Impact of SMEs on Economic Growth

This assignment is based on an extensive analysis of 16 academic sources, including books, journals, and online articles. It explores the significance of SMEs in boosting entrepreneurship, small business management, and economic development. The study highlights how SMEs contribute to job creation, innovation, and competitiveness, ultimately driving economic growth. The findings are presented in a detailed report, providing insights into the role of SMEs in promoting sustainable entrepreneurship and small business development.

Entrepreneurship
and Small business
management

TABLE OF CONTENTS
Table of Contents.............................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Examine various types entrepreneurial ventures and how they relate to the typology..........1
P2 Similarities and differences between various entrepreneurial ventures.................................2
TASK2.............................................................................................................................................4
P3 Assessing and interpreting statistical data to analyse impact of micro and small businesses
on economy..................................................................................................................................4
P4 Explaining importance of small businesses and business start ups which contribute to the
growth of social economy after 'BREXIT'..................................................................................6
TASK 3............................................................................................................................................7
P5 Determine the traits, characteristics and skills of two successful entrepreneurs when make
them different from business managers.......................................................................................7
P6 Entrepreneurial personality affect entrepreneurial motivation and mindset..........................9
TASK 4............................................................................................................................................9
P7 Experience and background can foster or hinder entrepreneurship.......................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Entrepreneurship is known as the process to discover, select, examine and exploit
opportunities for manufacturing products and services so as to satisfy the needs of target
audience. Entrepreneur is known as the individual who take initiative to start up a business
activity with a new concept for which use various business resources to manufacture innovative
products and to attract large number of customers (Bhachu, 2017). Various types of
entrepreneurial venture which run in market with different entrepreneurial typologies is all given
in this report. Various differences and similarities between different entrepreneurial venture is all
given in this report. Impact of small business enterprises on economic growth of a nation and its
contribution in growth of social economy is also given in this. Further, skills, traits and
characteristics which make entrepreneurs more successful as compared to business managers is
also described. In addition to this, impact of motivation and mindset on entrepreneurship process
and how experience and background hider or foster the process of entrepreneurship is all
mentioned in this.
TASK 1
P1 Examine various types entrepreneurial ventures and how they relate to the typology
Entrepreneurship is the process of design, launch and run a new business. Entrepreneur is a
person who take risk, identify the unfulfilled need of human and manufacture products to fulfil
the same (Blackburn, Hart and Wainwright, 2013). Entrepreneur first carry out research in order
to identify the opportunities exist in market and then use available business resources to achieve
success and growth. Various types of entrepreneurs are described as follows: -
Large scale enterprises : These type of firms are the one who manufacture and offer goods
with innovative features to its customers to fulfil their requirements and to sustain in market for
long run. These type of entrepreneurs require huge amount of financial resources to start. Feature
of these type of firms is that they carry out innovation on continuous basis to stay competitive in
market and increase its market share. Further these firms do changes in its products as per the
changes take place market trends.
Small scale enterprise: This is another type of organisation which carry commercial
activities on small level to generate profits. These type of firms are mainly self-managed and less
affect by the changes take place in market (Bridge and O'Neill, 2012). Grocery store, restaurant,
cafes all come under the category of small scale enterprise. Feature of these type of enterprises is
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that it provide employment opportunity to the individuals living in that area which improve their
standard of living and contribute in growth of economy.
Social enterprises: These are the enterprises who work on basis of non profit and main aim
of these firms is to offer products to fulfil the basic needs of society and individuals living in that
society (Burns, 2010). Mainly these firms manufacture and offer products that contribute more in
development of society and ensure betterment of individuals.
Scalable business enterprises: This is the type of enterprise which focus more on the
quality of products rather than manufacture in large quantity. They mainly focus on their vision
and attract more number of investors by communicate them about the vision.
Type of different type of entrepreneur typology
Lifestyle entrepreneur: These type of ventures emphasis more on profits and for that they
choose business model that suits best with their personal area of interest, knowledge and
expertise. These types of entrepreneurs can be small or large as they start business according to
their personal interest.
Female entrepreneur: When female take initiate and starts a business venture then it is
known as female entrepreneur. Research has explored that these kind of entrepreneurs are more
innovative and creative (Carland, Carland and Stewart, 2015). They offer employment to large
number of people by start business venture and handle all operations and maintain a balance
between personal and professional life. Emma Kane, CEO of Red leaf communication is an
example of female entrepreneur. Mainly female entrepreneurs become social enterprises as they
do efforts to contribute more in social development.
