . . . that we set ourselves up explicitly as a political venture. We had no idea at all whether 75

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

we would actually manage in business terms, this was very much a secondary consideration . . . It was a complete leap in the dark financially . . . [but] we do not see ourselves primarily as a business . . . we are a result of the women’s movement that has been tak­ ing place over the last ten years. Without the agitation that has gone before, without the analysis, without the political activity, we could not exist. Mrs Thatcher’s idea of economic independence and small business is based very much on capitalism. On the fact that you tread all over everybody else in the process. I don’t think the women’s movement can actually set up things like this business without hav­ ing a strong sense of sisterhood — call it support, call it what you like. The only way we can do something like this is to have that sense of support, to support each other, bringing the whole mass of women up with us. Anything that we do that enables women to become more independent — for example, to be able to go out on their own because we provide a taxi service — this is what we’re talking about. We’re not talking about lining our own pockets which is what Margaret Thatcher wants people to do. We wouldn’t consider hiring men because we’re a woman’s firm. Our discussions with each other around women’s issues are in­ formed by our politics of the women’s movement, and so on. Which is not to say that outside this place the women who work here do not have some engagements with men; they do. But here, in this place, issues and interests are for women. No, we wouldn’t have men working here . . . We’re not producing ‘products’, we’re actually engaging with ideas . . . in terms of vocabulary and sen­ sitivity to issues, it is in that way very different to deal with women than to deal with men. In our study, radical proprietors worked in such diverse spheres as publishing, printing, craft trades, retailing, education and smallscale manufacture; but all link their products or services with the wider women’s movement. Thus, business start-up is neither geared to self­ advancement nor to profit-making for its own sake; on the contrary, it is directed to collective feminist goals. The overriding objective of business ownership is seen as the provision of various services for women which are not currently catered for elsewhere by, for example, the state, local authorities and private enterprises. Support and service for women therefore takes overriding priority: profits which 76

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

do accrue are usually ‘ploughed back’ and are regarded as the means by which feminist ends can be achieved. Indeed, many see their businesses as experiments in women’s self-help which can be imitated by others in an effort to overcome their subordination. There are few ‘trade secrets’; on the contrary business skills are regarded as a resource to be shared so that more women-owned enterprises can be established. As one of them said: We’re accountable to the women’s movement. You can say that we’ve given the women’s movement, or anybody who wants to try, an absolutely convincing model that it can be done . . . Publishing, books, writing, ideas, the lot. If you look at the map of England to work out what is happening in relation to women, you need never see a flat plain any more because there’s a very strong model of how it can be done, which is incredibly valuable. . . . It’s de-ghettoising. Nobody can say that it’s a woman’s enter­ prise and therefore it’s going to be small. If a major objective is to cater for the unmet needs of women, a further goal is to ‘carve out’ areas of feminist activity which are removed from male influences. Indeed, some proprietors, deliberately run their enterprises in a way which minimises direct contact with men. This is achieved through explicitly providing goods and ser­ vices for women only — for example, taxi services, printing facilities, training resources, and so on — and by giving priority to purchases from various female suppliers. In these cases, women-owned businesses are encouraged and an alternative ‘feminist reality’ is created within patriarchal capitalism. This provides a context within which it is possible to foster self-confidence, improve activities and advance feminist aspirations more generally. Very few radical proprietors in the study were married or with children; indeed, they tended to regard their enterprises as alternatives to conventional family life. As with innovative entrepreneurs, they tend to be middle class in family background and often highly qualified, but they do not regard their expertise as a right to exclusive privileges; instead it is a resource to be shared with other women. If they are successful as proprietors — that is, according to the con­ ventional criterion of profitability — they obtain a material basis for the collective pursuit of economic and social rights. There can be little doubt that of the various forms of business ownership which we considered, these are the only women to explicitly and forcefully challenge conventional gender relationships. Their co77

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

owned and collectively organised enterprises provide spheres of autonomy which, to an extent, free them from male domination. However , even the ability of these women to confront subordination through creating jointly-owned business ventures can be severely con­ strained by the need to trade in a capitalist economy. For example, they often have to make swift business decisions which can under­ mine their commitment to collective consultation. Further, business growth can lead to hierarchy and impersonality which may challenge cherished ideals of egalitarianism and personal self-expression. Finally, trading success and the accumulation of profits can lead to dilemmas over the distribution of rewards and conflicts about the allocation of resources for new projects. Radical businesswomen, therefore, are constantly confronted with dilemmas stemming from ideals of sisterhood and the need to generate self-financing profits. Despite these reservations the potential of co-ownership ventures should not be underestimated (Gorz, 1982). The failure of the trade union movement in Britain to represent women’s interests at work and its inability to combat class and gender-based subordination is likely to encourage the growth of small-scale self-help groups geared to trading for the purposes of material support. Further, the persis­ tent strength of the women’s movement and the numerical growth of highly educated and technically qualified women may well pro­ vide the ideological and material conditions for the future expansion of radical forms of business ownership.

CONCLUSIONS As indicated above, both conventional and domestic business-owners tend to engage in economic activities which are typically regarded as ‘women’s work’. Given the continuing concentration of women within certain well-defined ‘female’ labour market sectors it seems likely that this is where the majority of women-owned businesses will be located during the 1980s and 1990s. Thus, two recent studies of female entrepreneurs in Belgium and Sweden found, for example, that they were heavily concentrated in areas such as hairstyling and beautycare, retailing and hotels, restaurants and cafes (Donckels and Degadt, 1985; Holmquist and Sundin, 1985). However, the poten­ tial for growth among conventional and domestic business owners is restricted by the fact that the desire to achieve either economic rewards or personal self-expression is typically not allowed to challenge existing domestic obligations and family relationships. 78

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

There are, perhaps, greater possibilities for growth among those women whom we have described as innovators and radicals. As a result of their educational and occupational experience, innovative proprietors are normally more aware of the available market opportunities. Moreover, their acceptance of the need to compromise with the male business world and to forego personal and family relationships for the sake of their enterprises enables them to over­ come many of the obstacles which women face. As yet, there are little research data on these women although there is evidence indicating a substantial growth of female self-employment within the ‘new’ professions where their businesses tend to be located. Over the next decade such women will be increasingly admired by the political right as harbingers of a new economic order which values the qualities of individual effort, ambition, risk-taking and will­ power. By contrast, the radical proprietors will be encouraged by the political left if only because they offer a means whereby limited feminist objectives can be attained within the context of de-industrial­ ising economies. Thus, a recent investigation of women’s cooperatives and collectives in Western Europe reported: From the cases studied it is clear that cooperatives/collectives can and have created jobs for women. The flexibility of working arrangements and hours, child-care facilities and a collective rather than hierarchical structure are the main reasons for women choos­ ing to work in this way. Cooperatives have offered the opportunity to women to return to paid work while at the same time improv­ ing their pay and working conditions . . . (they) have helped to integrate women into the labour market, by enabling women to find work when it would otherwise have been very difficult . . . (they) have also been used by women to enter previously ‘male dominated’ areas. (Centre for Research on European Women, 1984)

This study found some significant variations between different European countries. In France, for example, women’s collectives are highly concentrated within ‘feminist sectors’ such as bookshops, coffee bars and magazines. In Britain, by contrast, there are closer links with the state-funded Co-operative Development Agency and a broader spread over ‘traditional’ (for example, cleaning and textiles) and ‘nontraditional’ (for example, building and electronics) areas. In Italy, where the concept of collective self-management is more firmly 79

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

rooted within the labour movement, there is a considerable growth in women’s cooperatives in a variety of sectors including the provi­ sion of public social services such as creches and homehelp. Further research into the contrasting experiences of women in collective enter­ prises within different European economies is clearly necessary. More generally, the development of women’s businesses in the 1980s and 1990s will be shaped by a variety of economic, social and political forces. But it does seem certain that the flight from employ­ ment in large-scale organisations and the growth of smaller enter­ prises will continue as a result of structural economic changes and shifts in social and personal preferences. Both ends of the political spectrum in Britain now support this trend although for totally con­ trasting ideological reasons. Thus, despite the persistence of large numbers of domestic and conventional businesswomen, proprietor­ ship is most likely to expand among those we have described as radicals and innovators. In our view, both are concerned to overcome their experiences of subordination. But the means differ; whereas the former stress collectivism, the latter emphasise individualism. So, too, do they differ in their ends; innovators ultimately sustain the institu­ tions of Western capitalism, while radical proprietors seek to replace these with a new social order within which all women will be able to enjoy a greater degree of self-determination. Until then, the appeal of business proprietorship will persist because it offers, if only to a variable and limited extent, a measure of autonomy which many women would otherwise be unable to enjoy.

REFERENCES Allen, S. (1983) ‘Production and reproduction: the lives of women homeworkers’, Sociological Review, Vol. 31. Bechhofer, F., Elliott, B., Rushforth, M., Bland, R. (1974) ‘Small Shopkeepers: matters of money and meaning’, Sociological Review, Vol. 22 .

Bell, C. and Newby, H. (1976) ‘Husbands and wives: the dynamics of the deferential dialectic in Barker, G.L. and Allen, S. Dependence and Exploitation in Work and Marriage, Longman, London. Boissevain, J. (1981) Small Entrepreneurs in Changing Europe: Towards a Research Agenda, European Centre for Work and Society, Maastricht. Centre for Research on European Women (1984) New types o f employment initiatives especially as relating to women, EEC, Brussels. Cooper, C. (ed.) (1983) Practical Approaches to Women’s Career Develop­ ment, Manpower Services Commission, Sheffield. Cooper, C. and Davidson, M. (1982) High Pressure, Fontana, London. 80

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

Cragg, A. and Davidson, M. (1981) Qualitative Research Among Homeworkers. Research paper No. 21, Department of Employment, London. Curran, J. (1986) Bolton Fifteen Years On: A Review and Analysis o f Small Business Research in Britain, 1971-1986, Small Business Research Trust, London. Donckels, R. and Degadt, J. (1985) ‘Women in small business: the Flemish experience’. Paper presented to the seminar: Women in small business: female entrepreneur-contributing wife, KMO-studiecentrum, UFSAL University College, Brussels, 25 April. Eurostat (1981) Economic and Social Position o f Women in the Community, European Economic Community, Luxembourg. Finch, J. (1983) Married to the Job, Allen & Unwin, London. Gershuny, J. (1978) After Industrial Society, Macmillan, London. Goffee, R. and Scase, R. (1982) ‘Female entrepreneurs: some preliminary research findings’, Service Industries Review, Vol. 2. (1983a) ‘Business ownership and women’s subordination: a preliminary study of female proprietors’, Sociological Review, Vol. 31. (1983b) ‘Class, entrepreneurship and the service sector: towards a con­ ception classification’, Service Industries Journal, Vol. 13. (1985) Women in Charge: the experiences of female entrepreneurs, Allen & Unwin, London. Goffee, R., Scase, R. and Pollack, M. (1981) ‘Letter from America to business persons’, Guardian, 2 October. Holmqvist, C. and Sundin, E. (1985) ‘Women as entrepreneurs — a Swedish study’. Paper presented to the seminar: Women in small business: female entrepreneur-contributing wife, KMO-studiecentrum, UFSAL University College, Brussels, 25 April. Gorz, A. (1982) Farewell to the Working Class: An Essay on Post-industrial Socialism, Pluto Press, London. Interagency Task Force on Women Business Owners (1978) The Bottom Line: Unequal Enterprise in America, United States Government Printing Office, Washington, DC. Interagency Committee on Women’s Business Enterprise (1980) Annual Report to the President 1980, United States Government Printing Office, Washington, DC. Leighton, P. (1983) Contractual arrangements in selected industries, Research paper No. 39, Department of Employment, London. MacKenzie, G. (1973) The Aristocracy o f Labour, Cambridge University Press, Cambridge. Maij-Weggen, H.R.H. (1985) ‘The politics of women in small and medium sized undertakings’. Paper presented to the seminar: Women in small business: female entrepreneur-contributing wife, KMO-studiecentrum, UFSAL University College, Brussels, 25 April. Meijer, J.N. (1985) ‘Contributing wife : partner in business’. Paper presented to the seminar: Women in small business: female entrepreneur-contributing wife, KMO-Studiecentrum, UFSAL University College, Brussels, 25 April. Office of Population Censuses and Surveys (1981) Labour Force Survey 1981, HMSO, London. 81

BUSINESS PROPRIETORSHIP AMONG WOMEN IN BRITAIN

Pahl, R.E. (1980), ‘Employment, work and the domestic division of labour’, International Journal o f Urban and Regional Research, Vol. 4. Royal Commission on Income Distribution and Wealth, Report No. 8 , HMSO, London. Scase, R. and Goffee, R. (1980) ‘Home Life in a small business’, New Society, 30 October. (1981) ‘Traditional petty bourgeois attitudes: the case of the self-employed craftsman’, Sociological Review, Vol. 29. (1982) The Entrepreneurial Middle Class, Croom Helm, London. (1987) The Real World o f the Small Business Owner, 2nd edn Croom Helm, London.

82

6 Ethnic Entrepreneurs in Britain and Europe Robin Ward

Pakistani cash-and-carry wholesalers in Glasgow, Surinamese coffee shops in Amsterdam, Polish sausage makers in Stockholm, Korean grocery stores in New York and Indian motels in the Southern States, all are signs of the phenomenon of ‘ethnic business’. The growing tendency for members of ethnic minorities to find niches in the small business sector of advanced Western economies is occurring, it should be noted, at a time when recession, reduced industrial competitiveness and labour shedding through the introduction of new technology have been producing levels of unemployment not experienced for several decades. The presence of ethnic entrepreneurs can in most cases be traced back to the search for labour to aid post-war economic reconstruc­ tion in Western Europe and North America. Vacancies at the bottom of the job hierarchy have regularly been filled over the past 40 years by importing labour, whether former colonial subjects (as in the case of Britain or France), contract migrant workers (as with the Gastarbeiter in Germany and other Continental countries), refugees (from East to West Germany, from Hungary and Poland to Austria, from East Africa to Britain, from Vietnam to France) or free labour moving within the European Community (in particular from southern Italy to north-west Europe). With economic restructuring and the pro­ spect of discrimination in access to jobs in the primary sector of the labour market — also hard hit by economic change — earning a livelihood is increasingly conditional on the emergence of ethnic enter­ prise (Waldinger, Ward and Aldrich, 1985). However, the growth of ethnic businesses cannot be seen simply as a reflex action in response to contraction in the labour market. For there are both empirical and theoretical grounds for concluding that a variety of additional factors have helped to structure the pattern of 83

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

ethnic enterprise. An examination of these will help in understanding the role that ethnic business is likely to play in the small firms sector in the economies of Western Europe.

THE DISTRIBUTION OF ETHNIC BUSINESSES Statistics on the quantity and range of ethnic minority self-employment and small business ownership are easier to obtain for Britain than for the Continent. Reeves and Ward (1984, p. 128) showed that the pro­ portions of Afro-Caribbean, Indian and Pakistani/Bangladeshi householders among the self-employed all increased by about half between 1971 and 1978. Table 6.1 represents an estimate of the size of the West Indian and South Asian business population based on a national survey carried out in 1982 (Brown, 1984). This shows the proportion of South Asian men in business (18 per cent) to be somewhat higher than for the white population (14 per cent) while among those of Caribbean origin the proportion is substantially lower (7 per cent). This is consonant with accounts of business develop­ ment among blacks and Asians in the United States (Light, 1972) and recent statistics of business participation rates among major ancestry groups (Fratoe and Meeks, 1985, p. 5), which consistently show higher rates of business activity among Asian minorities than among blacks or Hispanics. While the involvement of Asians in the business sector in Britain continues to increase, there are signs of some con­ traction in the number of Afro-Caribbean firms (Wilson and Stan­ worth, 1985). The national survey undertaken in 1982 (Brown, 1984) also classified minority businesses by industrial sector. Based on this data, Table 6.2 shows the expected concentration of Asian business in distribution and catering with very little activity in construction. By contrast the distribution of white-owned and Caribbean-owned firms by industrial sector shows a broad similarity, with Afro-Caribbeans particularly strongly involved in construction. Statistics from the United States Small Business Administration (1985, p. 357) show a similar concentration of Asian firms in retailing, while black-operated businesses are over-represented in services and in manufacturing. A review of the results of local surveys of ethnic business shows a considerable similarity in the broad pattern of activity in different localities, with hair care and the retailing of beauty products, for example, being an area of strength within Caribbean business in all the areas covered (Ward, forthcoming, Table III). Thus the high 84

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

Table 6.1: Ethnic business population in the United Kingdom (b) West Indian

(a) White

Households by ethnicity of head of household (England) (1 9 7 7 /8 )1 16 ,240 ,0 00 Male self-employed as a percentage of all in work (1982)2 Estimated number of businesses (1982)

152,000

14%

186,000

(d) (b) + (c)

3 3 8,00 0

7%

18%

10,640

33 ,480

44 ,1 2 0

(c. 12,000)

(c.45,000)

(c.57,000)

2 ,2 7 3 ,6 0 0

Estimated number of business (1986)3

(c) South Asian (Indian/ Pakistani/ Bangladeshi)

Notes: 1. Source: National Dwelling and Housing Survey (1979) 2. Source: Brown (1984) 3. Allowing for (i) increase in households since 1978 (ii) increase in percentage of self-employed since 1982 (iii) number of ethnic minority-owned businesses in Scotland and Wales

Table 6.2: Distribution of self-employed by industrial sector in the United Kingdom

Industry group

Agriculture Manufacturing Construction Distribution, catering Hotels, repairs

White % (n:120)

West Indian % (n:38)

Asian % (n:265)

4 14 28 26 26

—

—

(18) (47) (21) (14)

10 2 67 21

Source: Brown (1984, p. 210)

level of segmentation between Caribbean and Asian business revealed in national figures is reproduced in specific areas. Representative statistics on business formation among ethnic minorities in Continental Europe are difficult to obtain. The West Ger­ man Mikrozensus for 1978 indicates that less than 4 per cent of 85

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

‘foreigners’ were self-employed or employers, compared to a figure of more than 9 per cent for Germans (Castles, Booth and Wallace, 1984, p. 133, quoting OECD, 1981, p. 30). Most are described as in the service sector (including distribution). Klandt and Nathusius (1977) found non-Germans heavily under-represented among recent entrepreneurs in the North Rhine-Westfalia region (almost half of them were Dutch or Italian). It is clear from studies undertaken in Amster­ dam (Boissevain, Choenni and Grotenbreg, 1984) and Berlin (Blaschke and Ersoz, 1986) that there has been a notable expansion in ethnic enterprise in recent years. Current research on ethnic participation in the clothing trade in Paris and Berlin, on Surinamese business in Amsterdam and on Turkish business in Berlin and Gelsenkirchen pro­ vides an indication of the increasing significance of ethnic enterprise in countries where it has commonly been assumed that all migrants have been confined to the status of employees.1 We divide the factors underlying the development of what is a highly variable pattern of ethnic business in Western Europe into those which are aspects of the opportunity structure and those which refer to the resources differentially possessed by ethnic minorities. Much of this chapter is concerned with analysing the structure of oppor­ tunities for minority business in Britain and on the Continent, the approach set out being used to explain the more highly developed state of ethnic business in Britain. The resources which minorities can bring to bear on those opportunities are considered more briefly; a case study of the importance of ethnic resources in explaining the pattern of ethnic business in the Netherlands is provided by Boissevain and Grotenbreg in Chapter 7. Much of the analysis is concerned with ethnic business development in Britain, where most of the published studies have been undertaken, but the approach put forward is applicable to all advanced Western economies in Europe and North America.

THE OPPORTUNITY STRUCTURE FOR ETHNIC BUSINESS IN WESTERN EUROPE The opportunity structure can be divided into key features of the economic environment and the social and political interventions which serve to restructure economic opportunities. We start by examining the overall degree of protection afforded the small firms sector in dif­ ferent national economies, then focus down on the structure of opportunities in particular types of localities. Access to business opportunities for members of minorities is restricted by racial 86

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

discrimination, by the terms of entry imposed on immigrant workers and by elements of the way in which business formation is regulated which put minorities at a disadvantage. Finally, alongside public policies which in some countries restrict ethnic enterprise is an increasing range of interventions designed to strengthen small business as a whole or ethnic business in particular.

The role of small business in the national economy Burris (1979) has argued that the overall degree of protection afforded to small business in Western economies is a function of the level of capitalist penetration.2 Where a nation has reached the stage of achieving a relatively uniform pattern of capital accumulation, with a predominance of standardised tastes for goods and services and presumably a level of disposable income allowing access to them, together with a stable level of demand and a system of communica­ tions and transportation capable of satisfying this demand, then cir­ cumstances favour a concentration of business in large firms and small firms in many sectors are at a competitive disadvantage. Burris uses Britain and the United States as examples of this conjuncture. By con­ trast, where the state has directed capitalist enterprise towards exports and left the internal economy in a state of uneven development, with localised tastes and consumption patterns continuing to predominate in some areas, large firms using economies of scale to mass produce standard products for a stable market gain less advantage; here small firms can be expected to retain more vitality. Italy is taken to exemplify this pattern, with Germany and France presumably occupying an intermediate position. However, those societies which are most advanced in their stage of capitalist development seem to have an unusually heterogeneous population. Both Britain and the United States, for example, are among the nations which have attracted not only the most numerous immigrant workers but immigrants whose culture and life-style are most radically different from those of the established population. Indeed, the relative strength of the small firms sector in the different Western European countries mentioned by Burris varies inversely with both the degree of capitalist penetration (with Italy and Britain, for example, being at opposite ends of the spectrum), and the level of ethnic enterprise. We may conclude, therefore, that while the contribution of small firms in a society is likely to be affected by its status as a core or semi­ peripheral economy, in accounting for the level of minority enter­ 87

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

prise, there are likely to be factors working in the opposite direction or not associated with the level of economic development. Even in the most advanced core societies the economies of scale on which large firms rely in maximising their competitive advantage are often difficult to achieve and small ethnic firms may gain as a result: (i) An increasingly significant feature of economic restructuring is the growth of de-centralised production and sub-contracting by large firms. This has created new opportunities for the small firms sector, including ethnic enterprises, to provide services for large firms in areas such as printing, transport, distribution and cleaning. (ii) In particular, the greater manufacturing capability of coun­ tries of the Pacific with lower labour costs is severely straining the operating strategies of large firms who have relied on steady sales of long runs of standard products. This allows small firms to use their resources to provide a flexible manufacturing capaci­ ty which is more responsive to the demands of fashion (Storey, 1982; Waldinger, 1985). Small ethnic firms seem to be particularly well equipped to achieve this. The clearest examples are in the textile and clothing industries (Waldinger, 1985; Ward, Randall and Krcmar, 1986). But there are opportunities for ethnic firms to use their resources to compete effectively in a much wider range of manufacturing industries influenced by changes in fashion. (iii) Boissevain (1984) has drawn attention to changes in life-style which have given rise to an increased demand in the industrialised economies of Western Europe for locally manufactured goods and personalised services. Many of the sectors concerned, particularly in distribution, are dominated by single site convenience outlets or are capable of sustaining specialised independent convenience stores despite overall contraction within the sector. The demand is frequently for services in which there are no significant economies of scale and provision is largely local in character. (iv) In multi-ethnic areas of core economies there are particular opportunities for small firms to compete. Waldinger (1985) has followed this line of argument in explaining the relative lack of success on the part of the major supermarket chains in attacking the highly cosmopolitan population of New York. Small ethnic firms have found it easier to dominate some sectors of retail distribution in consequence. 88

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

(v) This penetration of petty retailing has gone furthest where ethnic minorities have the chance to provide services to members of their own community, or of other communities whose tastes they are familiar with (in the Caribbean, for example, Asians of Indian or Chinese origin have for generations dominated large areas of petty trading). Further, while there may be a more extensive small firms sector in semi-peripheral societies marked by a lower level of capitalist develop­ ment, it may be harder for members of recently arrived ethnic minorities to gain access to such business sectors. Many such firms, particularly in the agricultural sector, are closely tied in to traditional patterns of landholding to which there is little access for newcomers. Indeed, the more established and secure the small business sector is in general, the lower the rate of turnover and the harder for new firms to establish themselves. Again, where small businesses still play a prominent role in the economy, this is likely to be reflected in ar­ rangements which support existing firms by requiring new entrants to ‘qualify’ before they are allowed to trade. Restrictions on the freedom of contract migrant workers to set up in business are com­ monly found in such societies (see below). So ethnic minorities in the early years of settlement may find it much easier to break into business in sectors of urban economic life in countries where the petite bourgeoisie is more threatened by forces of centralisation and standardisation. Thus, a close association can­ not be expected between the level of capitalist penetration and the development of ethnic business. But such macro-economic factors are clearly associated with both the pattern of ethnic enterprise and the shape of the small firms sector as a whole. More work needs to be done, however, in developing theoretical concepts which increase our understanding of how such linkages operate.’

The local opportunity structure There are also close links between the structure of the local economy, the level of Asian settlement in urban areas in Britain and, more specifically, the emerging pattern of ethnic business (Ward, 1985).3 Briefly, it is argued that New Commonwealth settlement in Britain over the post-war period has taken place where economic opportunities have been available but not attractive enough to draw in sufficient internal migrants from other parts of Britain. Vacant positions have 89

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

in large measure been those abandoned by previous occupants faced with the chance of a move to a better paid, more secure or more attractive job elsewhere. That is, Asian and Caribbean immigrants came primarily as a replacement labour force (Peach, 1968). Where the opportunities to make money by servicing the consumer tastes of the ethnic community are more attractive than available jobs in the local labour market, it is argued, the replacement labour posi­ tion gives way to that of the ‘ethnic niche’ or ‘ethnic enclave’ in which a culturally distinct minority moves towards a state of ethnic encap­ sulation with many of its needs provided for within the community. It should be stressed that opportunities for enterprise development will occur even where a minority is less culturally distinct from the established majority population. Further, the heightened sense of marginality experienced by some minorities may increase the demand for ethnic goods and services which serve to differentiate the com­ munity from the surrounding society whose prejudices are in large part responsible for such identifications. In addition, it should be noted that when ethnic groups come into contact, it is normal for consumer tastes on both sides to be affected. Thus, Asian and Caribbean settle­ ment has extended the demand for ethnic food and ethnic arts to other sections of the population and in so doing provided extra opportunities for ethnic businesses founded on specialist knowledge of the items concerned. However, a substantial and increasing proportion of ethnic businesses is primarily dependent on consumer demand from the wider community. The steady expansion of Asian retail establishments in such trades as confectioners, tobacconists and newsagents, grocery stores and chemists in white suburban areas and in areas of public housing and towns with a small Asian population is evidence of the strength of this move. In many cases, however, this has involved escaping from over-competition with other ethnic independent stores for a limited, low income, ethnic market to face equally severe com­ petition with multiples in retail sectors undergoing rapid concentration. The location of most ethnic enterprises can be accounted for by examining processes of change within the broader economy. In retail and wholesale distribution they are concentrated in sectors with low barriers to entry which have become available where there has been a rapid turnover among established proprietors as a consequence of residential change or the need to work unsocial hours or an inability to compete with large firms in the same industry sector (Aldrich, Jones and McEvoy, 1984). One dimension of this process of business suc­ cession is the ability to move into areas of enterprise previously 90

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

occupied by other ethnic groups who have been able to transfer to new sectors with higher capital requirements, where competitive pro­ spects are better. This phenomenon has also occurred in manufacturing, as the replacement of Jewish firms in some sections of the clothing trade by Indian, Pakistani and Bangladeshi owned businesses makes clear (Nowikowski, 1984; Werbner, 1984). But manufacturing oppor­ tunities have also been opened up in other circumstances. In the wider market a stronger emphasis on fashion and the great increase in the ability of firms in countries with lower labour costs to compete in traditional British markets have combined to undermine the position of large, established firms. Small firms which can provide a speedy and flexible response to the changing demands of the market have a strong advantage. Local patterns differ. In the Birmingham area cheap ethnic labour and cheap premises abound. But since Birmingham is not a centre for purchase by buyers from the large retail stores, most of the work is sub-contracted, ‘cut, make and trim’; there are few opportunities for full manufacturing firms to develop. By con­ trast, in Leicester, a traditional centre for hosiery and knitwear where retail buyers are located, more small Indian firms have been able to graduate from sweat shops to become full manufacturers with close links with major retail chains. In many cases the lack of access on favourable terms to good business opportunities is a product of negative stereotypes being applied to ethnic entrepreneurs seeking access to business loans, to supplies, to trading licences, to premises and to markets (Wilson, 1983; Wilson and Stanworth, 1985; Nowikowski, 1984). In this con­ nection Sowell (1981) has argued that it is important to distinguish between simple error, intended racial hostility and an intermediate position in which ‘race’ is used as a ‘valid pre-sorting category’ which he justifies on the grounds of the saving of time and money involved and the assumption that ethnic stereotypes correspond at least roughly to reality. To the extent that this position is adopted, it has the effect of, unjustly, reinforcing the differences referred to above in the level of business participation among Asians (who have a positive image among bankers) and Caribbeans (who are viewed much more cautious­ ly in relation to business loans).

