A consideration of Canadian government measures for simulating small business growth

Abstract

As an introduction, Chapter I attempts to: l. present an overview of Canadian economy and small business. 2. define the purpose and objectives of the study, and 3. outline the method used for the study. The efforts of Chapter II are directed towards the definition of small business by examining three popular approaches for the definition: Structural Approach, Behaviourial Approach. ang Generic Consideration. Arguments of all three alternatives were analyzed. Consequently, from the operational point of view and the purpose of this study, the structural definition is adopted, nevertheless, it is assumed that business is normally managed by its owner or owners. Chapter III concentrates its deliberation on the Economic Justification for Promoting Small Business. The argument presented in the chapter compares the relative efficiency of the smaller firm with that of larger company, its innovative activities and above all the resources consideration. t was concluded that there is no clear evidence that small firms are less efficient than large corporations, moreover, from the point of view of both the innovative activities and resources allocation, the performance of the smaller firms must, be recognized. For this reason, the government's efforts in promoting the growth of smaller firms is justifiable. However, the question of the extent to which the government should be involved in stimulating small business growth is yet to be examined. Chapter IV establishes a set of general criteria relating to small business development policy. Essentially, it emphasizes the importance of understanding the behaviourial characteristics of the owner/managers of small firms; the need of regional emphasis and above all, the self-sufficiency and self-reliance be the focal point of all government undertakings. Chapter V examines Canadian government policies affecting small business growth in retrospect. The examination includes major protective policies, and the various government incentive programmes and grants. Finally, the chapter closely examines the establishement of the Industrial Development Bank 3 its objectives, operations and accomplishments. Government measures to assist the small business since 1975 were assessed in Chapter VI. The first part of the assessment concentrates on the purposes and objectives of the Federal Business Development Bank and its first 2 years performance since its incorporation, A comparison is also made on the structural difference between the Industrial Development Bank and the Federal Business Development Bank. The latter section of the chapter is devoted exclusively to recent government undertakings, including the inauguration of the Minister of State Small Business, the Enterprise Development Programme and Enterprise Canada '77. As a general consideration for government measures in aiding the small business, Chapter VII analyzes the fundamental issues of the Canadian economy as related to small business. development problems encountered by Canadians. The lack of an effective industrial strategy, strong government presence and government influence on entrepreneurship are thought to be experienced by the small business community in Canada. Specific considerations are directed into inquiries of various crucial areas affecting Canadian small business growth (Chapter VIII). This includes a detailed assessment of the effectiveness of the operations of the Federal Business Development Bank, the government grants and incentive programmes on the basis of early established development criteria, taxation, the presence of crown corporations, legislation and regulations as well as the attitude of small business owner/managers towards the government. To conclude the findings of the study, Chapter IX reveals some of the policy recommendations made by the Canadian Federation of Independent Business that have been implemented by the government, At the same time, it is re-emphasized that should any attempt be made to resolve Canadian small business development problems, the need of adopting an effective industrial strategy must be taken into account, furthermore, the fundamentals of such a strategy must be based on self-sufficience and self-reliance. The model used by Ryerson Polytechnical Institute is demonstrative of total involvement in promoting small business by an educational institution and other undertakings in the private sector on self-sufficiency projects. These are illustrated and recommended as a starting point to begin the search for an effective small business policy for Canada.