PDF hosted at the Radboud Repository of the Radboud University Nijmegen The following full text is a publisher's version. For additional information about this publication click this link. http://hdl.handle.net/2066/146545 Please be advised that this information was generated on 2017-12-05 and may be subject to change. Nijmeegse Geografische Cahiers nr. 40 Small Business Growth in Contrasting Environments Peter Vaessen Department of Economie Geography Faculty of Administrative Sciences/KU Nijmegen small business growth in contrasting environments CIP-GEGEVENS KONINKLIJKE BIBLIOTHEEK, DEN HAAG Vaessen, Peter Mathias Maria. Small Business Growth in Contrasting Environments / P.M M Vaessen. - Nijmegen: Depart­ ment of Social Geography, Faculty of Administrative Sciences, Catholic University of Nijmegen. - 111, fig., tab. - (Nijmeegse geografische cahiers ; no 40) Also pubi, in commercial ed : Utrecht : Royal Dutch Geographic Society ; Nijmegen : Faculty of Administrative Sciences, Catholic University of Nijmegen, 1993. - Netherlands geographical studies, ISSN 0169-1839; 165). Thesis Nijmegen. - With rcf. ISBN 90-70898-38-1 Subject headings: small business gTowth. ISBN 90-70898-38-1 (Nijmeegse geografische cahiers 40) ISBN 90-6809-178-6 (Netherlands geographical studies 165) Copyright © 1993 Catholic University of Nijmegen, The Netherlands Alle rechten voorbehouden. Niets uit deze uitgave mag worden vermenigvuldigd en/of openbaar gemaakt door middel van druk, fotokopie of op welke andere wijze dan ook zonder voorafgaande toestemming van de auteur. All rights reserved. No part of this publication may be reproduced in any form, by print or photoprint, microfilm or any other means, without written permission from the authors. Drukkerij Elink wijk bv - Utrecht small business growth in contrasting environments een wetenschappelijke proeve op het gebied van de beleidswetenschappen proefschrift ter verkrijging van de graad van doctor aan de Katholieke Universiteit Nijmegen, volgens besluit van het College van Decanen in het openbaar te verdedigen op vrijdag 1 oktober 1993 des ochtends te 10.30 uur precies door peter mathias maria vaessen geboren op 19 mei 1955 te nijswiller - wittern promotor: prof. dr. egbert wever CONTENTS List of figures 7 List of tables 7 Acknowledgements 8 1 Introduction 9 1.1 Trends in the space economy 9 1.2 The main thrust: agglomeration and inequality 10 1.3 The actual trajectories: deviancy and contradiction 11 1.4 Research question and scope of the book 15 2 Firm and environment in regional science 17 2.1 Introduction 17 2.2 The primacy of the environment 17 2.3 The primacy of the enterprise 24 2.4 Linking environmental and organizational approaches 34 2.5 Conclusion 40 3 Organization and environment; the perspective of organization theory 43 3.1 Introduction 43 3.2 The environment 44 3.3 Three perspectives on action 55 3.4 The role of organizational size 70 3.5 Summary 77 4 Research method and sample 81 4.1 Introduction 81 4.2 A qualitative method 81 4.3 The sample 92 5 Environmental responsiveness of small firms (I): its forms 97 5.1 Introduction 97 5.2 Coping with the labour market 98 5.3 Dealing with the financial environment 115 5.4 Managing the material input environment 120 5.5 Handling the business service environment 127 5.6 Meeting the market environment 136 5.7 Coping with the environment; summary and conclusions 147 6 Environmental responsiveness of small firms (II): its strength 151 6.1 Introduction 153 6.2 Adaptation costs 152 6.3. Adaptation returns 154 6.4 The sustainability of revenues from adaptation behaviour 160 6.5 Summary 164 7 Environmental responsiveness of small firms (III): its origins 167 7.1 Introduction 167 7.2 The regional ecology 168 7.3 The incubator organization 171 7.4 Success and failure 174 7.5 Summary and conclusions 175 8 Summary and conclusions 179 8.1 Summary 179 8.2 Conclusions 185 Bibliography 189 Appendix 205 Korte Nederlandse samenvatting 217 Figures 2.1 Substitution of low locational by extra economic or adaptation efficiency 28 2.2 The fallacy of the substitution framework 32 3.1 Levels in the environment according to McDermott and Taylor 44 3.2 Levels in the environment according to Castrogiovanni 45 3.3 Two conceptualizations of the administrative environment 49 3.4 The regional component in an administrative model of the environment 53 3.5 The regional component built into Castrogiovanni's enviromental model 53 3.6 Adaptive abilities, state of adaptation, and adaptive fits 76 4.1 The Netherlands; the location of the firms investigated 95 Tables 3.1 Dimensions and subdimensions of the environment 48 3.2 Means of dealing with the external environment 66 5.1 The spatial scope of the sample firms' sales linkages in 1988 143 Acknowledgements A number of people have provided considerable help towards the conducting of the research on which this thesis is based, and the preparation of the text. Foremost I thank my promotor Prof. Dr. E. Wever for his stimulating support and valuable