Terms of entry for migrants Another major factor affecting the pattern of ethnic business develop­

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

ment — in this case one which differentiates between national as well as local patterns — is the terms on which migrant workers have been admitted to different European countries. The main factors involved are (i) the restrictions imposed at time of entry on the range of economic opportunities open to migrants, (ii) the circumstances in which permission to remain in the country of settlement may be withdrawn and (iii) the characteristics of migrants who apply for work permits under these terms. We differentiated above between the four main categories of immigrants: former colonial subjects, contract migrant workers, refugees and free labour moving within the Euro­ pean Community. In those Western European countries with substantial former col­ onial territories, immigration to the metropolis was normally pos­ sible until changing economic circumstances led to a bar on entry. For as long as access to the metropolis was not threatened, there was usually a close correspondence between vacancies in the metropolitan economy and the rate of immigration from former colonial territories (Peach, 1968). But the prospect of immigration controls led to a major distortion to this flow, as in the case of the ‘beat-the-ban rush’ to Bri­ tain between 1960 and 1962 and to the Netherlands before the award of independence to Surinam. The other notable feature of free immigration of this kind is that it has drawn in a relatively wide range of migrants, from differing economic and class backgrounds, and given rise to more immigration by families. While the latter has increased the demand for ethnic goods and services, the former has encouraged more immigrants with a background in business to migrate. This factor serves to explain in part the larger proportion of ethnic entrepreneurs in Britain (and more recently in the Netherlands), compared to, say, Germany. By contrast, where a country has relied on importing migrants on labour contracts on restrictive terms, this has resulted in a narrower stratum of immigrants entering the economy; in particular, it seems unlikely that people with a successful business background would nor­ mally consider entry as Gastarbeiter. Indeed, in many cases the terms of entry imposed have denied to migrants the opportunity to become self-employed or to act as entrepreneurs. While this has not stopped the emergence of ethnic-run enterprises, it has limited its develop­ ment, both by rendering it illegal and by discouraging those who would be best qualified to establish businesses from entering the country in the first place. In addition, in the case of migrant workers who become unemployed, where a labour permit is withdrawn following a defined period out of work and repatriation is enforced, the opportunity to 92

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

respond to redundancy by self-employment is largely removed. In some Western European countries refugee settlement has played a significant part in migration over the post-war period. The characteristics of refugees naturally depend on the circumstances in which they are forced to seek refuge. Where former capitalist coun­ tries have changed to a socialist regime (as in Vietnam or Cuba) or where a trading community has been expelled as part of the outworkings of colonial independence (as with Asian settlers in former British territories in East Africa), Western countries have seen refugee settle­ ment as a way of boosting the national economy. The ready access given to Asian entrepreneurs expelled from Uganda in 1972 and cur­ rent policies for attracting successful businessmen from Hong Kong to Canada, for example, bear witness to this. One of the most dynamic examples of ethnic business development in the United States is the Cuban sub-economy in Miami, a direct product of Cuban entre­ preneurs taking refuge there after Castro came to power (Portes and Bach, 1985). Ethnic business in Britain has benefited greatly from the infusion of Asian entrepreneurs from East Africa, and Vietnamese refugees in France have gained a speedy reputation as effective entre­ preneurs in the clothing trade in Paris. By contrast, while refugees to the Federal Republic from East Germany were a major source of labour during economic reconstruction, they do not constitute an ethnic minority. Finally, most countries of the EEC have received free migrant workers from territories within the Community who have a right of entry and are not restricted by the terms imposed on Gastarbeiter. The Italians, who comprise one of the chief examples of this type of migration, have already built up a reputation as effective entre­ preneurs in selling Italian culture in north-west Europe (Palmer, 1984). The combined effect of these four types of migration has been to increase the pool of entrepreneurial talent among ethnic minorities in Britain beyond that found on the Continent. Indeed, this is a major factor in explaining the more highly developed state of ethnic business in Britain. As governmental attitudes change towards the role that ethnic minorities can play in giving new life to economies hard pressed by the increasing competitiveness of the countries of the Pacific, some of the restrictions referred to above are being lifted. Opportunities for Turks to establish businesses in West Germany, for example, are becoming significantly greater as a result of recent changes. But because migrants came as Gastarbeiter from a narrower economic stratum, the imbalance in the rate of business participation among ethnic minorities in Britain and Germany seems likely to continue. 93

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

Legal requirements for starting a business A further factor which holds back members of ethnic minorities on the Continent is the degree of bureaucratic regulation of the business sector, especially the requirements imposed on anyone wishing to start a new business. Entrepreneurs may be required, for example, to demonstrate fluency in the local language, skill in the trade to be prac­ tised and experience in keeping books, before they are allowed to run an independent business. This creates serious difficulties for relative newcomers to the society from a different language group who have learnt the skills on which they propose to base their business by informal methods and whose way of running the firm is to follow the example of other community members, with advice when required from an accountant from within the community. Such regulations are a reflection of the strength of the local chambers of commerce from whom a business licence is required. There are various ways of avoiding the effects of bureaucratic regulation of the small firms sector. First, in the case of some trades it is not necessary to obtain official permission before setting up in business. Creoles from Surinam, for example, have started up coffee shops and gone into the entertainment business in Amsterdam without having to obtain a licence. In some other sectors, such as wholesal­ ing, Gastarbeiter have found that a licence is required but easier to obtain. In other cases the business needs a ‘Strohmann’ who has the qualifications required to secure a licence to trade. Where the owner does not have the necessary qualifications, it may be sufficient to take on an employee who does (craft-based businesses in Germany, for instance, may employ a ‘Meister’ in such circumstances, while hair­ dressing establishments in France will be approved if an employee holds the requisite diploma rather than the entrepreneur). Again, in some countries there are concessions which give easier access to some types of business for members of specified groups. In France, for example, Maghrebins from some former colonial territories in North Africa are entitled to set up a garage without obtaining official per­ mission. A group of Moroccans who want to start an ethnic newspaper, however, may still require a ‘straw man’ to act as official owner. In addition, a new kind of business has developed in France which is designed to render legitimate firms operating within the gar­ ment industry, many of them run by ethnic entrepreneurs, which have no formal entitlement to trade. Even where sectors of business are exempted from bureaucratic control, there is pressure on occasion to extend regulation when 94

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

a sector becomes particularly popular with ethnic entrepreneurs. For example, Boissevain and Grotenbreg have noted the growing con­ cern by the authorities to include Surinamese coffee shops in Amster­ dam within the controlled sector, in response to their rapid diffusion throughout the city (see Chapter 7). On the other hand there is evidence from Germany of a relaxation of such regulations with the result that a ‘straw man’ is in many cases no longer required to act as owner of a firm set up by a Gastarbeiter.

Public policy support for small and ethnic business We have already seen that the relationship beween the traditional small firms sector and small ethnic business may be problematic. A brief review of some of the main ways in which public policy affects small business confirms this. While some measures have had a generally beneficial (or adverse) effect on small business, others have assisted established firms to the disadvantage of ethnic enterprise, while others again have been directed specifically towards minority businesses. First, much general government economic policy has direct effects on the small firms sector. We saw above that where small firms benefit from the survival of localised markets, this may be a consequence of economic policy concentrating on encouraging exports in order to create the economies of scale sought by large domestic manufac­ turers. Fiscal policy also has a direct and major influence on small firm profitability, as does the system adopted for collecting revenues to pay for services provided by local municipalities. Secondly, central government policy may embrace specific instruments designed to support small-scale enterprise. The attention given in Japan, for example, to business modernisation, raising the quality of management, sub-contracting, procurement and financial support for small and medium-sized businesses has led to a major expansion in the number of shops at a time when in other economies there has been a more rapid contraction in this sector than could be attributed to a reduction in demand (Kirby, 1984). In general the lobby supporting the interests of small business has been much stronger on the Continent than in Britain. While many sectors of small business have been fighting for survival in Britain, elsewhere in Western Europe small firms have been better protected by government policy. The protection given to existing firms by subjecting new entrants to the bureaucratic controls noted above is a sign of the greater strength of this sector of the economy on the Continent. This support is 95

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

more easily forthcoming in countries with right of centre governments. Thirdly, while central government in Britain has in recent years been Conservative, local councils in most of the main urban centres have been Labour controlled. Whatever support for small firms may have been forthcoming from central government, therefore, local councils which couch economic development policy in terms of encouraging either large firms (the territory of organised labour) or cooperatives (seen as a socialist alternative to the traditional small business) have done little to complement this (Bovaird and Ward, 1985). Support for existing small firms in such situations has been largely confined to policies which are justified on grounds other than the encouragement of small-scale enterprise as a desirable form of economic organisation: environmental improvements to inner city firms, for instance, and shopping improvement schemes (Johnson et a/., 1985). Fourthly, an important area of support for small firms which has been forthcoming from councils, and central governments, of the left and the right is the direct encouragement of ethnic business. Policy in Labour administrations can be understood on the grounds that the object of support is ethnic, while Conservative backing is because it is business. In the former case, black business is the acceptable face of petit bourgeois economic organisation, activated by pressure from increasingly multi-racial constituency parties and justified as helping to redress historic disadvantage. (In the West Midlands this led to the Race Relations Act being used by the Conservatives to pre­ vent the County Council from proceeding with a programme to pro­ vide assistance to black-run firms which was not available to white businesses.) In the latter case, ethnic business support is to be seen as the acceptable face of community relations policy; as a way of avoiding what would be an electorally damaging redistributional emphasis on improving the access of racial minorities to a declining pool of jobs and substituting the aim of expanding the local economy, giving new life to the inner city through the creation of additional wealth and providing a new source of jobs for black school leavers. Empirical evidence suggests that reality falls far short of such aspira­ tions (Ward and Jenkins, 1984; Wilson and Stanworth, 1985), but there is enough evidence of success to justify such an approach (Islam, 1985). In brief, it seems reasonable to conclude that small business as a whole is better supported on the Continent, though this does not necessarily extend to the ethnic sector; indeed we have seen that established small firms have used their influence to protect their 96

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

position against competition from ethnic firms. Conversely, ethnic business has been better supported in Britain, but this support does not necessarily extend to the whole of the small firms sector; indeed there have been attempts to confine benefits to ethnic minorities. But while these differences are quite substantial, and go far towards explaining the more developed state of ethnic business in Britain, there is circumstantial evidence that they are becoming less significant. To the extent that there is a degree of convergence, it seems to be due largely to a dismantling of restrictions on ethnic enterprise on the Continent.

VARIATION IN THE PARTICIPATION RATE OF ETHNIC MINORITIES IN BUSINESS Significant differences in the opportunities for ethnic minorities to develop small businesses in Western European countries may help to explain the level of business participation among different ethnic groups; a minority concentrated in a country where such opportunities have been few could be expected to show a lower rate of business formation than one settled in a country where the climate for ethnic business formation and growth was more favourable. However, we have seen that there are substantial differences in the level and pat­ tern of business activity among different ethnic groups, from South Asia and the Caribbean, in the same country, Britain. Chapter 7 shows that there are similar variations in the pattern of business develop­ ment among different ethnic groups who have migrated to the Netherlands from Surinam. A brief exploration of some of the main factors underlying such variations helps us to identify the likely course of ethnic business expansion across Western Europe.

Human resources Waldinger (1985) has presented a cogent case for concluding that businesses established within certain ethnic minorities have a substan­ tial competitive advantage as against other firms which are obliged to recruit from the secondary sector of the labour market. For workers employed in such ethnic firms opportunities for skill acquisition across all the main areas of the business are much greater. This puts them in a stronger position to go on to set up their own firm in due course. For the entrepreneurs the network recruitment which predominates 97

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

in such firms gives several advantages. First, it reduces the risks involved in the training of staff, since the relationship which ties workers to entrepreneurs makes it more likely that they will stay on after completing their training to repay their investment, while in com­ peting firms, where there is a more instrumental relationship between operative and employer, a lower level of training is likely. This factor may spell the difference between moving upmarket to a sector of the industry where returns are more attractive and being confined to ser­ vicing the casual, low value-added sector of the market. Secondly, community ties in the workplace make it easier for entrepreneurs to have their authority recognised and maintain control of the business. Such ties are frequently used in strategies designed to encourage com­ mitment to the firm. Thirdly, they allow extra flexibility in operating the business, since staff are more prepared to adjust their working hours to suit the demands of the business and more easily transferred to those areas where they are most needed at a particular time. Since the competitiveness of ethnic firms, particularly in industries such as textiles and clothing, depends increasingly on being able to res­ pond quickly and flexibly to the varying requirements of customers, this is a significant competitive advantage. Entrepreneurs who can build on the strength of close family and community ties, as in the Italian case discussed in Chapter 2, have much to gain from this privileged access to labour. Asian ethnic groups in particular have tended to follow the Jews in drawing great advan­ tage from close intra-community links, while blacks have resembled the Irish in approaching business as individual nuclear households without the benefit of access to ethnic labour on such favourable terms. It should be added that Asian immigrant groups to North America and Western Europe are more likely to have had previous entre­ preneurial experience than blacks or Hispanics, a significant advan­ tage in the establishment of businesses in the new environment.

Finance The analysis set out in the preceding section also helps to explain the comparative advantage of some ethnic minorities in obtaining finance to run their businesses. Where money can be borrowed at low interest rates and on flexible terms from within the family or the community, the problems of maintaining the viability of a business financed by an, often unsecured, bank loan with a punitive rate of interest are avoided. Those minorities which have shown themselves able to use 98

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

community ties and institutions to secure business finance, and are therefore somewhat less dependent on banks, seem also to be the ones with the best record for business loans and the most positive image among banks and other sources of finance. Light (1972) has analysed these mechanisms among the Chinese and Japanese in the United States, and similar explanations can be given for the commercial suc­ cess of other Asian minorities, notably Koreans, Indians and Pakistanis. By contrast, in minorities where the nuclear family reigns supreme, there is much less opportunity to obtain business finance on such preferential terms.

Supplies In some areas of business the profitability of a firm is heavily depen­ dent on the terms on which supplies can be obtained. This gives an advantage to those firms which have informal networks linking them to suppliers or, in the case of retailers, those which have integrated backwards into wholesaling or manufacturing. Those ethnic groups which have established extensive networks of businesses within such sectors as distribution or clothing manufacturing are typically involved in activities where profitability hinges on the terms on which goods are bought and sold, as well as the cost of labour. Within this category would be included all the main Asian trading communities (Chinese, Japanese, Korean, Vietnamese, Indian, Pakistani). By contrast, en­ trepreneurs in those communities marked by both nuclear family struc­ tures and individual businesses not dependent on other ethnic firms in related areas tend to be engaged in sectors where business success depends largely on using skill or specialist knowledge to add value to the product or to provide the service. Thus, while Asian trading communities are extensively involved in the buying and selling of stan­ dard, low value products — buying in bulk and selling individual units — Caribbean enterprises are more heavily dependent on such skills as motor repairs, driving, baking, hairdressing, woodworking, print­ ing or electrical work, or specialist knowledge of, for example, music and the wider world of entertainment. Even where Caribbean retail businesses are found in the High Street, they typically consist of the sale of products which have previously been manufactured within the firm, such as bread and other food products, made to measure clothes and shoes. A further source of advantage for ethnic firms lies in their specialist knowledge of markets and trading in other parts of the world which 99

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

can be used to good effect in sales and marketing as well as obtaining supplies. Detailed knowledge of alternative sources of components, or of finance, due to involvement in international trading networks may be of great value. In particular, a good knowledge of the market for obtaining supplies of electronic components has been vital for some of the more successful Asian manufacturing companies based in Britain. There are major differences in the basis of competitiveness in the two types of firm discussed above. Economies of scale in purchasing are particularly important in firms which buy and sell standard pro­ ducts and competition with large firms may be fierce. Small ethnic firms organised around the application of a skill may have less opportunity for expansion but remain better protected in this respect, particularly when their services are sought by other members of the ethnic community.

ETHNIC BUSINESS AND ECONOMIC MOBILITY The mythology of ‘market stall to Mercedes’ which surrounds ethnic business draws heavily on the experience of immigrant groups which migrated to Britain or North America several decades ago when the opportunities for business development were much greater (Light, 1972; Ward and Jenkins, 1984). The particular consumer tastes of ethnic minorities which have moved to Western Europe or North America more recently continue to provide a protected market for ethnic entrepreneurs. But in many cases firms which rely on ethnic custom will find it very difficult to survive and even harder to expand their operations. The specialist skills and knowledge and the ethnic ties which are so valuable in servicing ethnic consumer demand are shared by co-ethnics, and competition in a limited, low income market works against the interests of most if not all of the firms involved. Business success, therefore, may depend on reaching out into the wider market, while continuing to rely on advantageous sources of labour, finance and supplies. Even here, however, prospects are less favourable than was the case with the expansion of Jewish, Chinese and Japanese business in the inter-war period (Light, 1972; Pollins, 1984). For the spread of low cost manufacturing in the Pacific has reduced the opportunity for ethnic entrepreneurs to use community resources to achieve business success through competing on price. Again, the industries they are entering in the 1980s are much more 100

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

highly concentrated than in previous periods. Despite some evidence of contrary trends, on balance small firms entering such markets as grocery retailing are at a considerable disadvantage. In many cases, indeed, the opportunity to compete only arises because a previous small firm was unable to survive, given the forces of concentration. Further, over-competition may characterise sectors trading in the open market as well as those relying on ethnic custom; and the prospect of continuing high rates of unemployment will help to maintain over­ competition. There are some instances of minorities which have been able to regulate competition within their own community.4 But most sectors will include competitors from different ethnic and social groups and the prospects for self-regulation of competition, except where this is provided for in the conditions of lease of retail premises, for example, are slight. So, while there is a tendency to attribute the high rate of turnover among ethnic firms to the lack of market opportunities, this may itself be a product of an over-supply of small ethnic firms as well as the dominant position of market leaders. Finally, while business expansion may reduce instability in ethnic firms, this reduces their distinctive competitive advantage. Indeed, for a small firm drawing its labour and finance from community sources, achieving the transition to an efficient medium-sized business with a stable market for its products calls for a degree of restructur­ ing which may threaten its very existence.

CONCLUSION

Despite these strictures, the numbers of entrepreneurs are likely to increase significantly over Western Europe in the foreseeable future. While trading prospects may not be attractive, current economic trends in many instances leave little alternative; and in many cases redun­ dancy provides monetary compensation which makes it possible to set up a business. Where barriers to the establishment of ethnic firms are being dismantled, therefore, as is now occurring on the Conti­ nent and where public policies are developed to encourage business formation and growth in the ethnic sector, a major expansion can be anticipated. But because of the deterioration of trading opportunities for small firms in many sectors, and because increasing numbers of ethnic businesses are being established as a result of external factors, such as redundancy, in circumstances which are often unfavourable, a high rate of fallout can also be expected to continue. However, because 101

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

there is a real basis for competitive advantage in many ethnic businesses, in the medium term it seems likely that a smaller, more professional stratum of well-managed enterprises will develop. While small business proprietorship is unlikely to challenge the labour market as a source of economic mobility for ethnic minorities, there are good prospects for the emergence of a significant ethnic sector within the small and medium-sized business population throughout Western Europe.

NOTES 1. See, for example, Grammenos (1982). 2. For an application of this approach to the topic of ethnic business, see Auster and Aldrich (1984). 3. It is assumed within this analysis, though not central to it, that local economic conjunctures may be highly influential in accounting for the overall performance of small business, not just the ethnic sector. See, for example, Lloyd (1980) on the contrasting climate for small business growth in Man­ chester and Liverpool. 4. See Light (1972) on Chinese business development and Sway (1984) on the structure of Gypsy business.

REFERENCES Aldrich, H., Jones, T. and McEvoy, D. (1984) ‘Ethnic Advantage and Minority Business Development’, in Ward, R. and Jenkins R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 189-210. Auster, E. and Aldrich, H. (1984) ‘Small Business Vulnerability, Ethnic Enclaves and Ethnic Enterprise’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 39-54. Blaschke, J. and Ersoz, A. (1986) ‘The Turkish economy in West Berlin’, International Small Business Journal, 4, 3: pp. 38-45. Boissevain, J. (1984) ‘Small Entrepreneurs in Contemporary Europe’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cam­ bridge University Press, Cambridge, pp. 20-38. Boissevain, J., Choenni, A. and Grotenbreg, H. (1984) Een kleine baas is altijd beter dan een grote knecht. Surinaamse kleine zelfstandige ondememers in Amsterdam, Antropologisch-Sociologisch Centrum and Ministerie van Economische Zaken, Amsterdam and Den Haag. Bovaird, A. and Ward, R. (1985) ‘New Firms Policy in the Inner City: A Case Study of the West Midlands’. Paper presented at the Babson Entrepreneurship Conference, Wharton School. Brown, C. (1984) Black and White Britain, Heinemann, PEP, London. 102

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

Burris, V. (1979) ‘Class Formation and Transformation in Advanced Capitalist Societies: A Comparative Analysis’, Working Paper, University of Oregon. Castles, S., Booth, H. and Wallace, T. (1984) Here for Good: Western Europe’s New Ethnic Minorities, Pluto Press, London. Department of the Environment (1979) National Dwelling and Housing Survey, HMSO, London. Fratoe, F. and Meeks, R. (1985) ‘Business Participation Rates of the Fifty Largest US Ancestry Groups: Preliminary Report’, Minority Business Development Agency, US Department of Commerce, Washington, DC. Grammenos, S. (1982) ‘Migrant Labour in Western Europe’, Studies and Documents, 3, European Centre for Work and Society, Maastricht. Islam, R. (1985) The Structure o f Asian Businesses in Glasgow and their Problems and Needs, The Queen’s College, Glasgow. Johnson, D. et al. (1985) ‘Five Year Review of the Birmingham Inner City Partnership’, Inner Cities Research Report, 12, Department of the Environment, HMSO, London. Kirby, D. (1984) ‘Government Policies towards the Small Retail Business in Japan’, International Small Business Journal, 2, 4, pp. 44-58. Klandt, H. and Nathusius, K. (1977) ‘Profiles and Attitudes of Real and Poten­ tial Entrepreneurs in Germany’. Paper presented at the Seventh European Small Business Seminar, Aarhus, Denmark. Light, I. (1972) Ethnic Enterprise in America: Business and Welfare among Chinese, Japanese and Blacks, University of California Press, Berkeley. Lloyd, P. (1980) ‘New Manufacturing Enterprises in Greater Manchester and Merseyside’, Working Paper Series 10, North West Industry Research Unit, Manchester. Nowikowski, S. (1984) ‘Snakes and Ladders: Asian Business in Britain’, in Ward, R. and Jenkins R. (eds.) Ethnic Communities in Business, Cam­ bridge University Press, Cambridge, pp. 149-65. OECD (1981) Young Foreigners and the World o f Work, OECD, Paris. Palmer, R. (1984) ‘The Rise of the Britalian Culture Entrepreneur’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 89-104. Peach, C. (1968) West Indian Migration to Britain, Oxford University Press, London. Pollins, H. (1984) ‘The Development of Jewish Business in the United Kingdom’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 73-88. Portes, A. and Bach, R. (1985) Latin Journey: Cuban and Mexican Immigrants in the United States, University of California Press, Berkeley. Reeves, F. and Ward, R. (1984) ‘West Indian Business in Britain’, Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 125-46. Sowell, T. (1981) Markets and Minorities, Basil Blackwell, Oxford. Storey, D. (1982) Entrepreneurship and the New Firm, Croom Helm, London. Sway, M. (1984) ‘Economic Adaptability: The Case of the Gypsies’, Urban Life, 13, 1, pp. 83-98. US Small Business Administration (1985) The State o f Small Business: A Report o f the President, US Government Printing Office, Washington, DC. 103

ETHNIC ENTREPRENEURS IN BRITAIN AND EUROPE

Waldinger, R. (1985) ‘Immigrant Enterprise and the Structure of the Labour Market’, in Roberts, B., Finnegan, R. and Gallie, D. (eds.), New Approaches to Economic Life, ESRC and Manchester University Press, Manchester, pp. 213-28. Waldinger, R., Ward, R. and Aldrich, H. (1985) ‘Trend Report: Ethnic Business and Occupational Mobility in Advanced Societies’, Sociology, 19, 4, pp. 586-97. Ward, R. (1985) ‘Minority Settlement and the Local Economy’, in Roberts, B., Finnegan, R. and Gallie, D. (eds.) New Perspectives on Economic Life, ESRC and Manchester University Press, Manchester, pp. 198-212. Ward, R. (Forthcoming) ‘Afro-Caribbean Business Enterprise in Britain’, in Cross, M. and Entzinger, H. (eds.) Caribbean Minorities in Metropolitan Societies, Tavistock, London. Ward, R. and Jenkins, R. (eds.) (1984) Ethnic Communities in Business, Cam­ bridge University Press, Cambridge. Ward, R., Randall, R. and Krcmar (1986), ‘Small Firms in the Clothing Industry — the Growth of Minority Enterprise’, International Small Business Journal, 4, 3, pp. 46-56. Werbner, P. (1984) ‘Business on Trust: Pakistani Entrepreneurship in the Manchester Garment Trade’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge, pp. 168-88. Wilson, P. (1983) Black Business Enterprise in Britain: A Survey o f AfroCaribbean and Asian Small Businesses in Brent, Runnymede Trust, London. Wilson, P. and Stanworth, J. (1985) Black Business in Brent, Small Business Research Trust, London.

104

7 Ethnic Enterprise in the Netherlands: the Surinamese of Amsterdam1 Jeremy Boissevain and Hanneke Grotenbreg

Many immigrants seek to make their way through self-employment. More than 7,000 of the 350,000 registered small and medium-sized businesses in the Netherlands are ethnic enterprises.2 There are clear differences in the rate of entrepreneurial participation between locals and immigrants as well as between the various immigrant groups. Among the ‘native’ Dutch approximately 10 per cent of the working population are self-employed. Of those of Surinamese extraction this rate is but 2 to 3 per cent; among Antillian immigrants it is also 2 per cent (Reubsaet, 1985). Among the Turkish working population in Amsterdam this is considerably higher: approximately 5 to 6 per cent (Tap, 1983). On the other hand, there are very few Moroccan entrepreneurs (Bakker and Tap, 1984) and there appears to be an almost complete absence of an entrepreneurial tradition among Moluccan immigrants (Veenman, 1985). This last is not surprising consider­ ing the Moluccans came to the Netherlands following a career as pro­ fessional soldiers in the Royal Dutch Indian Army. In the Netherlands all small entrepreneurs, whether native born or immigrant, are bound by rules that regulate their establishment, by municipal licences and ordinances and by laws governing payment of taxes and social contributions. This dense web of regulations is enforced quite rigidly with the result that ethnic entrepreneurs in the Netherlands face not only a well-organised structure of small and medium-sized Dutch businessmen, professional associations, semigovernmental industrial boards and councils, but also a legion of municipal and national inspection services and controllers of a con­ servative ministry. This solid edifice has a vested interest in maintain­ ing the status quo. But in spite of this, ethnic enterprise is flourishing in the Netherlands as more and more immigrant entrepreneurs find their way through the maze (cf. Boissevain and Grotenbreg, 1985). 105

ETHNIC ENTERPRISE IN THE NETHERLANDS

Besides differences in the rates of entrepreneurial activity there are differences, of course, in relative success and in the field of enter­ prise. This was most evident among Surinamese immigrants in Amsterdam. Chinese and Hindustani immigrants from Surinam were many times more active as small entrepreneurs than Creole im­ migrants.3 Why the style of entrepreneurship should differ between these ethnic groups, all of whom emigrated from the same place to Amsterdam in the past two decades, is one of the central questions we explore in this chapter. As far as we have been able to determine our research is unique in that it examines immigrant businessmen from three different ethnic groups who have come from the same country at about the same time. Their starting positions appear more or less equal. The differences lay in their diverse cultures and in their dif­ fering socio-economic background in Surinam.

ENTREPRENEURIAL RESOURCES

There are a number of cultural and structural characteristics which prove to be important entrepreneurial resources. If certain immigrants possess more of these characteristics they have an advantage over those who have not. Such resources include the following:

Experience and ‘feeling’ Experience and an awareness that not only craftsmanship but also managerial skills are important to the enterprise, are valuable resources. Those born into self-employed families, whether peasant, craftsman or shopkeeper, tend to be brought up with these attributes.

Access to loyal and cheap labour This enables labour costs to be kept down and reduces the risk of employees embezzling the business.

A patriarchal family structure Small enterprises are usually family enterprises. Within these there is a clear leader who has the trust and obedience of the others in the 106

ETHNIC ENTERPRISE IN THE NETHERLANDS

business. This enables swift decision-making and considerable flexibility.

Ethos An orientation or ethos that emphasises hard work and saving.

Access to capital This is necessary to start the enterprise and protect it against unfore­ seen problems, especially during the first five years.

Ability to control the administration of credit Obviously a delicate balance must be achieved, for through credit small businessmen bind their clients, but excessive credit can bankrupt an enterprise.

Access to a network of contacts These can provide specialised advice, introductions to wholesalers, information about market fluctuations, warning of government inspec­ tion and recommendations to future clients.

Ambition and willingness to take risks Such characteristics are particularly important for those wishing to expand their businesses.

Desire for independence and ability to take decisions This is perhaps the most important characteristic, for it often deter­ mines whether or not a business is established. The distribution of these resources over the three ethnic groups in­ cluded in our study differed in a number of respects. Before examining these we provide a brief ‘overview’ of the Surinamese in Amsterdam. 107

ETHNIC ENTERPRISE IN THE NETHERLANDS

THE SURINAMESE OF AMSTERDAM

Immigration of Surinamese to the Netherlands has a long history. Until the 1960s their numbers were limited. After that they increased slowly until 1968 and then more rapidly, reaching a peak in 1974 and 1975. After the independence of Surinam was achieved in 1975 the migra­ tion declined sharply, to rise again by the end of the 1970s. During the 1950s and 1960s the reasons for immigration were work, study and a better life for the children (Budike, 1982, p. 52). During this period the migrants were relatively affluent Creoles. In the 1970s the social composition and the motives of the migrants shifted. Growing tension between the political and ethnic groups as Surinam approached independence encouraged many lower-class Surinamese to migrate. Large numbers of Hindustanis, worried about the political future of their own ethnic group following independence, also left for the Netherlands. Of the estimated 180,000 Surinamese in the Netherlands, 40,000 now live in Amsterdam. Of these approximately 65 per cent are Creole and 28 per cent Hindustani. The balance is composed of those of Chinese and Javanese descent. The entrepreneurial activity of the Surinamese in Amsterdam reflects their migration history. The first tropica shops were estab­ lished in the 1960s. These sold a variety of Surinamese fruit, vegetables and groceries. A Creole bookkeeper began to import fresh vegetables from Surinam in 1964. He first explored the market: My strategy was like this: I first wrote to all the Chambers of Com­ merce for the addresses of shops that sold tropical products. When I had the addresses I bought a delivery-van and began to set out routes. I then just went to the shopkeepers and asked them if they were interested in Surinamese fruit and vegetables. Before that there had been no importation of fresh tropical fruit and vegetables. The toko's (shops catering to Indonesian immigrants) had sold mainly dried vegetables. Indonesian migrants had become used to making do with various substitutes purchased on the Dutch market. The market for fresh tropical vegetables and fruit expanded with the stream of Surinamese migrants. Surinamese tropica shps multiplied rapidly. Chan, a Hindustani entrepreneur, stimulated this. He bought up shops, converted them to tropica's and rented them to relatives and acquaintances. When they had built up the business, he sold out 108

ETHNIC ENTERPRISE IN THE NETHERLANDS

to them, often at exorbitant prices, obliging them to purchase articles they required from him at higher prices than those charged by Creole importers. During the 1970s Surinamese entrepreneurial activity diversified. Travel agencies, small restaurants, barbershops, butchers, cafes, driv­ ing schools, record- and, more recently, videoshops joined the tropica's. This development has been extremely rapid, especially dur­ ing the past five years. In 1983 there were approximately 250 Surinamese enterprises in Amsterdam. The average age of their owners was 38, and most had been established for about five years. (We have not included the informal bakers and sweet sellers who cater for the frequent house parties among Surinamese migrants.) Entrepreneurial activity is con­ centrated in retail, cafes and restaurants, and crafts. Most of the enter­ prises are located near the open air markets in the older section of the city, where real estate is relatively inexpensive; hence many immigrants have settled there. Table 7.1 : Surinamese entrepreneurs in Amsterdam by business and ethnic group Ethnic group

Craft

Other

Cafe/ restaurant

Retail

Hindustani Creole Chinese Javanese

18 54 18 6

39 10 7 1

12 16 4 —

17 12

Total

96

57

32

Total N

%

—

86 92 29 7

40 43 14 3

29

214

100

—

Source: Our own census (July 1983)

Ethnic background plays an important role. Hindustanis and Chinese, relatively speaking, are more active as entrepreneurs than Creoles. Although the Hindustanis form only 28 per cent of the Surinamese population in Amsterdam, they control 40 per cent of the Surinamese enterprises. The Chinese are even more active. As Table 7.1 shows Hindustanis as most strongly established in the retail trade, while Creoles and Chinese are concentrated in the cafe and restaurant sector, as are Javanese. Table 7.2 gives a more detailed breakdown of business activity.

