SMALL BUSINESS DEVELOPMENT IN REMOTE RURAL-AREAS - THE EXAMPLE OF MATURE MANUFACTURING FIRMS IN NORTHERN ENGLAND

There is a growing interest in the potential contribution of small and medium sized enterprises (SMEs) to rural economic development, as ref lected in the Rural Development Commission's strategy for the 1990s. U sing some evidence on the development of mature manufacturing SMEs in remoter rural areas during the 1980s and comparing them with similar u rban based firms, the paper shows that whilst there was little differe nce between the rural and urban SMEs in terms of their growth performa nce when measured by sales turnover, the rural firms generated signifi cantly more jobs. This indicates a different relationship between SME growth and employment generation in different geographical environment s. SMEs in remote rural areas are shown to pursue rather different dev elopment paths than their urban counterparts resulting from the way in which they adjust to the opportunities and constraints afforded by th eir local operating environments. The main section of the paper focuse s on three particular kinds of adaptation: (i) to local market conditi ons, and in particular on the ability of SMEs to make the transition i nto national and international markets; (ii) to local labour market co nditions, including various qualitative characteristics of rural labou r such as skill levels and functional flexibility; and (iii) to the la ck of an industrial milieu, especially the limited opportunities for e xternalising production. The paper concludes by raising some concerns about the longer term competitiveness of SMEs in remote rural areas in cluding low levels of labour productivity, technological backwardness and skill levels within the workforce. Copyright (C) 1996 Elsevier Sci ence Ltd