Introduction
When the unemployment increases above certain limit, then it becomes extremely important for the policy makers to return people to their work. They find out the ways to bring business to the markets so that more and more people can be employed. However, this is only possible if the government, policy makers, politicians and economic development experts emphasize much more on the development of entrepreneurs or small businesses. According to Helfand et.al,(2007) in order to sustain generous benefits to society and combat prevailing unemployment throughout any economy the government has to undergo very daunting task of introducing policies and practices that generate jobs (Helfand et.al, 2007). A good business climate plays a vital role for any community or economy to prosper and improve the quality of life. If businesses are not provided a good climate then economy does not grow as can be seen that small businesses having less than 100 employees contribute towards providing almost 45% of jobs while rest of 55% do not contribute towards the economic net growth of job. This helps to expand the infrastructure of the economy and solves the problem of unemployment. Apart from that, Job opening and loss turnover survey suggest that definitively that job separation did not rise in the recession of 2001(Hall, pp. 101-166).
Traditionally policy makers would focus on businesses that were large but now the approaches are differently adopted. They are instead targeting towards establishing newer businesses and supporting the existing ones who have potential to grow, create jobs in markets and provide the society with benefits. As a result, the idea that new businesses create jobs and increase the employment rate is beyond any doubt. A government comes with the points that if it encourages the small businesses and provides them with opportunities businesses are likely to grow. On the other hand, if a government attracts solely large businesses then they may hinder competition and incur huge costs, thus keeping the small firms away and leading to the loss of jobs. The idea behind attracting many small firms is to create more jobs and maximize competition in the market rather than just focusing on very few giants.
Small and new firms bring innovation and rapidly grow to create thousands of jobs. It is a well researched and debatable issue that there are only few businesses that are able to grow and provide social and economic benefits as they have the potential to offer better, stable, competitive, and innovative work. They have the largest capital base, greatest monopoly power, and greatest sales potential. Therefore, large numbers of small firms fail as they lack such important aspects, leaving others to pursue growth, becoming industry leaders.
Discussion
New businesses create new jobs
For any economy to boost, it is important to bring the unemployment rate at very low level. If people remain unemployed, it affects the entire economy as people are deprived of either money at all or are hardly able to make both ends meet (Neumark, pp. 16-29). It affects businesses, markets, demands, spending power of people. As a result, government takes measures and does better control of situations by introducing the policies and exploring the causes of unemployment. Unemployment comes through various reasons such as an economic recession, political conditions, and businesses having financial trouble. In order to control the situation a government adopts monetary policies, (reducing interest rates to encourage more investments), fiscal policies (cutting down tax rates and increasing the consumer spending), and providing unemployment benefits to those affected and most importantly creating new jobs. New jobs are created when a government or politicians allow businesses to capture the markets of an economy, hiring people and increasing demands and thus consumer spending. When government realizes the need to introduce investment friendly practices and policies then it helps the economy to maximize its potential to grow and develop largely. New businesses lead to the rapid growth and additional entrants to the labor market (Stangler and Litan, 2009). It is because the demand of the labor increases and labor market starts to enjoy more opportunities to fight over the unemployment. According to Dohm and Lynn, (2007), job losses in 2003 were around 180,000 (Dohm and Lynn, 2007).
Politicians and policy makers believe that long-term and sustainable growth is possible when attractive investment environment is created. As more opportunities become open and new types of businesses capture the markets by the help of stimulus measures of government, then it brings diversification and good investment projects for which new jobs are established, and more labor is required. Politicians also believe that when they establish good cooperation with the business communities to help create new jobs, markets become competitive and adaptable.
When new businesses establish they intensify competition and open up the opportunities for workforce throughout the economy. Encouraging new businesses goes hand in hand with effective monetary and fiscal policies. According to Edminston, joblessness serves as a costly economic problem that is partially solved by attracting newer investments (Edmiston, 2007).
