Firm Growth, Exit & Renewal

12th to 15th century · roughly 700 years ago

Craft guilds across medieval Europe, the Islamic world and China regulated training and quality to help small workshops survive across generations

Guilds set apprenticeship terms, quality standards and pricing rules for trades from textiles to metalwork, giving small family workshops a structure that supported long-term survival and gradual growth in a way individual artisans could not achieve alone.

1890 · 136 years ago

The economist Alfred Marshall described the advantages of localised clusters of small firms

His account of industrial districts explained how firms concentrated in one trade and place gained shared access to skilled labour, specialist suppliers and diffused technical knowledge, an early theoretical basis for why small firms cluster and grow together rather than alone.

• Later economists applied the same clustering logic to modern technology hubs

1930s · about 90 years ago

The Japanese economist Kaname Akamatsu proposed the 'flying geese' model of industrial catch-up

The theory described industries, and the small and large firms within them, moving in sequence from one developing economy to the next as wages and skills rose, later used to explain the successive rise of manufacturing bases across East and Southeast Asia.

1950s · about 70 years ago

Toyota extended its production and quality methods down its supplier network

Smaller manufacturers tied into the keiretsu supply chain adopted just-in-time delivery and continuous improvement practices under the parent firm's guidance, raising their productivity and survival prospects far above unaffiliated small manufacturers.

1953 · 73 years ago

United States Congress mandated a 23 per cent small business share of federal prime contracts via the Small Business Act of 1953

The Small Business Act of 1953 legally obliged the federal government to direct a fair portion of the total value of its prime contracts to small firms, later fixed at 23 per cent. Guaranteed procurement access became one of the principal state mechanisms supporting small business survival and expansion.

1955 · 71 years ago

Ray Kroc built the McDonald's franchise system

Selling the right to operate a standardised outlet under a shared brand and format let a business concept expand rapidly through many independently owned small enterprises, establishing franchising as a durable model for scaling beyond a single owner's capital.

1970s · about 50 years ago

Clusters of small manufacturers in central and north-eastern Italy became known as an industrial district model of collective growth

Networks of specialised small firms in textiles, ceramics and footwear, concentrated in towns such as Prato and Sassuolo, achieved efficiencies normally associated with large factories by sharing skilled labour, suppliers and knowledge within a local area.

1979 · 47 years ago

David Birch identified 'gazelles' as the source of most net new jobs

David Birch's research on American firms provided the first empirical evidence that small firms, rather than large corporations, generated most new jobs, finding that companies with fewer than 100 employees created the bulk of new employment and that a small minority of fast-growing firms he later labelled 'gazelles' accounted for most net job growth. The finding reframed small business survival and growth as a central economic policy concern, reshaped how governments targeted small business support and drove much subsequent interest in entrepreneurship.

1980s · about 40 years ago

China's township and village enterprises grew into millions of small rural manufacturers before mass privatisation in the late 1990s

Collectively and locally owned firms absorbed rural labour and produced a huge share of industrial output during the decade, an experiment in small-firm growth outside the state and private-ownership categories that shaped later Chinese industrial policy.

1984–98 · 42 years ago

UK franchising sector saw only 36 per cent of franchisors survive from 1984 to 1998

Research found that of 1,658 franchising companies operating in the UK in 1984, only 601 remained by 1998. The figures undercut assumptions that franchising guaranteed small business survival.

late 1990s–2000s · 36 years ago

Small businesses exploited the Internet revolution to serve specialised niches

The spread of the internet from the late 1990s made online marketing well suited to small firms, which could reach narrow niches that had previously been impractical to serve. This lowered the cost of market access and altered the growth prospects of very small businesses.

1990–2002 · 36 years ago

Researchers studied how partnerships and alliances affect small business outcomes

Research conducted between 1990 and 2002 examined how relationships such as partnerships and alliances made a substantial difference for small businesses. It pointed to business networks as a factor in small firm survival and expansion.

1996 · 30 years ago

Hermann Simon documented Germany's 'hidden champions'

His study identified hundreds of little-known small and medium manufacturers that had become world market leaders in narrow product niches, offering an influential model of growth through specialisation and export focus rather than diversification.

• Many hidden champions exported most of their output

1996–2003 · 30 years ago

South African legislature defined small business through the National Small Business Act and its 2003 amendment

The National Small Business Act (Act 102 of 1996) established five classification categories, and the National Small Business Amendment Act (Act 26 of 2003) refined them using industrial sector, size class, paid employees, turnover and asset value. Formal definition determined which firms could access state support.

1997 · 29 years ago

The 1997 Asian financial crisis exposed the fragility of small suppliers dependent on large, debt-heavy conglomerates

As chaebol-linked lending collapsed across South Korea and neighbouring economies, governments moved afterward to build dedicated small and medium enterprise support agencies and credit guarantee systems, treating SME resilience as a matter of national economic stability.

2002 · 24 years ago

US federal investigators began uncovering diversion of small business contracts to large corporations

From 2002 a series of federal investigations found fraud, abuse, loopholes and weak oversight in small business contracting. Billions of dollars intended to support small firms were found to have gone to large corporations, undermining the procurement set-aside as a growth mechanism.

2007 · 19 years ago

US Small Business Administration credited small firms with two-thirds of net new private-sector jobs

The SBA found that since 2007 small businesses generated two-thirds of net new private-sector jobs in the United States. The finding sustained the policy case for supporting small business survival and growth.

2009 · 17 years ago

Australian Parliament defined a small business as fewer than 15 employees under the Fair Work Act 2009

The Fair Work Act 2009 set the Australian statutory threshold for small business at fewer than fifteen employees, while the Australian Bureau of Statistics uses fewer than twenty. The legal definition governs which firms receive lighter regulatory treatment.

