City economies and microbusiness growth

Donald Houston, Darja Reuschke

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    Abstract

    In developing countries, microbusinesses (those employing fewer than 10 people) and homebased businesses have been systematically overlooked in urban economic development thinking. This article assesses the influence of city location and being run from the business owner’s home on microbusiness growth, based on empirical analysis of panel firm-level data over a four-year period during the UK’s long boom. The analysis reveals that cities provide benefits to microbusinesses for turnover growth but not for employment growth – suggesting that the additional growth induced by cities for microbusinesses may be jobless growth. However, in the case of microbusinesses run from the owner’s home, cities facilitate growth into medium-sized businesses (with 50+ staff). In conclusion, microbusinesses, including those run from business owners’ homes, are integral to the evolution and dynamics of urban economies and essential to understanding the nature of growth in cities. Agglomeration theory needs to say more about how urban agglomeration benefits firms of different types and sizes, and small business and selfemployment research needs to say more about the influence of location, in particular cities.
    Original languageEnglish
    Pages (from-to)3199-3217
    Number of pages19
    JournalUrban Studies
    Volume54
    Issue number14
    Early online date1 Dec 2016
    DOIs
    Publication statusPublished - 1 Nov 2017

    Keywords

    • agglomeration
    • growth
    • home-base businesses (HBBs)
    • microbusinesses
    • microenterprises

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