As it costs the country billions of dollars, as a result, it becomes important for the government to tackle the situation with real jobs for people with real futures for them. While new businesses operate in an economy, they hire individuals and this solve the problem of unemployment. In order to combat the situation often government comes in to private and public partnership that does not only mobilize the finances but also encourages the long-term investment projects to operate effectively, creating jobs. This is common specifically in services like telecommunications, water, electricity, service provision, and sanitary infrastructure. New enterprises operate successfully, retain labor and affect the entire economy as well.
Moreover, new businesses bring creativity (producing useful ideas) and innovation (implementing such ideas successfully). New organizations intensify competition and maximize the productivity levels of the economy of the country. If entrepreneurship increases then it affects significantly and positively the economic growth of the economy as either unexploited or underexploited opportunities come into existence.
Business Growth and New Jobs
New businesses after growing require more workforce as it automatically affects the consumer spending power and thus the demands of products and services. Growing businesses are financially sound and able to compete effectively. Economic crisis is easily dealt with by job creators that drive the economy and spur economic growth (Haltiwanger et.al, pp. 347-361). When huge investments and encouragement towards the idea of introducing new businesses become the major steps of politicians then self-employment automatically increases, reducing bankruptcy and thus unemployment. For any country’s economy, the small and medium size enterprises play very important role. They generate jobs and are evident of creating good results in terms of revenue and profits, providing sustainable and quality work to the workforce. Often SMES comes in to the good relationship with large firms to exploit the opportunities and attract best recruits to power the workforce and help economy at larger scale. The point is who creates the jobs in a market. Is it the young immature start-ups, small firms or growth businesses that provide the social and economic benefits on the large scale and long-term basis? Well, according to the study, economists, and researchers start-ups provide more jobs to the market as they believe that company size and job growth have no interconnections (Jenkins, 2007). According to them, the age of the business is the only factor that counts. Start-ups keep coming to the markets on the persistent basis and so keep providing jobs. On the other hand, the existing firms keep fluctuating the demand according to the cycle in which they are moving and the jobs that start-ups provide remain until almost many years and so the economic and social benefits. Edmiston and Jenkins suggest that when large firms grow up to a certain level can get various other options as recruiting cheap labor from other countries and thus hunt overseas options.
Socioeconomic Benefits of New Businesses
Encouraging businesses to the mainstream of economic development always prove to be fruitful for any economy (Wiklund and Shepherd, pp. 1919-1941). In order to create a prosperous economy, it is important to create an environment where small businesses evolve to turn into medium sized and large businesses. Small businesses either as self-employed owner operator businesses or consisting of very few employees are only able to become the growth oriented and innovative when government creates the conditions and prioritizes the regulatory and industrial policies with taxes accordingly. When new businesses capture markets they come up with new ideas and approach that increase value to the market and maximize the social and economical progress of society. When businesses finally start working, they provide economy with social and economic benefits. Once they prove the ability to take decisions and exploit opportunities to bring best products and services, redefine the productivity of a value chain, and enable the local development then they have the chances to grow and innovate which is of great benefit to society and economy and serve as huge benefits (Porter and Kramer, pp.62-77). If business is seen as a social, economic and environmental problem, it is perceived as prospering the broader community and embracing the social responsibility. Legitimate businesses that truly develop to grow the economy at large scale always address the needs and challenges of society and thus better sustain and survive. When they grow, their competitiveness enhances and to manage that they need workforce that automatically solve the problem of unemployment. According to Jenkins (2009), growth businesses bring their businesses and society together and understanding social issues connect the business success with social progress (Jenkins, pp. 21-36). They understand the concept of shared value according to which they adopt practices and policies that maximize their competitiveness and the same time improve the social and economic conditions that are prevailed in society in which they operate. They embark on the society to put the efforts that introduce skills, expertise, new innovative ideas, moving across profit boundaries. As a result, they inevitably grow to meet the needs of humans, enhance the efficiency, create wealth, and most importantly develop new jobs.