Male entrepreneur: As the name implies these type of ventures are controlled and
managed by the males. Main aim of these type of entrepreneurs is to get a competitive benefit in
market by offer unique and featured goods to its target customers. Mark Zuckerberg is one of the
most renowned male entrepreneur. These type of entrepreneurs become scalable business
enterprises as males take more risk in order to achieve set objectives.
Serial entrepreneur: These are the entrepreneur who work with high passion and the one
who always take challenges and explore new areas in order to manufacture and offer innovative
products to customers (Carraher and Paridon, 2015). One of the feature which make these
entrepreneurs different from others is that after successfully setting up business in specific area
they take part in some more challenging.
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P2 Similarities and differences between various entrepreneurial ventures
Difference between male and female entrepreneurs
Female entrepreneurs Male entrepreneurs
These type of enterprises are monitor and
manage by the female entrepreneur.
On the other hand, these type of enterprises are
run and monitor by the male entrepreneur.
Main focus of these enterprises is to contribute
in development of society with generation of
profit (Chittithaworn and et. al., 2011).
Only aim of these kind of enterprises is to get
competitive advantage by offer innovative
products to its customers. further they
formulate strategies in order to get competitive
benefit.
These type of entrepreneurs are more
concerned about the risk involved in business
operations.
On the other hand, male entrepreneurs are more
risks taker and take high risk in order to get
more return (Cooper and Folta, 2017).
Similarities between female s and male enterprise
Female enterprises Male enterprises
To sustain in market for long it is essential for
female entrepreneur to generate an adequate
amount of profits.
Like the same generate revenues is important
for male enterprises in order to sustain in
market for long run.
In order to maintain its market share and to
attract large number of customers, it is
essential for female enterprises to implement
innovation at workplace on continuous basis or
offer something new to its customers on
continuous basis (Dennis 2011).
Like the same, male enterprises also do various
efforts and introduce innovation at workplace
in order to make business products more useful
which help in attract large number of customers
and results in increase profitability of company.
Difference between serial and lifestyle entrepreneurs
Lifestyle ventures Serial ventures
These are the entrepreneurs who put their
passion first before anything and choose a
business model who fit best with their self
interest and area of expertise.
Serial entrepreneurs are the one who work
constantly to develop a creative idea to start a
new business venture (Fassin, Van Rossem
and Buelens, 2011).
One of the main motive of lifestyle ventures is Main aim of this kind of enterprises is to be
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to start business so they can pursue their
passion.
innovative in every product they offer to its
target customers to satisfy their needs.
Similarities between lifestyle and serial entrepreneurs
Lifestyle ventures Serial ventures
Lifestyle ventures focus more on their
hobbies and switch their areas of working
which relates from their area of interest.
Like the same serial entrepreneurs also
passionate about the work they perform.
They always explore new things and areas as
they love change.
Serial entrepreneurs also love to work on a
new concept and idea.
TASK2
P3 Assessing and interpreting statistical data to analyse impact of micro and small businesses on
economy
Micro businesses: Businesses which operates on very small scale are come under the
category of micro businesses. This type of business run with five or less than five employees and
require less than 35000$ to start business operations.
Small businesses: Independently operated and owned company that is limited in revenue
and size is known as small business. These are privately owned corporations that have fewer
employees and its revenue is less than a regular sized business.
Micro and small businesses are the organisations which are small due to their low
turnover and profit. These businesses are considered as a backbone of an economy as these
businesses generally deals in producing utility products and services for their consumers. In
today's scenario, innovation is encouraged in small and medium enterprises in order to attain
competitive advantage so that they can grow and develop. Small and medium businesses
enterprises are not only source of the income of their owners but it also generates several job
opportunities (Gorgievski, Ascalon and Stephan, 2011). Economies like United kingdom are in
great benefit of these SMEs as they result in productivity and growth for the industries. There are
positive impacts of small and medium business enterprises on the economy which are mentioned
below:
Increasing job opportunities - Small and micro businesses requires low funds due to
which they can be easily ventured. These business organisations contributes less capital and
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operates in any specific segment. Due to the ease of formation of these organisations, there are
numerous enterprises which establish every year. Huge number of small organisations requires
huge man power due to which job opportunities to local individuals increases.
Increase of GDP - Gross domestic product is a market measure which determines
economic performance of a country. GDP of an economy increases only when industries and
businesses in that country also increases. Gross domestic product of a country shows the level of
income and spending by the individuals of a company (Islam and et. al., 2011). Small and
medium enterprises usually have low capital involvement and profitability but due to high
number of these businesses, capital and profitability of these companies collectively contribute a
lot towards the GDP of an economy.
