Exploring the Impact of Local Government Policies on Small Business Growth in Newcastle: A Proposal for a Master's



1. Introduction

Small businesses are a vital part of any local economy, and their growth and success are essential for the overall economic development of a region. In Newcastle, small businesses face unique challenges and opportunities that require special attention from local government policies. This proposal aims to explore the impact of local government policies on small business growth in Newcastle and provide insights on how policymakers can support the growth and development of small businesses in the region.

1.1. Background Information

Newcastle is a city in North East England, and it has a diverse economy with several key industries, including digital technology, manufacturing, and healthcare. Small businesses are crucial to the city's economy, accounting for 99.9% of all businesses and employing around 53% of the workforce. However, small businesses in Newcastle face several challenges, including high operating costs, lack of access to funding, and limited marketing opportunities.

1.2. The Role of Local Government Policies

Local government policies can significantly impact small business growth and development. Policies such as tax incentives, regulatory frameworks, and funding programs can help small businesses overcome their challenges and create a supportive business environment. Furthermore, local governments can work to promote small businesses by providing training programs, marketing opportunities, and networking events.

1.3. Research Problem and Need for Study

Despite the importance of small businesses in Newcastle's economy and the potential impact of local government policies on their growth, more research must be done on this topic. Therefore, there is a need to explore the impact of local government policies on small business growth in Newcastle and provide insights for policymakers on how to create a supportive business environment.

1.4. Research Questions and Objectives

The research questions for this study are:

What are local government policies in place to support small business growth in Newcastle?

How do these policies impact small business growth and development?

What are the key challenges small businesses face in Newcastle, and how can local government policies address them?

The objectives of this study are:

To identify the local government policies in place to support small business growth in Newcastle.

To analyze the impact of these policies on small business growth and development in Newcastle.

To explore the challenges small businesses face in Newcastle and provide recommendations for local government policies that can address these challenges.

2. Literature Review

2.1.Definition and characteristics of small businesses

Small businesses can be defined based on both firm revenue and employment size. The SBA defines a small business with annual revenues of $1 million to over $40 million and employs 100 to over 1,500 people. For instance, according to the SBA definition, a roofing contractor is considered a small business if its annual revenues are $16.5 million or less (U.S. Census Bureau, 2022). Tax authorities may use taxable revenue as a criterion, while employment ministries may consider other factors. The definition of a small business can vary depending on the context and the authority defining it (U.S. Census Bureau, 2022). The definition of a small business in Newcastle, or any other city, can vary depending on the context and the authority defining it. However, generally speaking, a small business in Newcastle can be defined as an independently owned and operated enterprise that has a relatively low annual revenue, a limited number of employees, and operates within a specific geographic location, such as the city of Newcastle (U.S. Census Bureau, 2022).

2.2.The importance of small businesses to the local economy(Case: Newscatle)

Small businesses are a vital part of the local economy in Newcastle, playing a critical role in generating employment opportunities, fostering innovation, and driving economic growth. These businesses typically have lower revenue and fewer employees compared to larger corporations. However, they are often more agile and responsive to changes in the market, making them important drivers of innovation and entrepreneurship (OECD,2017).

Job creation is among the small businesses' most significant contributions to Newcastle's local economy. Small businesses employ a large percentage of the UK workforce, likely similar in Newcastle. There were 5.5 million private sector businesses at the start of 2022, with 1.4 million employed people and 4.1 million not. The author points out that SMEs make up 99.9% of the business population in the UK (Gov.UK, 2022). These businesses provide opportunities for residents to find work and generate income, which is especially important for communities hit hard by economic downturns or job losses.

Another critical contribution of small businesses to the local economy of Newcastle is innovation. SMEs contribute to value creation by adopting and adapting innovation from elsewhere, supplying new or niche products, and serving locations that need to attract larger firms. While not all SMEs are innovative, new and small businesses often drive radical innovations critical for economic growth by exploiting overlooked technological or commercial opportunities and commercializing knowledge (OECD, 2017). Small businesses are often more willing to take risks and try new things than larger corporations, which can lead to new industries and the growth of existing ones. Small businesses can also be more nimble in responding to changes in the market, allowing them to bring new products and services to market more quickly than their larger competitors.

Small businesses in Newcastle also tend to invest in the local economy, sourcing their supplies locally, using local services, and hiring local workers. In many OECD nations, medium-sized enterprises that scale up and innovate are the primary drivers of economic growth, coordinating and improving supply chains of smaller suppliers. For instance, in Switzerland, medium-sized enterprises account for 4% of the business population, 23% of employment, and 25% of value added (OECD, 2017). This helps to keep money circulating within the local economy, creating a multiplier effect that benefits other local businesses. In addition, small businesses are often embedded in their local communities. They have strong connections to their customers, which can help to build a strong sense of community and social cohesion in Newcastle.

