Differing Perceptions of Small Business Problems

Abstract

Three differing perceptions of what constitute the real problems of small business are examined: (1) the management deficiency diagnosis, (2) the unfair competition hypothesis, and (3) the government intervention hypothesis. Valid arguments and factual data can be demonstrated for each model, depending upon the portion of the small business universe from which the data is drawn. Hence the sampling Problem is a serious difficulty in small business research, due to the lack of a current and comprehensive data base on the small business universe. The most comprehensive data set on the universe now available is from IRS tabulations of tax returns. In testing two of the hypotheses above against IRS data by business size, the findings are: (1) small business is not deficient in management competence relative to large business, but rather is more competent, and (2) the tax burden on small business is regressive and prejudicial to the accumulation of internal or external capital.

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