The Geography of ‘Successful’ Small Firms in the United Kingdom

Abstract

One significant contributory factor to regional economic disparities in the United Kingdom is the much higher rate of new firm formation in the South East and adjacent counties compared with the peripheral regions. However, recent evidence tentatively suggests that contrasts between regions in the emergence of rapid-growth small firms might be a still more significant source of uneven regional development. In the absence of a suitable data source, recourse is made to listings of small firms that have been judged either on technological or on financial criteria as being ‘successful’ and, by implication, growing rapidly; this evidence confirms that such firms are disproportionately concentrated in the South East and parts of East Anglia and the South West and scarce in peripheral regions. This geographical pattern is interpreted as being largely an outcome of the underlying occupational structure of the United Kingdom which results in southern England having the greatest supply of new firm founders with the necessary abilities, skills, and motivation to establish businesses with the capability of achieving rapid growth. The economic milieu of southern England reinforces its structural advantage. Recent economic developments in Scotland support the view that policymakers can, over the longer term, achieve changes in regional industrial and occupational structures and economic milieu which make an area more conducive for the emergence of rapid-growth small firms. However, current UK regional policy makes no attempt to achieve such changes; it therefore seems likely that the geographical distribution of successful small firms will continue to be highly concentrated in southern England to the detriment of peripheral regions.