Why Northern Ireland business start-up policy is failing

Earlier this year the Enterprise Research Centre issued a press release which included this finding attributed to the GEM (Global Entrepreneurship Monitor) 2021-22 report: ‘More than 70% of Britons believe that it is easy to start a business in the UK, but less [stet] than one in ten has any intention of doing so.’ writes Dr Simon Bridge.

This observation is particularly relevant to Northern Ireland because, since the 1980s, we have had a policy aim of increasing the rate of business start-ups. This followed research by David Birch in the United States which indicated that, were there was an increase in new jobs, they came from small businesses. This was a time of rising unemployment so governments wanted more small businesses for the jobs they expected them to create.

Business start-up policy

For instance it was to this end that, when Invest NI launched its Accelerating Entrepreneurship Strategy in 2003, it indicated that its vision was’ to make Northern Ireland an exemplar location for starting and growing a successful business’. Thus it continued the policy, started by the earlier small business agency LEDU, of providing support for start-ups. However, while LEDU had tried to offer a combination of funding, business training and networking opportunities, Invest NI soon reduced the assistance just to help with the production of a business plan.

However many people have argued that ‘business plans’ are not a good help for start-ups, especially when they are the only support offered. Also policies of encouraging start-ups by making it easy to do and/or providing assistance have not worked, either here or elsewhere, as the statistics consistently show that start-up rates have not consequently risen.

That is why the quote at the start of this article is interesting because it highlights the role of intentions in this process – a factor which policy has generally ignored. Actually LEDU did indicate that it wanted to look at attitudes to enterprise alongside its provision of assistance but, with no institutional memory for such long-term views, that aspiration got lost in the subsequent turnover of staff and, indeed, of organisations.

As the proverb says: ‘you can lead a horse to water but you cannot make it drink’ – so why have we insisted on continuing to take the horse to water, or to take water to the horse, on the apparent assumption that it must want to drink because that suits our approach.

Donald Rumsfeld famously referred to ‘known unknowns’ – the things we know we don’t know, but not to the ‘unknown knowns’ – the things we could know but have managed not to know, possibly because we don’t want to know them.

Thus policy appears not to have known about intentions even though, for those who are prepared to look, there are many articles and books which stress that human beings are a very social species who are strongly influenced by the apparent attitudes of the people in their social circles.

Whether this is referred to as culture, society ‘rules’, social capital or other labels it is clear that what people do, even in their economic and financial transactions, is determined less by logic (despite traditional economic thinking) than by social example and/or pressure.

Thus people are unlikely to think of starting their own business if they think that, by doing so, they may sacrifice prospects in a recognised career and/or the social standing that goes with it.

But in this area, policy thinking seems to have ignored cultural pressure and assumed that people will want to start businesses if they are offered assistance to do that. It probably suited the policy makers to follow the conventional wisdom, custom and practice and/or what was apparently being lauded elsewhere – but that hasn’t worked.

Is it therefore time for Northern Ireland to stop looking to others for ideas to copy and to try to develop our own approaches and thus lead the field rather than constantly seeking to follow it? That does not mean they we know immediately what to do, but it does suggest a need to look and an area to explore.

However that would require the application of a ‘trial and error’ approach which does not sit well with public service accountability systems – but that is another story.

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