The Influence of Location and Distance on the Supply of Business Advice

Abstract

The authors examine the geographical relations between small business clients and their external suppliers of business advice. The analysis is based on the stratified random sample survey carried out by the ESRC Centre for Business Research in 1999. The analysis demonstrates the importance of localisation in a simplistic sense: a large percentage of advisors are drawn from within 10 km of the client, and almost all from within 50 km for most types of advisor. There are important differences between types of advisors, with public sector advisors, chambers of commerce, and enterprise agencies being the most localised. However, the high degree of localisation is shown to be chiefly dependent on the agglomeration benefits of the accessibility and size of centres in which advisors are located. The general pattern of client – advisor relations is demonstrated to be modelled accurately by a standard spatial interaction model. A key finding is that the spatial pattern of the location of the supply of advisors, particularly the size of the business centres in which they are located, is a key determinant of choice and must be taken into account simultaneously with any role of distance which influences demand, in order to explain the pattern of choice of business advisors. This suggests that small business support policies should be focused chiefly towards small and medium-sized enterprises that have difficulty in accessing major supply sources by virtue of their locations; that is, they should be focused on rural and more peripheral areas.