109

ETHNIC ENTERPRISE IN THE NETHERLANDS

Table 7.2: Surinamese business activity by ethnic group Creole

Hindustani

—

27 7 1 2 4 2 2 3

Shop (tropical prod.)1 Record/videoshop Barbers Goldsmiths Butchers Garage Tailor Coffeeshop Cafe Restaurant/snackbar Travel agency Miscellaneous

2 24 17 11 6 15

Total

92

6 10 1 — —

—

14 5 19 86

Chinese

Javanese

1

—

29

7

214

—

3 —

1

Total 34 14 11 6 4 2 4 27 19 47 11 35

6 1

— — — —

—

—

—

—

—

—

2 16

—

—

—

6

Note 1: including market stall holders Source: Our own census (July 1983)

E N T R E P R E N E U R IA L R E S O U R C E S

Let us now examine the distribution of entrepreneurial resources in greater detail.

Experience

One of the most important resources for a budding entrepreneur is experience. There is a close relation between experience of selfemployment and ethnic group. The Chinese among our informants had the most business experience: of those who had worked in Surinam before coming to the Netherlands (and remember that many were too young to have had the experience), fully 69 per cent had been selfemployed. The corresponding figure among the Hindustanis and Creoles was 55 per cent and 32 per cent. Creoles had the least experience of self-employment. The greater degree of involvement of Chinese and Hindustanis in self-employment in Surinam as well as in Amsterdam, which clearly emerges from our study, derives in part from their family background. All the Chinese interviewed formed part of families of self-employed and had been thus socialised in an entrepreneurial milieu. Of the Hindustanis 87 per cent had a similar background, while only 45 per cent of the Creoles shared this experience. The entrepreneurial background affected not only our 110

ETHNIC ENTERPRISE IN THE NETHERLANDS

informants, but also their siblings. This was particularly clear among the Chinese, 84 per cent of whose brothers and 40 per cent of whose sisters were established as self-employed. The corresponding propor­ tions of self-employed brothers and sisters for Hindustanis and Creoles were respectively 57 and 22 per cent and 25 and 14 per cent. The brothers and sisters of our Creole informants were much more heavily involved than the other groups in managerial and professional posi­ tions and salaried employment. It is clear that there is a relation between ethnic descent and experience in self-employment and between ethnic descent and entre­ preneurial milieu. This is particularly clear among the Chinese. It is typical of small businesses that there is no clear division between enterprise and family; small businesses are family businesses.

Family enterprise Chinese and Hindustani families are more often patriarchally organised than those of working-class Creoles.4 Generally speaking the Hindu­ stani man, as head of the family, occupies a dominant position (Speckmann, 1965). Another characteristic, even in Amsterdam, is that many Hindustanis maintain a joint family structure consisting of father, mother, one or more married sons, unmarried children and, very often, grandparents and other family members. Although this type of household is declining in Surinam (Adhin, 1960, pp. 17-22; Speckmann, 1965, p. 203), the family still occupies a central place in the lives of Hindustanis. Central tenets of the joint family are that there is a collective responsibility, loyalty and a clear hierarchical line; the father is the head and others take their place in order of seniority. There is no question of siblings being equal. The most important characteristic of the Creole family system is the diversity of institutionalised relationships between men and women. Besides marriage, there are concubines and visiting partners. Because, especially among the working-class Creoles, the household is often headed by the mother, it is typically matrifocal. Buschkens (1974) has described this family system as an adaptation to the dif­ ficult situations which Creoles have had to survive, such as slavery, unemployment, poverty and discrimination. Compared to the Hindu­ stani family, the Creole family is a much smaller unit, focused on the mother, with loyalty extending only to nuclear members, without the sense of hierarchy and seniority that characterises relations between joint family members. Ill

ETHNIC ENTERPRISE IN THE NETHERLANDS

The traditional partriarchal Chinese family is proverbial. Hindu­ stanis and Chinese thus have a strong sense of family loyalty and a clear hierarchical line within the family authority structure. The Creole family unit is more egalitarian and authority is diffuse. These dif­ ferences in family structure are reflected in the composition of the family enterprises. We more often found family members working in Chinese and Hindustani enterprises than in Creole businesses (respectively 82 per cent, 75 per cent and 65 per cent). The reciprocal of this is that we found more non-relatives work­ ing with Creoles than with Hindustanis and Chinese. There are several indications that Creoles are less able to draw on family labour than the other two ethnic groups. The importance of family workers for a small business cannot be overemphasised. Not only do they help cut the entrepreneur’s labour costs, they also provide loyal assistants prepared to work under him. This enables him to expand his business by opening other branches. Of the 25 enterprises that had more than one branch, 15 were owned by Hindustanis. Radjen, a 37-year-old Hindustani grocer and importer, illustrated the relative advantage of a large loyal family. Before he emigrated he had worked in Surinam as a travelling salesman and white col­ lar employee. He found work in Holland and Germany as a salesman and was able to save something so that he could set himself up in business. He joined forces with an unrelated acquaint­ ance he had known in Surinam who was running a small grocery specialising in tropical foods. Radjen invested f 22,500 and shared the running expenses. Radjen was to see to provisioning and rela­ tions with the wholesalers; his partner would handle sales in the shop. Business was good and their profits soared. Radjen went to Surinam to locate new suppliers. Upon his return he discovered that his partner had flown. The shelves were bare, the cash had disappeared and the bank account was empty. After a long, unpleasant series of scenes with his partner’s family, the police, and lawyers, the enterprise became his. But his funds were ex­ hausted. He turned to his family. His mother and brothers provid­ ed f 15,000. He eventually borrowed another f 10,000 from the bank. Gradually business picked up. In 1976 his mother came to the Netherlands, bringing with her the cash she had realised from the sale of her cafS in Surinam. With this further injection of capital things began to look up. Radjen could expand and opened a second branch in 1977, a third in 1978 and fourth in 1981. ITiey are respec­ tively managed by one of his brothers, his sister and his brother-in112

ETHNIC ENTERPRISE IN THE NETHERLANDS

law. The family also has a branch in Surinam run by two brothers who stayed home. There is no question of their loyalty to each other and to the business. Together they built it up. They all accept Radjen’s leadership. Radjen’s experience is very different from that of Henry, a Creole businessman. He explained to us that under no circumstances could he get his children to help out in the store. ‘I can understand it’, he continued, ‘they see me working eighty hours a week and have chosen other occupations. ’ His children are at the university. He tried to expand his business by establishing branch stores, but ran into problems: ‘I had no family. When I placed acquaintances from Surinam in my branches, they enriched themselves at my expense. ’ He stressed that if you wished to open branches you had to have the right people who do not ‘trick you, preferably your own children’. Hindustanis generally had a more wide-ranging set of relatives in the Netherlands than the other ethnic groups. We constructed an index of the number of their kinsmen in the Netherlands (adult brothers and sisters, uncles and aunts, in-laws and parents and grandparents), and found that the Hindustani had an average of 8.6, Creoles 7.4 and Chinese 7 relatives. Clearly Hindustanis have greater access to this important resource and make the most of it.

Saving and the work ethic Hindustanis are more parsimonious than Creoles. This is apparent in the literature (Buschkens, 1977, pp. 276-7; Speckmann, 1963, p. 99). We also heard it repeatedly from Hindustani entrepreneurs. Some were very explicit: ‘In our Hindustani restaurants they only eat soup, the cheapest item on the menu.’ The tropica shopkeepers pointed out that they ‘could not survive on only Hindustani clients’, because they often purchased only one item, tried to argue the price down and were extremely ‘stingy’. A Hindustani travel agent told us that under no circumstances would he do business with fellow Hindustanis. ‘You can be sure then of having to be content with a small profit margin. A Hindustani cannot find his own shadow. He allows himself nothing!’ Hindustani businessmen told us in no uncertain terms that they 113

ETHNIC ENTERPRISE IN THE NETHERLANDS

preferred Creole clients, who, they said, were more enthusiastic shoppers, were less inclined to worry about the prices and were less interested in bargaining. It was also apparent that Creoles lead a more exuberant lifestyle and consequently do more entertaining, all of which means they generally spend more than Hindustanis. We tried to determine the propensity to save of the three groups of businessmen. This was a difficult task because entrepreneurs, like many people, do not care to talk about personal finances to strangers. It seemed to us that house-ownership was an index of accumulated capital which could be an expression of saving. From those who were prepared to provide information to us it appeared that slightly more Chinese and Hindustanis owned houses than Creoles. Half the Chinese, 48 per cent of the Hindustanis and 43 per cent of the Creoles owned their own houses. We found the same relative proportions reflected in ownership of ‘second’ houses though, of course, fewer had invested in a second house. We also found, not surprisingly, that investment in business premises was influenced by the length of residence in the Netherlands and the time the business had been established. The longer the immigrant had been established as selfemployed, the more often he owned his business premises. Twice as many Hindustanis owned their own premises as Creoles. The above data indicate that Hindustanis are slightly more often than Creoles the owner of their business premises and houses. This may very well be an indication that they save more, but it is difficult to be categorical about it. We did not enquire systematically about external funding of property. But it was evident that several of the relatives and acquaintances of Chan, the founder of the tropica chain, were burdened by heavy mortgages. One, who considered he had been ‘taken’ by his distant relative, carried a f 350,000 mortgage on his shop. The ‘owner’ of his premises was thus the bank. We also found that some Hindustani businessmen displayed the type of consumptive behaviour that is stereotypically associated with Creoles. One said he used to give weekly parties where he served ‘champagne and whisky’ and for which he hired a Surinamese band. He rode in the most expensive type of Mercedes, with a telephone, ‘that cost f 130,000’, because it was his hobby. He owned it, that is, until he encountered certain financial problems and had to reduce drastically his style of living. He traded his car in for a ‘simpler model costing f 40,000’. We also tried to obtain some indication of the involvement in their work, by asking entrepreneurs what they would do if suddenly they were to inherit enough money so that could live without working. 114

ETHNIC ENTERPRISE IN THE NETHERLANDS

The replies of the Hindustanis and Creoles were very much in keeping with the pattern that we have begun to establish: 78 per cent of the Hindustanis, 63 per cent of the Creoles and 60 per cent of the Chinese said that they would continue working. This relative lack of interest of the Chinese in continuing working probably had something to do with the long hours that they work now. The Chinese work an average of 75.3 hours a week, the Hindustanis 66.7 and the Creoles 61.8 hours. These figures, however, do not really permit generalisations about the relative presence of a work ethic: the demands differ according to the type of business. It is clear, however, that Surinamese businessmen work considerably longer hours than their Dutch counter­ parts, who average a 60-hour week (Pompe, 1980, p.320; Van den Tillaart, 1981, p.53, 445). The Chinese are particularly hard working. A Creole wholesaler remarked: All the Chinese I know work very long days. It sometimes worries me. I advise them not to work seven days a week but to take at least one day of rest. But they don’t do it. Saving, investment in housing and business premises and long days are not the only important indicators to assess the relative ability of entrepreneurs to accumulate. The actual investment and reinvestment in the business, aside from the acquisition of the premises, also provide insights into the relation of the entrepreneur to his enterprise. The pattern is familiar: 93 per cent of the Chinese had recently invested to expand or improve their business. The corresponding figures for Hindustanis and Creoles were 66 and 63 per cent respectively.

Capital and credit One of the first problems the immigrant entrepreneur had to resolve was to acquire the capital needed to set up the business. The average initial capital was f 36,480. The variations were considerable. While 8 per cent invested nothing or practically nothing, 6 per cent invested initially over f 100,000. The average initial capital of the Chinese was highest, f 54,000, followed by the Hindustanis with f 43,000 and, finally, the Creoles with f 23,750. Creoles had difficulty acquiring capital. Most used their own savings to start their modest businesses. Seven out of ten Creoles told us they were reluctant to borrow from family or friends. Chinese and Hindustanis felt no such qualms. Both 115

ETHNIC ENTERPRISE IN THE NETHERLANDS

indicated that they would rather borrow from family and acquaint­ ances, 60 per cent of the Chinese and 40 per cent of the Hindustanis. The relation between family structure and financial resources is apparent. It must be remembered, however, that the family background of the Creoles was considerably more modest than that of the Hindustanis and Chinese. Hindustanis made the greatest use of banks (62 per cent), Chinese and Creoles least (respectively 24 per cent and 22 per cent). The provision of credit to clients was another matter. Creoles are the most generous, 54 per cent indicated they provided credit, whereas 43 per cent of the Hindustanis and a mere 27 per cent of the Chinese did so. Consistent with this, we found that the Chinese were also less inclined to give discounts. We suspect that, just as Benedict (1979) concluded about Seychelles Creoles, Amsterdam Creoles are in a more vulnerable position regarding extending credit. Besides having the reputation of being more generous and sociable, and forming part of more vigorously interacting social networks than Chinese and Hindustanis, almost half the clients of Creole businessmen are members of their own ethnic group. Table 7.3 gives a detailed breakdown of the clients of Surinamese businesses. Table 7.3: Clients of Surinamese enterprises according to ethnic group Clients Dutch Creoles Hindustanis Others Total %

Surinamese businessmen (per cent) Hindustani Creole Chinese Surinamese 30 38 25 8

29 47 10 13

20 60 17 4

26 45 20 9

101

99

101

100

Because more than three-quarters of the clients of Chinese and Hindustanis come from outside their ethnic group, it is far easier for them to deny credit and to be more strict and businesslike about col­ lecting debts. A Hindustani travel agent was succinct about refusal to extend credit. Travel can be compared to drink. Drinking debts are usually never repaid, because you have enjoyed your drink. The same applies to travel. Once you have made your trip, why should you pay for it?

116

ETHNIC ENTERPRISE IN THE NETHERLANDS

Their cool, businesslike hardness was admired and at the same time disapproved of by our Surinamese informants. Creoles emphasised their own greater permissiveness towards their clients. A Creole wholesale grocer remarked: My (Dutch) wife is much better at business than I am. She is more businesslike and isn’t such a soft touch. Again and again I trust people who let me down. Yet, despite his ‘softness’, his business prospers. We shall return to this apparent paradox later. The difficulty that Creoles have in being hard and businesslike to members of their own group is of long standing. Van Lier noted this in his historical description of the development of the Surinamese economy, written in the 1950s (1971, p. 251): The Creole has not shown himself suitable for trade, lacking economic insight as a result of the absence of commercial tradi­ tion, while his numerous friends and relatives were often only too ready to sponge on him. On the whole, the Creole lacks the necessary business acumen and firmness to deal with this situation. Although one can speculate that if the majority of the Hindustanis’ clients were members of their own ethnic group they might, like the Creoles, be more inclined to give credit, the sparse comparative data does not support this. In Britain, Aldrich, Jones and McEvoy found that only 37 per cent of the Asian shopkeepers in Bradford, Ealing and Leicester extended credit to their clients, the bulk of whom were fellow Asians (1984, p. 196, table 1). One Hindustani shopkeeper, who had more Hindustani clients than most of his colleagues, told us that he had only twice given credit since starting his business. We conclude therefore that Hindustanis are harder businessmen than Creoles, who give credit more easily.

Networks As noted, Hindustanis appear to have a larger network of relatives than do Chinese and Creole businessmen. Given the value they attach to family loyalty, this seems to indicate that Hindustanis have access to a wider information and support network. Our Hindustani in­ formants also indicated that they consulted a larger range of business 117

ETHNIC ENTERPRISE IN THE NETHERLANDS

contacts than Creoles and Chinese. The latter, especially, were handicapped by their poor knowledge of Dutch and often had to rely upon Creole intermediaries with whom they could converse in Sranang in dealing with non-Chinese.

Ambition Ambition is difficult to measure. We asked about future plans. The Hindustanis were most explicit and 81 per cent had plans for expan­ sion, whereas the figures respectively for Creoles and Chinese were 39 and 33 per cent. It must be remembered that most Chinese had invested heavily in the recent past, establishing and/or expanding their businesses. Two-thirds of all our informants clearly indicated that if they had the financial possibilities they would expand. A second line of inquiry we pursued was to try to ascertain how far our informants saw their own future and that of their children bound up with their enterprises. Well over half wanted their children to study and choose their own career. Of the Hindustanis 30 per cent explicitly indicated that they would like their children to pursue a self-employed career. Only 13 per cent of the Creoles expressed interest in self-employment. The Chinese were generally non-committal. Hindustani entrepreneurs thus saw their own future and that of their children more clearly in terms of self-employment than did the other two ethnic groups.

Independence The drive to become independent was similar for all our informants. The incentive to begin something for oneself is the most important motive for self-employment. We were surprised, however, that in contrast to the findings of many others (Newcomer, 1961; Gans, 1962; Trevor Jones, 1982; Ladbury, 1984), discrimination and unemploy­ ment appeared to be relatively unimportant factors in influencing the decision to become self-employed. More than two-thirds of our informants deliberately chose to set up on their own and not as a reaction to unemployment and discrimination. Less than 1 in 5 indicated that unemployment influenced their choice to become selfemployed. Only 3 per cent mentioned discrimination as the chief reason for establishing their enterprise.

118

ETHNIC ENTERPRISE IN THE NETHERLANDS

STRUCTURE, CULTURE AND ENTERPRISE

From this rapid survey of the relative distribution of entrepreneurial resources, there appear to be systematic differences between Hindu­ stanis and, especially, Chinese on the one hand, and Creoles, on the other. There were considerable differences in experience, socialis­ ation in an entrepreneurial milieu, commitment to the work ethic and to saving and access to a network of contacts. Why should this be so? Chinese conform most closely to the ideal type of middlemanminority described by Bonacich (1973). Many Chinese emigrated to Surinam or were recruited to work as self-employed (Heilbron, 1982, p. 232). As a trading minority they dominated the distributive sector of the Surinamese economy. Chinese associations were active in Surinam, not only in the leisure field. They played an important role in organising rotating credit associations which gave members access to capital. On the national level, these associations acted as pressure groups, representing the interests of more powerful Chinese to govern­ ment and influencing trading practices, including pricing. There were important patronage and kinship links between the small neighbour­ hood grocers and the wealthy merchants (cf. Vermeulen, 1984, pp. 92-6). It is interesting that Chinese immigrants to Amsterdam have not so far become heavily involved in retail trade. They left Surinam relatively late and upon arrival found their traditional economic niche occupied in Amsterdam by the Hindustanis. They turned instead to the restaurant field, where the Indonesian and Hongkong Chinese were already active. The relation between Hindustanis and self-employment is somewhat more complex. Originally they were imported to Surinam as contract labourers for the plantations. On termination of the contract they were offered the choice of remaining and becoming land-owning peasants. Many did this. The first Hindustanis to become active in trade, however, were not descendants of contract labourers. Many British Indians came to Surinam as traders and there recruited other Hindu­ stanis to assist them (Heilbron, 1982, p. 149ff). The growth of Paramaribo is paralleled by the movement of Hindustanis to the city and its environs. Increasingly they began to produce vegetables and fruit for the markets and organised transport between rural areas and the city. Tradesmen, transport owners and small farmers are entre­ preneurs par excellence. They are accustomed to independence, taking decisions, coordinating the family enterprise and, above all, saving to protect themselves against unforeseen events. The activity of Hindustanis in Amsterdam in the fruit and greengrocery sector is 119

ETHNIC ENTERPRISE IN THE NETHERLANDS

simply an extension of their activities in Surinam. The experience of Creoles was very different. After failing as peasant farmers following their manumission, Creoles increasingly became involved in wage labour and crafts. Though at first active as market traders, they were gradually replaced by Hindustanis who had closer links with rural suppliers (Kruijer, 1977, p. 69). In Surinam there are far more Hindustani and Chinese than Creole shops. Creoles are more active in the civil service, as white collar workers in the larger firms and, above all, skilled and unskilled wage labourers with the large companies exploiting Surinam’s bauxite and timber wealth. Many Creoles are unemployed and are obliged to hossel (hustle) in Paramaribo in order to survive (Van Gelder, 1984). Chinese and Hindustanis in Surinam attempted to achieve a better life for themselves and their children by means of self-employment. In contrast, Creoles by and large followed another strategy. It was not the successful entrepreneur, but the senior civil servant, the pro­ fessional and the highly skilled industrial specialist who provided ideal role models for Creoles. These were positions which could not be attained without considerable further education. This explains the greater attention Creoles have given to education, something Van Lier noted over 40 years ago (1971, pp. 186-7). We noted that the children of self-employed Creoles generally followed a higher level of educa­ tion than the children of self-employed Hindustanis (66 per cent of Creole children went to advanced schools or university as opposed to 47 per cent of Hindustani children). This in spite of the fact that many more Creole children came from working-class backgrounds. (Though the average age of the children may have played a role here. Creole children were slightly older, around 16, whereas Hindustani children were around 12.) There also seemed to be greater interest in education among the Creole businessmen, for more Creoles than Hindustanis possessed the various diplomas and certificates Dutch bureaucracy requires of self-employed businessmen. But here again, the fact that Creole businessmen by and large had been in Holland slightly longer than Hindustanis may have played a modest role. In short, the socio-economic background of the ethnic groups in Surinam helps to explain their different experience and knowledge of self-employment. Cultural attributes such as family structure and work ethic are more difficult to explain. Access to loyal labour, a patriarchal family orientation and a network of kinsmen who hold strong values regarding rights and duties towards each other, derive both from the Hindustani joint family and the Chinese patrilineal kin­ ship system. The rules and values that form a kinship system are 120

ETHNIC ENTERPRISE IN THE NETHERLANDS

fundamental cultural traits of an ethnic group. They change but slowly. The ideology and values relating to kinsmen are among the most important cultural baggage an immigrant brings along. Chinese and Hindustani migrants from Surinam brought these cultural attributes which enhanced their chances of successful entrepreneurship. It is not coincidental that soberness, hard work, a propensity to save, a future orientation and patriarchal leadership are associated with Chinese and Hindustanis. For centuries these ethnic groups were small-scale peasants and traders for whom such values were essen­ tial for survival. The culture of an ethnic group is in large measure an adaptation to existing economic constraints. Similarly, the generous, ebullient, more hedonistic orientation of many workingclass Creoles is rooted in their past experience, first as slaves and then as a proletariat, always unsure of the future, thus living off the possibilities and pleasures that the present offered them (cf. Buschkens, 1974). For Creoles who would aspire to middle-class roles, the long colonial hegemony was important. This group was exposed for far longer than Hindustanis and Chinese to European role models, to a European lifestyle and, especially, to the necessity of obtaining diplomas, ‘for otherwise you had failed’. It is fascinating to note that the cultural attributes such as soberness, hard work, saving, discipline, a patriarchal orientation, family loyalty and especially the drive to become independent, are not only characteristic of the Hindustanis and Chinese. The same combina­ tion of character traits are present among indigenous western European small self-employed and their families (cf. Bechhofer and Elliot, 1981; Boissevain, 1981). As we have noted, these attributes are important resources for a successful small enterprise. They are also values generated by the activities of an entrepreneur seeking to meet the demands imposed by his enterprise. The enterprises of the small selfemployed are intimately interlinked with their families. Together they form a moral unit. Values generated in the workplace thus become part of the family culture and are transmitted from one generation to the next. In this way the production and reproduction of culture takes place.

THE CREOLE PARADOX The foregoing suggests that Chinese and Hindustanis are better equipped for entrepreneurship than Creoles. To a certain extent this is so (cf. Benedict, 1979; Marris and Somerset, 1971, pp. 132-50). 121

ETHNIC ENTERPRISE IN THE NETHERLANDS

Given the competition in the market place and what appears to be clearly superior entrepreneurial resources among their competitors, why then are there so many very successful Creole enterprises in Amsterdam? Although Creoles generally seek a better life via the pro­ fessions, government service, skilled industrial crafts, music or sport (cf. Cashmore, 1982, p. 213), activities which fall outside this study, they are nevertheless also extremely active as entrepreneurs. In fact, they appear to be more active in Amsterdam and are involved in a wider scale of activities than Afro-Caribbeans in Britain. In 1971, when West Indians — like the present Creoles in Amster­ dam — were just getting settled in Britain, the census showed that 2.5 per cent of employed West Indian males were self-employed. This figure included the independent professions and entertainment. In Amsterdam 2.8 per cent of Creole males are self-employed, but this figure excludes the independent professions and entertainment. If the figures for Amsterdam were corrected to reflect these, the percen­ tage of self-employed Afro-Caribbeans would be considerably higher in Amsterdam than in Britain (Reeves and Ward, 1984, p. 128, table 3). Their considerable self-employment in spite of their relatively more modest access to certain entrepreneurial resources presents us with an interesting puzzle. Do they have important entrepreneurial resources that have hitherto escaped our attention? There are certain indications that the resources we have mentioned so far are especially important in establishing an enterprise and seeing it through its first critical five years. But they may not necessarily have the same practical function over a longer period. The choice of business activity — which is both structurally con­ strained and culturally influenced — is of great importance. Both Chinese and Hindustanis are concentrated in economic niches in Amsterdam which are over-populated. In all of Holland there is room for only 140 Chinese restaurants. The market for tropical products is saturated. Entrance to the restaurant trade and shopkeeping is strictly controlled by a scala of government regulations. In contrast to Surinam, there is no association which represents Chinese interests. A network of contacts is thus essential for the survival of both Chinese and Hindustani small businesses. It is an open question just how long Hindustanis will be able to exploit fully their family structure. Increasingly the wives of Hindustani entrepreneurs are pursuing activities which take them out of their husbands’ shops. It is critically important for Hindustanis and Chinese to diversify their trade, to export to Dutch customers. Population growth of Amsterdam Surinamese, now that immigration has virtually ceased, has slowed 122

ETHNIC ENTERPRISE IN THE NETHERLANDS

down. Faced with a market that is saturated and without the prospect of growth, their future is bleak. In contrast, partly because their resources were relatively limited, it appears that Creoles adapted more rapidly to the Dutch entre­ preneurial culture. They concentrated on catering which has a relatively mixed clientele and proportionally more Dutch customers. Coffeeshops do not require licences. Cafes do, but the major breweries skilfully pilot the new entrepreneurs in this branch through the tangle of government controls and red tape. Creole hairdressers have success­ fully filled a hole in a large market and apparently exploited a gap in the control net designed to protect established entrepreneurs. Creole travel agents emphasised their experience. Robert is an example. Robert is 57. He was bom into a working-class family in Paramaribo. He went to work immediately upon completing school. At home survival was continually stressed. For 20 years he was employed by Panam, and experienced in the United States ‘what it was like to be discriminated against’. In 1969 he came to the Netherlands with his family to take advantage of excellent educa­ tional opportunities for his children. He opened his first travel agency in the Hague in 1969, ‘without the help of my brothers! I’ve got my pride. You wait as long as you can. My brothers do the same. They don’t ask for help until it is absolutely necessary. ’ To find a suitable location he mobilised some window washers. ‘I didn’t know one street from the next. I still remember: I arrived in Amsterdam early in the morning and saw several window washers. I went over to them and asked if they wanted a couple of beers that evening in exchange for noting empty premises suitable for a travel agency. That evening I obtained several addresses. ’ He demonstrated that further study was important for his personal development. He doesn’t hesitate to call on outsiders for advice. He has followed the advice of the various inspectors to obtain the required licences. By continually working on contacts, even though it ‘takes a long time’, he has obtained access to bank credit. Just as other Creole self-employed, he regards giving advice and help as part of his job. Robert also provides his Hindustani clients with many services. He thus differs from his Hindustani colleague quoted above, who denigrated his compatriots and complained about the low profit margin in dealing with them. Incidentally, although the latter has been 123

ETHNIC ENTERPRISE IN THE NETHERLANDS

operating since 1970, he still does not possess the licences required. Robert does. It will be recalled that a number of Creole enterprises were founded somewhat before those of the other Surinamese immigrants. The relative advantage that the Chinese and Hindustanis have regarding access to family labour and capital may inhibit the acquisition of knowledge and integration into Dutch entrepreneurial culture. Con­ versely, the apparent disadvantages of scarce family labour and capital may have meant that the Creole businessman has had to turn to Dutch institutions to resolve these handicaps. Once established, he makes greater use of resources outside his circle of friends and relatives to acquire capital. He makes more use of outside labour and, more often than his Hindustani and Chinese colleagues, he acquires the papers required to operate within the stifling maze of red tape which regulates self-employment in the Netherlands. The Creoles’ entrance into Dutch culture is facilitated by his, usually, greater knowledge of the Dutch language and culture in general than Hindustanis and, especially, Chinese. These latter, because of their superior access to capital, are not dependent upon Dutch financial institutions and hence can partly ignore them. Two-thirds of Hindustani businessmen are missing some of the papers, documentation, licences, and diplomas legally required of them and, consequently, are operating partly outside the law (Boissevain and Grotenbreg, 1985). This is only the case with 1 out of 4 Creole businessmen. Creole businessmen have fewer problems with the law. This is a reflection not only of their longer experience with employment in the Netherlands, but, especially, of their greater knowledge and acceptance of Dutch culture. This may also explain why, mpre than the other groups, Creole businessmen have aimed their coffeeshops and cafes at Dutch clients. Finally, it may very well be that the less calculating attitude of Creole businessmen is not the handicap it appears to be at first sight. In the long run their friendlier approach to clients, reflected in part through their greater willingness to grant credit and discuss problems, may create a reciprocal dependence that can assure them of a stable and loyal clientele. In other words, the very open and generous character of the Creole is an essential element in building up good­ will. A large volume of clients can compensate for bad debts. These ‘hidden’ resources — familiarity with the host culture and friendliness — go some way towards resolving the Creole paradox. They may assist Creole businessmen to consolidate and even to expand their enterprises more rapidly than might at first be expected.

