A Burden on Business? Reviewing the Evidence Base on Regulation and Small-Business Performance

Abstract

The evidence base regarding the impact of regulation on small-business performance is reviewed. The substantive findings of various studies and their methodological approaches are critiqued. Many studies suffer from inadequate conceptualisation of ‘regulation’ and methodological shortcomings, and fail to investigate the causal mechanisms through which regulation contributes to business-performance outcomes. In some cases, they positively encourage superficial and misleading results. More sophisticated approaches, using qualitative data, demonstrate that regulations generate a variety of consequences and should not be conceptualised solely in terms of costs and constraints. Rather, regulation can impact upon small businesses directly and indirectly, and both constrain and enable and motivate business owners to act. The impact of regulation is contingent upon business owners' adaptations to particular interventions within the broader social contexts within which they operate. The implications for policymakers are discussed.