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New firm formation and regional development
Book reviews
165
Department’s consultancy work. Most of it is concerned with putting the ‘soft’ systems methodology into perspective. The book opens by explaining the systems view of the world and systems thinking. This explanation consists of an interesting but somewhat digressive chapter on the history and method of science, a chapter on problems which cannot be tackled by science (complexity, social phenomena, etc.), and a chapter which discusses systems taxonomy and system typology. Then comes the material on the ‘soft’ systems methodology (why we need it, what it is, case studies and appraisal). The book concludes by looking at the interaction between systems thinking and systems practice and discussing at some length the application of the ‘soft’ systems methodology to the study of social problems. The main thrust of the argument in the book is that whereas scientific method is suitable for studying natural and designed systems (‘hard’ systems), it is not suitable for studying human activity systems (‘soft’ systems). Checkland maintains that once natural systems are manifest they ‘could not be other than they are’. Human activity systems, on the other hand, can be manifest ‘only as perceptions by human actors who are free to attribute meaning to what they perceive’. As a result, Checkland argues, there can ‘never be a single (testable) account of a human activity system, only a set of possible accounts all valid according to a particular Weltanschauungen’. (This distinction between natural systems and human activity systems is, I believe, somewhat erroneous because our perception of the nature of systems at subatomic, atomic, molecular, and higher levels is periodically reassessed and to some extent conditioned by social and political attitudes.) Checkland then offers a methodology for studying ‘soft’ systems, for tackling ill-defined problems which pervade the realm of human affairs. But does this methodology work and can it be tested? Checkland himself says ‘If systems thinking is to be taken seriously it will have to show that within the subject there is a cycle of interaction between the formulation of a theory relevant to serious problems or concerns, and the testing of that theory by the application of methodology appropriate to the subject matter’. Having stated this, he later admits that his methodology cannot show interaction between hypothesis and refutation and is therefore unscientific. He suggests that the best test of the methodology is to answer the question ‘Was the problem solved?‘, and argues that in most of the hundred or so cases studied by the Lancaster Department the answer is ‘yes’. The case studies given in the book support this contention. Checkland puts his case carefully and the threads of the argument are easy to follow. I have doubts as to the utility of the methodology, but then my interests lie with natural systems and scientific method. Applied geographers, applied ecologists, social scientists and people who study ill-defined systems where decision making plays a paramount role may well find the methodology appealing. Indeed, it has already been used by one geographer (Morgan 1977). Morgan, R. K. (1977) The injuence of anthropogenic activities on the regeneration of the open woodlands of the New Forest, Hants. Unpublished PhD thesis, University of Birmingham. Richard Huggett Department of Geography, University of Manchester Cross, M. New&m formation and regional development. Aldershot: 342 pp. &15.00 hardback.
Gower Press, 1981.
Studies of industrial movement dominated analyses of industrial change in the 1970s but increasingly this dominance is being challenged by studies of new firm formation. This
166
Book reviews
change of emphasis in academic research reflects the declining significance of mobile industry, a decline which has also led regional and local authorities to turn from policies for attracting industry to policies for encouraging new local firms. The recognition that regional industrial change was associated both with mobile plants and new firm formation resulted in more detailed study of the variety of processes that led to change in manufacturing employment levels in different industries. These processes included not only the birth of branch plants and new firms, but also the growth and decline of existing establishments, as well as the complete closure of plants. Identification of these different processes forms the basis for what has become known as the components of change approach. Early use of this approach involved the development of an accounting framework in which the relative importance of each of the components (processes) could be assessed. It was a particularly attractive method for imposing order on industrial data held in regional and urban data banks, but at that level it was simply a descriptive technique which tended to raise more questions than it answered. One such question was why does the relative importance of new firm formation vary from area to area, and it is to this question that Michael Cross’s new book addresses itself. It is, however, wider in scope that its title implies, for not only does he make an important contribution to the study of the development of new firms, but he also examines their relationship to the other components of change. This is a very thorough, painstaking and careful study of industrial change in Scotland from 1968 to 1977. It shows a mastery both of the relevant literature (the bibliography consists of 30 pages) and of the various data sources available to the student of industrial change. After a brief introduction the book examines the origin and structure of manufacturing industry in Scotland, before devoting chapters to data sources and a components of change analysis of Scottish manufacturing employment. Emphasis on new firm formation does not really begin until p. 115, and probably for those interested specifically in this topic it is the latter half of the book which