Regional development policy and small medium enterprise financial performance

Abstract

This paper reports on an investigation into the potential to use the financial ratios of New Zealand small businesses to discriminate their location as an aid in the accurate targeting of regional economic development programs. To the extent that there are clearly identifiable differences in performance and financial structure for urban and rural firms this could be significant for small business policy development and the efficient implementation of strategies. An expanded awareness of the role of small business in employment generation and sustainable economic growth has resulted in more government attention being directed toward the sector. As government becomes more active in working for and with small business it is important that scarce resources should not be wasted but directed toward gaining the best pay-off. The paper discusses the data sources, the statistical testing, the results, and the interpretation of the findings and finally a range of policy implications.