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How SME takeover targets affect regional productivity.

Nicholls, Tom 2011. How SME takeover targets affect regional productivity. PhD Thesis, Cardiff University.

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Abstract

This thesis uses a new data set (BSD) of nearly all British firms that allows the study of small businesses in a spatial context, with particular attention to the market for SME control. The aim is to understand whether this market contributes to the productivity gap between core (London and the South East) and peripheral regions in Britain. It might do so if larger firms attempted to compensate for a lack of internally generated innovation by acquiring and absorbing productive small enterprises. Regular culling of top performing small firms in the periphery by 'outside' businesses could then stunt a region's capacity for indigenous development. On the other hand, acquisition by larger firms (perhaps from the core) may enable SMEs to improve their performance and thereby enhance a region's economy. In fact contrary to the experience of large firms, more productive small businesses have a higher likelihood of being acquired -- although there is a lower rate of takeovers more generally in the peripheral regions than in London and the South East. Takeovers also increase the chances of SMEs exiting, but this effect is stronger for the core region as well. Takeovers raise productivity after acquisition but by less, or even with deleterious effects, for the most productive SMEs. Combining the rate of takeovers with their effect on exits and performance, the overall, net beneficial, impact on regional productivity from the targets of SME acquisitions is slightly larger in the core than in the periphery. This is due to the differential rate of takeovers between locations. Rather than regarding the effects on SMEs from acquisitions as harmful to periphery regions, policy makers should attempt to understand why takeovers are less frequent there, and consider ways of improving the operation of the market for small businesses, especially in the periphery.

Item Type: Thesis (PhD)
Status: Unpublished
Schools: Business (Including Economics)
Subjects: H Social Sciences > HF Commerce
Date of First Compliant Deposit: 30 March 2016
Last Modified: 19 Mar 2016 23:32
URI: http://orca.cf.ac.uk/id/eprint/55503

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