Government Will Keep Us Together

9 Nov

Diamond-District-NYC-02Clumping – no, not what happens when you forget to stir the sauce. It’s when retailers cluster in the same neighborhood, to create, say, New York’s Diamond District, or Silicon Valley. It’s a counter-intuitive fact, that NPR’s Planet Money podcast examined in an older podcast, and I just listened to it today. Because Busan, imitating Bologna in Italy, is thinking of doing some intentional clumping.

I’ve noticed over the years, that retailers tend to cluster into districts, like the Gaegeum for computers. But smaller businesses like hair salons and bakeries also tend to cluster. Clumping is not a good business strategy, when proximity to customers, as with grocery stores, is key. So, I’m a bit concerned when a professor I know started talking about a project he has slaved over for a year has concluded its work (with two stints on KBS as a bonus).

 

The research showed that the innovation, risk-taking and pro-activeness of the manifested difference in the degree of perception depending on the type of small businesses. Among the four business types, the ones that manifested the highest successful start-up rates were food, service, wholesale and retail sales and manufacturing. Results after conducting the regression analysis are shown on, which proves that the small business entrepreneurship exerts direct effect on the financial management performance of small businesses. In other words, small business entrepreneurship exerts a positive effect on the small business financial success and management performance. The R² value is 0.61. It is possible to know that the perception of systematization and variables on attitude explains the 61% of the success for small self-employed businesses management performance. We define start-up key factors that are helpful to achieve internal growth of firms by finding business survival strategies. The results also focus on Korean government policy for micro enterprise and small business support.

I don’t pretend to understand this completely. The city will renovate city blocks and feed the districts with new roads. The SMEs will form cooperatives in clusters. I didn’t realize when I quizzed this professor, that my concern about clumping retail businesses into “Mom and Pop Valley” had some precedent. I kept making the argument for proximity, and the professor countered with the Silicon Valley precedent. After listening to the podcast, I think this fostering of SMEs is the wrong strategy.

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