124

ETHNIC ENTERPRISE IN THE NETHERLANDS

THE FUTURE There is a continuous dialectical exchange taking place between culture and structure (cf. Vermeulen, 1984). The socio-economic conditions in Surinam generated the social environment in which the present generation of Surinamese in Amsterdam were socialised. This experience has brought forth a particular combination of characteristics which constrain present and influence future prospects of a new category of self-employed in Amsterdam. It is difficult to predict the future. It is likely that in the long run differences between the various ethnic groups that have been highlighted here will diminish somewhat. The Chinese will probably continue to expand their activities to other areas, partly thanks to their experience and the considerable capital to which they have access. The children of Creole businessmen will have been socialised in some of the values — such as hard work, saving, and especially the desire for independence — which have been important for their parents’ sur­ vival as self-employed. We may also expect the Hindustani work ethic and soberness to be gradually eroded by the all-pervasive Dutch Welfare State. There is an important symbiotic relation between the three ethnic groups that have emigrated from Surinam. Hindustani shopkeepers and Chinese restauranteurs depend largely on Creole clients. A Creole wholesaler supplies products to a series of Hindustani shops on whom he relies for his survival. Because he has been established in Amster­ dam for years, he is also a source of advice for his customers. An active Creole entrepreneur employs both Hindustanis and Creoles in his travel agency and draws customers from both ethnic groups. Ethnic differences will continue to influence the style of entrepreneurship. But the different groups of Surinamese immigrants depend upon each other. This interdependence is largely the result of their shared experience in Surinam. This ongoing exchange, as well as their inter­ action with Dutch culture, ensures that differences in style will probably diminish. Their interdependence is a source of mutual strength. A comparison between the characteristics of native Dutch and Surinamese immigrant enterpreneurs provides a certain measure of support for our prediction that differences in the style of entrepreneur­ ship will diminish in time.

125

ETHNIC ENTERPRISE IN THE NETHERLANDS

SU R IN A M E S E A N D D U T C H E N T R E P R E N E U R S : S IM ILA R IT IE S A N D D IFF E R E N C E S

We not only compared ethnic businessmen to each other but also to their native Dutch counterparts in terms of their personal characteristics, the attributes of their enterprises, their level of education (including professional certificates), turnover, and net profit. In addition we compared their experience as entrepreneurs and their orientations.5 There were many similarities between Dutch and Surinamese businessmen. Both shared an entrepreneurial family background; both had worked as employees before becoming selfemployed; and both shared an intense desire to be independent. Both started with an initial capital of about f 36,000. Both groups considered their personal relations with clients and suppliers an extremely impor­ tant part of their existential being. Both aimed to provide services and goods of high quality and considered that the most important asset of an entrepreneur was the ability to get along with people. They also shared a similar professional orientation in that they were primarily concerned with craftmanship rather than with profit. Besides sharing a strong interest in independence, they also exhibited a general satis­ faction with their occupation in spite of meagre rewards. In short, both Dutch and Surinamese entrepreneurs stressed craftmanship, good personal relations and the importance of taking their own decisions. There are also a number of differences between self-employed Surinamese and their Dutch colleagues. We have alreeady noted that Surinamese entrepreneurs in general work longer hours than their Dutch counterparts. Obviously they recruit many of their clients because they offer specifically ethnic services. As such they exploit a gap in the market. Generally speaking the level of education of the Surinamese businessmen is lower; and they do not possess the necessary formal qualifications to the same extent as their Dutch colleagues. Fewer Surinamese than Dutch live over or next to their enterprises but generally they employ more family relatives. Finally, the Surinamese face a number of specific problems which result from their ethnic status. These include discrimination by banks, unfamili­ arity with the activities and services of various government and associational advice and information bureaux and, for those specialis­ ing in ethnic products, a limited clientele. Many of these differences with their Dutch colleagues are as a result of their experience in Surinam and their lack of familiarity with Dutch culture. Generally speaking, these differences appear to diminish the longer Surinamese entrepreneurs reside in the Netherlands and are established 126

ETHNIC ENTERPRISE IN THE NETHERLANDS

as self-employed. Surinamese businessmen, compared to Dutch selfemployed, have a smaller turnover as well as a lower profit margin; the net profit of Dutch retailers is about f 45,000 per annum, of Surinamese f 36,000. On the other hand, there is evidence that Surinamese compensate for their lower profits with income from other sources. More than two-thirds have additional income, as compared with one-third of Dutch entrepreneurs. Surinamese self-employed who have been established longer have a higher net profit and turnover than their more recently established colleagues. They also tend to have larger networks, employ more people including non-relatives, and are more aware of and in touch with Dutch institutions that provide advice, assistance and loans. It is uncertain to what extent those entrepreneurs who have been established longer are willing and able to establish their own interest groups and professional associations to resolve such problems as the increasing competition and discrimination from Dutch institutions. Dutch retailers established in neighbourhoods with many ethnic entrepreneurs are generally not hostile to their Surinamese colleagues. They do not fear direct competition. On the other hand, 30 per cent of Dutch entrepreneurs note that they have problems with other Dutch enterprises. It has become evident that relations between Surinamese entrepreneurs are influenced not only by the fact that they are com­ patriots but also competitors. They emphasise kin relationships and mistrust non-relatives. Competition between them is increasing, especially in the retail and catering sectors. The number of small cafes and shops selling tropical products are continually increasing although the population of Surinamese extraction has remained more or less constant in the past five years. Surinamese businessmen in different branches deny each other the right to sell the same products: tropica proprietors sell dried fish, records, haircreams, medicines and cooked food; a number of barbershops as well as videoshops sell cooked food (rotV s). None of those involved believe that these problems can be resolved by negotiation. ‘We need the government’s strong hand’, one of them told us. Those who have been established longer note that the viability of existing enterprises will be endangered if more are established. It is likely that those who have been established longer will increasingly agitate for more rules to control the newcomers. In a period of economic recession these social tensions can become acute. Economic emancipation generally is accompanied by conflict. The first generation of Surinamese self-employed have already become aware of this. The economic recession of the past few years has bankrupted many Dutch companies in spite of massive government 127

ETHNIC ENTERPRISE IN THE NETHERLANDS

rescue efforts. During the same period just over 200 Surinamese businessmen, using only their savings and private capital, have established themselves firmly as part of the Dutch commercial scene and created over 1,000 new jobs. The hard work and determination to make it on their own of the Surinamese self-employed and their counterparts from other ethnic groups is injecting new blood into the Dutch economy. It is also earning them the respect of the Dutch government and burghers.

NO TES

1. Research was carried out from February 1983 through January 1984 by the authors and August Choenni, assisted by Mariette Meester, and was financed by the Netherlands Ministry of Economic Affairs (Boissevain, Choenni and Grotenbreg, 1984). This chapter is a substantially revised version of a previous article (Boissevain and Grotenbreg, 1986). 2. In the Netherlands, enterprises employing up to 99 employees are con­ sidered small or medium-sized. There are 200,000 enterprises which employ up to ten persons, including the owner. 3. Hindustanis are descendants of ex-contract labourers recruited on the Indian sub-continent to provide plantation labour in Surinam following manumission. Creoles are descendants of the slaves. 4. Benedict, who compared Chinese, Indian and Creole businessmen in the Seychelles, concluded that the success of a family enterprise depended upon the existence of a hierarchical family structure, family loyalty and loyalty to the family enterprise (1979). 5. Based on Boissevain, Choenni and Grotenbreg (1984) (Ch. 4 in par­ ticular). We have drawn on Van den Tillaart et al. (1981) and Pompe (1980) for data on native entrepreneurs.

REFERENCES

Adhin, J.H. (1960) ‘Over de ‘joint-family’ der Hindostanen’ (Concerning the ‘joint-family’ of the Hindustanis), Nieuwe West-Indische Gids, 40, pp. 17-27. Aldrich, H.E., Jones, T.P. and McEvoy, D. (1984) ‘Ethnic Advantage and Minority in Business Development’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business. Strategies for Economic Survival, Cam­ bridge University Press, Cambridge, pp. 189-210. Bakker, J. and Tap, L.J. (1984) ‘Varianten in het etnische ondememerschap’ (Variations in Ethnic enterprise), Kroniek van het ambacht/klein- en middenbedrijf 38, pp. 24-7. Bechhofer, F. and Elliot, B. (eds.) (1981) The Petite Bourgeoisie. Comparative Studies o f the Uneasy Stratum, Macmillan, London. Benedict, B. (1979) ‘Family Firms and Firm Families: A Comparison of 128

ETHNIC ENTERPRISE IN THE NETHERLANDS

Indian, Chinese and Creole Firms in Seychelles’, in Greenfield, S.M., Strickon, A. and Aubey, R.T. (eds.) Entrepreneurs in Cultural Context University of New Mexico Press, Albuquerque, pp. 305-26. Boissevain, J., (1981) Small Entrepreneurs in Changing Europe: Toward a Research Agenda, European Centre for Work and Society, Maastricht. Boissevain, J., Choenni, A. and Grotenbreg, H. (1984) ‘Een Kleine haas is altijd beter dan een grote knecht. Surinaamse kleine zelfstandige ondememers in Amsterdam ’ (Better a small boss than a rich employee: Surinamese entrepreneurs in Amsterdam), Antropologisch-Sociologisch Centrum and Minsterie van Economische Zaken, Amsterdam and Den Haag. Boissevain, J. and Grotenbreg, H. (1985) ‘Survival in Spite of the Law: the Surinamese of Amsterdam’. Paper prepared for Wenner-Gren Symposium: ‘Historical Models for the Evolution of Law in Specific Societies’, Bellagio, Italy, 10-18 August. (1986) ‘Culture, Structure and Ethnic Enterprise: the Surinamese of Amsterdam’, Ethnic and Racial Studies, 9, pp. 1-23. Bonacich, E. (1973) ‘A Theory of Middleman Minorities’, American Sociological Review, 38, pp. 583-94. Budike, R. (1982) Surinamers naar Nederland. De migratie van 1687 tot 1982 (Surinamese to the Netherlands: the migration from 1687 to 1982), Instituut Voortgezet Agogisch Beroepsonderwijs, Amsterdam. Buschkens, W.F.L. (1974) The Family System o f the Paramaribo Creoles, Martinus Nijhoff, ’s-Gravenhage. (1977) ‘Der Creoolsebevolking’, inHelman, A. (ed.),Cultureel Mozaik van Suriname (The Creole population), De Walburg Pers, Zutphen, pp. 243-77. Cashmore, E. (1982) ‘Black Youth, Sport and Education’, New Commodity, 10, pp. 213-21. Gans, H. (1962) The Urban Villagers, Groups and Class in the Life o f ItalianAmericans, The Free Press, New York. Gelder, P. Van (1984) Werken onderde boom. Dynamiek en informele sektor: de situatie in Groot-Paramaribom, Suriname (Working under a tree. Dynamic and the informal sector: the situation in greater Paramaribo, Surinam). Ph.D. Thesis, University of Amsterdam, Amsterdam. Heilbron, W. (1982) Kleine Boeren in de schaduw van de plantage. De politieke ekonomie van de na-slaverijperiode in Suriname (Peasant-farmers in the shadow of the plantation: the political economy of the post-slavery period in Surinam). Ph.D. Thesis, Erasmus University, Rotterdam. Jones, T.P. (1982) ‘Small Business development and the Asian community in Britain’, New Community, 9, pp. 467-77. Kruijer, G.J. (1977) Suriname. Deproblemen en hun oplossignen (Surinam: the problems and their solutions), Het Spectrum, Utrecht/Antwerpen. Ladbury, S. (1984) ‘Choice or no Alternative? Turkish Cypriots in business in London’, in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business. Strategies for Economic Survival, Cambridge University Press, Cambridge, pp. 89-124. Lier, R. Van (1971) Frontier Society: a Social Analysis of History of Surinam, Martinus Nijhoff, ’s-Gravenhage (Original Dutch edition 1949.) Marris, P. and Somerset, A., (1971) African Businessmen: A Study o f 129

ETHNIC ENTERPRISE IN THE NETHERLANDS

Entrepreneurship and Development in Kenya, Routledge and Kegan Paul, London. Newcomer, M. (1961) ‘The Little Businessman: A Study of Business Pro­ prietors in Poughkeepsie’, Business History Review, 35, pp. 477-531. Pompe, J.H. (1980) De kleine middenstand in Nederland. Een vergelijkende studie tussen de oude en de nieuwe middenstand (The petite bourgeoisie in the Netherlands: a comparative study of the old and the new petite bourgeoisie), Van Loghum Slaterus b.v., Deventer. Reeves, R. and Ward, R. (1984) ‘West Indian Business in Britain,’ in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business. Strategies for Economic Survival, Cambridge University Press, Cambridge. Reubsaet, T.J.M. and Kropman, J.A. (1985) Beter opgeleide Antillianen op de Nederlandse arbeidsmarkt (Better educated Antillians on the Dutch labour market), Ministerie van Sociale Zaken en werkgelegenheid, ’s-Gravenhage. Speckmann, J.D. (1963) ‘De houding van de Hindostaanse bevolkingsgroep ten opzichte van de Creolen’ (The attitude of Hindustanis to Creoles), Bijdragen tot de Taal-, Land- en Volkenkunde, 119, pp. 76-92. (1965) Marriage and Kinship among Indians in Surinam, Van Gorcum, Assen. Tap, L.J. (1983) Het Turkse bedrijfsleven in Amsterdam. Rapport naar aanleiding van een afstudeeronderzoek (Turkish Business in Amsterdam), Interfaculteit Bedrijfskunde, Groningen. Tillaart, H.J.M. van den, van der Hoeven, H.C., van Uxem, F.W., van Westerlaak, J.M. (1981) Zelfstandig Ondememen. Onderzoek naar de problemen en mogelijkheden van het zelfstandig ondememerschap in het midden-/en kleinbedrijf (Entrepreneurship. Research into the problems and the possibilities of entrepreneurship in medium sized and small firms), Instituut voor Toegepaste Sociologie/Economisch Instituut voor het Midden- en Kleinbedrijf, Nijmegen. Veenman, J. (1985) De werkloosheid van Molukkers (Unemployment among the Moluccans), Ministerie van Sociale Zaken en Werkgelegenheid, ’s-Gravenhage. Vermeulen, H. (1984) Etnische groepen en grenzen. Surinamers, Chinezen en Turken (Ethnic groups and boundaries. The Surinamese, Chinese and Turks), Het Wereldvenster, Weesp.

130

8 Entrepreneurship in a Corporatist State: the Case of Sweden Bengt Johannisson

Sweden is a society confronted by conflicting processes. On the one hand, powerful institutions are creating a corporatist economy; on the other, locally-based initiatives, aimed at establishing new businesses, are flourishing. The increasingly corporatist nature of an economy might be expected to reduce the potential for business start-up as market opportunities decline. However, various local initiatives in Sweden are now leading to the emergence of both traditional and new forms of entrepreneurship. In discussing these issues, this chapter focuses upon the ways in which regional policies are shaping the formation and growth of small businesses. The major institutional systems in Sweden can be grouped into four main categories: the market, the political, the public bureaucratic and various pressure groups. Government policy is shaped by negotia­ tion among representatives of these. Historically, this implies a move from ‘economic’ and ‘administrative man’ to ‘representative man’ as the agent of change in society. A further implication is that these institutional systems constitute a fairly rigid framework for local initiatives and action. Employment in small manufacturing establishments is declining in Sweden as in many other European countries (Storey, 1982). However, although owner-manager firms in 1980 still accounted for 38 per cent of total employment in Swedish manufacturing industry (Industridepartementet, 1982), there are significant regional varia­ tions. In sparsely-populated areas, local entrepreneurship is often the major vehicle for economic recovery if only because national strategies to entice firms to relocate in them have been largely unsuccessful. However, entrepreneurship must be interpreted in a broader sense than simply consisting of private and independent initiatives in the local market place since many start-ups stem from the various pro­ 131

A CORPORATIST STATE: THE CASE OF SWEDEN

grammes administered by local authorities and large privately-owned corporations. In Sweden, regional imbalances in economic growth have been tackled in three ways. First, by public sector investment which, to­ day, provides employment for almost 40 per cent of the labour force; a high proportion of which is engaged in the provision of various local services. Second, by central government decentralisation through office relocation from Stockholm to different regional centres. In the 1970s, this led to the emergence of regional centres which could then offer better housing, education, welfare and employment oppor­ tunities. Third, by the economic regeneration of regions through state incentives and subsidies to the private sector. Programmes directed towards the needs of small and medium-sized firms, that is, those with less than 200 employees, are jointly administered by 24 regional development funds and the various county councils. As a result of these initiatives, employment in privately-owned manufacturing industry has been maintained. Regional policies include various location loans and employment grants and, in the private sector, it is the large national-based corp­ orations rather than small and local business-owners that have been attracted by such financial incentives. However, through its various regional funds, the Swedish government has, in the 1980s, made more determined efforts to encourage local entrepreneurship. But the suc­ cess of these has been dependent upon a variety of factors including market opportunities, the availability of financial and other support services, and by various local industrial and business traditions. For instance, small businesses in sparsely-populated areas usually have difficulty in reaching their customers. Often, there are few other local suppliers and sub-contractors and the local market is also, by defini­ tion, limited. However, these problems have been mitigated by the introduction of regional transport subsidies which cover both goods and key personnel travel. Similarly, local infrastructures, in terms of health, welfare, education and housing services have been improved — even in the poorest areas — although they tend to be concentrated in regional centres. Further, there is the increasing provision of industrial and management training financed by regional development funds and of business premises by local authorities, often in conjunc­ tion with state-owned agencies. In short, access to markets, the quality of community infrastructures, and the availability of various industrial and commercial services are now fairly evenly distributed throughout the whole of Sweden. Even so, some provinces in Sweden — notably in the north — lack industrial traditions and this may imply that 132

A CORPORATIST STATE: THE CASE OF SWEDEN

business cultures vary from one geographical area to another. Indeed, the findings of a national survey indicate that attitudes towards entre­ preneurship vary regionally and are more favourable in the southern parts of the country (Zetterberg, 1977). Similarly, more detailed studies of local communities in the south suggest that business cultures also vary within regions (Johannisson, 1984). As Figure 8.1 suggests, the annual rate of start-ups was fairly stable during the late 1970s, but has increased significantly during the 1980s. The rate of self-employment has greatly increased and of the firms established in 1983, 60 per cent were woman-owned businesses. The total number of new businesses has increased from an average 15,000 per annum between 1978 and 1981, to almost 20,000 in 1983. In terms of the regional distribution of business start-ups, two conclusions can be derived from this period. First, the proportion of total start-ups in the less developed regions is quite small. Second, the propensity to start businesses — that is, the number of start-ups per thousand inhabitants - varies from between 1.4 and 1.8 in the disadvantaged regions to 2.0 to 2.5 in the more urbanised areas (Industridepartementet, 1982). In the manufacturing sector, the number of new enter­ prises in relation to the existing population is above average in the deprived area of northern Sweden but this does not apply to the non­ manufacturing sector in this region. The number of bankruptcies has also increased quite dramatically; by 77 per cent between 1974 and 1983 (SIND, 1985). The ratio of business start-ups to bankruptcies does not appear to vary regionally, being roughly 3 to 1 during the 1980s. In summary, the picture is rather unclear. While regional policies have not been very successful in preserving the population base in sparsely-populated areas, there is evidence of some small business growth in northern Sweden. Some emerging patterns of entrepreneurship in Sweden can be sum­ marised as follows: (1) The number of female entrepreneurs has grown with women owner-managers in the non-agricultural sector increasing by 50 per cent between 1970 and 1980 (Holmqvist and Sundin, 1984). These women tend to be overrepresented as owner-managers in those pro­ vinces where the general business climate would appear to be favourable. (2) The number of workers’ cooperatives and other employeeowned companies — those in which at least 50 per cent of the shares are owned by at least 50 per cent of the employees — has increased and has become generally recognised as a viable form of business ven­ ture. Although self-management is found most frequently in the service 133

A CORPORATIST STATE: THE CASE OF SWEDEN

Figure 8.1: New enterprises and bankruptcies in Swedish industry: 1978-83 INDEX

200

(5,500)

180

160 (

20 ,000 )

140

120 (15,000)

100

( 11, 000 )

80

------ 1------- 1------ 1------ 1------- 1------ 1----- 1 1978

-7 9

-8 0

-81

-8 2

-8 3

-8 4

YEAR

= new enterprises = bankruptcies

Note. The break in the chart for new enterprises in 1 9 8 2 is due to a change in the source of data. The latter excludes registered start-ups which only involve a change in legal status of the enterprise. The chart is based on statistics presented in SIN D , 1 9 8 5 and SC B, 1985.

134

A CORPORATIST STATE: THE CASE OF SWEDEN

sector, more than 100 manufacturing firms are now employee-owned. (3) Entrepreneurs who have relocated to the less-developed regions have often contributed to the economic growth of such areas. Many immigrants to Sweden have started their own businesses and although a comprehensive study of them is needed, it has been suggested that some immigrant groups are more entrepreneurial than the average indigenous Swede (Ekberg, 1985). Self-employment is a reasonable but ‘qualified’ indicator of entrepreneurship. But the process of launching a business starts long before it becomes a full-time activity; indeed, most owner-managers start their businesses on a part-time basis. In about one third of the start-ups in Sweden in 1983, the turnover during the first full year of trading was less than SEK 100,000, which is roughly the average annual wage of a semi-skilled industrial worker. There are also various forms of entrepreneurship that operate within or on the fringes of large-scale corporations. Thus, in order to grasp all aspects of Swedish entrepreneurship, it is necessary to regard the process in this broader sense; only then can the historical and the present-day regional dif­ ferences in small-scale business activity be understood and its poten­ tial for sustaining communities be assessed. Because the frequency of start-ups varies regionally in Sweden, it does not mean that indi­ viduals with particular entrepreneurial talents are unevenly distributed throughout the country. On the contrary, local circumstances can determine the incidence of entrepreneurship. Accordingly, in sparselypopulated areas, the informal economy probably encourages entre­ preneurship. Generally speaking, entrepreneurs tend to be both ‘individualists’ and organisers and, as such, they have a strong desire to control not only their own lives but also those of other people (Johannisson, 1987). Consequently, a contextual approach is needed to understand entrepreneurship which often means the analysis of local networks. In this chapter, I have chosen three local contexts within which individual initiatives are differently organised; the multi­ company town, the one-company town and the sparsely-populated district. The first two cases consist of communities with between 5,000 and 15,000 inhabitants, while in the third, there are no determining territorial boundaries. In the southern, relatively more densely-populated area of Sweden, there are many small towns that have prospered since the Second World War. Typically, they are dominated by local owner-managed, small-scale manufacturing firms. The owners of these are leading members of their communities, while the trade union movement is correspondingly weak. The role of the local authorities in these 135

A CORPORATIST STATE: THE CASE OF SWEDEN

towns is to provide public services as business activity expands. The economic vigour of these communities is maintained by a highly diversified business structure, informally organised through local pro­ duction systems and by a wide range of business and other communitybased associations. In the multi-company small town, to own a business is to be at the core of the prevailing life-style (Johannisson, 1984). Sweden’s historic role as a supplier of raw materials to various European countries has produced many one-company towns, espec­ ially in the central and northern provinces of the country. In the past, these factories were locally owned but today most of them have become incorporated within national and internationally-based public companies. Consequently, such communities cannot influence cor­ porate decision-making and regulate the level of local economic activity. The only alternative ‘mobilising agency’ is the trade union movement which organises the majority of the local cultural activities. In 1977, 66 of Sweden’s (then) 277 municipalities were classified as one-company industrial communities, using the criterion that employ­ ment in manufacturing was at least 30 per cent and the largest com­ pany’s share was at least 40 per cent (Lundmark and Malmberg, 1985). Today, Swedish regional policy includes special programmes to encourage business start-up in these communities. In the sparsely-populated provinces of northern Sweden, agriculture — including reindeer breeding and forestry — has traditionally been the dominant economic activity. Much of the land is owned by either the state or by large corporations which exploit the province as a pro­ vider of raw materials. There are few indigenous manufacturing firms and attempts to industrialise this area have either failed or produced a highly vulnerable absentee-owned industrial structure. In one county in particular, one third of the few manufacturing firms with more than 50 employees are publicly-owned, a further one-third are subsidiaries of nationally-based corporations, and the remainder are owned by local entrepreneurs. In this area, business start-up initiatives have been oriented towards fishing and other rural activities. This has created seasonal and/or part-time self-employment which, until recently, has sometimes been considered a problem by agencies operating within the more formal economic sector. Today, the benefits of informal trading are more widely recognised, although the ways are limited of using it as a vehicle for developing economically self-sustaining communities. However, regional policies do now include special measures for sparsely-populated regions which encourage part-time self-employment. 136

A CORPORATIST STATE: THE CASE OF SWEDEN

Table 8.1 offers an analysis of the forms of entrepreneurial initiative found in the three different contexts. I have already commented on the nature of the various local initiatives. The second dimension is the frame of reference for these: in multi-company towns, local and national markets constitute the frame of action; in one-company towns, action is oriented towards the community itself; while in sparselypopulated districts, the frame of action is the natural environment. Ways of organising tasks also vary: in multi-company towns, instrumental and contractual relationships intermingle with personal commitments; in one-company towns, business and non-business sec­ tors are separated with each being hierarchically organised; while in sparsely-populated communities, informal economies are built upon barter relationships which integrate instrumental and personal obligations. Freedom of action is fundamental for both the self-realisation of the entrepreneur and for the success of his/her business. Multiple scenes or ‘arenas’ of action where personal networks can be estab­ lished, therefore, are of considerable importance. In multi-company towns, possibilities for both formal and informal gatherings are abun­ dant; in one-company towns, such arenas are largely absent; while in the rural areas, networking is basically restricted to informal and seasonal gatherings. The personal networks of entrepreneurs varies both with the character of their enterprises — the ‘type’ of business — and their personal characteristics. Small businesses are often reliant upon colleagues in their local communities, although ‘hi-tech’ small firms will usually need to develop wider links. Some entrepreneurs consider themselves as ‘locals’ and prefer a few strong ties with neighbouring colleagues while ‘cosmopolitan’ entrepreneurs will build wider networks with many weak linkages. When businesses are first established and the entrepreneurs are inexperienced, the main pur­ pose of networks is to supply information and offer psychological sup­ port. The nature of these networks in different types of community means that in multi-company towns, traditional family businesses predominate; in one-company towns, there is the emergence of intra­ preneurship and partnerships; while in rural areas, there are part-time and ‘informal’ businesses. Although the ideological climate in Sweden has become more favourable towards entrepreneurship over the past decade, two issues have been of concern to owner-managers: the tax system and the introduction of wage-earners’ funds. The succession of family businesses becomes difficult as property taxes, which are based upon owner-managers’ private wealth — including capital tied up in their 137

General frame of reference The market

The local community

Nature

Nature of local initiative

Formal economy and informal local economy

Union and community life

Informal economy

Local context

Multi-company town

One-company town

Sparselypopulated district

Scenes of action The community; local social clubs; and local trade associations The community. The large corporation Seasonal gatherings

Organising principles Dyadic contracts embedded in personal commitments Hierarchical structures

Barter relationships

Table 8 .1: Forms of entrepreneurial initiative in various local contexts

Self-employment and part-time businesses

Intrapreneurship and partnerships

Traditional family businesses

Type of private enterprise

A CORPORATIST STATE: THE CASE OF SWEDEN

Figure 8.2: The legitimation of local initiatives

POLITICAL SYSTEM

Political \ disobedience N

I

Social entrepreneurship

\ Intrapreneurship LOCAL INITIATIVES

MARKET < \

Need for local context

Increased lo ca l\ \ competencies

'

\ ~7

Cooperative revival /

INTEREST GROUPS

Decentralisation

I

(Controlled experiments) I

\ \

Reduced / paperwork /

PUBLIC ADMINISTRATION

business operations — have become more significant. But the main challenge to private enterprise in Sweden over the past decade has been the collective wage-eamers’ funds. The debate over these funds had only just started when, in 1976, the Social Democratic Party lost its first general election in more than 40 years. The party then regained power in 1982 with an explicit commitment to introduce them. In 1984, five regional funds were set up, financed through ‘excess’ com­ pany profits and a system of employees’ contributions. The Social Democratic Party and the trade union movement have been promoting these funds in order to attain four major goals: (1) a more egalitarian distribution of wealth; (2) an equitable incomes policy; 139

A CORPORATIST STATE: THE CASE OF SWEDEN

(3) an increase in economic democracy and a reduction in the con­ centration of ownership and control in industry; and (4) an increase in the level of savings and of investment to enhance the supply of risk capital to industry (Ohman, 1985). However, the main implication of the funds is that they have rein­ forced the institutional ownership of Swedish industry. Indeed, they reinforce the grip which institutions exercise over the operation of the Swedish economy. The only processes that seem to be actively opposing such developments are those local initiatives which direct­ ly or indirectly promote entrepreneurship. The general economic crisis in the Western industrialised countries has encouraged local initiatives for jobs and enterprises. This has led to changes within the overall institutional structure of pluralistic Swedish corporatism. I will briefly comment on some of these. Figure 8.2 presents an overview of the dynamics.

