A Comparative Analysis of Small Business Development Policy in Germany, Poland, England and the United States

Abstract

This Senior Independent Project consists of an international comparison of the manner in which Germany, Poland, England and the United States support small business. It compares particular policy programs, while discussing the cultural and historical reasons these programs exist and differ from one another. My interest in this area evolves from the fact that I have been exposed to the operations of small businesses from early childhood. I grew up with both my parents owning a small firm. My interest expanded while traveling and researching small business policy in Germany, Poland and England during my study abroad experience. The thesis is divided by country. I discuss how each government reacts to the unique problems that the small business sector faces. I also discuss the common elements throughout the small business community, regardless of nationality. One of these common elements is the shift in public policy that occurred in the early 1980's regarding small firm development. This began with an empirical study in the United States which strongly suggested that small businesses were a major contributor to job creation. This caused policy changes throughout the United States and much of Europe that lead to the added support of small business. This was especially true in England, where the election of the conservative Thatcher administration in 1979 also helped the small business sector. Poland seems to be an exception to this rule because of its unique communist past. Their radical shift came in the early 1990's, when the entrepreneur was still a new idea within the Eastern bloc. When one realizes that deep cultural histories help to form small business policy in each country, one can better understand why each country supports small business at different levels. For example, traditionally in Germany, high levels of spending exist for all social programs. This mindset is translated to a relatively large amount of government support for small businesses within Germany. Whereas in Poland, there is a much lower amount spent on small business for a number of cultural and historical reasons. One of these is that the entrepreneur is a totally new idea for Polish people and policy makers, this causes a lack of support for the small business sector. The other reason is that the Polish government tends to equate the small businessperson with the illegal activities of the non-taxpaying black market. These two reasons help to explain why Poland does not support their fledgling small business sector as much as the three other countries studied. England is another interesting case. They are pulled between the European policy of spending more on social welfare programs, and the United States historical policy of letting the individual fend for her/himself. England seems to be somewhere in the middle of these two extremes. However, of the four countries I studied, England's support for small business has increased most dramatically in the last twenty years. The United States believes in supporting the individual small businessperson, but is wary of anything bordering "socialism". This helps to explain why the actual monetary support for small business is relatively low in the United States, though the esteem for the small businessperson is high. Each one of these case studies show that there is more to supporting the small business sector than first appears.