Increase in per capita income - Per capital income is the income which is earned by
every individual of an economy. This income states the average income of an country by which
growth and development rate of a specific country is analysed (Kirzner, 2015). For example:
United Kingdom is an economy which has numerous small and medium enterprises that will
impact on the per capita income of UK and these earnings will be enhanced.
Optimum utilisation of resources - Large organisations has numerous operations due to
which they requires ample of resources such as inventory, funds and many more. On the other
hand, small and medium enterprises of an organisation deals by low funds due to which they
utilise all their resources efficiently(Kirzner, 2015).
Impact of small and medium enterprises can be presented using graphical tools. An
example of the impact of SMEs on the economy of United Kingdom is presented below:
Year Value addition by SME's in UK economy
2008 100
2009 85
2010 82
2011 90
2012 100
2013 105
2014 120
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2015 140
2016 135
2017 130
2018 130
(Source: Impact of SMEs on growth of an economy, 2018)
From the above graphical representation it has been ascertained that growth of United
Kingdom's economy and rise in small and medium enterprises is positive as it grows to become
important factor for another to even grow further (Parker, 2018).
P4 Explaining importance of small businesses and business start ups which contribute to the
growth of social economy after 'BREXIT'
BREXIT or British exit is a phase in which the economy of United kingdom decides to
separate themselves from European union. This decision of adopting BREXIT has influenced the
economy of United Kingdom so badly (Lee-Ross and Lashley, 2010). This concept has impacted
the growth of social economy of United Kingdom. In the scenario where every large organisation
is planning to take to exit from United Kingdom, there are various small and medium enterprises
which contributes towards the economy of United Kingdom and benefits them. Small businesses
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and small start-ups enables flow of money in the market by which economy of a nation gets
enhanced. These ventures such as small businesses and businesses start ups contribute to the
growth of the social economy after 'BREXIT'. There are various benefits and contributions are
mentioned below:
Reducing poverty - It is a most important social economic factor which must be
considered and resolved by an economy. Small and medium enterprises increase job
opportunities in an organisation by which existing situation of a country related to poverty can be
positively enhanced (Luiz, 2011). Poverty is a phenomenon in which individuals are unable to
fulfil their basic requirements of living. Small and medium enterprises helps in introducing more
job opportunities so that poverty can be evaded from an economy.
Raises standard of living - This phenomenon is the concept in which living standards of
an economy are enhanced. It is important for a country to adopts various systems which can help
them their individuals to grow and develop. Small and medium enterprises are the bridge which
can fill the gap between individuals and high living. These living standards are developed by
considering average individuals (Cooper andFolta, 2017).
Industrialisation - BREXIT is the phase in which United Kingdom decides to exit from
European union. Due to this decision, United Kingdom has to face various issues related to
procurement of funds and inventories from other countries which are now a part of European
union and does not allows United Kingdom's large scale industry to procure materials from other
countries (Neck and Greene, 2011). And even if they allow them to procure materials, the cost of
acquiring is way to high. This issue can be resolved by small and medium scale enterprises as
they can freely trade as they procure materials which comes under maximum limit for
procuration. With high number of these organisations, industrialisation of United Kingdom will
be positive impacted (Bhachu, 2017).
Small businesses and business start ups are the ventures which involves low capital and low
turnover for their activities. But the collection of these businesses collectively contributes a lot
against the economy. BREXIT is phase which has impacted overall economy of United
Kingdom. These businesses benefits the growth of social economy by the providing advantage
of above elements.
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TASK 3
P5 Determine the traits, characteristics and skills of two successful entrepreneurs when make
them different from business managers
Entrepreneur is known as the one who take part in various business activities, encourage
innovation in order to attract more number of customers and to achieve competitive benefit.
Some specific skills, traits and characteristics are there which should be there in an entrepreneur
in order achieve the heights of success or to become successful entrepreneurs (Parker, 2018).
Mark Zuckerberg and Bill gates are the example of two successful entrepreneurs who are popular
for their abilities and skills due to which they achieve a new level of success. Some specific
skills, characteristics and traits are there which should be there in an individual to become
successful entrepreneur:
Skills of Bill Gates
Visionary: It is very important for an entrepreneur to be visionary or to have a clear picture
of what they want to achieve or become. This direct an individual what need to be done in order
to achieve set business objectives. They always remain focused and inspire others to believe in
their idea and always work autonomously to achieve their set target.
Flexible and adaptable: This is known as one of the most essential skill which should be
there in an individual to be a successful entrepreneur in today’s dynamic business environment.
This help in do necessary changes in products and services to better satisfy the needs and wants
of its customers (Schaper and et. al., 2014). Bill gates encourage innovation and this is the main
reason he is a successful today and this make him different from business managers because
business managers always remain static and follow the policies and rules set by the top
management.