P O L IT IC A L S Y S T E M

The operating autonomy of local politicians is heavily circumscribed by laws and regulations, as well as by rules imposed by the local authorities’ own national organisation, the Swedish Association of Local Authorities. But, as the effectiveness of regional policies has declined and as the central government has required local authorities to tackle unemployment problems on a local basis, many politicians have been able to develop initiatives beyond their formal mandate. In some cases, they have taken on the role of ‘social entrepreneurs’ (Johannisson, 1986). In many communities, new enterprises can rent publicly-owned premises on a reduced-payment basis. This has increased the opportunities available for local entrepreneurship and reduced the need for the ‘forced’ relocation of plants owned by national companies in order to solve regional problems of unemploy­ ment. Such developments have given local politicians a more active role in the economic developments of their communities and re­ established local identity as a basic ingredient within a ‘self-reliant’ strategy.

P U B L IC A D M IN IST R A T IO N

This has become more decentralised as a result of the relocation of government offices outside large urban areas. Regional forms of 140

A CORPORATIST STATE: THE CASE OF SWEDEN

administration, further, have been given greater autonomy and addi­ tional financial resources for experimenting with local projects. Deregulation has also implied less paperwork for both the administra­ tion and businesses. Within local government, most authorities have created posts for industrial officers and established corporations for industrial developments. At both local and regional levels, the overlap between community and business affairs, and between local and regional administration has increased.

IN T E R ES T AN D PRE SS U R E GRO U PS

With or without the authority of their affiliated central organisations, many local and regional trade unions have become engaged in local employment and start-up initiatives. Their commitment has been primarily in terms of organising study circles in order to identify the potential for local enterprise projects. The cooperative movement has also become involved in this way. Local trade associations and various interests groups for small and medium-sized firms have also taken part in programmes that have led to the creation of industrial parks in many Swedish towns. These have often enabled new enterprises to establish local networks for the purposes of trading.

THE M AR KET

The business community as a whole has also become more involved in local business development projects. Many large corporations with plants in ‘single-company’ communities organise schemes for encour­ aging employees to start their own businesses. Many have applied the principles of ‘intrapreneurship’ whereby employees who are potential entrepreneurs can develop their ideas on the job and proceed to start trading with their employers on a consultancy basis. Such programmes are often supported by the Employment Security Council which was set up by the Swedish Employers’ Confederation and the private sector white-collar unions, to relieve the effects of white-collar unemployment. Thus, large companies have recognised their social responsibilities in one-company towns and encouraged the growth of local businesses. In many ways, small business policies in Sweden are similar to those in the other Nordic countries. The various initiatives that are currently evolving at the local level in Sweden have parallels in 141

A CORPORATIST STATE: THE CASE OF SWEDEN

Norway, Finland and Denmark. In these, the institutional settings have special implications for the structuring of personal networks as important dimensions of entrepreneurship (Deeks, 1976; Johannisson and Peterson, 1984). In recent research, personal networks in two contrasting Swedish areas have been studied. In the more prosperous region, owner-managers were found to have extensive links with other local entrepreneurs, while in the declining region — where small businesses have to be supported by various incentive schemes — per­ sonal contacts with state officials in local, regional and national insti­ tutions were more important. Overall, however, personal networks were more important to entrepreneurs in the more prosperous than in the less wealthy areas (Johannisson and Spilling, 1986). If entrepreneurs are essentially innovators, it is clear that their energies and talents cannot be planned by corporatist institutional processes. Consequently, the increasing emphasis that is being placed upon individualism at the local level in Sweden and which is reflected in various business initiatives, may be regarded as a reaction against the corporatist nature of the economy as a whole. Although such initiatives have, so far, generated only limited numbers of new firms and jobs, they have probably enhanced the potential for further and more ambitious projects. In this process, it seems clear that the crea­ tion of ‘entrepreneurial networks’ will play a key role.

REFERENCES

Deeks, J. (1976) The Small Firm Owner-Manager, Praeger, New York, N. Y. Ekberg, J. (1985) Invandrare i Stockholms Ian. Yrkeskarriarer under 70-talet (Immigrants in the Stockholm county. Professional careers in the 70s), Stockholms Ians landsting, Stockholm. Holmquist, C. and Sundin, E. (1984) Kvinnor som foretdgare (Female Entrepreneurship), Umea universitet, Umea. Industridepartementet (1982) Industri och industripolitik (Industry and industrial policies), Industridepartementet, Stockholm. Johannisson, B. (1984) ‘A Cultural Perspective on Small Business — Local Business Climate’, International Small Business Journal, Vol. 2, No. 2, pp. 32-41. (1986) ‘A Territorial Strategy for Encouraging Entrepreneurship — Progress Report from Field Research into Stagnating Swedish Com­ munities’. Paper presented at the 1986 Babson College Workshop on Encouraging Entrepreneurship Internationally, Wellesley, Massachusetts, 13-15 April. (1987) ‘Anarchists and Organizers — Entrepreneurs in a Network Perspective’, International Studies in Management and Organization. Johannisson, B. and Peterson, R. (1984) ‘The Personal Network of Entre142

A CORPORATIST STATE: THE CASE OF SWEDEN

preneurs’, Proceedings from the Third Canadian Conference — ICSBCanada, Toronto, The Ryerson Polytechnical Institute 1984. Johannisson, B. and Spilling, O.R. (eds.) (1986) Lokal naeringsutvikling — entreprenorskap og nettverksstrategier i noen norske og svenske kommuner (Local Business Development — Entrepreneurship and Network Strategies in some Norwegian and Swedish Municipalities), Universitetsforlaget, Oslo. Lundmark, M. and Malmberg, A. (1985) Ensidiga industrikommuner (Industrial one-company towns), ERU-rapport 43, Industridepartementet, Stockholm. SCB (1985) New Firms, 1982 and 1983, F 15 SM 8501, SCB, Stockholm. SIND Statistik 1974-1984 (1985) Konkurser, ackord, nyetablering (Bankrupt­ cies, composition, new establishments), Statens industriverk, Stockholm. Storey, S.J. (1982) Entrepreneurship and the New Firm, Croom Helm, Beckenham. Zetterberg, H. (1977) Om livsstilar i 1970-talets samhalle (On lifestyles in the society of the 1970s), SAF, Stockholm. Ohman, B. (1985) Collective Workers' Saving and Industrial Democracy, Research report 1985-1, University of Orebro, Orebro. .

143

9 Independent Economic Activity under State Socialism: is there a Petite Bourgeoisie in Eastern Europe? Howard H. Davis

The phenomenon of small-scale enterprise is as relevant to the understanding of socio-economic change and reform in Eastern Europe as it is in Western Europe. This chapter offers a general perspective for looking at current trends in independent economic activity in the state socialist countries and casts doubt on the widely-held view that the non-socialised sector only survives in those countries as a residual or anachronistic feature. Much debate about the significance of independent activity lays stress either on its illegality (e.g. Grossman, 1977) or its contribu­ tion to solving problems caused by the rigidities of a command system. The emphasis here is on the alternative view that the system of cen­ tralised economic planning is not monolithic and that the ‘second economy’ which involves income-generating activities carried out by households or individuals outside the organisations of the socialist sector, is an integral feature of state socialism. Increasingly it is recognised as having a contribution to make within the framework of state socialist production relations, not just outside it in terms of peripheral and illegal activities. The chapter also considers the ques­ tion of whether the social groups who are most actively engaged in the second economy can be described as a distinct social stratum and whether it is useful to compare them with the petite bourgeoisie in Western capitalist societies. An earlier publication (Davis and Scase, 1985) compares the social structures of the Western capitalist and state socialist systems and iden­ tifies their most significant similarities and contrasts. For the pur­ poses of comparative analysis and general exposition of the features of similarity and difference it was not felt necessary to find a solu­ tion to all the problems of class categorisation, or to engage in attempts at classification at the level of abstraction found in Poulantzas, 144

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

Carchedi or Wright.1 Indeed, the serious dearth of empirical evidence makes this virtually impossible. The priority, it can be argued, should be to focus on actual social relationships and grasp the meaning of experience and trends which threaten to elude even the best attempts at formal structural definition. Many authors acknowledge that the legal private sector, activities ‘not officially registered’, employment in state socialist enterprises where income depends substantially on tips or ‘thank-you’ money (as in many ser­ vice occupations), as well as illegal activities, are important yet problematic from both an economic and sociological point of view. In all the state socialist countries, by definition, the dynamics of social change are determined by strategies and structures which originate in the Soviet model of collective ownership of the means of production and comprehensive control through the party-state apparatus. The primary characteristics are: that the basic means of production are state-owned and controlled by a centralised plan; that there is a substantial state apparatus which implements economic and social plans according to principles laid down by the party; and that the legitimating ideology is derived from Marx and Lenin, combined with indigenous socialist traditions. The socialisation of the means of production is not necessarily complete in all or any of the sectors of the economy but the ‘commanding heights’ of banking, industry and the infrastructure of communications and services are invariably in state hands. These common features, which include the most funda­ mental economic and social relations, constitute a distinctive mode of production.2 Only by a considerable stretch of the imagination can it be called a pathological form of capitalism (e.g. ‘state capitalism’) or a purely ‘transitional’ phenomenon. That is not to say that the actually existing forms of state socialism are without features which stem from earlier modes of production: the capitalist, certainly and, as some would emphasise (e.g. Casals, 1980), the feudal. They linger on in hierarchies, political practices and attitudes which would be anachronistic even in contemporary capitalism. However, the primary characteristics are those of collective ownership and monopoly con­ trol of economic and political planning by the dictatorial party-state. What room is there, then, for independent ownership of the means of production in such an apparently unitary system? The answer lies in the official planning system at those points where experience shows that the benefits — political as well as economic — of achieving max­ imum control are outweighed by the costs. The boundary is between that part of the economy which is under compulsory state direction and that which is state-regulated by means of laws, control of 145

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

resources, etc., but subject to market conditions. The boundary changes over time and it is fixed in different countries in different ways but the broad trend in the Soviet Union and throughout Eastern Europe in the initial phases of state socialism was towards increasing socialisation of the productive system. In the last two decades, however, economic reforms in a number of countries have allowed the boundary to shift in favour of the second economy but never so as to give it more than an auxiliary role. Unfortunately, the difficulty of specifying the boundaries in economic terms is matched by the problems involved in defining the social relations which they support. Unofficial, private and illegal activities are not confined to one class or stratum which can be defined as a petite bourgeoisie. Indeed, such a designation is inappropriate in the state socialist countries, where there is no direct class counter­ part to the grande bourgeoisie in capitalism.3 The term should serve only to indicate the analogy with certain strata in Western capitalist countries which are characterised by their relative independence (in terms of ownership and control of the production of goods and ser­ vices) from large-scale business and public sector bureaucracies. For instance, the economic and political ‘uneasiness’ of the strata and their ‘contradictory’ location within the structures of capitalist society is echoed in the experiences of the second economy in Eastern Europpean countries. The relative economic independence of certain groups under state socialism is a product of their position either at the margins or within the interstices of the centrally planned system and covers a wide range of activities. It is not helpful to restrict the discussion to those such as self-employed artisans or shopkeepers who could be said to occupy an intermediate position between the ‘administrative’ and ‘working’ classes in the state socialist mode of production.4 In most state socialist countries those officially ‘working on their own account’ as artisans or craftsmen are relatively few (not usually more than 2 per cent of the economically active population). But the fact is that smallscale, private or independent activities are to be found across the range of classes and strata, existing for the most part in close proximity to the official economic system. The sections which follow examine the nature of these relationships in the agricultural sector and in smallscale production and services.

146

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

AGRICULTURE

Agriculture in every state socialist country is less comprehensively socialised than industry. Even before the end of the 1940s, state enter­ prises accounted for virtually the whole of industrial output in the main Eastern European countries. In some countries, the transitional period lasted into the 1950s, so that, for example, the private sector in East Germany still accounted for 12.3 per cent of total gross out­ put in 1956 (Zauberman, 1964, p. 3). However, the private sector as far as industry was concerned was destined to extinction. As is well known, the socialisation of the agricultural sector was, and still is, far less comprehensive. Although it can be argued that the political as well as economic problems of planning and control have been the main cause of the slow rate of change, this is not the whole story. Even where collectivisation has affected the entire population work­ ing on the land, as in the Soviet Union, there is a substantial amount of private or independent activity outside the formal structure of economic planning. Independent production in the Soviet Union takes place on private household plots. The right of families of kolkhoz (collective farm) members, and workers and office employees in rural regions to these plots is guaranteed by Article XIII of the Constitution and a variety of legislation. The allocation of plots is normally made at general meetings or by order of the collective farm administration. The max­ imum size of a plot is 0.5 hectares and individual living quarters and income-producing structures may be erected. Officially, all work on private plots is performed by members of the household, and all pro­ ducts obtained are ‘for the household’s personal use’. In practice, however, the role of the private plots has never been a purely sub­ sistence one, limited to the reproduction of the agricultural worker’s labour power. The 34 million households who work these plots have also made a substantial contribution to the supply of many agricultural products to the urban population. How substantial can be judged by Table 9.1. The idea that private production is something more than a purely ‘residual’ phenomenon is strongly reinforced by the evidence that the area cultivated has remained virtually the same for the last 20 years and that its relative contribution to the total output continues to be vastly greater than the proportion of cultivated land involved. Although Table 9.1 shows that the share of private output has been falling, its volume has risen and in some forms of output the private sector still provides up to half or more of the total. For example, in 1979, 147

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

Table 9.1: Percentage share of private production in total USSR agricultural production (based on 1973 prices) 1960 1965 1970 1975 1979

35.6 32.5 29.7 28.3 26.5

Source: Nove (1982) based on figures in Shmelev (1981).

60 per cent of potatoes, 42 per cent of fruit and berries, and 40 per cent of pork and poultry-meat came from this sector. The state has taken measures to ensure that it gains directly from the private sector in two ways: by high rates of taxation and by com­ pulsory deliveries to official distributors and markets. The general pattern is revealed in more detail in the case of egg production (Table 9.2). Table 9.2: Egg production in state and private sectors of the Soviet Union, 1 9 4 0 -8 0 Total production (mlrd) 1940 1950 1955 1960 1965 1970 1975 1980

12.2 11.7 18.5 27.4 29.1 40.7 57.5 67.8

Collective and state farm production (mlrd) (as % of total) 0.7 1.3 2.3 5.4 9.5 19.0 34.8 4 6 .2

6 11 13 19 33 47 61 68

Private production (mlrd)

State procurements (mlrd)

11.5 10.4 16.2 22.1 19.6 21.7 22.7 21.6

2.7 1.9 2.9 6.5 10.5 18.1 33.1 43.1

Source: Clarke and Matko (1983) pp. 18 2-3 .

The total production of eggs has more than doubled in the last 20 years while the contribution from the private sector has remained fairly constant. State procurements from household plots increased to more than 43 per cent in 1980 so it would appear that the trend is for private production to become more closely integrated with the official economy. Only recently, however, have there been indications that there is some official interest in regulating the flow of resources to 148

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

as well as from the private sector and giving incentives to higher pro­ ductivity. Before moving on to an assessment of these recent trends, it is relevant to consider the impact of private activities on household budgets. In the Soviet Union, where peasant farms as such do not exist, the income from private activities is invariably supplementary to wages and salaries. The relative proportions are shown in Table 9.3 which gives the average structure of income in the families of collective farm workers. Table 9.3: Structure of income in kolkhoznik's family, 1 9 4 0 -8 0 (percentage)

Total family income, of which: Income from kolkhoz Wages and salaries Pensions, stipendia and other payments and benefits from social consumption funds (including free education, medical care, etc.) Income from private auxiliary activities Income from other sources

1940

1965

1970

1975

1980

100 39.7 5.8

100 39.6 7.4

100 40 .0 8.4

100 43.7 8.1

100 43.9 9.6

4.9

14.6

17.9

21.4

19.5

48.3 1.3

36.5 1.9

31.9 1.8

25.4 1.4

25.3 1.7

Source: Clarke and Matko (1983) p. 52.

There has been a steady increase in the proportion of income in the form of wages, salaries, pensions and benefits and a corresponding decline in income from ‘private auxiliary activities’. However, a quarter of all income is from that source and recent evidence sug­ gests that the rate of decline has slowed down or even levelled off. Agriculture in the second economy of the Soviet Union is, then, a hybrid system in terms of its pattern of land-holding and control of production. It is fully legitimate and legally sanctioned but within strict limits which do not include the granting of financial support, technical assistance, a marketing infrastructure or other services which are necessary for anything more than subsistence activities. There is a fundamental ambivalence towards private production. The state acknowledges the need for it but has so far failed to provide the framework which would incorporate it into the socially-planned pro­ duction of food and livestock. As Feldbrugge points out, although production on private plots is legal, it can only fulfil its function in the wider production system: 149

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

. . . with illegally acquired seed, manure and implements, with the plots being cultivated during official working hours, with the produce being transported using borrowed means of transport and being sold through commercial middlemen, with the active or passive connivance — for a consideration — of various officials along the line. (1984, p. 529) It is hardly surprising, then, to find recent expressions of concern in official quarters about this area of uncertainty in ‘socialist produc­ tion relations’. For example, decrees in 1977 and 1981 were designed to improve the productivity of private plots. And one of the earliest symbols of the Gorbachev era was the official backing for private allotments and gardens through advice and measures to provide gardeners with seeds and garden implements. A series of articles appeared in the Soviet press to promote these developments.5 It is interesting to consider the more elaborated official view which is to be found in journal articles. M.I. Kozyr (1982) states the basic concept of the private household plot (PHP) as follows: The PHP is a specific transitional socialist form of production that is based on the public ownership of land, on the personal owner­ ship of certain means of production by working members of socialist society, and on their personal labour. According to Kozyr, the essential features of PHPs are that they are derived from, dependent on and a development of the social economy of the collective farm or other socialist enterprise. They are not regarded as ‘independent’. The question of how that affects the social relations of production is simply dismissed as irrelevant. Notwithstanding certain similarities to small-scale private produc­ tion (the individual labour process, the primitive character of the means and implements of production, etc.), the PHP, by virtue of its uninterrupted ties with socialist production, is basically dif­ ferent from small-scale private production because it does not generate any new kind of independent class or social group or regenerate the exploitation of one man by another. However, the question of whether access to the production potential of the private plot is sufficient basis for the formation of a distinct social stratum cannot be resolved this easily by reference to ‘uninter­ rupted ties’. It turns on the precise nature of the linkage. The statistical 150

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

trends reviewed above, as well as other evidence, appear to show that this is changing. The official Soviet view cannot countenance a pattern of social rela­ tions which is independent, contradictory or essentially conflictual. The preferred description is a functional one based on the positive contribution which private plots make to the formal, socialised sec­ tors of the economy. Quoting G.I. Shmelev, an agrarian economist, Kozyr argues that the private plot is not independent but the subject and the object of socialist economic management. Its socialist nature is determined by important social functions, specifically by its participation in the reproduction of labour power in the social sector of production, by the intertwining and com­ plementation of reproductive processes on social farms and on PHPs, and by participation in the creation of a state food fund. The broadening and deepening of various direct and indirect, in­ cluding commercial, relations of social farms and PHPs make the socialist character of production relations in the farming of PHPs increasingly graphic. According to this view, it is the context of private ownership which gives it a socialist character and allows for the expression of rela­ tions of ‘comradely cooperation and mutual assistance’ rather than exploitation. It is argued that these relations could be formalised. Shmelev (1981) appeals to the experience of Hungary to urge the substantial expansion of contractual relationships between the farms and the plot-holders and between the plot-holders and cooperative trade organs. Hungary has a highly developed pattern of independent farm­ ing which is closely linked through cooperatives to the official, planned economy. Agricultural producers’ cooperatives play an important part in coordinating production on household plots and in purchasing their output (see Gabor, 1985). Allowing for the fact that these Soviet analyses have both a pro­ paganda purpose (to legitimate what clearly exists and cannot be wished away) and a political-legal aim (to promote greater produc­ tivity and economic integration), they contain an important theme which deserves to be more fully explored; that is the extent to which the private plots are, or will become, the object of state manipulation and intervention. The problem for state socialist economic planning is to ensure that the enhanced output which comes from greater legitimacy and resources being devoted to private plots is channelled into the formal economy through a system of official contracts and 151

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

markets. For the individual farmer, the practical question is whether there is sufficient incentive and reward in such a system to justify the effort and risks of private production. The possibilities of private accumulation are, after all, extremely restricted. In Soviet society, the continuing economic importance of private plots, the independent access which they give to means of produc­ tion, and the priority which they seem to have in the life and work, if not always in the total income of the families involved, gives suffi­ cient grounds for describing private plot-holders as a social stratum within the relations of production of state socialism. Scale alone can be deceptive; where political and economic direction by the state is the norm, independent activities have a special value. The character of the stratum is defined not so much by its ‘contradictory’ location but by the correspondence and interaction between two types of economic activity: one is subject to centralised planning mechanisms and the other is too small, under-mechanised and fragmented to be responsive to these mechanisms. The interaction may be more or less harmonious or conflictual. Whatever the attempts of Soviet officialdom to justify the private sector as ‘socialist’ — and it can, of course, be consistently inter­ preted in this way — the logic is that of private labour for private (or family) reward. Fewer such possibilities exist in the nonagricultural sector but they are not insignificant. In most countries in Eastern Europe they appear to be increasing in scale and import­ ance. The evidence for this has generally been discussed in terms of the nature and significance of the ‘second’, ‘parallel’ or ‘shadow’ economy.

INDEPENDENT ENTERPRISE IN SMALL-SCALE PRODUCTION AND SERVICES In their characterisation of the state socialist societies, Feher et al. observe that there is a ‘very uneasy, but functionally necessary, inter­ action and inter-penetration of three economies which are governed by quite diverse and opposed mechanisms’ (1983, p. 99). They are the first economy or official command system, which predominates and determines the direction and dynamics of economic development; the second economy, constituted by cooperative and private activities on a smaller scale regulated by highly segmented markets; and the third economy, based on informal and often illegal relations of barter, bribery and black markets. 152

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

Although it can be argued that the ‘criminalisation’ of unofficial economic activity has increased as the rigidities of centralised plan­ ning have become harder to overcome in conditions of greater com­ plexity, this may not continue indefinitely if official measures to improve efficiency and combat corruption meet with some success. There is all the more reason, then, for believing that the second, and officially tolerated, economy is where important developments are most likely to occur. Indeed, in Hungary since the reforms of 1968, the second economy has been officially recognised as the sphere in which markets should be allowed to function as an essential concomi­ tant to the plan, and not in opposition to it. Kemeny, referring to this view, acknowledges that there is potential for conflict. He states: The functioning of socialist economies should be understood as being conditioned not primarily by centralised economic planning and then to some extent modified by the market, but rather by both central economic planning and the market working together in con­ cert or in contradiction. (1982, p. 349) Since Hungarian-type reforms are widely taken as a model for the future direction of state socialism, the question of whether it provides a successful solution to problems of linkage between the first and se­ cond economies is of great importance. The second economy includes the private plots in the Soviet Union discussed above but extends to private enterprises and activities in a wide range of other areas. They are most important in services, construction and housebuilding. In some Eastern European countries, independent enterprises may account for half or more of the total out­ put in certain sectors. As might be expected, the types of activity are so varied that it is only possible to give a few examples by way of illustration. According to the two main sources of information on the second economy in the Soviet Union — articles in Soviet newspapers and interviews with recent emigres — much of the private activity depends heavily on the ‘misuse’ or theft of state assets and time. This is hardly surprising when legislation on economic crime forbids individuals to buy or sell for profit or to employ anyone to make goods for sale. While the possibility of ‘individual labour’ is recognised in law (but not considered to be socialist in character) the numbers of cottage industries, peasant farms, etc., is insignificant. It is generally agreed that the most substantial contribution from the private sector comes from the construction teams made up of moonlighters and freelance 153

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

migrant workers (shabashniki). Grossman describes these illegal or semi-legal construction teams as follows: Typically, the teams provide the building materials and equipment obtained by them mostly by illegal means. For climatic reasons, their work is generally limited to three, or even two, summer months. They tend to work long hours and hard. Earnings are high by Soviet standards — say, 2,000 roubles per person per season, or almost the equivalent of a full year’s average wage/salary in the USSR. Performance is reported to be fast and good. The socialist customers are mostly rural — state-owned farms and firms as well as kolkhozes — but not only rural. (1982, pp. 102-3) The other significant inputs apart from private housebuilding are in the areas of repair work, transport and personal services: engineer­ ing design and repair; spare parts, some manufactured illegally; TV repair in urban areas; the use of official vehicles for private purposes; and private tutoring.6 None of these activities, it should be remembered, is included in that complicated nexus of barter, blat (influence) and bribe which oils the wheels of the first economy and which is institutionalised in the person of the tolkach, or expediter. The illegality of these latter activities is played down to the extent that they are essential to the working of the first economy. They do not always involve private financial gain and they are routinely engag­ ed in by managers and officials who are fully identified with the first economy. There is, however, some continuity between the two types of activity because official and private uses of, say, vehicles are not always distinct. The continuity is also recognised in so far as the laws against economic crimes are applied in a way which reflects the relative contribution which these ‘crimes’ make to the official economy. In a survey of second economy activities reported in the Current Digest o f the Soviet Press for 1982 and 1983, Feldbrugge (1984) classifies them into a number of groups according to the seriousness of the offence. Here are some examples of the ‘less serious’ types of activity drawn from a much fuller list which includes economic crimes punishable by death or lengthy imprisonment. Punishable, likely to result in dismissal — Embezzlement, fraud — Running unlicensed school for hairdressers — Illegal allocation and sale of private cars 154

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

— Dealing in second-hand books Criticised in media — Private sale of private car — Renting apartments without registration Tolerated — Workers taking time off for personal business — Sympathetic view of activities of ‘expediter’ (tolkach) — 90 per cent of fuel used by private cars is acquired illegally Treated as ‘normal’ — Private tutoring — Urban population acquiring farming plots in the country Viewed as useful/morally praiseworthy — — — — —

Private fruit and vegetable gardening; also for market Irregular construction brigades (shabashniki) should be legalised Personal auxiliary farms Private and cooperative housing construction Work of private craftsmen (official regulation advocated).

Feldbrugge’s conclusion, which underlines the importance of the linkages between the ‘three economies’, is that second economy activities which are largely unconnected with the official economy encounter little toleration, while activities which support the perform­ ance of the official economy, in what he calls ‘cooperative symbiosis’, are tolerated and even encouraged. Reforms based on this view of integration and cooperation have been more fully implemented in Hungary than anywhere else in Eastern Europe. The New Economic Mechanism (NEM) established in Hungary in 1968 brought about significant changes by allowing market mechanisms to regulate a wide range of economic activity. The NEM had a number of features. First, it gave a large measure of autonomy to state enterprises. Within the broad objectives of the Plan, they have freedom to decide on production targets, purchasing and sales, thus removing some of the rigidities of the planning system. Secondly, the NEM allowed for some decentralisation in industrial investment decisions, so that considerable funds for capital formation are left to the discretion of enterprises. Thirdly, the NEM removed obligatory planning controls on foreign trade, encouraging expansion. And finally, pricing policies were reformed to allow the movement of prices 155

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

in relatively free markets for certain goods to work for the realisa­ tion of planning goals. Despite the considerable success of these reforms, which have made Hungary into a model of state socialist consumerism, not all enterprises have reacted positively to market movements in the years since the reforms. For example, shortages of labour or materials still exist. In recent years, some of the lessons of success in the agricultural sphere have been applied in the industrial and service sectors. For example, state-owned restaurants and small shops may be run by private individuals on a rental basis from the state. One of the most rapid growth areas is the so-called enterprise business work partner­ ships (VGMK) which allow workers to perform contract work for their employer in free time, using factory equipment, for an entrepreneurial fee.7 Skilled workers may obtain a licence to operate officially after hours. The result has been a significant change in the distribution of workers in private production and services. Increas­ ingly, independent activities are being pursued in combination with an occupation in the first economy (Table 9.4). According to Berend and Ranki, about 16 per cent of labour hours in Hungary are realised in the second economy, although there is wide variation between sec­ tors. They estimate that nearly one third of national income and about 40 per cent of personal incomes originate from outside the first economy (1985, p. 249). Table 9.4: Distribution of persons engaged in private service and pro­ duction activities in Hungary

1960 1970 1975 1980

As primary occupation

Mode of activity Together with primary occupation

Together with pension

100 82 69 61

—

—

14 22 28

4 9 11

Source: Gabor (1985), p. 163.

Several new decrees at the end of 1981 opened up the possibility of a variety of new producing organisations in industry, construction and services. They are all relatively small-scale and some relate directly to the second economy, as Hare (1983) describes. 156

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

(i) Small enterprises with not more than 100 workers and employees, not subject to detailed regulation. (ii) Subsidiary companies, founded by small enterprises. (iii) Small cooperatives with between 5 and 100 members. The members are expected to put up initial funds, in effect becom­ ing shareholders, while only the legal minimum wage will be guaranteed. In fact, for bearing greater than normal risks, the members will be free to decide on the disposition of any earnings between personal income and development. (iv) Private artisans, who can hire up to 3 employees and 6 family members. It appears that the reforms will help to legitimise existing second economy activities and create new forms of enterprise to contain them. However, the close dependency of the second economy on the first is unlikely to change. The supply of credit, materials and spare parts to the independent artisan is not guaranteed by the state of the existing markets and this may force the individual entrepreneur either to seek employment in the first economy, keeping a foot in each camp, or to operate outside the approved legal framework, or both. Smith observes that: The most important reason for taking state-sector employment as an adjunct to private-sector employment is the necessity (and finan­ cial advantage) to be obtained from using state-sector materials in the secondary economy . . . State-sector employment may be the best method for finding potential customers. (1983, p. 96) This mutual dependency of the two sectors, rather than the independence of one from the other, is one of the most characteristic features of ‘private’ economic activity under state socialism. Smith illustrates this interdependency by pointing out the contrast between private agriculture in Hungary and Poland: Much of the apparent failure of private agriculture in Poland can be attributed to its inability to obtain basic inputs such as specialised implements, small tractors, and appropriate fertilisers, while these facilities have been directed towards state farms. Preference towards the state sector has adversely affected the performance of the private sector, although this sector itself is vital for the effi­ cient functioning of the Polish economy in total. A similar rela­ tionship of interdependence prevails between the two sectors 157

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

in Hungary where it appears that the private sector is more successful in drawing off resources from the public sector, to the extent that this may even have detracted from the performance of the public sector. (1983, p. 95) In short, while interdependency between the three economies may be characteristic, it is an unstable state which economic and legal reforms will only partly succeed in stabilising. In the literature on the second economy, most attention is given to the role of private agriculture and ‘artisanal’ activities. There is a further category which should not be ignored, namely the private work carried out by professionally qualified individuals including architects, lawyers, teachers, writers and artists. While systematic evidence of the scale of these activities is seriously lacking, the opportunities for supplementary income from state-sector employment with privately-secured income are not inconsiderable, judging from the scale of private tuition, for example. However, it may be that the private economic activities of the intelligentsia divert fewer resources from the socialised sector than those of other strata.

