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EUROPEAN SMALL BUSINESS GROWTH TRENDS
AND FUTURE FORESIGHT
Karolis MATIKONIS
Manchester Metropolitan University,
Faculty of Business and Law, Manchester, United Kingdom.
Abstract
Purpose of the research. This paper aims to review the literature on the phenomenon of employment creation
by small firms at a regional level.
Research methodology. This study adopted a systematic literature review method. The approach built on other
literature reviews with more critical analysis of the literature. Initially, the literature review focused on the two
highly ranked management journals that published just literature reviews. Although those analyses of reviews
provided understanding about the subject development, it needed to be updated and modified. Therefore,
different terms and restriction criteria were formed and 45 articles analysing employment between 2005 and
2015 were coded. However, the study was not limited to those materials. By looking at other literature
reviews, citations and co-citations, fourteen key empirical up to date articles from various journals were added
to coding.
Results and research implications. Job creation phenomenon was investigated and debated by at least two
streams of research converging on the issues of how firm characteristics influenced job creation and what
quality of employment small firms created. The study identified three main issues that should be explored:
income, contractual relationship and security. The four main areas dominated the field: growth,
entrepreneurship, economics, and regional development. There were many exploratory and explanatory
empirical studies, but there are still avenues for future research particularly in the quality of jobs created by
high growth firms (HGFs) at the regional level. For example, speculations about HGF’s being innovative and
their highly appreciated skilled labour should be confirmed.
Keywords: literature review, growth, SME, small firm, entrepreneurship, business, region, HGF.
Introduction
In 1979, Birch formulated the pioneering idea that ‘small firms generated 66% of all new
jobs generated in the U.S.’ (8). Although Birch’s (1987) theories were criticized by studies
such as Dennis and Phillips (1994), the significance of the role of small firms in job creation
became accepted (Cowling et al., 2015; Du & Temouri, 2015). Recently, Anyadike-Danes et
al. (2015) found that around 6% of all firms added about 40% of net jobs by all 15-year
survivors in the UK. Although Anyadike-Danes et al. (2015, 22) claimed that those firms
‘require further analysis … to understand the process of small business growth’, researchers
(Senderovitz et al., 2015) and policy makers (Huggins et al., 2015) were concentrating on
growth for the past few decades and came up with contradicting ideas. For example,
Eisenhardt and Schoonhoven (1990) and Wennberg (2009) speculated about HGF’s being
innovative and their highly appreciated skilled labour, whilst others (Coad et al., 2014; Lepak
& Snell, 1999) had quite the opposite view.
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