State of the South West 2008

Enterprise

2.90 Enterprise refers to the organisation of the factors of production - land, labour and capital – to make goods and services. Although some aspects of enterprise, such as risk, are difficult to capture, enterprise is generally quantified by the rate of business start up and closure, and overall business stock within a region. This is usually measured by the stock or flow of businesses registering for Value Added Tax ¹¹ .  Looking at only VAT registered businesses inevitably underestimates total business stock, excluding the large number of micro businesses in the South West.  However, analysis of the VAT data will still give a reasonable picture of the health of regional business stock as a whole. 

2.91 New enterprise or new business formation increases productivity through competitive pressures and innovation bringing new products and processes to the market.  Growing businesses in general tend to become more productive due to economies of scale.