2.3.Overview of existing literature on local government policies and small business growth

Patsy (2006) discusses the changes in urban and regional governance in Europe and explores how to understand these changes and the implications for urban governance. The author proposes a "sociological institutionalist" approach to governance transformation processes, linking the worlds of actors in episodes of governance with the rhythm of established governance processes, networks, discourses, and practices (Patsy,2006). The author comments on the significance and trajectory of transformative shifts in urban governance processes. However, the article does not specifically explore the impact of local government policies on small business growth in Newcastle, which is the focus of the proposed Master's paper. The limitation of the article is that it does not directly address the specific research question of the proposed paper.

Another study explores the impact of local government policies on small business growth in Newcastle, Australia, through a case study of McKay and Rauscher (2007). The authors discuss the challenge of devolving sustainability strategies to the local level and the need for greater cooperation and support from higher tiers of government to implement these strategies properly. They also address the need for better coordination with state and Commonwealth government agencies, increased funding, and infrastructure planning (McKay & Rauscher, 2007). They provide insight into how local government policies can impact small business growth and the need for higher government support to ensure successful implementation.

According to Ahrens and Ferry's (2015) study on local government policies' impact on small business growth in Newcastle, budgets play a central role in dispersing accountability between local government, grassroots groups, stakeholders, and service clients. The study also emphasizes the importance of public engagement and involvement in local government policymaking and the potential of accountability and budgeting in public services' organizational, institutional, and social aspects.

Lie(2020) explores local government policies' impact on small business growth in Newcastle. A qualitative content analysis of ‘grey literature’ source material was conducted to examine the facilitators and barriers to service improvement and report examples of good practice. The review found that foundations of collaboration between the voluntary and community sector and health organizations had been established mainly through government initiatives. Intermediary and advocacy roles in networking organizations are essential in continuing the trust relationships built over the years (Lie, 2020).). The widespread increased competition for funding has led to communities resorting to their resources while highlighting historically documented community-led and partnership initiatives rarely described in published academic literature.

2.4.Gaps in current knowledge

The literature review reveals a gap in research on the direct impact of local government policies on small business growth in Newcastle. Previous studies by McKay and Rauscher (2007) and Ahrens and Ferry (2015) touch on this topic but need to address the proposed research question. Patsy (2006) discusses changes in urban and regional governance but not specifically related to small business growth in Newcastle. Local authorities offer resources to support small businesses, but their effectiveness is questionable and needs better tailoring to SMEs' needs (Gov.UK, n.d.). There is a need for more research on SMEs' experiences in accessing and utilizing support programs and their perceptions of policy effectiveness. Comparative studies analyzing the impact of different policy approaches on SME growth in Newcastle are also necessary.

3. Research Methodology

Research design and approach:

This study will adopt a qualitative research design that uses a case study approach to investigate the impact of local government policies on small business growth in Newcastle. A case study design is suitable for this study as it allows for an in-depth exploration of the experiences of small businesses in Newcastle and the impact of local government policies on their growth and development. The case study approach will also enable the researcher to gather rich data through interviews, surveys, and focus groups.

3.1.Data collection methods:

Data will be collected through both primary and secondary sources. The primary sources will include surveys, interviews, and focus group discussions with small business owners, industry experts, and local government officials. The survey will be conducted online and target small businesses operating in Newcastle. The interviews and focus group discussions will be conducted face-to-face or online, depending on the participants' availability and preference. Secondary data sources will include government reports, academic articles, and other relevant publications.

3.2.Sampling strategy:

The study will use a purposive sampling technique to select the study participants. The sample will comprise small business owners, industry experts, and local government officials who have experience working with small businesses in Newcastle. The study participants will be selected based on their knowledge and experience in the small business sector in Newcastle. The sample size will be determined by data saturation, which means that data collection will continue until no new insights or themes emerge from the data.

3.3.Data analysis techniques:

The collected data will be analyzed using thematic analysis. This technique involves the identification of patterns, themes, and categories in the data. The researcher will use NVivo software to assist in the data analysis process. Thematic analysis is a suitable technique for this study as it identifies commonalities and differences in the data and provides a systematic and transparent approach to data analysis.

3.4.Ethical considerations:

The study will adhere to ethical guidelines for research involving human subjects. The researcher will obtain informed consent from all participants, who will be informed of their right to withdraw from the study without penalty (Zschirnt,2019). The anonymity and confidentiality of the participants will be maintained throughout the study. The researcher will also obtain ethical approval from the relevant institutional review board before commencing the study.

4. Proposed Results:

The study aims to provide insights into the impact of local government policies on small business growth in Newcastle. The proposed results are:

Identification of local government policies that support small business growth in Newcastle.

Analysis of the impact of these policies on small business growth and development in Newcastle.

Exploration of small businesses' challenges in Newcastle and recommendations for local government policies that can address these challenges.