INDEPENDENT ECONOMIC ACTIVITY: AN ASSESSMENT

The conventional definition of the petite bourgeoisie, common to a large body of Marxist as well as non-Marxist writing, is based on a dichotomic model with a class of owners and controllers of the means of production on the one hand and workers on the other. In this scheme, the petite bourgeoisie occupies an intermediary position, sometimes regarded as a class, sometimes a subsidiary stratum. Misztal (1981) has argued from this basis that there is a residual petite bourgeoisie in Poland, forming a very small percentage (perhaps 1 per cent) of the population. While this may be consistent with one definition of the petite bourgeoisie, it does less than justice to the scale and complexity of independent economic activities in contemporary state socialism. It would be better to accept, as starting propositions, that such activities are not restricted to such a small proportion of the population, that they involve a wide range of social groups in different types of production, and that they are closely interrelated with other types of economic activity. These propositions are reminis­ cent of those in some recent discussion of the petite bourgeoisie in Western capitalism (cf. Scase and Goffee, 1982, Chapter 1) and make for some useful cross-referencing of themes. 158

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

The key question in a social, as distinct from a purely quantitative economic assessment, is the precise mix of ownership and control of the means of production in independent enterprise under state socialism. Arrangements differ between countries but the meaning of economic independence lies in possibilities of access to, and con­ trol over, both capital and labour. The limiting cases are: (a) individual workers who are able to dispose of at least some of their labour on their own account but with only the minimum of productive means, whether land, materials, tools or capital; and (b) workers who can work and employ others full-time and have access to capital, resources and markets on a large scale. In all the Eastern European countries the largest proportion of independent activity is closer to type (a) than type (b). Thus the private income (or supplement to income from employment) is typically acquired through the exercise of labour and not from property owner­ ship or capital. The similarities between East and West (where selfemployed are by far the most numerous category of independent entrepreneurs) may therefore be closer than is often assumed. There is one important difference, however, in that products of indepen­ dent economic activity under state socialism are much less likely to find a legal market or outlet. It is this feature which delimits the social character of these activities and not just the questions of ownership and control. The second economy in the state socialist countries is, then, not simply an alternative mechanism for equating supply and demand. If it were, it would resemble more closely the informal or ‘shadow’ sector in capitalist economies. In most situations in the capitalist economy, the secondary sector can obtain its supplies of capital, materials and labour by perfectly legal methods which may even sustain the state and corporate sector. In the centrally planned economies, by contrast, the markets for the second economy (not to mention the third, illegal, sector) tend to be highly fragmented and lack official support and recognition. In which case, there is no reason to suppose that the secondary economy will provide more satisfac­ tory long-term solutions to the problems of supply and demand than central planning can do. One of the most important social conse­ quences of this is to reduce the symbolic importance of independent economic activity which, in Western countries, is said to preserve the images of competitiveness, mobility through effort and other positive, ‘traditional’ values (Bechhofer et al., 1974). Whether the continuing illegitimacy or dubious status of independent economic activities within the state socialist productive system tends to foster 159

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

values of another kind — self-preservation, working the system, cynicism, opposition, etc. — is a moot point. What can be said with some certainty is that those who engage in independent enterprise, and in Hungary according to an official estimate 70 per cent of all wage earners draw some income (in the majority of cases in addition to official wages) from the second economy,8 are too numerous and diffuse to have a common culture or social perspective. They certainly do not have access to the means of communication and association which could make this possible or likely. The nature of the second economy is, in fact, more conducive to social dis-integration than cohesion. Referring to the Hungarian experience, Feher et al. point out that it had an important stabilising function in the post-Stalinist period because it enabled the satisfac­ tion of many consumer needs. The continued relaxation of control over legal and semi-legal independent economic activities has, in time, opened up significant new channels for initiative and enterprise. The effect of this, they claim, is to stimulate the processes of social fragmentation by creating significant differences and conflicts between strata and groups who otherwise seem to occupy the same social position. This is because access to the second economy is highly differential according to specific jobs and circumstances: for example, a TV mechanic will find it easier to achieve a private income than a miner (Feher et al., 1983, p. 100). But to the extent that the second economy is successful in producing and marketing goods which are in short supply in the first economy it may also have a disintegrating effect by undermining the productivity and effectiveness of the first. The prospects for one possible alternative, namely small-scale cooperative enterprise firmly incorporated into the state socialist rela­ tion of production and attracting full official support, as in Hungary, do not appear to be particularly good in other countries, although there are some parallels to the situation in Western capitalist countries where small-scale cooperative enterprise is advocated as an alternative to large-scale corporate business. An assessment of the future direction of economic reform in state socialism needs to take account of the existing crisis tendencies within those countries. The major sources of social and economic crises in the state socialist countries are to be found in the contradictory tendencies within bureaucratic central planning and they have been manifested in three distinct ways. The first came with the end of the phase of rapid industrialisation and accumulation based on the extraction of the maximum possible surplus from the peasantry and working class. The second was a crisis of administration created by 160

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

the inefficiencies of the central planning system in a more mature industrial phase. The economic reforms since 1968 have been an attempt to find a solution to these problems. The third and most recent form of crisis comes from exposure to the competitive pressures of the global economy and their indebtedness to the capitalist countries. Each can be traced to contradictions between the forces and relations of production in the developing state socialist mode of production. The political and economic remedies which have been applied at successive stages have merely set the scene for the next crisis phase. Thus a reading of the phenomenon of independent activity in the state socialist countries must recognise its potential for deepening the already profound contradictions and cleavages between the official planning structures and ideology and the actual reality of economic life. It might be inviting to speculate on a possible cultural and political role for the (semi-)independent social strata but there is no more than a hint of this in notions of the ‘second culture’, ‘parallel polis’ (Havel, 1985, pp. 78-9), and ‘second society’ (Hankiss, 1986) being put forward by some Eastern European writers. Any such idea has yet to be acknowledged by the state and party apparatus. In fact, past experience of crisis and reform within state socialism appears not to hold any promise for the social mobilisation of these strata in such a way as to have a constructive impact on the future pattern of social and economic development.

NOTES 1. See, for example, Poulantzas (1975), Carchedi (1977) and Wright (1978). 2. Yugoslavia, although an interesting case for some of the arguments presented in this chapter, does not fit well with this definition of state socialism and is, therefore, excluded from the analysis. 3. Misztal (1981), writing about Poland, does work with the term petite bourgeoisie, but in doing so he is virtually forced to accept that it refers to a stratum which is becoming more and more marginal. It fails to connect with a wide range of other well-established and emerging phenomena. 4. For clarification of these terms, see Davis and Scase (1985) pp. 90-8. 5. Reported in Guardian, 14 May 1985. 6. Feldbrugge (1984) quotes a statement by V. Rogovin: ‘In five years Soviet families spend 8 billion roubles on private tutoring alone: this is approximately the size of the annual budget for the whole country’s generaleducation secondary schools.’ 7. G. Kovari and G. Sziraczki state that the VGMK has become the dominant form of small-scale undertaking in the Hungarian economy.

161

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

These partnerships (of up to 30 members) have the authority and legal status as semi-autonomous economic units to enter into contracts to produce goods and services during free hours, using factory equipment. The work partnership pays 3 per cent corporation tax on its profits and a fee to the enterprise for using its equipment. Partnership members share among themselves the net profit as personal income which again is taxed. (1985, pp. 282-3) Significantly, they argue that ‘management initiates and promotes the establish­ ment of VGMKs on the one hand but on the other openly tries to cut off these work partnerships from the market, keeping their work capacity exclusively for itself (p. 283). 8. Feher et al. (1983, p. 101) referring to an estimate published in the central organ of the Hungarian Communist Party.

REFERENCES Bechhofer, F. Elliot, B. Rushworth, M. and Bland, R. (1974) ‘The Petite Bourgeoisie in the Class Structure: The Case of the Small Shopkeepers’, in Parkin, F. (ed.) Social Analysis o f Class Structure, Tavistock, London. Bechhofer, F. and Elliot, B. (eds.) (1981) The Petite Bourgeoisie: Comparative Studies o f the Uneasy Stratum, Macmillan, London. Berend, I.T. and Ranki, G. (1985) The Hungarian Economy in the Twen­ tieth Century, Croom Helm, London. Carchedi, G. (1977) The Economic Identification of Social Classes, Routledge and Kegan Paul, London. Casals, F.G. (1980) The Syncretic Society, M.E. Sharpe, Inc., White Plains, New York. Clarke, R.A. and Matko, D.J.I. (1983) Soviet Economic Facts, 1917-81 (Second Edition), Macmillan, London. Davis, H. and Scase, R. (1985) Western Capitalism and State Socialism, Blackwell, Oxford. Feher, F., Heller, A. and Markus, G. (1983) Dictatorship Over Needs, Blackwell, Oxford. Feldbrugge, F.J.M. (1984) ‘Government and Economy in the USSR’, Soviet Studies, XXXVI, 4, pp. 528-43. Gabor, I.R. (1985) ‘The Major Domains of the Second Economy’ in Galasi, P. and Sziraczki, G. (eds.) Labour Market and Second Economy in Hungary, Campus Verlag, Frankfurt/New York. Grossman, G. (1977) ‘The “ Second Economy’’ of the USSR’, Problems o f Communism, XXVI, 5, pp. 25-40. — - (1982) ‘The “ Shadow Economy’’ in the Socialist Sector of the USSR’ in NATO Economics Directorate — Proceedings of Annual Colloquium 1982, The CMEA Five-year Plan (1981-1985) in a New Perspective, NATO, Brussels. Hankiss, E. (1986) Interview reported in Times Higher Education Supple­ ment, 7 March 1986. Hare, P.G., Radice, H.K. and Swain, N. (eds.) (1981) Hungary: a Decade

162

ECONOMIC ACTIVITY UNDER STATE SOCIALISM

o f Economic Reform, George Allen & Unwin, London. Hare, P.G. (1983) ‘The Beginnings of Institutional Reform in Hungary’, Soviet Studies, XXXV, 3, pp. 313-30. Havel, V. et al. (1985) The Power o f the Powerless: Citizens against the State in Central-eastern Europe, Hutchinson, London. Kemeny, I. (1982) ‘The Unregistered Economy in Hungary’, Soviet Studies, XXXIV, 3, pp. 349-66. Kovari, G. and Sziraczki, G. (1985) ‘Old and New Forms of Wage Bargain­ ing on the Shop Floor’ in Galasi, P. and Sziraczki, G. (eds.) Labour Market and Second Economy in Hungary, Campus Verlag, Frankfurt/New York. Kozyr, M.I. (1982) ‘Improving Legal Regulation of the Personal Household Plots of Soviet Citizens’, Soviet Law and Government, XXI, 1, pp. 68-83. Misztal, B. (1981) ‘The Petite Bourgeoisie in Socialist Society’ in Bechhofer, F. and Elliot, B. (eds.) The Petite Bourgeoisie: Comparative Studies of the Uneasy Stratum, Macmillan, London. Nove, A. (1982) ‘Soviet Agriculture: New Data’, Soviet Studies, XXIV, 1, pp. 118-22. Poulantzas, N. (1975) Classes in Contemporary Capitalism, New Left Books, London. Rogovin, V. (1982) Sotsiologischeskie Issledovaniya, No. 1, pp. 7-18. Shmelev, G.I. (1981) in Voprosy ekonomiki, No. 5. Quoted in Nove (1982). Scase, R. and Goffee, R. (1982) The Entrepreneurial Middle Class, Croom Helm, London. Smith, A.H. (1983) The Planned Economies of Eastern Europe, Croom Helm, London. Wright, E.O. (1978) Class, Crisis and the State, New Left Books, London. Zauberman, A. (1964) Industrial Progress in Poland, Czechoslovakia and East Germany 1937-62, Oxford University Press, London.

163

10 The Social Analysis o f Small Business: Some Emerging Themes James Curran and Roger Burrows

INTRODUCTION

The contributors to this book depict a variety of social processes associated with entrepreneurial activity in several European economies. Their accounts show that, despite some similarities, such processes are shaped significantly by different national contexts. The objective of this final chapter is to identify and critically review, by reference to research reported in this book and elsewhere, a number of emergent themes within recent social research on small businesses and entrepreneurship. We hope, in this way, to provide a baseline from which future research agendas might develop. Despite national variations in the incidence of small-scale enterprise1 there are strong indications of a growth in small business activity in most European economies in the 1980s (Granovetter, 1984; Bechhofer and Elliott, 1985; Ganguly and Bannock, 1985). Yet the social analysis of small businesses remains largely under-developed. This is perhaps due to the continuing theoretical influence of the sociological models of Durkheim, Marx and Weber, all of which, in different ways, tend to conceptualise small firms as being typical of the early phases of industrialisation, doomed to be displaced by the increasing concentration, centralisation and rationalisation of capitalist forms of production. Granovetter (1984) has recently argued that these models, by encouraging researchers to concentrate upon the analysis of large capital, have seriously distorted sociological understanding of economic life under monopoly capitalism. Nevertheless, it is now possible to draw out six main themes within the emerging social analysis of small businesses: (i) the sociology of entrepreneurship, (ii) employment relations in the small firm, (iii) gender, ethnicity and small business, (iv) small businesses and alter­ 164

THE SOCIAL ANALYSIS OF SMALL BUSINESS

native economic structures, (v) the articulation of small capital with the wider society and, finally, (vi) class analysis and the small business.

THE SOCIOLOGY OF ENTREPRENEURSHIP

Although the entrepreneur is at the centre of neo-classical microeconomic theories of the firm, the sociological analysis of this role is very limited. This is despite the pioneering work of Weber (1965) on the genesis of the role within early capitalism. Indeed, there appears to be no agreed sociological definition of ‘entrepreneur’. Here it is used to denote the innovatory process involved in the creation of a new economic enterprise based on a new product or service which differs from products or services offered by others in content, or in the way its production is organised, or in its marketing. This con­ ceptualisation thus excludes small business-owners whose enterprise is a replica of an existing business or who inherit or purchase an existing business adding little or nothing novel to its operation. However, the Weberian notion of the entrepreneur as ‘outsider’ has frequently re-emerged in those sociological studies that do exist. For instance, the notion of ‘social marginality has been used to analyse the self-conceptions and actions of those who start traditional small businesses (Stanworth and Curran, 1973). In more recent discussions of different types of small business founders, such as those from ethnic communities (Ward, Chapter 6; Boissevain and Grotenbreg, Chapter 7; Waldinger et al., 1985) and women (Goffee and Scase, Chapter 5) attention has also been given to various structural factors within the wider society — such as racism, sexism and credentialism — which through processes of exclusionary closure (Parkin, 1979), render people ‘outsiders’. Such people, so it is argued, form ‘feeder groups’ from which new entrepreneurs emerge. Of course, most small business-owners are not ‘entrepreneurs’ in the above strict sense but inherit an existing enterprise or purchase an established business or simply replicate an existing, proven form of business. But much of the recent reserch on entrepreneurs in a narrow sense appears to apply to small business-owners more gener­ ally. Many of the factors predisposing people to start a wholly new enterprise appear to have a broadly similar influence on small businessowners more generally. For example, Curran and Stanworth (1983) have suggested that people who become small business-owners by purchasing a ready-made business in the form of a franchise, share 165

THE SOCIAL ANALYSIS OF SMALL BUSINESS

many of the key characteristics and motivations of conventional entrepreneurs. Managerially and organisationally, small business-owners do not generally follow the patterns found in larger enterprises. The centra­ lised unstructured form of the small enterprise is often adopted not simply because of the lack of necessity for more ‘technical’ or ‘bureaucratic’ procedures (Edwards, 1979) but as a reflection of the desires of many owner-managers. Empirical evidence indicates that many have strong psychological inclinations towards notions of autonomy and independence (Klandt, Chapter 3; Mayer, Chapter 4; Boissevain and Grotenbreg, Chapter 7)2 and this is often translated into organisational forms which attempt to ensure their maximisation. This frequently results, therefore, in organisations which differ markedly from those of the conventional large capitalist enterprise. Forward planning is usually limited and the typical ‘spider’s web’ organisational form of the small firm often means little or no delegation of decision-making and over-dependence on the owner (Scase and Goffee, 1980; 1982; Goffee and Scase, 1985b). However, actual knowledge of the everyday decision-making practices of small business owner-managers is very patchy. The bulk of existing research is survey based, often of the ‘one shot’ variety, with little or no attempt to relate the data to actual management behaviour, either short- or long-term. The likelihood of disjunctures between declared views and management practices may well be high, given the contingent nature of many small business activities, subject as they are to unforeseen constraints arising from internal social rela­ tions and, especially, from the external environment (Gill, 1985). There are indications that researchers are becoming increasingly aware of this major deficiency and of the need to adopt longitudinal, ethnographic approaches to these aspects of entrepreneurial behaviour (Curran and Burrows, 1985). The social psychological literature on entrepreneurship is more developed, but has been largely ignored in sociological accounts of the small business. Chell (1985) provides a useful overview on this work, which she sees as being constituted by three broad approaches: psycho-dynamic models, social development models, and trait models.3. The psycho-dynamic model is typified by the much quoted view of Kets de Vries’ (1977), of the entrepreneurial personality as a function of a painful psychological inheritance. Here the creation of a small business becomes a way of coping with inner psychological states. Chell notes that such a model may be applicable to some entrepreneurs, 166

THE SOCIAL ANALYSIS OF SMALL BUSINESS

but is unlikely to be generalisable to all entrepreneurs still less, it might be added, to all small business-owners. Theoretically, this model appears to dismiss entirely the importance of external structural influence on the small business-owner and to be based upon a gross voluntarism. In short, this approach neglects the fundamental point that owner-managers, like all human agents, attempt to make their own history, but not under circumstances of their own choosing. The social development (or situationist) model is exemplified by Gibb and Ritchie (1981; 1982). This tends to give primacy to structural context over social action, and, as such, can be seen as a mirror image of psycho-dynamic models. In this model, entrepreneurship is seen almost exclusively in terms of the situations which individuals encoun­ ter and the social groups to which they relate. Individuals change continuously and it is their interactions with specific social contexts and reference groups which produce distinctive ambitions and behaviour. Given the enormously wide range of influence and inter­ actions and their possible combinations, Gibb and Ritchie (1982, p. 36) suggest that it is impossible to talk of a single entrepreneurial model. Following the approach of previous theorists (Smith, 1967; Stanworth and Curran, 1973; Scase and Goffee, 1980) they develop a typology of entrepreneurs — labelled, in this instance, improvisors, revisionists, superceders and reverters — each indentified as being at the centre of different sets of influences. In short, this model privileges structural influences on entrepreneurship, while psychological dispositions and human agency are all but lost. Trait models are based upon attempts to discover the single traits, or collection of traits, which distinguish the entrepreneur from other individuals’ characteristic forms of economic partici­ pation (Klandt, Chapter 3)4. In practice such attempts have been unconvincing. Among the many problems of such approaches, two are obvious. First, as we have already argued, it is not plausible to argue that economic activity is entirely a function of personality, and, second, even if we accept that personality traits have at least some limited explanatory power, this still begs the question of from where they derive. Chell’s preferred social psychological model is the product of a synthesis of the social development model with the realist psychological theories of Harre (1979). It is an attempt to build a more diachronic perspective which can deal with changes in both individuals and situations. In terms of the individual, the approach stresses ‘appropriate person variables’ that is, a set of attributes which the individual develops over his/her life that regulate or structure how 167

THE SOCIAL ANALYSIS OF SMALL BUSINESS

experiences are managed. Entrepreneurs are assumed to develop a set of ‘appropriate person variables’ specific to running their enter­ prises. The model further assumes that entrepreneurs are constantly on a learning curve, so that the identification of a single entrepreneurial personality is firmly rejected. From Harre, Chell adopts the situation-act model which posits that individuals encounter situations which are ‘rule governed’ and prescribe the ‘acting out’ of appropriate rules. The small business is thus conceptualised as a complex of such situations. Each situation has certain rules embedded within it which demand certain kinds of responses but which, in practice, interact with the ‘appropriate person variables’ possessed by the entrepreneur. But since the overall model is dynamic, it is clear that this repertoire of behaviour is virtually in a dialectical relation to the situations encountered. Chell’s model is more sophisticated than the previous three con­ sidered in that it is implicitly based upon realist and structurationist principles. However, the variable-centred methodological strategies advocated to explore its adequacy do not match the subtlety of the theoretical model itself which, in our view, demands the development of more sophisticated and essentially qualitative methods (Curran and Burrows, 1985).

EMPLOYMENT RELATIONS WITHIN THE SMALL FIRM

Although a substantial proportion of the labour force work in small enterprises, sociologists have devoted a disproportionate amount of research and theorising to employment and employment relations in large firms. Exceptions have included the work of Batstone (1969), Ingham (1970), Rainnie (1983) and MacLennon (1984). Ingham extended the approach of Goldthorpe et al. (1968) to suggest that employees in small firms self-select themselves into this sector of the economy as a result of developing a distinct set of orientations. Whereas large firm workers develop an economistic-instrumental orientation combining a desire for high economic rewards and a relative indifference to intrinsic rewards, others develop a noneconomistic-expressive orientation which combines a relatively low desire for economic rewards with a strong desire for intrinsic rewards. Workers with the latter orientation gravitate to small firms since these provide an environment most able to satisfy this orientation. However, later research has been highly critical of this approach on two grounds. Firstly, little evidence has been found that small 168

THE SOCIAL ANALYSIS OF SMALL BUSINESS

firm employees develop an overall orientation which influences their job seeking (Curran and Stanworth, 1979b). Instead, as for most workers, occupational placement is rather less the result of rational decision-making based upon stable orientations than the result of a host of influences largely beyond the employee’s control (Blackburn and Mann, 1979). Secondly, among the latter influences are those resulting from the operation of labour market forces and employer preferences. Small firm employers generally tend to have a distinc­ tive approach to employee recruitment which contrasts sharply with the more bureaucratic procedures of the large employer, private or public. For instance, small employers appear to be more willing to recruit younger, less well trained, less experienced and, as a result, cheaper employees (Curran and Stanworth, 1979b). Frequently, they are also strongly antipathetic to trade unions and will attempt to ensure that union members are not recruited. Theories of the labour market (Stolzenberg, 1978; Kreckel, 1980; Scott and Rainnie, 1982; Rainnie and Scott, 1986) stress that small firms tend to be part of a secondary labour market. The more highly skilled, experienced and stable employees are likely to be recruited by large firms who are willing to pay for these attributes in money, fringe benefits and internal career opportunities. These relationships form the primary labour market. Small firms, on the other hand, are constrained to seek and accept employees less attractive to large firms not least because they are unable to offer most of the non-monetary benefits offered by large employers. In short, rather than small firm employees being seen as self-selecting, a more accurate interpreta­ tion is to see small firm workers and their employers as tied to each other not through choice but more through the operation of the labour market. Recently, however, the validity of dual labour market theory and economic dualism more generally have been questioned. The neat dichotomisation of large and small firms into primary and secondary labour markets, core and periphery sectors, is now seen as overly 1 simplistic (Wilkinson, 1981; Baron and Bielby, 1984; Granovetter, 1984; Hodson, 1984). There appears to be no clear correspondence between size of economic unit and the labour market or sector of the economy within which it is located. Recession and fundamental economic change, for example, may mean that large firms are unwilling or unable to offer high, stable rewards, security and career mobility. Successful high technology small firms may spearhead economic change and practise what are seen as primary labour market strategies. But, whatever the limitations of these theories, differences 169

THE SOCIAL ANALYSIS OF SMALL BUSINESS

may be expected to exist between small and large firms although their forms require detailed and precise investigation. Manager-worker relations in the small enterprise have traditionally been summed up in terms of the notion of paternalistic capitalism. This sees the enterprise operating as a neo-familial unit, with the employer taking a close, personal interest in employees’ lives in and out of work (Boissevain and Grotenbreg, Chapter 7). Relations are particularistic rather than bureaucratic, wage rates and other rewards are the result of employer judgements on the employee’s individual worth rather than negotiated as an employment contract. Employees themselves are often seen as ‘traditional deferentials’ (Lockwood, 1966) accepting the employer’s position and judgement as part of a desirable and natural social order. Newby (1975; 1977) was among the first to question the implied harmonious view of worker-management relations under paternalistic capitalism. He noted the contradiction between operating a conven­ tional, hierarchical economic enterprise, closely constrained by market forces and the moral, affective relations at the heart of the paternalisticdeferential relationship. The economic order dictates that the over­ riding criteria in the operation of the enterprise will be those of the impersonal market. Small enterprises, much more than their large counterparts, are at the mercy of market influences because they are small and have little control over the environment. Personal relations must always be subordinated to these unpredictable, external in­ fluences over which neither employer nor employee have much control. More recently, Goffee and Scase (1982) have suggested that paternalism is merely one possible small employer strategy. In a study of the building industry where market conditions are highly unstable, they suggest that employers frequently adopt a fraternal strategy in which they abandon overt hierarchical relations with employees and adopt an ‘all workers together’ strategy. This explicitly recognises both the inability of the employer to control the market and employer dependence on the indispensable, skilled tradesman. Employers work alongside their employees, keeping their management tasks to a minimum or carrying them out outside normal working hours. Rela­ tions between employers and employees remain highly particularistic and generate contradictions but are clearly not paternalistic. Newby has also suggested that deferential behaviour on the part of employees might not be so much the result of a strongly held set of beliefs and attitudes but a strategy for survival where employees are highly dependent on their employers. More recent research on 170

THE SOCIAL ANALYSIS OF SMALL BUSINESS

the male small firm employee has found little evidence of either deferential attitudes to employers (Curran and Stanworth, 1979a) or of a wider deferential view of society (Curran, 1981). For example, small firm employees were held to be an important segment among manual workers upon which the Tories could rely for support (Lockwood, 1966; Parkin, 1967) but, again, research on political views and behaviour of male small firm workers has not supported this view (Curran, 1980). The paternalistic capitalism model also apparently ‘explained’ why, in the small firm sector, industrial relations are characterised by a seeming absence of overt industrial conflict, especially in the form of strikes, and why trade unions find it difficult to recruit and retain members. But again recent research has suggested alternative inter­ pretations. Strikes are only one form of industrial conflict and their absence does not necessarily imply harmonious relations between employer and employee (Stephenson et al., 1983). Curran and Stanworth (1979a; 1981) have reported that male small firm workers clearly recognise the possible differences in interest between themselves and their employees and Scott and Rainnie (1982) and Rainnie (1984; 1985b) have reported similarly for female small firm workers. The absence of trade unions in small firms5 might be attributed more to the antipathy of employers and the logistical problems for any trade union attempting to recruit members in widely dispersed small firms with relatively high rates of labour instability, than simply to employee indifference or a dislike of unions. Although recent research on employment in the small enterprise has helped to develop a more sophisticated sociological interpreta­ tion of worker relations under petit capitalism, this is far from complete. Relatively few small firm employment contexts have been examined and almost none outside agriculture, building and manu­ facturing.6 Secondly, as already indicated, sociology lacks a full ethnographic account of worker-employer relations within the small firm environment.

