Which Small Business Owners Think Their State Governments Are Supportive?
Small business advocacy groups on the left often claim that the government has small business owners’ backs, while those on the right frequently say that our elected officials are hostile to small business.
It turns out that both sides are right.
Small company owners do not agree on whether government is supportive of small business, analysis of data from a recent Thumbtack.com survey shows. Older, female, minority, less-educated, politically independent small business owners running young, rapidly growing businesses with no employees, in states where the governor is from the political party the owner supports, are most likely to believe that their state governments are supportive of small business.
Jon Lieber, chief economist, and Lucas Puente, economic analyst, at Thumbtack.com, recently examined data from their company’s 2015 Small Business Friendliness Survey – an online poll of more than 17,000 small business owners from across the United States – so that I could see which factors that lead small business owners to rate their “state government’s support of small business owners” more favorably than other owners.
Controlling for the small business owner’s industry and state, and simultaneously examining the effect of a variety of different influences, Thumbtack.com’s data show four categories of factors that affect small business owners’ perceptions of the favorability of state government support of small business: attributes of the company, location of the business owner, demographics of the founders, and political beliefs of the owner.
Owners of young, rapidly growing businesses with no employees view their state governments as most supportive. Owners of younger companies and companies with revenue that is growing faster, view their state government as more supportive of small business owners than owners of older companies and companies with revenue that is growing less rapidly or shrinking. Owners of businesses with between two and 50 employees view their state government as less helpful than small business owners who “work alone” at their businesses.
Owners of small businesses in economically more vibrant states view their state governments as most supportive. Owners who believe that their state economy performed better over the previous 12 months saw their state government as more supportive than owners who think that their state economy performed worse over the previous 12 months.
Older, female, minority and less-educated small business owners viewed their state governments as most supportive. Small business owners 55 and older view their state government as more supportive than those aged 45 to 54. Asian, African-American, and Hispanic small business owners see their state government as more helpful than White owners. Small business owners who did not graduate from high school believe their state government is more supportive than those who graduated from college. Veteran and female business owners view their state government more willing to assist than those who have not served, and male owners.
Politically independent small business owners and small business owners in states where the governor is from the political party they support viewed their state government as most supportive. Small business owners who report that they lean conservative or are strong conservatives and small business owners who said they lean liberal or are strong liberals were both more likely to think that their state government was less helpful than politically independent small business owners. Conservative small business owners also were more likely to say that their state government was supportive if their governor was a Republican, while liberal small business owners were more likely to report a helpful state government if their governor was a Democrat.
Small business owners don’t agree how much their state governments have their back. Whether small business owners think their state government is supportive or hostile depends on who they are, the kind of business they are running, where they are located and their political beliefs.
Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).