Skills of Mark Zuckerberg
Encourage to take risk: This is known as one of the most important skill that require to be
possess by an individual to be a successful entrepreneur. Successful entrepreneurs also take risk
and invest their money in the ideas which they think are more appropriate. Without take risks an
entrepreneur can nit become a successful one.
Communication skills: This is one of the most essential skill which should be there in an
individual in order to become a successful entrepreneur. One of the main benefit of effective
communication skills is that it helps in communicate with employees and make them aware
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about wants company’s wants to achieve (Schaper, 2016). In addition to this, good
communication skills help in create and maintain good relationship with employees.
Creative and innovative: In order to attract more number of customers and to sustain in
market for long run, it is very important for an entrepreneur to be creative and innovative. With
innovation company can manufacture products with unique features and can better satisfy the
needs of its target customers. Mark Zuckerberg encourage innovation due to which today he is a
successful entrepreneurs. Opposite of this, business managers do not encourage employees to
think create or be innovative.
P6 Entrepreneurial personality affect entrepreneurial motivation and mindset
Specific features and skills are there which make an entrepreneur a successful one. Further,
so many components are there which affect the process of entrepreneurship. Personality of an
enterprise affect their motivation and mindset (Shane, 2012). Mark Zuckerberg and Bill gates
both have some specific personality traits that help them in identify the way to success. There is
a model known as Big five framework that could be use to examine the dimensions of
personality. This model can be understood by the points given below: Openness to experience: This aspect of Big five Framework model is related with
innovative and creative thinking of an individual. An entrepreneur require to be
innovative, creative, and imaginative in order to satisfy the unfulfil requirements of
human beings (Stokes, Wilson and Wilson, 2010). This skill help in manufacture
products with innovative features which help in better satisfy the needs of workers and
provide competitive benefit to company. Conscientiousness: This aspect reflect that an entrepreneur require to be focus to achieve
set goals and objectives with available business resources and with given time period.
Further, this help in formulate effective strategies and policies for business which ensure
proper execution of all activities. All this help in achieve set business objectives. Extraversion: According to this aspect and entrepreneur require to have an ability that
he/ she can communicate the vision and objectives of business with target audience in an
most convincing manner (Storey and Greene, 2010). All this help in attract large number
of investors.
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 Agreeableness: This is a personality trait of an entrepreneur which make it desirable for
an entrepreneur to be trustable. It help in bring cooperation among all employees working
in company which ensure execution of all activities in appropriate manner.
 Emotional stability: This reflect that an entrepreneur require to be emotionally stable
during complex business situations as this help in take right decision and help in handle
the situations.
Differences between Bill gates and Mark Zuckerberg
 Bill gates had a clear vision about his goals and what he wants to achieve on the other
hand Mark Zuckerberg created Facebook with the aim to provide a communication tool
for the students on campus. Facebook escalated popularity among all the students and
then slowly spread outside the campus. Zuckerberg’s success was not intentional and Bill
Gates was intentional.
 Creation of both Bill Gates and Mark Zuckerberg were quite different from each other.
Microsoft is a software company on the other hand Facebook is world’s most famous
social network and this provide an opportunity to individuals to share information from
each other.
TASK 4
P7 Experience and background can foster or hinder entrepreneurship
Process of entrepreneurship is affected by the various elements. Some elements affect the
process in positive manner while other affect the same in negative manner. Background of an
entrepreneur have a significant impact on skills of an entrepreneur and the way they behave or
take decision. If a person belongs from a family having business background then it encourage
the individual to take initiative to start a business venture as an individual have adequate
information and knowledge about how to deal with various elements. All this ensure proper
monitor and management of available business resources and contribute in success of enterprise.
opposite of this, if a person does not belongs from a family having business background then in
initial level of business it remain difficult to manager things. Further past experience of an
individual is another element which hinder or foster the process of entrepreneurship. Major
factor that hinder or foster the process of entrepreneurship can be understood by the following
points:
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Level of education: Education is known as one of the most important aspect of human’s life.
It make an individual learn about how to behave in society. High level of education encourage an
individual to take risk in order to achieve success.
Family background: This is another aspect that have a great impact on mindset and
motivation of an individual. Bill gates belong from a family in which his father was a lawyer
who always motivate him to think innovative and be different from others. All family members
of Bill gates motivate him to take his own decision. Like the same, Mark Zuckerberg also get a
support from family. He faces various failures but due to support of his family he never loose
down his hope. From these incidents, it can be summarised that support and background of
family play a big role in foster process of entrepreneurship.