Early 2026 · 6 months ago

Cloud-based accounting and e-commerce tools kept lowering the cost for Southeast Asian small firms to formalise and scale operations

Affordable software for bookkeeping, payments and online sales let more micro and small enterprises in Indonesia, Vietnam and the Philippines move beyond a single owner-operator stage without hiring specialist back-office staff, a persistent barrier to growth in the region.

• Indonesia linked formalisation incentives to platform use

April 2025 · 1 year ago

Donald Trump announced Liberation Day tariffs that destabilised small business trade

Tariffs announced on 2 April 2025 were followed by a global stock market collapse, layoffs and economic turmoil, with a legal challenge filed on 14 April 2025. Smaller margins, thinner cash cushions and tiny staffs left small businesses especially vulnerable to such trade shocks.

2025 · last year

Turkey's small businesses kept facing very high borrowing costs even as the central bank began cutting rates

After holding its policy rate near fifty per cent to curb inflation, the central bank started a gradual cutting cycle, but credit for small and medium enterprises remained expensive, continuing to constrain firms' ability to invest and grow.

2025 · last year

The OECD again flagged a widening gap between a small share of high-growth firms and a long tail of stagnant small businesses

Cross-country comparisons found that only a small minority of small and medium enterprises ever add substantial employment or revenue after their first years, with most remaining the same size indefinitely, a pattern linked to financing, management skills and regulatory thresholds.

2025 · last year

South Korea's Ministry of SMEs and Startups expanded support aimed at growing more small firms into unicorns

Programmes offering scale-up financing, overseas expansion support and regulatory sandboxes targeted a cohort of promising small and medium enterprises, part of a long-running government effort to grow the country's small number of billion-dollar start-ups.

2025 · last year

Bangladesh continued preparing smaller exporters for the loss of trade preferences due at graduation from least-developed-country status

With graduation delayed to November 2026, garment-sector small and medium exporters and their government backers used the extra time to diversify export markets and upgrade compliance ahead of the preferences they are due to lose.

2025 · last year

Nearshoring investment in northern Mexico continued pulling smaller manufacturers into supplier networks serving United States-bound production

As multinational manufacturers relocated supply chains closer to the United States, Mexican small and medium manufacturers won new contracts as tier-two and tier-three suppliers, though many still struggled to meet the quality and financing requirements needed to grow into the role.

2025 · last year

The African Continental Free Trade Area added more countries and products to its guided trade initiative

The pilot scheme, designed to let smaller exporters test cross-border trade under the continental agreement's reduced tariffs before full rollout, expanded beyond its original eight participating countries, a step toward giving smaller African firms room to scale across borders.

2025 · last year

The Beijing Stock Exchange kept adding listings of smaller innovative manufacturers

Created to give high-growth small and medium enterprises a public listing route separate from the larger Shanghai and Shenzhen markets, the exchange continued to expand its roster of listed firms, most drawn from advanced manufacturing and technology.

• Prospective listers still had to clear profitability tests

2025 · last year

India raised the investment and turnover thresholds used to classify micro, small and medium enterprises

The revised limits, announced in the union budget, let firms grow their assets and revenue further before losing access to MSME support schemes, intended to reduce the incentive for businesses to stay artificially small.

Late 2024 · 2 years ago

Manufacturers' associations in Nigeria reported rising numbers of small firm closures

High inflation and a sharply weaker naira raised the cost of imported inputs and fuel, pushing many small manufacturers to scale back, relocate or shut down, even as some larger exporters benefited from the more competitive currency.

• Some multinational consumer goods makers scaled back local manufacturing

January 2020 · 6 years ago

Armenia introduced a micro-entrepreneurship tax regime exempting small firms

From 1 January 2020 Armenia created a special micro-entrepreneurship tax system with a non-taxable base of 24 million AMD. Qualifying micro-businesses were exempted from taxes other than income tax, capped at 5,000 AMD per employee, as a deliberate survival aid.

2016 · 10 years ago

Researchers published a study of the demographics of small business ownership

A 2016 study examined who owns small businesses, drawing on US census data for 2014 and 2015. It showed women owned about 22 per cent of small businesses with 100–500 employees, with the share rising as firm size fell.

2016 · 10 years ago

US small businesses absorbed over $1.33 billion in reported cybercrime damage

Cybercrime caused more than $1.33 billion of monetary damage in the United States in 2016, with California alone reporting over $255 million to the IC3. Cyber losses became a recognised threat to the thin cash cushions of small firms.

2015–16 · 11 years ago

United Kingdom transposed the EU accounting directive and withdrew the FRSSE regime

The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 brought the EU Directive into UK law, amending reduced disclosure reporting for accounting periods beginning on or after 1 January 2016. The FRSSE ceased to be available, replaced by abridged and filleted accounts and by FRS 105 for micro-entities.

2013 · 13 years ago

European Union adopted the Directive on annual financial statements to lighten SME reporting

The 2013 Directive sought to limit administrative burdens and provide simple, robust accounting rules, especially for small and medium-sized enterprises. Reduced compliance costs were framed as a direct support to SME viability.

2012–13 · 14 years ago

United Kingdom exporters raised the share of businesses exporting from 32 to 39 per cent

An international trade survey recorded the British share of exporting businesses rising from 32 per cent in 2012 to 39 per cent in 2013. Export activity is treated as a route to growth beyond the domestic market.

October 2010 · 16 years ago

Alejandro Cremades and Tanya Prive founded the first equity crowdfunding platform for small businesses

In October 2010 the pair launched what is described as the first equity crowdfunding platform in history, aimed at small firms. It opened an alternative channel of finance beyond bank lending, addressing a core constraint on small business survival and growth.