GENDER, ETHNICITY AND SMALL BUSINESS The equation of small-scale enterprise with ‘economic man’ was unchallenged until comparatively recently. Of course, in one way or another, women have always been associated with small-scale enter­ prises: small businesses are often family businesses with women typically providing all kinds of essential support from labour to 171

THE SOCIAL ANALYSIS OF SMALL BUSINESS

administration (Goffee and Scase, Chapter 5; Bamford, Chapter 2; Boissevain and Grotenbreg, Chapter 7) and, occasionally, taking overall charge especially after the death of husbands. But women (as Goffee and Scase discuss in Chapter 5) also start and run their own businesses, particularly in the retailing and service sectors of the economy. Generally, research on female small business-owners has been very limited and this makes systematic comparisons between men and women very difficult. Recent studies in Britain (Goffee and Scase, 1985a; Cromie, 1984) report that age at founding seems broadly similar for males and females but Watkins and Watkins (1984, p. 27) also suggest that there is a bimodal age distribution among women small business-owners reflecting the similarly patterned age distribu­ tion among female participants within the economy in general. Overwhelmingly, female small business-owners are concentrated in the service sector and especially retailing (Goffee and Scase, Chapter 5). This may well be because women find that their experi­ ences and the definitions of others such as bank managers, push them towards this area of the economy. It is also likely that women’s finan­ cial resources are more limited than are those of men entering into business for themselves, and service enterprises typically have lower start-up costs than those in other areas such as manufacturing. As with male small business-owners, the main motivations for women to start up on their own appear to be independence and autonomy. However, for women not only does self-employment offer an escape from the servitude of formal employment, it may also help in attaining domestic independence (Goffee and Scase, Chapter 5). Indeed, it has been suggested that business start-up for women may be an alternative to dependence on men in conventional marital rela­ tions. It might be expected, therefore, that women small businessowners have higher rates of divorce or separation than other female participants in the formal economy. Both Watkins and Watkins (1984, p. 25) and Goffee and Scase (1985a, pp. 53-5) offer data to support these contentions. But more recent research (Curran et al. , 1987) suggests that this may be a function of non-random samples. An inspection of women self-employed and small business-owners in the 1980 General Household Survey suggests that although women small businessowners are more likely to be divorced or separated than their male counterparts, they are less likely to be divorced or separated than female employees. It is the case, however, that women in business for themselves are much more likely to be widowed. Whether this is 172

THE SOCIAL ANALYSIS OF SMALL BUSINESS

because a business was started after the husband’s death or was simply a business carried on after his death is not known. Other gender differences highlighted by recent research show that while men are helped to a considerable extent in their businesses by their spouses, the reverse is generally not true. Further it seems that women are less likely to have previous experience and/or qualifica­ tions relevant to their enterprise; more likely to experience difficulty in obtaining finance; and more likely to find that suppliers, customers and others do not take them seriously (Goffee and Scase, 1985a). In short, while business proprietorship may represent a difficult career change for a man, for a woman it seems even more hazardous. Another form of small business ownership which has received increasing attention in the 1980s is that among ethnic minorities. Some of these have well established patterns of entrepreneurial activity although it is important not to exaggerate. The 1980 General Household Survey, for example, suggests that, depending on the defini­ tion of ‘ethnicity’ employed, the extent of over-representation of ethnic minority group members in self-employment, relative to their propor­ tions in the population as a whole, is slight (Curran et al., 1987). Further, as Ward (Chapter 6) and Boissevain and Grotenbreg (Chapter 7) point out, certain ethnic minorities are actually less likely to go into business for themselves than other members of the ‘native’ population. There are a number of perspectives on ethnic minority participa­ tion in small-scale enterprise. Jenkins (1984), for example, outlines three models. First, the economic opportunity model which suggests that there is no real difference between ethnic minority and other capitalist entrepreneurial activities. Ethnic minority group members simply take advantage of an ethnic niche or other special market in which they have some advantage. Secondly, there is the culture model which assumes some groups have a developed cultural predisposi­ tion towards small business activities. Thirdly, is the model which sees entry into small-scale enterprise as a survival strategy in a racist society which Jenkins (1984, p. 232) terms the reaction model. Waldinger et al. (1985) also offer three models. The first, the cultural model, is broadly similar to that outlined by Jenkins. The second, the ecological model, building upon the Chicago School of sociology of Park and Burgess, suggests that ethnic small business formation is linked to patterns of urban development. The crucial element in this model is the proposition that the formation of ethnic businesses will tend to correlate with changing ethnic residential patterns. The third is the interactive model which suggests that ethnic 173

THE SOCIAL ANALYSIS OF SMALL BUSINESS

businesses will emerge in sectors where there is a homology between the demands of the economic environment and the informal resources of the ethnic population, and is thus broadly similar, if a little more sophisticated than Jenkins’ economic model. Each of these models leads to further issues and each has evidence consistent with its central thesis. Nor are the models mutually exclusive (Boissevain and Grotenbreg, Chapter 7; Ward, Chapter 6). Indeed, it is quite possible to see all of them informing analysis of small ethnic enterprises. Clearly, more needs to be learned about what is specific to the ethnic small business. Boissevain and Grotenbreg address this issue systematically (Chapter 7) in their comparison of Surinamese and Dutch entrepreneurs. Styles of management in the ethnic small business also need to be researched as well as organisational structures. To what extent, for example, do established ethnic enterprises trade successfully without conforming to the dominant bureaucratic organisational form and procedures in the white owned economy? Waldinger et al. (1985, p. 593) suggest that more informed answers to these and other important research questions will come ‘as researchers move beyond the study of individual cases (whether of ethnic groups or particular industries) to comparative analysis’.

SMALL BUSINESS AND ALTERNATIVE ECONOMIC STRUCTURES: FRANCHISES AND COOPERATIVES

One of the most interesting trends of the last decade has been the emergence of alternative forms of small-scale enterprise. Some, such as the franchised small business or the ‘alternative entrepreneurship’7 of the producer cooperative have been around for a long time but have expanded rapidly over recent years (Klandt, Chapter 3). Others, such as networking and the community business, are much more modern and much less common but, again, there are indirect parallels with the past. The franchised small business comes into existence as an inde­ pendent satellite enterprise linked to a host enterprise, the franchisor. The latter, which may be large or small, has devised a business ‘package’ comprising a product or service plus all the necessary accompanying procedures required to present it to the consumer. The franchisee enters into a continuing agreement with the franchisor with the latter supplying advice, marketing and, often, the materials needed to produce the product or service. The franchisee pays some kind of royalty or mark-up on supplies for the advantages of the association 174

THE SOCIAL ANALYSIS OF SMALL BUSINESS

with the franchisor. As Curran and Stanworth (1983) point out, this business form is likely to emerge where economic activities involve divided economies of scale. Where there are advantages in, for example, a national image, large-scale purchases of raw materials or production of basic products, these may not exist at the final point of contact with the consumer. This is especially likely to be the case where customer service is highly personalised. Here dis-economies of scale are likely to exist. The fast food industry frequently displays such split economies of scale but so do many areas of economic activity within advanced economies. Indeed, as these economies move away from their previous emphasis on primary and secondary industry and towards services, more opportunities are likely to emerge for franchised or similar forms of enterprise. Only in this way will it be possible to exploit fully economies of scale at each level within the vertical chain of produc­ tion and distribution from raw materials to final provision for the consumer. Already, franchised small businesses have emerged in a wide range of activities outside the fast food sector — printing, car servicing, beauty care, health products, central heating installation and servicing and driving schools are just some examples. Motivationally, it has been argued that franchisees are not ‘real’ small business-owners because they have opted for a sheltered form of enterprise rather than bearing the full risks of operating a conven­ tional business. On the other hand, the ‘independence’ of the con­ ventional small business may easily be over-stated: many are closely tied to larger firms or operate in such competitive or poor markets that their independence is closely circumscribed. Franchised small businesses can fail like any other business and evidence suggests that, in fact, not only do franchised owners see themselves as enjoying a high degree of independence but franchisors do not normally closely supervise them (Stanworth, et al., 1984). To do so would eliminate the major advantage of having a committed outlet owner willing to use a high level of initiative. Whether, in fact, franchisees are substantially different in the way they run their businesses from other kinds of small enterprise ownermanagers cannot be established from present data. We know little about the day-to-day decision-making of franchised business-owners — who are also to be found in a wide variety of economic activities with varying management demands — or, for that matter, about the everyday business practices of conventional business-owners. Tentatively, however, it might be argued that whatever the specific differences between the two groups, they will also demonstrate 175

THE SOCIAL ANALYSIS OF SMALL BUSINESS

considerable similarities where they operate in similar economic contexts. Of course, there may well be differences between the backgrounds of franchised and conventional small enterprise owners. Hough (1982) found a wide range of similarities between the two groups in terms of age of entry into business and marital status. Education, on the other hand, was much more variable among franchisees. This may be linked to another important difference: unlike conventional small business-owners, franchisees go through a selection process. Estab­ lished franchisors can choose who they take on as franchisees and may have strong preferences for particular kinds of people. Such preferences may lead to differences in the type of people who start conventional as opposed to franchised small businesses. Producer cooperatives, like franchised small businesses, have grown in numbers during the last decade (Klandt, Chapter 3; Johannisson, Chapter 8), and, similarly, the shift towards tertiary and quadrenary activities favours this form of enterprise. Yet, this economic restructuring cannot entirely explain the more than fortyfold increase in producer cooperatives in Britain between 1975 and 1985.8 Cooperative ideologies have been traditionally associated with the left and certainly many of those established in the nineteenth and early twentieth centuries had close links with some form of socialist think­ ing. Cornforth (1983) and Klandt (Chapter 3), however, argue that the recent upsurge is mainly composed of those whose ideological commitments owe more to the alternative thinking of the late 1960s and early 1970s than to conventional left-wing politics; indeed, many of those involved in the new producer cooperatives condemn con­ ventional political ideologies of both the left and right. Starting a cooperative, in other words, is for them almost a form of economic anarchism which rejects conventional means of organising as far as possible. Producer cooperatives are frequently seen as highly unstable — perhaps partly because of the extensive publicity given to the so-called ‘Benn’ cooperatives, set up to rescue failing conventional firms, all of which eventually failed. But these ‘defensive’ cooperatives (Cornforth, 1983) are far from typical. More generally, cooperatives appear to compare very favourably with equivalent small conventional enterprises involved in similar kinds of economic activity. Like most new enterprises, whatever the basis of ownership, they are small and tend to remain small, sharing the same problems of under­ capitalisation and poor management skills. In addition, cooperatives, for both men and women (Goffee and 176

THE SOCIAL ANALYSIS OF SMALL BUSINESS

Scase, Chapter 5), have the problem of maintaining their ideological commitment to democratic decision-making practices. Oh the other hand, high levels of commitment and involvement on the part of members are a valuable resource, often resulting in lower labour costs than a comparable conventional enterprise. Since high profitability may not be an aim — indeed, may be explicitly rejected — this may also allow the cooperative to be more competitive. A network of cooperative development agencies and other sources of external support now provide help and advice to would-be and existing cooperatives and this too contributes to a lowering of risks (Cornforth and Lewis, 1985). Research on day-to-day decision-making in cooperatives is scarce with the exception of analyses of those in crisis (Eccles 1981; Wajcman, 1983). In particular, relatively little is known about ‘top down’ cooperatives where a few founders have to persuade other, often sceptical, members of the superiority of the cooperative over conventional ways or organising economic activities. Another issue is how cooperatives cope with commercial success: like other small businesses, these sometimes achieve better than average levels of prosperity and this can put a further strain on cooperative principles as some members are tempted to shift to more conventional organisa­ tional forms (Goffee and Scase, Chapter 5).

THE ARTICULATION OF SMALL CAPITAL WITH THE WIDER SOCIETY

As we have already argued, one reason for the neglect of petit capitalism by sociologists has been the widespread assumption within dominant perspectives that the small enterprise was a remnant of early stages of industrialisation, increasingly confined to peripheral areas of economic activity. Under monopoly capitalism, it was assumed its role would diminish still further and certainly have little part to play in any sociological interpretation of advanced industrial societies. This view has come under increasing challenge on a number of grounds and it is gradually being recognised that, far from simply occupying a marginal role in monopoly capitalism, small enterprises play an integral part in its reproduction (Bamford, Chapter 2; Berger and Piore, 1980; Weiss, 1984; Bechhofer and Elliott, 1985). Both short-term and long-term influences are important in analysing the role of petit capitalism in the re-structuring and reproduction of capitalist industrial societies. For instance, as Bannock (1981; 1985) 177

THE SOCIAL ANALYSIS OF SMALL BUSINESS

and others have pointed out, the recent revival in small-scale economic activities may well be related to the current economic recession since a similar upsurge occurred in the major recession of the 1930s. In recession large firms withdraw from marginal markets and release labour and other resources creating opportunities for small business. However, it may be argued that it is the long-term influences which are of greater importance in spelling out the role of small-scale capitalism in the future of Western industrial societies. A conventional way of conceptualising small-scale economic activities is to see them as inextricably linked with traditional or under­ developed forms of technology. In reality, however, the small enter­ prise has no necessary relation with any stage of the development of technology. For instance, some relatively recent technological developments in plastics and electronics have offered opportunities for small-scale economic activities which would have been impossible using ‘traditional’ technology because the latter only permitted economically viable production under conditions of large-scale opera­ tion.9 Similarly, the emergence of new technology frequently opens up opportunities for small-scale economic activities as the recent history of ‘information technology’ demonstrates (Klandt, Chapter 3). The growth of large, monopolistic enterprises in certain areas of the economy is increasingly linked to conditions where mixed economies of scale emerge so that full vertical integration becomes difficult to sustain. As already noted, this has typically occurred where initial production is most economically carried out in large units but distribution is more economically effective when carried out through smaller units. An early example of these processes was the produc­ tion and selling of cars when manufacturers split off distribution because of difficulties in the long-distance monitoring of complex customer relations in local markets (Marx, 1980). Franchising, as also noted above, represents the extension of these processes where the contradictions between centralised production and control, on the one hand, and localised personal distribution, on the other hand, have grown acute. There are also other examples of ways in which large- and smallscale enterprises may interpenetrate under monopoly capitalism. Rothwell (1984), for example, in his detailed examination of the semi­ conductor and computer-aided design industries, showed how there are dynamic complementarities between large and small firms in an industry or product life-cycle. At different stages in the latter, small and large firms may play a key role with the large firms bankrolling or otherwise encouraging small firms to contribute crucially to specific 178

THE SOCIAL ANALYSIS OF SMALL BUSINESS

stages in the technological development and market penetration processes. Similarly, Rainnie (1984) in an examination of the textiles industry in Britain, suggests that the emergence of large retailers, such as Marks and Spencer, who face high levels of competition and market uncer­ tainty because of difficulties in predicting fashion trends, sustains a large number of independent small firms. The latter spread the risks and allow quicker responses to market changes than would be the case if large firms attempted total vertical integration. This suggests that dependent small firms are necessary to the continuation of large-scale enterprise in retailing in this sector and, indeed, that dependency runs both ways in the small-large relationship. The continuation of the lowtechnology small firm in textiles, in other words, is part and parcel of the development of large-scale enterprises at the forefront of retailing. More generally, Miller (1975) and Davis (1984) have argued that uneven development in advanced capitalist industrial societies produces opportunities for small-scale economic activities which results in a ‘split-level economy’. This is not simply a consequence of the lag in the advance of certain areas of the economy but the result of the way the dominant sectors are developing. Small-scale economic activities are, as Bamford shows (Chapter 2) for Italy, not residual but sustained and enhanced by these processes of development. For instance, one way in which large employers are bringing pressure on organised labour in the 1980s is by reducing the average size of establishment either through setting up branches or by sub-contracting to independent small producers (Murray, 1983; Rainnie, 1984; 1985a). This practice is, of course, long established in Japan. It is also possible to suggest that the relations between monopoly capitalism and the state in advanced capitalist societies has implica­ tions for the role of the small enterprise (Johannisson, Chapter 8). For example, it has been argued that the ability of monopoly enter­ prise to shift the burden of taxation onto other sectors of society contributes substantially to ‘the fiscal crisis of the state’ and pushes those on whom taxation becomes an increasing burden into self-employment. The shifting of production by many large-scale enterprises to ‘developing’ countries as a way of lowering labour costs and taxes, also helps explain increasing state encouragement for the small enter­ prise in several industrial societies. Small enterprises are seen as a major way of creating new employment and hence are promoted by a variety of interventionist strategies aimed at increasing their number 179

THE SOCIAL ANALYSIS OF SMALL BUSINESS

and the numbers they employ. At the more ideological level, as has been pointed out (Bechhofer and Elliot, 1981; Rainnie, 1985a; Mayer, Chapter 4), albeit from different perspectives, the small firm has been taken up as the articulating principle of the right-wing reaction to the economic crisis; the remoralisation and recapitalisation of capitalism as mediated through the discourse of monetarism in particular and of the ‘new right’ in general. This discourse has received an initial analysis by Ritchie (1984) but, as we shall discuss in the next section, more work is required to fully understand the articulation of ‘small business revivalism’ by various political initiatives.

SMALL BUSINESS-OWNERS AND CLASS ANALYSIS

Sociologists have often neglected the small business-owning class (Newby, 1982, pp. 37-8). When discussed at all, there has been a strong, albeit implicit, tendency to see them as some form of residual stratum from an earlier age of industrialisation. Yet, numbers alone belie this view. A recent estimate, for example, suggests there are 2.6 million self-employed people in Britain — a sharp increase over previously recorded levels (Creigh et al., 1986, p. 183).10 If spouses and offspring are added, as is usual within contemporary class analysis, it would not be unreasonable to claim that the petite bourgeoisie in Britain comprise over 4 million adults and children. Other capitalist industrial societies contain proportionately larger petite bourgeoisie classes as Ahrne and Wright (1983, p. 216) demonstrate for societies as otherwise dissimilar as Sweden and the United States. Bechhofer and Elliott (1985, pp. 197-201) in a recent review of sociological thinking on the petite bourgeoisie in industrial societies generally, conclude that it not only remains a significant class economically, politically and socially, but shows widespread indi­ cations of a revival in its fortunes. In the current recession and economic restructuring occurring in advanced industrial societies, the petite bourgeoisie are increasingly seen by governments as sources of new jobs and as playing an important role in economic change and innovation. In political terms, besides a potential for independent action, the class also provides potent symbols for the revalidation of capitalist values. Socially, it provides the bulk of the population with many of the most durable conceptions of property and the social rela­ tions within which they are embedded since so many peoples’ mundane dealings are with the owners of small rather than large capital (Elliott and McCrone, 1982, pp. 111-12). 180

THE SOCIAL ANALYSIS OF SMALL BUSINESS

The few attempts to develop an adequate class analysis of the owners of small capital have been well reviewed by Scase (1982) and Scase and Goffee (1982, pp. 9-31). They suggest that three broad concep­ tual strategies can be identified. The first is associated with the work of Bechhofer and his colleagues, and tends to view the owners of small capital as, in some sense, detached from the ‘main’ classes of contem­ porary capitalism.11 However, at the ideological level the class — or stratum as Bechhofer and Elliott (1981, p. 183) prefer — not only plays the crucial role in the formation of conceptions of property and pro­ perty relations noted above but also provides an image of competitive capitalism, individualism and opportunity behind which the real in­ terests of monopoly capital can hide. The second approach views the owners of small capital as a class currently being regenerated by various mechanisms embedded within an emerging post-industrial society.12 The third, and most developed approach, derives from Marxism and will be considered in detail below. Scase and Goffee (1982, pp. 185-97) themselves also attempt a conceptualisation towards the end of their major study, but appear to offer little more than a conventional func­ tionalist account of the reproduction of the class. Rather than examine these various approaches in detail, which has recently been done elsewhere (Bechhofer and Elliott, 1985, pp. 183-8) we shall discuss the two most crucial problems that we believe currently undermine the development of class analysis in general and the class analysis of the owners of small capital in particular; the notion of ‘contradic­ tion’ and the problems of reductionism. It has been argued in a seminal paper by Holmwood and Stewart (1983) that class analysis in both its neo-Marxian and neo-Weberian variants is in a state of ‘explanatory crisis’ which turns on the use of notions of ‘contradiction’ or ‘contradictory experience’ employed to deal with some increasingly obvious shortcomings. For example, Marxist theorists talk in terms of ‘contradictory class locations’ (Carchedi, 1977; Wright, 1978) whose occupants are analytically a ‘bundle’ of the functions of both capital and labour. Similarly, neoWeberian approaches use notions of ‘status ambiguity’ or ‘status discrepancy’ to account theoretically for the empirically observed disjuncture between economic class positions and status perceptions. What these approaches have in common is an inability to produce a fully integrated theory of stratification which adequately deals with complex reality without resort to ad hoc concepts which, upon close examination, can be shown to be separate from, and in some cases essentially inconsistent with, the basic theory. Although Holmwood and Stewart devote considerable attention to 181

THE SOCIAL ANALYSIS OF SMALL BUSINESS

this problem as it is mediated through the analysis of the ‘new middle class’, it is recent discussions of the class location of the owners of small capital which provide much clearer examples of an analysis which is rendered irretrievably ‘contradictory’ by current theoretical approaches to stratification. Indeed, the fact that the petite bourgeoisie are so often analysed as an afterthought, following an analysis of the ‘main’ classes in modem society, is itself a major reason why ad hoc concepts abound. This general problem can be best illustrated by considering its most acute manifestation, the class analysis of small employers and the self-employed offered by the American Marxist Erik Olin Wright (1978).13 As Holmwood and Stewart argue, the problematic status of the notion of contradiction arises in Marxist theory because it attempts to explain social development in terms of an antagonistic and contra­ dictory relation between two social classes. But, because social reality no longer conforms with this model (if indeed it ever did) Marxism has to import essentially ad hoc additions to its theories which operate in an unsynthesised way with the original theory and which only come into operation when the original theory fails. Thus, although Marxism may refer to contradictions as if they had a materiality, most of the usage made of this concept implicitly refers to a contradiction between Marxist theory and empirical observation. For Wright the basic contradiction between labour and capital within a capitalist mode of production can be ‘decoded’ into three relations of control: control over surplus value (investments and resource allocation); control over constant capital (machinery and the physical means of production in general) and control over variable capital (the labour process of others) (Wright, 1978, p. 73). The bourgeoisie has control over all three aspects, while the proletariat is excluded from all three. These two classes are thus, in some sense, considered to be ‘unambiguous’. Within this general scheme the petite bourgeoisie are defined as having control over both surplus value and constant capital, but not over the labour power of others, while small employers are differentiated from the bourgeoisie proper by virtue of the fact that they only have minimal control over the work of others and also contribute labour themselves. Within this conceptualisation the petite bourgeoisie are also con­ sidered to be an ‘unambiguous’ class because they are thought to be located within a subordinate commodity mode of production which Wright argues is articulated with the dominant capitalist mode within concrete capitalist social formations. The small employer class, on the other hand, is considered to be ‘contradictory’ in a double sense; 182

THE SOCIAL ANALYSIS OF SMALL BUSINESS

firstly because its members fulfil aspects of the functions of both capital and labour, and secondly, because its location is thought to be situated between the capitalist and the simple commodity modes of produc­ tion. But, as Holmwood and Stewart (1983, p. 239) point out, such locations are not contradictory in any real sense, rather they argue that such locations are considered to be contradictory because of their problematic relationship to the ‘basic’ contradiction between capital and labour. In short, the notion of a ‘contradictory class location’ attempts to explain away the empirical observation that class polar­ isation is incomplete. It can also be argued that the ‘unambiguous’ class location of the petite bourgeoisie can only be accepted to the extent that one concedes that a concrete capitalist social formation can be accounted for by a capitalist mode of production articulated with a simple commodity mode of production. Such an approach tends to reinforce the view of the petite bourgeoisie as a ‘survivor’ from some ‘outdated’ organ­ isation of production. But, more importantly, it again illustrates the inherent ‘contradictions’ of such a theoretical approach in that empirical observations (for example, the continued reproduction of the petite bourgeoisie under monopoly capitalism) cannot be ‘explained’ by original Marxian concepts (for example, the capitalist mode of production) without the essentially ad hoc addition of other principles to make up for its deficiencies (for example, its articulation with a simple commodity mode of production). An adequate theoretical treatment of the owners of small capital within the class structure requires the development of schemes that do not attempt to squeeze empirical observations into theoretical contradictions in an attempt to remain true to some sacred texts. Class-reductionism is a further general problem within class analysis, but which is again at its most acute in the analysis of the owners of small capital. Laclau (1977, pp. 92-100) argues that a theory is class-reductionist when it is governed by three implicit principles. First, that all subjects are, in the last instance, class subjects; secondly, that all classes have their own paradigmatic ideologies or, more crudely ‘interests’; and thirdly, that all ideological ‘elements’ have a necessary class belonging. In such models politics and ideology are treated as more or less complex determinations of the location of subjects within the relations of production. Thus, the owners of small capital in class-reductionist formulations are thought to possess an ideology and a political practice that are reducible to their class location. The ‘world view’ of the owners of small capital is thus ‘explained’ in terms of their class position. This ‘world-view’ 183

THE SOCIAL ANALYSIS OF SMALL BUSINESS

is usually characterised as consisting of notions of autonomy and independence in combination with a dislike of collectivities of all kinds from the state to monopoly capital, trade unions and most political parties. In short, these notions add up to what are usually seen as the core ideological elements of laissez-faire capitalism. Reductionist formulations are widespread within both Marxist and non-Marxist accounts of the owners of small capital, but, as Scase and Goffee (1981) and Lee (1985) have shown empirically, in Britain at least, this characterisation may not be widely generalisable. Class-reductionist models imply that subjects are constituted as class subjects (proletarians, petite bourgeoisie, bourgeoisie, etc.) in the economic base of society, and are then somehow ‘transported’ to the political and ideological superstructures of society in the same form. This leads to three major problems which will have to be overcome if a more adequate class analysis of the owners of small capital is to be developed. First, such models do not provide an account of how a structural location in the social relations of production is ‘translated’ into a set of values, beliefs and meanings. Secondly, such models allow no theoretical way of explaining the empirical existence of those members of the petite bourgeoisie who hold a ‘world-view’ or ideology that is at odds with their economic location — for example, small business-owners who are socialists, except to fall back onto the equally problematic notion of ‘false consciousness’. Thirdly, and crucially, such models do not allow a full understanding of the process by which the dominant political discourse is able to articulate elements of what would normally be considered petite bourgeoisie ideology into its own hegemonic project, unless we rather absurdly conclude that all those involved in such an undertaking must themselves be members of the petite bourgeoisie. The theoretical work required to overcome these problems is complex.14 But the most important aspect of any solution is the recognition that we must abandon notions of ‘fixed’ class ideologies. Rather, different groups in society, such as those within the petite bourgeoisie, can articulate a range of ideological elements from a myriad of sources at different times in order to make sense of their world and to maintain or improve their position within it. Thus, as Bechhofer and Elliott (1976, p. 79; 1985, p. 198) point out, in the nineteenth century some elements of the petite bourgeoisie utilised a ‘radical’ political discourse aimed at changing the traditional pattern of British politics. At other times, Tory discourse itself has had no use for 'petite bourgeoisie ideology’, and has instead articulated more corporatist elements (Bonnett, 1982). Thus, we are suggesting that 184

THE SOCIAL ANALYSIS OF SMALL BUSINESS

future conceptualisations of the petite bourgeoisie as a class should be careful not to fall into the reductionist trap, which often leads to theoretical and empirical problems when the political and ideological practices of the class are analysed and also to the misrecognition of the true sources of political discourse and the interests that it attempts to serve.

CONCLUDING REMARKS

An overview of sociological contributions to the understanding of small-scale enterprise suggests that, despite recent research efforts, an integrated account of the reproduction of small businesses in advanced industrial societies has yet to emerge. Clearly, as this volume illustrates, elements of such an account are developing but more needs to be done to reinstate this under-recognised segment of economic, political and social life to its proper position within social analysis. Besides theoretical inadequacies, there are also shortcomings at the research level. Under-studied or dealt with in piecemeal fashion, the petite bourgeoisie and others closely involved in the functioning of small-scale enterprises deserve much more systematic attention to provide the bases for more adequate theoretical accounts. What is required is a dual agenda of more variable-centred primary and secon­ dary analyses to provide a fuller coverage of the exceptionally wide range of small-scale economic activities coupled with much greater emphasis on ethnographic research. The latter is specially lacking and yet particularly important, as several contributions to this volume illustrate, in gaining a proper understanding of the complexities of the petite capitalist sector. If, as the research reviewed in this chapter has shown, small-scale enterprise, in its wide variety of expressions, is central to the workings of advanced capitalism, then the task of reinstating it, both theoretically and in research terms, to a more significant position in sociological discourse must begin as soon as possible.

NOTES (Parts of this chapter are updated and extended versions of discussions which originally appeared in Curran and Burrows (1986). A fuller treatment of many of the issues covered here can also be found in Curran (1986).)

185

THE SOCIAL ANALYSIS OF SMALL BUSINESS

1. The definition of what constitutes a ‘small’ enterprise has never been satisfactorily settled. For discussion of this complex issue and the poor quality of the available data set: The Bolton Report (1971, Chapter 1), Binks and Coyne (1983, pp. 17-30) and Curran (1986). Estimating the number and significance of other forms of small enterprise such as cooperatives and especially those situated in the ‘black economy’, is even more difficult but see, for example, Cornforth (1983) and O’Higgins (1980). 2. This often declared desire by the owners of small capital for autonomy and independence provides something of a paradox. Because although they might be ‘free’ from the formal management structures which exercise domina­ tion over wage labour, they are often controlled in an even more restricted, albeit indirect, sense by banks, large buyers and suppliers and the state. 3. For a more detailed and critical discussion of this paper than is possible here see Curran and Burrows (1985). 4. Brockhaus (1982) provides a comprehensive review of trait approaches to the entrepreneur. Among recent examples are Smith and Miner (1983) and Gill (1985). 5. Although it is generally true that small firms and small firm industries have low levels of unionisation, there have been notable exceptions, as the printing and boot and shoe industries demonstrate. 6. Yet, as Creigh et al. (1986, p. 186) demonstrate, agriculture con­ stitutes only 11.9 per cent of small businesses, construction 12.8 per cent and manufacturing 7.1 per cent. While the relatively unexplored areas of dis­ tribution, hotels, catering, repairs and other services constitute over 52 per cent. 7. The juxtaposition of ‘cooperative’ and ‘entrepreneurship’ may, at first sight, seem rather odd but in terms of the conceptualisation of ‘entrepreneur’ offered earlier, there need be no necessary link with either capitalist economic forms or the actions of a single person. 8. Cornforth (1983, p. 163) reported that there were about 35 co­ operatives in Britain in 1975. Meade-King (1986) suggested that by 1985 this total had risen to 1,400 with 12,000 people involved. 9. For example, modem plastics can be used to mass produce complex forms only previously possible, if at all, by using expensive steel fabricating plant. Or again, in printing much of the most recent electronic developments are easier to exploit on a small- rather than large-scale in terms of the invest­ ment risks involved. 10. Not all of those classified as ‘self-employed’ would conventionally be seen as petit capitalists. For instance, some will be professional workers such as architects while others may be contract workers, registered as selfemployed for the tax advantages to be gained. But, equally, many petit capitalists such as those operating in the ‘black economy’ will escape official statistics. The problematics of the concept of self-employment are carefully examined in Dale (1986). 11. See, for example, Bechhofer and Elliott (1986; 1976; 1981) and Bechhofer et al. (1974). Note though should be made of their more recent statement that ‘it is the adaptability of the stratum and its role as the dependent but integral part of modem economies that most impresses us’ (Bechhofer and Elliott, 1985, p. 192). 12. Such mechanisms are taken to include technological developments, 186

THE SOCIAL ANALYSIS OF SMALL BUSINESS

the growth of ‘informal’ economic activity and other factors such as the desire to avoid the burden of taxation, the growth of the service sector, the decen­ tralisation of capital, the impact of immigration, etc. See Scase and Goffee (1982, pp. 13-15), Boissevain (1984) and Bechhofer and Elliott (1985, pp. 187-8) for further discussions. 13. Note should be made of Wright’s recent attempt to answer some of the criticisms of his work (Wright, 1985, pp. 19-63), and also his largely unconvincing reconceptualisation (Wright, 1985, pp. 64-135) based upon John Roemer’s analytic Marxism (Roemer, 1982). Despite our criticisms of aspects of his work it should be noted that Wright reaches a level of clarity and insight rare within this area of social inquiry. 14. See, for example, Laclau and Mouffe (1985) and the overly critical response of Meiksins-Wood (1986).

