managing regulation: what small firms need to know

12th June 2012

agenda

1.00 what are your assumptions about regulation?

1.15 our project

1.25 our findings: how you enhance firm performance

2.20 coffee

2.35 have your say: what goes on in your firm?

3.35 wrap up

what are your assumptions about regulation?

outcomesinsights for small firms

encouraging better regulation

deepening the knowledge base

the projectESRC study of how small firms receive, understand and respond to regulation

why?we know lots about what entrepreneurs say/think, less about what they do

researching businesses over time is needed to see how they adapt to change

what we didworked with 14 high growth small firms in the North East and East

Midlands over 28 months

funded by UK government’s ESRC and supported by BIS

Sector Firm Approx size Year founded

Location

Bio-Business Bio 1 (bio-tech software development) 30 1989 North East

Bio 2 (drug manufacture) 50 2008

Bio 3 (drug delivery technologies) 15 2002 East Mids

Bio 4 (drug development) 52 2007

Environmental Services

ES 1 (waste treatment ) 20 2002 North East

ES 2 (environmental testing service) 40 1999

ES 3 (pollution control ) 10 1995

ES 4 (sustainable energy) 20 2007 East Mids

Security S1 (vision technology) 32 1992 North East

S2 (imaging technologies) 40 2003

S3 (clothing/armour protection) 40 1989 East Mids

Film & Media FM 1 (digital communications) 10 2000 North East

FM2 (design agency) 7 1990 East Mids

FM3 (TV facilities company) 7 1998

the fieldwork

• collection of data from web, trade press etc.• keeping abreast of policy developments• http://www.youtube.com/watch?v=UmmQao_Hjeg

• interviews with owner-managers, workers, policy makers, regulatory bodies, VCs...

• three sweeps of interviewing and observing work in each of 14 sample firms

our findings in 7 questions:how you enhance firm performance

1. in what ways can regulation be a burden to you?

2. in what ways can regulation be an opportunity for you?

3. what kinds of regulation matter most to you?

4. who is regulating you?

5. in what ways do you shape regulation?

6. who helps you manage regulation?

7. how do you get on with regulators?

1. in what ways can regulation be a burden to you?

• the usual suspects: staff time = cost, administrative duplication, lack of enforcement, unclear and inconsistent guidelines, employment law stacked in favour of employee, unfair for small firms...

• it assumes the worst of us: employment law“built on a premise that all employers are bastards!” (bio-science

– maternity)

• lack of clarity about policy intentions and timing“the speed and clarity of decisions damages businesses”(sustainable technology – Feed-in-Tariff policy)

• trend of displacing burden to the firm“all they've done by that is move the anxiety and the burden onto the firms” (bio-tech software – Companies House audit)

2. in what ways can regulation be an opportunity for you?

• creates market opportunities• promotes innovation: incentives for new technology development

(imaging technologies – airport security)

• changes in policy frame market behaviour (sustainable technology – energy incentives policy)

• signals legitimacy in the marketplace“keeps out the cowboys” (environmental services – complying with laboratory protocols)

• signals market leadershipinternal code of conduct to alter behaviour in supply chain (sustainable technology)

• sustains regulatory services industry: creates jobs!

3. what kinds of regulation matter most to you?

• investment in core business model versus ‘simple compliance’

sector specific intellectual property versus out-sourced generic health and safety (drug delivery technologies)

• protection from litigationexpert advice on redundancy procedures (digital communications)

4. who is regulating you?

• not just the government, but your financierscurrent and future investors require certain behaviours from us (drug delivery technologies)

• other firms or parent companiesimposing standards, IT systems, targets, culture (drug development – customers/supply chain)

• you!your culture, aspirations and expectations (sustainable technology - professionalization)

5. in what ways do you shape regulation?

• lobbying regulatory bodiesmeetings with regulators, UK, EU, global (security technology – emerging rules/policies: airport security)

• routinely exercising your voicesitting on various boards, steering groups (environmental services – engagement with EA)

6. who helps you manage regulation?

• external consultants and expertsfeeling safe, especially with HR regulation (bio-tech software – “it’s a security blanket”)

• personal contacts and old friends/colleaguesknowledge sharing via adapting documentation/systems from a previous employer (environmental services – ISO compliance)

• regulatorsconsulting regulatory body prior to innovation (drug delivery, paying MHRA: “it was money well spent”)

7. how do you get on with regulators?

• lots of you don’tlimited contact, little knowledge or understanding (“Our relationship with HMRC? There is none” medical technology developer)

• some of you have regular informal contact which is strategically useful (environmental testing – HSE Inspector: “not everyone’s got that degree of access”)

coffee

discussion groups – have your say

1. Do our findings reflect your experiences or those of your clients?

2. Are there any other regulatory issues you would like to raise?

wrap up

• http://www.ncl.ac.uk/nubs/research/projects/rebel.htm

• our dissemination plans (e.g. FSB, EA, BRDO...)

• June 29th policy-oriented conference (BIS, London)• Where Next for Small Business Regulation? Building Better Policy,

12.30-2.30• register: http://forms.ncl.ac.uk/view.php?id=3190 

• further academic research• further knowledge exchange grants• post-doctoral researcher

• how else can we reach you (and other firms) with our messages?

• please complete feedback form

thank you