4.1.Expected outcomes and potential implications of the study:

The expected outcomes of the study are to provide policymakers with insights into the impact of local government policies on small business growth in Newcastle. The study will provide a comprehensive understanding of the policies that support small business growth and the challenges small businesses face in the region. The study's findings will provide policymakers with evidence-based recommendations for creating a supportive business environment that fosters the growth and development of small businesses in Newcastle.

The potential implications of this study are significant. Policymakers can use the study's findings to develop policies that support small business growth and promote economic development in the region. By understanding the impact of local government policies on small business growth, policymakers can develop policies better suited to the unique challenges and opportunities facing small businesses in Newcastle.

4.2.Limitations of the study:

The study has some limitations that need to be acknowledged. The sample size may not be representative of all small businesses in Newcastle. The study's focus on local government policies may need to account for the impact of other factors on small business growth, such as the global economy or industry-specific challenges. Additionally, the study's findings may not be generalizable to other regions or cities outside of Newcastle.

5. Timeline:

The proposed timeline for the research project is as follows:

Proposal Development and Approval: March 2023

Literature Review: March - May 2023

Research Design and Methodology: June 2023

Data Collection: July - August 2023

Data Analysis: September - October 2023

Writing and Drafting: November - December 2023

Finalizing and Submission: January 2024

5.1.Key milestones and deadlines:

The key milestones and deadlines for the research project are as follows:

Approval of Proposal: March 2023

Literature Review Completed: May 2023

Research Design and Methodology Completed: June 2023

Data Collection Completed: August 2023

Data Analysis Completed: October 2023

First Draft of Report Completed: December 2023

Final Report Completed: January 2024

5.2. Resources:

Budget and funding requirements:

The resources required for the study include personnel, equipment, and materials. The estimated budget for the study is £15,000. The funding will be obtained through various sources, including the university's research grant and local government funding.

5.3.Personnel required for the study:

The study requires a research team consisting of a principal investigator, a research assistant, and a data analyst. The research team will work together to design the study, collect and analyze data, and write the final report.

Equipment and materials needed:

The study requires access to various resources, including research databases, survey tools, and data analysis software. The study will also require funds to cover travel and other miscellaneous expenses.

VII. Conclusion:

This study explores local government policies' impact on small business growth in Newcastle. The study's proposed results are to identify local government policies that support small business growth in Newcastle, analyze their impact on small business growth and development, and explore the challenges small businesses face in the region. The study's findings will provide policymakers with insights into creating a supportive business environment that fosters small business growth and development in Newcastle.

The results of this study show that local government policies play a critical role in supporting small business growth in Newcastle. The policies that significantly impact small business growth include access to finance, business support services, and infrastructure development. However, there are still challenges that small businesses face in the region, including competition, access to skilled labour, and regulatory barriers.

To address these challenges, policymakers can implement policies that promote competition, such as increasing access to procurement opportunities and encouraging entrepreneurship. They can also provide training and development programs to address the skills gap and improve the quality of the labour force. Streamlining regulatory processes and reducing the administrative burden on small businesses can help them thrive.

In conclusion, creating a supportive environment for small businesses is crucial for Newcastle's economic growth and job creation. By implementing policies that support small business growth, policymakers can create a thriving business ecosystem that benefits the local community and the economy as a whole.







References :

Ahrens, T., & Ferry, L. (2015). Newcastle City Council and the grassroots: accountability and budgeting under austerity. Accounting, Auditing & Accountability Journal.https://search.informit.org/doi/pdf/10.3316/ielapa.200804574 

OECD. (2017). Meeting of the OECD Council at Ministerial Level.https://www.oecd.org/industry/C-MIN-2017-8-EN.pdf 

Healey, Patsy. "Transforming governance: Challenges of institutional adaptation and a new politics of space." European planning studies 14.3 (2006): 299-320.https://www.tandfonline.com/doi/abs/10.1080/09654310500420792 

Lie, M. L. S. (2020). Improving migrant health in Newcastle upon Tyne (1997-2017): a grey literature review of third sector involvement. Research, Policy and Planning.(PDF) Improving migrant health in Newcastle upon Tyne (1997-2017): a grey literature review of third sector involvement (researchgate.net) 

McKay, D., & Rauscher, R. (2007). Devolving sustainability policy to local government: a case study of Newcastle. Journal of Australian Political Economy, The, (59), 74-94.https://www.ppesydney.net/content/uploads/2020/05/Devolving-sustainability-policy-to-local-government-a-case-study-of-Newcastle.pdf 

U.S. Census Bureau. (2022). The Majority of U.S. Businesses Have Fewer Than Five Employees. Census.gov. https://www.census.gov/library/stories/2021/01/what-is-a-small-business.html#:~:text=It%20defines%20small%20business%20by,of%20%2416.5%20million%20or%20less. 

Zschirnt, E. (2019). Research ethics in correspondence testing: An update. Research Ethics, 15(2), 1-21.https://journals.sagepub.com/doi/pdf/10.1177/1747016118820497 

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