The Founders of New Manufacturing Firms: A Note on the Size of their `Incubator' Plants

Abstract

IN an article in this journal in 1955 Beesley [2] put forward the proposition that larger plants may provide better incubator environments than smaller ones for stimulating the growth of entrepreneurial aspirations in their work forces. Employees of such plants would thus be more likely to set up in business on their own account. In comparing the north-west and south-west zones of the West Midlands, he suggested that the higher rate of formation in the metal industries in the former might have been attributable in part to the fact that they had relatively more larger plants; this 'may have given the zone as a whole more experience of management techniques'.' On the other hand, however, other writers (e.g. Cooper [3]) have suggested that there are good grounds for holding the opposite view. It is, for example, more likely that employees of smaller plants will have greater contact with individuals who have themselves set up in business. They will gain greater familiarity with the types of market that could be served by a new business, which in the early years at least is almost inevitably going to be small. They are also likely to obtain greater all-round experience in the running of a business. While these arguments in favour of the small unit as an incubator have been put forward mainly in the context of technological spin-off, i.e. the formation of new enterprises in science-based industries, they are not specific to it and could have more general applicability. The effect of plant size on fertility in terms of new business formation is not of academic interest only. The absolute size of plants has been increasing in the UK over a fairly long period (Prais [9, pp. 5i-4]) and it would be useful to know whether this trend is likely to have any effect on the rate of