will hold most interest, although the first half does allow the new firm formation process to be placed in context. It is in Ch. 7 that the author presents us with an interesting, thoughtful and stimulating discussion of the methods that can be used in studying new firm formation. To anyone considering further work on new firms this chapter would be worth careful consideration. The empirical work developing from this is presented in the following two chapters. The first reports the results of a survey of new firm founders, while the second adopts multiple regression analysis to explain spatial variations in new firm formation rates within Scotland. The discussion of the survey results is perhaps the most interesting chapter in the book especially as, contrary to previous studies, the author identifies a clear tendency for a considerable proportion of new founders to originate outside the region. Despite the interest raised by this chapter one is left with the unanswered question as to whether the founders of new firms established after 1967 and operating in 1977 are typical of all founders, as the population by definition excludes unsuccessful firms. Further, it could also be argued that the respondents can be divided into two types: founders of successful firms (perhaps those operating five or more years), and founders of firms which have yet to establish their long-term viability (perhaps those operating for less than five years). An examination of the differences between these groups might have thrown some light on the extent to which the exclusion of unsuccessful founders influenced the results. The multiple regression analysis is less exciting, and indeed the author fails to make the most of his results. There is a lengthy methodological section and the usual discussion of definitional and measurement problems, with the inevitable scattering of computer mnemonics. This takes up 20 pages while the analysis and discussion is limited to eight pages, several of which are devoted entirely or in part to tables. Surely this needs expansion to give due weight to the author’s important findings.
Book reviews
167
Despite these criticisms, Dr Cross is to be congratulated on his exhaustive study of new firm formation which will be read eagerly by research workers in industrial geography. It is to be hoped that Dr Cross will find time to write a more popular work which will focus more clearly both on the new firm formation process and on the results, rather than the methodology, of his work. H. D. Watts Department of Geography, University of Sheffield
165
Department’s consultancy work. Most of it is concerned with putting the ‘soft’ systems methodology into perspective. The book opens by explaining the systems view of the world and systems thinking. This explanation consists of an interesting but somewhat digressive chapter on the history and method of science, a chapter on problems which cannot be tackled by science (complexity, social phenomena, etc.), and a chapter which discusses systems taxonomy and system typology. Then comes the material on the ‘soft’ systems methodology (why we need it, what it is, case studies and appraisal). The book concludes by looking at the interaction between systems thinking and systems practice and discussing at some length the application of the ‘soft’ systems methodology to the study of social problems. The main thrust of the argument in the book is that whereas scientific method is suitable for studying natural and designed systems (‘hard’ systems), it is not suitable for studying human activity systems (‘soft’ systems). Checkland maintains that once natural systems are manifest they ‘could not be other than they are’. Human activity systems, on the other hand, can be manifest ‘only as perceptions by human actors who are free to attribute meaning to what they perceive’. As a result, Checkland argues, there can ‘never be a single (testable) account of a human activity system, only a set of possible accounts all valid according to a particular Weltanschauungen’. (This distinction between natural systems and human activity systems is, I believe, somewhat erroneous because our perception of the nature of systems at subatomic, atomic, molecular, and higher levels is periodically reassessed and to some extent conditioned by social and political attitudes.) Checkland then offers a methodology for studying ‘soft’ systems, for tackling ill-defined problems which pervade the realm of human affairs. But does this methodology work and can it be tested? Checkland himself says ‘If systems thinking is to be taken seriously it will have to show that within the subject there is a cycle of interaction between the formulation of a theory relevant to serious problems or concerns, and the testing of that theory by the application of methodology appropriate to the subject matter’. Having stated this, he later admits that his methodology cannot show interaction between hypothesis and refutation and is therefore unscientific. He suggests that the best test of the methodology is to answer the question ‘Was the problem solved?‘, and argues that in most of the hundred or so cases studied by the Lancaster Department the answer is ‘yes’. The case studies given in the book support this contention. Checkland puts his case carefully and the threads of the argument are easy to follow. I have doubts as to the utility of the methodology, but then my interests lie with natural systems and scientific method. Applied geographers, applied ecologists, social scientists and people who study ill-defined systems where decision making plays a paramount role may well find the methodology appealing. Indeed, it has already been used by one geographer (Morgan 1977). Morgan, R. K. (1977) The injuence of anthropogenic activities on the regeneration of the open woodlands of the New Forest, Hants. Unpublished PhD thesis, University of Birmingham. Richard Huggett Department of Geography, University of Manchester Cross, M. New&m formation and regional development. Aldershot: 342 pp. &15.00 hardback.
