The Employment Generation Potential of Mature SMEs in Different Geographical Environments

Abstract

Using a longitudinal database, this paper compares the employment performance over the 1979-90 period of mature SMEs in three contrasting geographical environments—i.e. London, outer metropolitan locations in the South East, and remote rural locations in northern England. The performance of SMEs in London locations is shown to be inferior to that of similar firms in remote rural locations, but this is found not to result from them having a weaker performance in output terms. Whilst it is the most rapidly growing firms which have the greatest employment generation potential in all locations, London-based SMEs are more likely to achieve growth in ways which minimise the number of additional workers employed directly by the firm. These urban-rural differences can be explained by the different 'strategies' for business growth adopted by managers in responding to the various opportunities and constraints existing in different geographical environments.