The pressures and responsibilities to provide societal benefits require businesses to go beyond making profits and pursue other goals as well such as hiring disabled, providing safety at work, and considering environmental costs to society (Lepoutre and Heene, pp. 257-273). Lepoutre and Heene (2006) are of the view that for many businesses, this comes as a hurdle and thus results in halt of their progresses. Therefore, society remains with just growth businesses that make profits and equally serve society and its needs, giving and creating new jobs with better safety at work and chances for workforce to grow and help built up better society.
Small Minority of Businesses That Create Jobs
For the years, it has been under great debate that only small numbers of businesses grow and thus keep producing jobs for the market. Once business starts to progress with successful years, it starts to show the demand for increasing labor. When small business captures the market, it is not necessarily expected to succeed as it enters the volatile environment that is challenging and more globalized in the world of today. Young businesses may fail due to various reasons and thus destroy number of jobs whereas mature businesses exploit the opportunities and survive in a better way. Thus, market remains with very few businesses that grow and keep fighting the unemployment of economy. Growth and small businesses are categorized according to various factors such as number of employees and age of businesses. Often small firm enters the market but finds itself in troubles such as related to finance, gearing, profitability, underperformance, thus backups, leading many unemployed and giving a chance to mature business. On the other hand, powerful businesses exploit the potential and become important to the economy, growing at fast pace and creating jobs. They are known about the economic and social objectives, and are strategic, competitive, customer and market oriented and have better idea of how to gain socially and economically effective and efficient benefits. They are aware of the play towards various variables. Even the customers and workforce want to deal with larger businesses as they feel they are more likely to be stable and less likely to fail. It becomes the ability of very few businesses to handle the volatile situation of the environment and unpredictable economy.
Nevertheless, small businesses cannot be ignored as they have major contribution towards economic growth and social development. Small business is the young business that becomes responsible for creating jobs and net job growth for some period. According to the Kuratko and Audretsch (2009), majority of small firms come to the market but hardly grow significantly as they lack the ability to contribute towards job growth (Kuratko and Audretsch, pp. 1-17). The reason behind such facts may become the areas that such small firms concentrate on. They focus the areas of economy where low productivity towards growth is expected but that does not mean they have no contribution towards fighting the unemployment rate of an economy.
Conclusion
Creating new jobs is solely possible through the efforts of policy makers to attract new businesses. However, if they just support growth businesses then it brings economic turmoil and seems to destroy the broader economic purpose of doing well to society and entire economy. New and innovative businesses create jobs and growth businesses being in minority do bring impact to the society but in other ways (Williamson et.al, pp. 83-106). They create jobs but not to the extent of start-ups and small businesses. Job gains and losses very much depend upon the economic conditions that are constantly changing. Same way employment rate is also dependent upon the age of business and its size. Growth businesses are no doubt different but they provide quality of jobs as compare to quantity and innovative jobs that small and start-ups provide. As a result, they are in minority to create jobs and build up the economy to provide it with economic and other benefits. They want the help of policy makers for which policy makers are available.
Startups and small businesses do provide jobs and bring new ideas and innovation to prosper economy. On the other hand, large businesses have the potential to create jobs, accepting social responsibility and fulfilling needs of economy (Jenkins, 2007). Therefore, size does not count to provide majority of economic and social benefits. When large businesses are encouraged to bring jobs then start-ups and small businesses need to jump to the market in process of boosting economic development. Small minority growth businesses prove to be bad and good for the economy. Their failure can bring distress and monopoly where as their success bring business, jobs, investment project. Small minority of businesses do grow and create jobs but being few they do not necessarily provide majority of benefits in term of jobs collectively as small firms being higher in numbers do. Economic benefits are collectively provided by few large firms and huge numbers of small firms as businesses are quite important for any economy to grow.
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