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Perceptions and experience of employment regulation in UK small firms

Carter, S.L. and Mason, C.M. and Tagg, S.K. (2009) Perceptions and experience of employment regulation in UK small firms. Environment and Planning C: Government and Policy, 27 (2). pp. 263-278. ISSN 1472-3425

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Abstract

The view that excessive regulation constrains small business growth has been a persistent theme within business and policy communities, although recent studies have demonstrated the actual effects of regulation to be relatively modest. A prior small-scale study proposed four reasons why employment legislation does 'not damage' small firms. We attempt to assess the robustness of these propositions in a large-scale survey of 16 779 small firms. Results provide empirical support for three propositions. Firstly, perceived dissatisfaction masks actual effects. Secondly, competitive conditions mediate regulatory effects; however, even resource-constrained firms reported few negative effects. Thirdly, informality eases regulatory impact. Results failed to confirm that older laws are 'routinised'. Length of time as a business owner was found to be more influential than age of regulation, with owners who have been in business for many years having a longer 'window of exposure' increasing their likelihood of experiencing negative and positive effects.