advice. He created a very stimulating work climate by giving me sufficient elbow- room while at the same time showing great interest in the work during the course of the project. I am also indebted to the entrepreneurs interviewed, for their willing cooperation with the present research. This is particularly true as the extensive interviews have demanded much of their time and effort. Furthermore, I thank the staff members of the Department of Social and Economic Geography of the University of Nijmegen for forming a pleasant work environment, for their stimulating comments, and for any assistence when needed. In addition I thank the commission consisting of Prof. Dr. J. Buursink, Prof. Dr. J.G. Lambooy and Dr. D. Keeble who evaluated the thesis. Thanks are also due, with regard to the preparation of the manuscript. I acknowledge very much the services of drs. Nancy Smyth van Weesep who corrected the text with respect to stylistic and linguistic errors. I am also very grateful to my wife drs. Paula Roovers for preparing the lay out, the tables and the figures. Apart from that she did take over the finishing of the manuscript and dealt with the manuscript commission during my stay abroad at the University of Cambridge (UK) between April and August 1993. I am also in debt to my wife's younger sister Nathalie Roovers for coming to my help when the situation was hectic. Moreover, I am obliged to Willem Maas and Allen Swindell for some translation work. Finally, I am very thankful to Dr. Keeble for making a final check on the manuscript for detecting and correcting remaining typing, spelling and grammatical errors. Chapter One Introduction 1.1 Trends in the space economy Reality is complex. In order to understand something, we must abstract from it. Academics tend to do this by generalizing from numerous observations. Social scientists often search for trends and express these in models. They are more con­ cerned with the dominant processes and phenomena than with the exceptions, the deviations from the 'norm'. So too regional economists and economic geographers. Scott's account of the main trends in geographic development since the beginning of the 1950s, is revealing. In the mid 1950s, the major capitalist economies seemed to be split into two spatial realms. One was a core of manufacturing regions with dense concentrations of population and economic activity. The other consisted of peripheral expanses of less well developed territory, largely dedicated to agriculture and local service activities, with occasional clusters of industrial employment in a few favoured places (Scott 1988a). Furthermore, many theorists considered the contrasts between the core and the periphery to be extremely durable and likely to intensify (Hirschmaft 1958, Myrdal 1957). During the 1970s, however, this pattern began to shift dramatically. As the postwar boom came to an end, the major capitalist economies (North America and Western Europe) entered a long period of crisis and readjustment which continues to the present day. More and more of the basic industry of the core regions - steel, shipbuilding, car assembly, machinery, electrical goods, and so on - have moved to the world periphery. There they can take advantage of increasingly attractive produc­ tion conditions (particularly low wages and regressive labour relations). The net result of these developments is a major crisis in the core regions of North America and Western Europe. The crisis first became apparent in Britain and the United States in the late 1960s, spreading in the early 1970s to France, Italy, and West Germany. In many formerly prosperous industrial regions, investment in new plants and machinery has slowed to a trickle. Large units of fixed capital are written off in an epidemic of factory closures and layoffs. In the United States, several major cities are at the brink of bankruptcy, as their tax bases shrink in response to their declining economies. Nevertheless, even as these processes of decay and decline reach their greatest intensity, some regions in advanced capitalist nations are moving counter to the general trend. They are actually experiencing a rapid formation of new manufacturing 9 capital and a rapid rise in employment. These exceptions comprise either (a) a number of enclaves within older manufacturing regions (e.g., Route 128, The Scientific City Ile de France, the M4 Corridor), or (b) more importantly, a series of regions located in formerly peripheral and semi-peripheral areas (e.g., Third Italy, Orange County, Silicon Valley, Grenoble, Montpellier, Sophia Antipolis, Toulouse, Cam­ bridge) (Scott 1988b). By the mid-1980s it was clear that these regions had not only weathered the storm of restructuring of the 1970s but were also functioning as major foci of industrial innovation and expansion in their own right. It was now quite evident that a series of new industrial spaces had come in existence, and were beginning to form important alternative centres of capitalist accumulation.