REFERENCES Ahme, G. and Wright, E.O. (1983) ‘Classes in the United States and Sweden: A Comparison’, Acta Sociologica, 26 3/4, pp. 211-35. Bannock, G. (1981) The Economics of Small Firms: Return from the Wilderness, Basil Blackwell, Oxford. (1985) ‘New Business Formation, Unemployment and the Role of Small Business in Economic Growth’. Paper presented to 30th Annual World Conference o f the International Councilfor Small Business, Montreal, June. Baron, J. and Bielby, W. (1984) ‘The Organization of Work in a Segmented Economy’, American Sociological Review, Vol. 49, August, 454-73. Batstone, E.V. (1969) Aspects o f Stratification in a Community Context: A Study o f Class Attitudes and the ‘Size Effect \ unpublished PhD thesis, University of Wales. Bechhofer, F, and Elliott, B. (1968) ‘An Approach to a Study of Small Shopkeepers and the Class Structure’, European Journal o f Sociology, IX, pp. 180-202. (1976) ‘Persistence and Change: the Petit Bourgeois in Industrial Society’, European Journal o f Sociology, XVII, pp. 74-99. (1981) ‘Petty Property: the Survival of a Moral Economy’, in Bechhofer, F. and Elliott, B. (eds.) The Petite Bourgeoisie: Comparative Studies o f the Uneasy Stratum, Macmillan, London. (1985) ‘The Petite Bourgeoisie in Late Capitalism’, Annual Review o f Sociology,, pp. 181-207. Berger, S. and Piore, M. (1980) Dualism and Discontinuity in Industrial Societies, Cambridge University Press, Cambridge. Binks, M. and Coyne, J. (1983) The Birth o f Enterprise, Hobart Paper 98, IEA, London. Blackburn, R. and Mann, M. (1979) The Working Class in the Labour Market, Macmillan, London. Boissevain, J. (1984) ‘Small Entrepreneurs in Contemporary Europe’ in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge. Bolton Report, The (1971) Small Firms, Report o f the Committee o f Inquiry 187

THE SOCIAL ANALYSIS OF SMALL BUSINESS

on Small Firms, HMSO, London. Bonnet, K. (1982) ‘Classes, Class Fractions and Monetarism’, in Robbins D. et al. (eds.) Rethinking Social Inequality, Gower, Aldershot. Brockhaus, R.H. (1982) ‘The Psychology of the Entrepreneur’ in Kent, C.A. etal. (eds.) Encyclopedia o f Entrepreneurship, Prentice-Hall, Englewood Cliffs. Carchedi, G. (1977) On the Economic Identification o f Social Classes, Routledge and Kegan Paul, London. Carter, R. (1985) Capitalism, Class Conflict and the New Middle Class, Routlege and Kegan Paul, London. Chell, E. (1985) ‘The Entrepreneurial Personality: A Few Ghosts Laid to Rest’, International Small Business Journal, Vol. 3, No. 3, pp. 43-54. Cornforth, C. (1983) ‘Some Factors Affecting the Success or Failure of Worker Co-operatives: a Review of Empirical Research in the U.K.’, Economic and Industrial Democracy, Vol. 4, No. 2, pp. 163-88. Cornforth, C. and Lewis, J. (1985) The Role and Impact o f Local Co-operative Support Organisations, Monograph No. 7, Co-operative Research Unit, The Open University, Milton Keynes. Creigh, S. etal. (1986) ‘Self-Employment in Britain, Results from the Labour Free Surveys 1981-1984’, Employment Gazette, Vol. 95, No. 6, pp. 183-94. Cromie, S. (1984) ‘Motivations of Aspiring Male and Female Entrepreneurs’. Paper presented to the Small Business Policy and Research Conference, Trent Polytechnic, September. Curran, J. (1980) ‘The Political World of the Small Firm Worker’, Sociological Review, Vol. 28, No. 1, pp. 75-103. (1981) ‘Class Imagery, Work Environment and Community: Some Fur­ ther Findings and a Brief Comment’, British Journal o f Sociology, Vol. XXXII, No. 1, pp. 111-26. (1986) Bolton Fifteen Years On: A Review and Analysis o f Small Business Research in Britain, 1971-1986, Small Business Research Trust, London. Curran, J. and Burrows, R. (1985) ‘Ethnographic Approaches to the Study of the Small Business Owner’. Paper presented to the Eighth United Kingdom Small Firms Policy and Research Conference, University of Ulster, November. (1986) ‘The Sociology of Petit Capitalism: A Trend Report’, Sociology, Vol. 20, No. 2, pp. 265-79. Curran, J. and Stanworth, J. (1979a) ‘Worker Involvement and Social Relations in the Small Firm’, Sociological Review, Vol. 27, No. 2, pp. 317-42. (1979b) ‘Self Selection and the Small Firm Worker — a Critique and an Alternative View’, Sociology, Vol. 13, No. 3, pp. 427-44. (1981) ‘Size of Workplace and Attitudes to Industrial Relations in the Printing and Electronics Industries’, British Journal o f Industrial Rela­ tions, Vol. XIX, No. 1, pp. 14-25. (1983) ‘Franchising in the Modem Economy — Towards a Theoretical Understanding’, International Small Business Journal, Vol. 2, No. 1, pp. 8-26. Curran, J. et al. (eds.) (1986) The Survival o f the Small Firm, Vols. I and II, Gower, Aldershot. 188

THE SOCIAL ANALYSIS OF SMALL BUSINESS

(1987) Small Business Owners and the Self-Employed in Britain: An Analysis o f General Household Survey Data, Small Business Research Trust, London. Dale, A. (1986) ‘Social Class and the Self-Employed’, Sociology, Vol. 20, No. 3, pp. 430-4. Davis, M. (1984) ‘The Political Economy of Late-Imperial America’, New Left Review, 143, pp. 6-38. Eccles, T. (1981) Under New Management, Pan Books, London. Edwards, R. (1979) Contested Terrain: The Transformation o f the Workplace In the Twentieth Century, Heinemann, London. Elliott, B. and McCrone, D. (1982) ‘The Social World of Petty Property’ in Hollowell, P. (ed.) Property and Social Relations, Heinemann, London. Ganguly, P. and Bannock, G. (1985) U.K. Small Business Statistics and Inter­ national Comparison, Harper and Row, London. Gibb, A. and Ritchie, J. (1981) ‘Influences on Entrepreneurship: A Study Over Time’. Paper presented to the National Small Firms Policy and Research Conference, Polytechnic of Central London, September. (1982) ‘Understanding the Process of Starting Small Businesses’, Euro­ pean Small Business Journal, Vol. 1, No. 1, pp. 26-45. Gill, J. (1985) Factors Affecting the Survival and Growth of the Smaller Company, Gower, Aldershot. Goffee, R. and Scase, R. (1982) ‘ “ Fratemalism” and “ Paternalism” as Employer Strategies in Small Firms’, in Day, G. et al. (eds.) Diversity and Decomposition in the Labour Market, Gower, Aldershot. (1985a) Women in Charge, the Experience o f Female Entrepreneurs, Allen and Unwin, London. (1985b) ‘Proprietorial Control in Family Firms: Some Functions of “ Quasi-organic” Management Systems’, Journal of Management Systems, Vol. 22, No. 1, pp. 53-68. Goldthorpe, J. et al. (1968) The Affluent Worker: Industrial Attitudes and Behaviour, Cambridge University Press, Cambridge. Granovetter, M. (1984) ‘Small is Bountiful: Labor Markets and Establish­ ment Size’, American Scoiological Review, Vol. 49, June, pp. 323-34. Harre, R. (1979) Social Being, Basil Blackwell, Oxford. Hodson, R. (1984) ‘Companies, Industries and the Measurement of Economic Segmentation’, American Sociological Review, Vol. 49, June, pp. 335-48. Holmwood, J. and Stewart, A. (1983) ‘The Role of Contradictions in Modem Theories of Social Stratification’, Sociology, Vol. 17, No. 2, pp. 234-54. Hough, J. (1982) ‘Franchising — An Avenue for Entry into Small Business’ in Stanworth, J. et al. (eds.) Perspectives on a Decade o f Small Business Research, Bolton, Ten Years On, Gower, Aldershot. Ingham, G. (1970) Size o f Industrial Organisation and Worker Behaviour, Cambridge University Press, Cambridge. Jenkins, R. (1984) ‘Ethnic Minorities in Business: A Research Agenda’ in Ward, R. and Jenkins, R. (eds.) Ethnic Communities in Business, Strategies for Economic Survival, Cambridge University Press, Cambridge. Kets de Vries, M.F.R. (1977) ‘The Entrepreneurial Personality: a Person at the Crossroads’, Journal o f Management Studies, N ol. 14, No. l,pp. 34-57. Kreckel, R. (1980) ‘Unequal Opportunity Structure and Labour Market 189

THE SOCIAL ANALYSIS OF SMALL BUSINESS

Segmentation’, Sociology, Vol. 14, No. 4, pp. 525-50. Laclau, E. (1977) Politics and Ideology in Marxist Theory, NLB, London. Laclau, E. and Mouffe, C. (1985) Hegemony and Socialist Strategy, Verso, London. Lee, R.M. (1985) T he Entry Into Self-Employment of Redundant Steelworkers’, Industrial Relations, Vol. 16, No. 2, pp. 42-9. Lockwood, D. (1966) ‘Sources of Variation in Working Class Images of Society’, Sociological Review, Vol. 14, No. 3, pp. 249-67. MacLennon, E. (1984) ‘Women and Employment Legislation in Small Firms’. Paper presented to National Small Firms Policy and Research Conference, Trent Polytechnic, September 1984. Marx, T.G. (1980) ‘Distribution Efficiency in Franchising’, MSUBusiness Topics, Vol. 28, No. 1, pp. 5-14. Meade-King, M. (1986) ‘Workface’, Guardian, 7 May. Meiksins-Wood, E. (1986) The Retreat from Class, Verso, London. Miller, S.M. (1975) ‘Notes on Neo-Capitalism’, Theory and Society, Vol. 2, No. 1, pp. 1-35. Mills, C.W. (1951) White Collar: The American Middle Classes, Oxford University Press, New York. Murray, F. (1983) ‘The Decentralization of Production — The Decline of the Mass Collective Worker’, Capital and Class, 19, pp. 74-99. Newby, H. (1975) ‘The Deferential Dialectic’, Comparative Studies in Society and History, Vol. 17, No. 2, pp. 139-64. (1977) ‘Paternalism and Capitalism’, in Scase R. (ed.) Industrial Society: Class, Cleavage and Control, Allen and Unwin, London. (1982) The State o f Research into Social Stratification in Britain: A report commissioned by the SSRC, SSRC, London. O’Higgins, M. (1980) Measuring the Black Economy, Outer Circle Policy Unit, London. Parkin, F. (1967) ‘Working Class Conservatives: A Theory of Political Deviance’, British Journal o f Sociology, Vol. XVIII, No. 2, pp. 280-90. (1979) Marxism and Class Theory, A Bourgeois Critique, Tavistock, London. Rainnie, A. (1983) Industrial Relations in Small Businesses: the Case o f the Clothing Industry in North East England, unpublished PhD thesis, New­ castle Polytechnic, Newcastle-upon-Tyne. (1984) ‘Combined and Uneven Development in the Clothing Industry: the Effects of Competition on Accumulation’, Capital and Class, 22, pp. 141-56. (1985a) ‘Small Firms — Big Problems: The Political Economy of Small Business’, Capital and Class, 25, pp. 140-68. (1985b)‘Is Small Beautiful? Industrial Relations in Small Clothing Firms’. Sociology, Vol. 19, No. 2, pp. 213-24. Rainnie, A. and Scott, M. (1986) ‘Industrial Relations in the Small Firms’ in Curran, J. et al. (eds.) The Survival o f the Small Firm, Gower, Aidershot, Vol. 2. Report o f the Census o f Production, 1980 (1983), HMSO, London. Ritchie, J. (1984) ‘Small Business Revival as Cultural Play and Spectacle’, School o f Occupational Studies, Newcastle Polytechnic, Newcastle-uponTyne. 190

THE SOCIAL ANALYSIS OF SMALL BUSINESS

Roemer, J. (1982) A General Theory o f Exploitation and Class, Harvard University Press, Mass. Rothwell, R. (1984) ‘The Role of Small Firms in the Emergence of New Technology’, Omega, Vol. 12, No. 1, pp. 19-29. Scase, R. (1982) ‘The Petty Bourgeoisie and Modem Capitalism: A Consider­ ation of Recent Theories’, in Giddens, A. and Mackenzie, G. (eds.) Social Class and the Division of Labour, Cambridge University Press, Cambridge. Scase, R. and Goffee, R. (1980) The Real World of the Small Business Owner, Croom Helm, London. (1981) ‘ “ Traditional” Petty Bourgeois Attitudes: the Case of the SelfEmployed Craftsman’, Sociological Review, Vol. 29, No. 4, pp. 729-47. (1982) The Entrepreneurial Middle Class, Croom Helm, London. Scott, M. and Rainnie, A. (1982) ‘Beyond Bolton — Industrial Relations in the Small Firm’ in Stanworth, J. et al. (eds.) Perspectives on a Decade o f Small Businesses Research: Bolton Ten Years On, Gower, Aldershot. Smith, N.R. (1967) The Entrepreneur and his Firm: The Relationship Between Type o f Man and Type o f Company, Michigan State University Press, Michigan. Smith, N.R. and Miner, J.B. (1983) ‘Type of Entrepreneur, Type of Firm and Managerial Motivation: Implications for Organisational Life Cycle Theory’, Strategic Management Journal, Vol. 4, pp. 325-40. Stanworth, J. and Curran, J. (1973) Management Motivation in the Smaller Business, Gower, Epping. Stanworth, J. et al. (1984) ‘The Franchised Small Enterprise: Formal and Operational Independence’, in Lewis J. et al. (eds.). Success and Failure in Small Business, Gower, Aldershot. Stephenson, G. et al. (1983) ‘Size of Organisation, Attitudes to Work and Job Satisfaction’, Industrial Relations Journal, Vol. 14, No. 2, pp. 28-40. Stolzenberg, R.M. (1978) ‘Bringing the Boss Back In: Employer Size, Employee Schooling and Socio-Economic Achievement’, American Sociological Review, Vol. 43, No. 6, pp. 813-28. Wajcman, J. (1983) Women in Control: Dilemmas of a Workers' Co-operative, Open University Press, Milton Keynes. Waldinger, R., Ward, R. and Aldrich, H. (1985) ‘Ethnic Business and Occupational Mobility in Advanced Societies, Sociology, Vol. 19, No. 4, pp. 586-97. Watkins, D. and Watkins, J. (1984) ‘The Female Entrepreneur: Background and Determinants of Business Choice — some British Data’, International Small Business Journal, Vol. 2, No. 4, pp. 21-31. Ward, R. and Jenkins, R. (1984) (eds.) Ethnic Communities in Business, Cambridge University Press, Cambridge. Weber, M. (1965) The Protestant Ethic and the Spirit o f Capitalism, Unwin University Books, London. Weiss, L. (1984) ‘The Italian State and Small Business’, European Journal o f Sociology, XXV, pp. 214-41. Wilkinson, F. (ed.) (1981) The Dynamics o f Labour Market Segmentation, Academic Press, London. Wright, E.O. (1978) Class, Crisis and the State, NLB, London. (1985) Classes, Verso, London.

191

Index Adhin, J.H. I l l agriculture in Italy 16-20 in socialist states 147-52 Ahrne, G. 180 Aldrich, H. 83, 90, 117 Allen, S. 63 ‘alternative’ enterprise 27-8, 75-8, 79, 174-7 analysis, social, of small alternative economic structures 174-7 business 9, 164-87 class 180-5 employment relations 168-71 gender and ethnicity 171-4 integration 177-80 sociology of entrepreneurship 165-8 Asian entrepreneurs 84-5, 89-91, 97-100 see also Surinamese autonomy 4-5, 40-2, 118 Bach, R. 93 Bagnasco, A. 13, 15, 20 Bakker, J. 105 Bamford, J. vii, 7, 12-24, 172, 177-9 Bannock, G. 2-3, 5, 164, 177 Barbagli, M. 16-17 Baron, J. 169 Barral, P. 56n Batstone, E.V. 168 Becattini, G. 23-4n Bechhofer, F. 4, 62, 121, 159, 164, 177, 180-1, 184, 186-7n Bell, C. 66 Benedict, B. 116, 121, 128n Berend, I.T. 156 Berengo, M. 16 Berger, S. 14, 177 Bertaux, D. 44 Bielby, W. 169 Binks, M. 186n 192

‘black7‘informal’ economy 6-7, 63 socialist states 152-4 Blackburn, R. 169 Blaschke, J. 86 Boissevain, J. vii, 2-3, 6-9, 63, 86-8, 105-28, 165-6, 170-4, 187n Bonacich, E. 119 Bonnett, K. 184 Booth, H. 86 Bourdieu, P. 51 Bovaird, A. 96 Braverman, H. 5 Brittan, S. 2 Brockhaus, R.H. 186n Brown, C. 84-5 Brusco, S. 14, 16, 23 Budike, R. 108 Burris, V. 87 Burrows, R. vii, 9, 164-87 Buschkens, W.F.L. I l l , 113,

121 businesses, small ethnic entrepreneurs 83-102, 105-28 in France 39-58 in Italy 12-24 in Sweden 131-42 in the Netherlands 105-28 in West Germany 26-37 social analysis of 164-87 under state socialism 144-62 women proprietors 60-80 see also ‘alternative’ enterprise Capdevielle, J. 52, 56n capitalism 2 and entrepreneurship 4, 52, 177-80 and feminism 61-2, 80 and state socialism 144-5 Carchedi, G. 145, 161n, 181 Caribbean entrepreneurs 84-5, 90-1, 97, 99, 122

INDEX

Casals, F.G. 145 Cashmore, E. 122 Castles, S. 8, 86 Catala, N. 47 Chell, E. 166-8 Chinese see Surinamese Choenni, A. 86, 128n Clarke, R.A. 148-9 class 180-5 Clemens, R. 36n collectives 133, 176-7 women’s 75-80 Colrat, M. 51, 57n Cooper, C. 62, 75 cooperatives 133, 176-7 women’s 75-80 Cornforth, C. 176-7, 186n corporations 1, 3 in Italy 15-16, 21-3 see also franchises corporatism 1-2, 9 see also Sweden Coyne, J. 186n Cragg, A. 63 Creigh, S. 180, 186n Creoles 121-4 see also Surinamese Cromie, S. 172, 186n culture and enterprise 119-21, 173 Curran, J. vii, 9, 64, 164-87 Davidson, M. 62 Davis, H.H. vii, 3-6, 9, 26, 39, 144-62 Davis, M. 179 Dawson, M. 63 Deeks, J. 142 Degadt, J. 63, 78 discrimination 8-9, 96 see also ethnic entrepreneurs; women Donckels, R. 8, 63, 78 Dupoirier, E. 56n Eccles, T. 177 economy, national, and small business 87-9 France 49-51 socialist states 144-6, 152-3,

160-1 Sweden 132 see also ‘black’ economy Edwards, R. 4, 166 Ekberg, J. 135 Elliott, B. 4, 121, 164, 177, 180-1, 184, 186-7n employment relations 168-71 Engels, F. 39 entrepreneurs 1-9 encouragement of 1-4 ethnic (q.v.) 83-102, 105-28 in France 40-2 in Germany 29-34 in Sweden 135 resources of 106-7 sociology of 165-8 women 60-80 Ersoz, A. 86 ethnic entrepreneurs 8-9, 83-102, 173-4 and economic mobility 100-1 and national economy 87-9 distribution of 84-6, 91 in the Netherlands 105-28 legal requirements for 94-5 local opportunities for 89-91 migrant terms of entry 91-3 public policy and 95-7 resources of 97-100 Europe 1-9 Eastern see socialism, state Western 1-2, 5-7 see also countries by name families 106-7 ethnic 98, 111-13 in France 46 in Italy 16-21 in UK 60-1 Feher, F. 152, 160, 162n Feldbrugge, F.J.M. 149-50, 154-5, 161n feminism 61-2, 74-8, 79 Ferbos, J. 45 financing 5 ethnic entrepreneurs 98-9, 115-16 Finch, J. 66 193

INDEX

firms large 1, 3 small see businesses, small; entrepreneurs France, small businesses in 6-7, 39-58 corporatist policies 2 entrepreneurs 40-2 ethnic 93-4 families 46 national economy 49-51 politics 51-5 social mobility 8, 39, 45-51 start-ups 42-5 state 2, 54 women’s collectives 79 franchises 174-6, 178 Fratoe, F. 84 freedom 2, 4-5, 40-2, 118 Friede, C. 36n Friedman, M. 2 Fromm, E. 27 Fua, G. 14 Gabor, I.R. 151, 156 Gambetta, 42 Ganguly, P. 164 Gans, H. 118 Gelder, P. van 120 gender 171-4 see also women Germany, Federal Republic of, small businesses in 26-37 corporatist policies 2 entrepreneurs 29-34 ethnic entrepreneurs 85-6, 93-4 influences on start-ups 28-33 influences on success 32-5 start-ups 6-7, 26-8 state 2, 29 technology 26-7 Gerry, C. 7 Gershuny, J. 63 Gibb, A. 167 Gill, J. 166, 186n Gingembre, L. 51, 57n Girod, R. 46 Glynn, A. 3 Goffee, R. vii, 1-9, 60-80, 158, 165-7, 170-3, 177, 181, 184, 194

187n Goglio, S. 14 Goldthorpe, J. 168 Goldthwaite, R. 16 Goody, J. 16 Gorz, A. 78 Grammenos, S. 102n Granovetter, M. 164, 169 Grossman, G. 144, 154 Grotenbreg, H. vii-viii, 8-9, 86, 105-28, 165-6, 170-4 Gruhl, H. 27 Grunberg, G. 51 Handy, C. 3 Hankiss, E. 161 Hannah, L. 1 Hare, P.G. 156 Harre, R. 167-8 Havel, V. 161 Hayek, F.A. von 2 Heilbron, W. 119 Hertz, L. 1 Hindustanis see Asians; Surinamese Hirsch, J. 1-2 Hodson, R. 169 Holmqvist, C. 78, 133 Holmwood, J. 181-3 Hough, J. 176 Hungary 153, 155-8, 160 Hunsdiek, D. 27, 35n Hurtsfield, J. 6 Illich, I. 27 immigration 83, 87, 91-3 see also ethnic entrepreneurs independence 4-5, 40-2, 118 industrial relations 2-3 industrialisation 5, 164 Italy 13, 23 Ingham, G. 168 integration of small business 177-80 Islam, R. 96 Italy, small businesses in 6-7, 12-24 agricultural traditions 17-20 corporatist policies 2 distribution 15-16, 21

INDEX

family patterns 16-21 industrial districts 15-16, 21-3 networks 14, 23 politics 14 state 2, 12-13 technology 12, 21-2 women 79-80 Japan 95 Jenkins, R. 96, 100, 173-4 Johannisson, B. viii, 9, 131-42, 176, 179 Johnson, E. 96 Jones, T.P. 9, 90, 117, 118 Kay, J.A. 1 Kelly, J. 5 Kemeny, I. 153 Kets de Vries, M.F.R. 166 Kirby, D. 95 Kirschbaum, G. 35 Klandt, H. viii, 7, 26-37, 86, 166-7, 174, 176, 178 Korpl, W. 6 Kovari, G. 161-2n Kozyr, M.I. 150-1 Krcmar 88 Kreckel, R. 169 Kruijer, G.L. 120 Kuczynski, J. 42 Laclau, E. 183, 187n Ladbury, S. 118 Laslett, P. 16, 24n Lavau, G. 51 Lee, R.M. 184 Leighton, P. 64 Lewis, J. 177 Lier, R. van 117, 120 Light, I. 84, 99-100, 102n Liles, P. 31 Little, A.D. 27 Littler, C. 6 Lloyd, P. 102n Lockwood, D. 170-1 Lundmark, M. 136 McCrone, D. 180 McEvoy, D. 9, 90, 117 MacKenzie, G. 62

MacLennon, E. 168 Maij-Weggen, H.R.H. 61 Malmberg, A. 136 Mandel, E. 2 Mann, M. 169 Marris, P. 121 Marshall, A. 14, 23-4n Marx, T.G. 178 Marxism see socialism, state Matko, D.J.I. 148-9 Mayer, A.J. 4, 39, 51 Mayer, N. viii, 8, 39-58, 166, 180 Meade-King, M. 186n Meeks, R. 84 Meijer, J. 8, 61 Meiksins-Wood, E. 187n Meindl, U. 28 Messori, M. 13 Miller, S.M. 179 Miner, J.B. 186n Misztal, B. 158, 161n mobility economic 100-1 social 8, 39, 45-51 motivation 1-7, 40-2, 165-8 Mouffe, C. 187n Mouriaux, R. 52 Murray, F. 179 Nathusius, K. 36n, 86 Netherlands entrepreneurs 61, 105, 126-8 ethnic entrepreneurs 86, 105-28 see also Surinamese networks, small business 14, 23, 137, 141-2 ethnic 117-18 Newby, H. 66, 170, 180 Newcomer, M. 118 Nove, A. 148 Nowikowski, S. 91 O’Higgins, M. 186n Ohman, B. 140 Paci, M. 19, 24n Pahl, R.E. 63 195

INDEX

Palmer, R. 93 Parkin, F. 165, 171 Peach, C. 90, 92 Peterson, R. 142 petite bourgeoisie 39, 89, 146, 158, 180-5 Piore, M.J. 12, 14, 177 Poland 157-8 politics, and small businesses 6 cooperatives 75-9, 176-7 in France 51-5 in Italy 14 in Sweden 139-40 in UK 96 Pollack, M. 61 Pollins, H. 8, 100 Pompe, J.H. 115, 128n Portes, A. 93 Poujade, P. 51-2, 57n Poulantzas, N. 144, 161n Proudhon, P.J. 52 Piitz, P.U. 28 racism 8-9, 96 Rainnie, A. 3, 168-9, 171, 179-80 Randall, R. 88 Ranki, G. 156 Reeves, F. 84, 122 Reubsaet, T.J.M. 105 Ritchie, J. 167, 180 Robertson, J. 3 Roemer, J. 187n Rogovin, V. 16In Rothwell, R. 3, 178 Sabel, C. 12 satisfaction, job 4, 62 Scase, R. viii, 1-9, 60-80, 144, 158, 161n, 165-7, 170-3, 177, 181, 184, 187n Schumacher, E.F. 27 Schweisguth, E. 52, 56n Scott, M. 3, 169, 171 Shapero, A. 32 share-cropping 18-20 Shmelev, G.I. 148, 151 Smelser, N. 16 Smith, A.H. 157-8 Smith, N.R. 167, 186n 196

socialism 2, 6 socialism, state 9, 144-62 agriculture 147-52 collective ownership 145 production and services, small 152-8 second economy 145-6, 158-61 sociology of entrepreneurship see analysis, social Somerset, A. 121 Speckmann, J.D. I l l , 113 Spilling, O.R. 142 Stanworth, J. 84, 91, 96, 165-71, 175 start-up, small businesses 5-7 in France 42-5 in Germany (q. v.) 26-8 in Sweden 133-5 state, and small businesses 1-7, 95-7 ethnic 91-7 France 54 Germany 29 Italy 12-13 socialist see socialism, state Sweden 132 Stephens, J. 2 Stephenson, G. 171 Stewart, A. 181-3 Stolzenberg, R.M. 169 Storey, D. 3, 88, 131 Strinati, D. 1 Sundin, E. 78, 133 Surinamese, in the Netherlands 108-28 ambition 118 and Dutch entrepreneurs 126-8 capital and credit 115-17 different ethnic groups 108-10, 121-5 experience 110-11 families 111-13 independence 118 networks 117-18 saving, work ethic 113-15 structure and culture 119-21

INDEX

Sutcliffe, B. 3 Sway, M. 102n Sweden, small business in 6, 9, 131-42 corporatist policies 2, 9 forms of 138 networks 137, 141-2 politics and 139-41 regional policies 132, 136 start-ups 133-5 state 2, 9, 132 Sziraczki, G. 161-2n Szyperski, N. 26, 36n Tap, L.J. 105 technology 4, 12, 21-2, 26-7 ‘Terza Italia’ 15-21, 23 Theobald, M. 27 Tillaart, H.J.M. van den 115 trade unions 6-7, 136, 139 Trigilia, C. 15, 20, 24n Trogan, P. 49 Tulli, P. de 47 Union of Soviet Socialist Republics (USSR) 147-55 United Kingdom (UK), small businesses in 2, 6-7, 96 ethnic entrepreneurs 8-9, 85, 91 women entrepreneurs 8, 60-80 United States of America (USA) 83, 87-8, 99 Utton, M. 6

Wajcman, J. 177 Waldinger, R. 83, 88, 97, 165, 173-4 Wallace, T. 86 Ward, R. viii, 8, 83-102, 122, 165, 173-4 Watkins, D. and J. 172 Weber, M. 31, 165 Weiss, L. 177 Werbner, P. 91 West Indians 84-5, 90-1, 97, 99, 122 Wilkinson, F. 169 Wilson, P. 84, 91, 96 wives an entrepreneurs 67-72 of entrepreneurs 60-1, 173 women entrepreneurs 171-3 and feminism 61-2, 74-8 in France 44 in Germany 34 in Sweden 133 in UK 8, 62-5 conventional 67-9 domestic 69-72 innovative 72-5 radical 75-8 Wright, E.O. 145, 161n, 180-2, 187n Ysmal, C. 56n Zacchi, C. 14 Zauberman, A. 147 Zetterberg, H. 133 Zoihsel, V. 31, 36n

Veenman, J. 105 Vermeulen, H. 119, 125

197