Gower Press, 1981.
Studies of industrial movement dominated analyses of industrial change in the 1970s but increasingly this dominance is being challenged by studies of new firm formation. This
166
Book reviews
change of emphasis in academic research reflects the declining significance of mobile industry, a decline which has also led regional and local authorities to turn from policies for attracting industry to policies for encouraging new local firms. The recognition that regional industrial change was associated both with mobile plants and new firm formation resulted in more detailed study of the variety of processes that led to change in manufacturing employment levels in different industries. These processes included not only the birth of branch plants and new firms, but also the growth and decline of existing establishments, as well as the complete closure of plants. Identification of these different processes forms the basis for what has become known as the components of change approach. Early use of this approach involved the development of an accounting framework in which the relative importance of each of the components (processes) could be assessed. It was a particularly attractive method for imposing order on industrial data held in regional and urban data banks, but at that level it was simply a descriptive technique which tended to raise more questions than it answered. One such question was why does the relative importance of new firm formation vary from area to area, and it is to this question that Michael Cross’s new book addresses itself. It is, however, wider in scope that its title implies, for not only does he make an important contribution to the study of the development of new firms, but he also examines their relationship to the other components of change. This is a very thorough, painstaking and careful study of industrial change in Scotland from 1968 to 1977. It shows a mastery both of the relevant literature (the bibliography consists of 30 pages) and of the various data sources available to the student of industrial change. After a brief introduction the book examines the origin and structure of manufacturing industry in Scotland, before devoting chapters to data sources and a components of change analysis of Scottish manufacturing employment. Emphasis on new firm formation does not really begin until p. 115, and probably for those interested specifically in this topic it is the latter half of the book which will hold most interest, although the first half does allow the new firm formation process to be placed in context. It is in Ch. 7 that the author presents us with an interesting, thoughtful and stimulating discussion of the methods that can be used in studying new firm formation. To anyone considering further work on new firms this chapter would be worth careful consideration. The empirical work developing from this is presented in the following two chapters. The first reports the results of a survey of new firm founders, while the second adopts multiple regression analysis to explain spatial variations in new firm formation rates within Scotland. The discussion of the survey results is perhaps the most interesting chapter in the book especially as, contrary to previous studies, the author identifies a clear tendency for a considerable proportion of new founders to originate outside the region. Despite the interest raised by this chapter one is left with the unanswered question as to whether the founders of new firms established after 1967 and operating in 1977 are typical of all founders, as the population by definition excludes unsuccessful firms. Further, it could also be argued that the respondents can be divided into two types: founders of successful firms (perhaps those operating five or more years), and founders of firms which have yet to establish their long-term viability (perhaps those operating for less than five years). An examination of the differences between these groups might have thrown some light on the extent to which the exclusion of unsuccessful founders influenced the results. The multiple regression analysis is less exciting, and indeed the author fails to make the most of his results. There is a lengthy methodological section and the usual discussion of definitional and measurement problems, with the inevitable scattering of computer mnemonics. This takes up 20 pages while the analysis and discussion is limited to eight pages, several of which are devoted entirely or in part to tables. Surely this needs expansion to give due weight to the author’s important findings.
Book reviews
167
Despite these criticisms, Dr Cross is to be congratulated on his exhaustive study of new firm formation which will be read eagerly by research workers in industrial geography. It is to be hoped that Dr Cross will find time to write a more popular work which will focus more clearly both on the new firm formation process and on the results, rather than the methodology, of his work. H. D. Watts Department of Geography, University of Sheffield