Home based business and economic growth: lifestyle businesses or growth generators?

Abstract

Home based businesses (HBBs) have been a growing phenomenon during the last decade in the UK but remain largely “invisible businesses”. This growth in home based business activity raises important questions as to how it relates to existing economic growth processes as well as the extent to which it provides the basis for alternative development paths. Critical to answering such questions is a better understanding of the motivations and objectives of home based entrepreneurs.This paper explores how the growth of home based business interrelates with the economic growth process through an examination of entrepreneurial motivations. The paper uses data from the UK SME omnibus survey and the Open University quarterly small business SME survey panel to provide original results on the entrepreneurial motivations and goals of surveyed HBBs in relation to other UK SMEs. Results presented not only demonstrate important differences in the motivations of HBBs to other SMEs, but also indicate the importance of distinguishing the differing trajectories of HBBs in the growth process. These range from dynamic HBBs that operate in higher growth sectors through to lifestyle businesses which follow a different type of growth model where profit and sales are supplanted (not fully replaced) by personal/social values, control. The paper concludes by considering the implications of these important differences for the rationale and development of policy in relation to supporting HBB activity