Nationality: This is another element that have a impact on motivation and mindset of an
entrepreneur. National culture and boundaries affect the thinking style of individual which affect
the decision taken by individuals. Both Bill gates and Mark Zuckerberg belongs to the America
and this is known as a major contributor in their success.
All these are the major element that have an impact on thinking style of entrepreneur and
also affect their motivation and mindset.
CONCLUSION
From the above given information, it can be summarized that entrepreneurship is a process
of determine, examine and work on a new concept to manufacture and offer products to target
audience with some innovative features. Different type of ventures with different aim operate in
market. Government also provide their support in development of small business enterprise in
country as this provide employment opportunities to large number of individuals and also
provide innovative solution to the people. All this boost up the economic growth of nation. To
become a successful entrepreneur some specific skill, traits and characteristics are there which
should be there in an individual. Past experience, family background, level of education and
various other elements are there which have an impact on mindset and motivation of
entrepreneur.
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REFERENCES
Books and Journals
Bhachu, P., 2017. Immigration and entrepreneurship: culture, capital, and ethnic networks.
Routledge.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small business.
Palgrave Macmillan.
Burns, P., 2010. Entrepreneurship and Small Business: Start-up. Growth and Maturity. Palgrave
Macmillan.
Carland, J. C., Carland, J. W. and Stewart, W. H., 2015. Seeing what's not there: The enigma of
entrepreneurship. Journal of small business strategy. 7(1). pp.1-20.
Carraher, S. M. and Paridon, T. J., 2015. Entrepreneurship journal rankings across the discipline.
Journal of Small Business Strategy. 19(2). pp.89-98.
Chittithaworn and et. al., 2011. Factors affecting business success of small & medium
enterprises (SMEs) in Thailand. Asian Social Science. 7(5). p.180.
Cooper, A. and Folta, T., 2017. Entrepreneurship and high‐technology clusters. The Blackwell
handbook of entrepreneurship, pp.348-367.
Dennis Jr, W. J., 2011. Entrepreneurship, small business and public policy levers. Journal of
Small Business Management. 49(1). pp.92-106.
Fassin, Y., Van Rossem, A. and Buelens, M., 2011. Small-business owner-managers’
perceptions of business ethics and CSR-related concepts. Journal of Business ethics.
98(3). pp.425-453.
Gorgievski, M. J., Ascalon, M.E. and Stephan, U., 2011. Small business owners' success criteria,
a values approach to personal differences. Journal of Small Business Management.
49(2). pp.207-232.
Islam and et. al., 2011. Effect of entrepreneur and firm characteristics on the business success of
small and medium enterprises (SMEs) in Bangladesh. International Journal of Business
and Management. 6(3). p.289.
Kirzner, I. M, 2015. Competition and entrepreneurship. University of Chicago press.
Lee-Ross, D. and Lashley, C., 2010. Entrepreneurship and small business management in the
hospitality industry. Routledge.
Luiz, J., 2011. Small business development, entrepreneurship and expanding the business sector
in a developing economy: The case of South Africa. Journal of Applied Business
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Parker, S. C., 2018. The economics of entrepreneurship. Cambridge University Press.
Schaper and et. al., 2014. Entrepreneurship and small business.
Schaper, M. ed., 2016. Making ecopreneurs: developing sustainable entrepreneurship. CRC
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Shane, S., 2012. Reflections on the 2010 AMR decade award: delivering on the promise of
entrepreneurship as a field of research. Academy of Management Review. 37(1). pp.10-
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Stokes, D., Wilson, N. and Wilson, N., 2010. Small business management and entrepreneurship.
Cengage Learning EMEA.
Storey, D. J. and Greene, F. J., 2010. Small business and entrepreneurship. Financial
Times/Prentice Hall.
Online
Impact of SMEs on growth of an economy.2018. [Online]. Available through:
<https://ec.europa.eu/growth/smes/business-friendly-environment/performance-
review_it>
(Bhachu, 2017) (Blackburn, Hart and Wainwright, 2013) (Bridge and O'Neill, 2012) (Burns,
2010) (Carland, Carland and Stewart, 2015) (Carraher and Paridon, 2015) (Chittithaworn and et.
al., 2011) (Cooper and Folta, 2017) (Dennis 2011) (Fassin, Van Rossem and Buelens, 2011)
(Gorgievski, Ascalon and Stephan, 2011) (Islam and et. al., 2011) (Kirzner, 2015) (Lee-Ross and
Lashley, 2010) (Luiz, 2011) (Neck and Greene, 2011) (Parker, 2018) (Schaper and et. al., 2014)
(Schaper, 2016) (Shane, 2012) (Stokes, Wilson and Wilson, 2010) (Storey and Greene, 2010)
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