Customer Location and Home-Based Business Performance: Smaller and Global, or Larger and Local?

Abstract

Today, half or more of all small businesses in the UK, US and many other developed economies are located in or run from home, making it arguably the most important of all business locations (Mason et al., 2011). Digital technologies, outsourcing and the reduction in importance of economies of scale have become key drivers of business formation in the home (Young, 2015; Reuschke & Mason, 2022). However, only a small academic literature has studied this phenomena, and very little specific policy attention has been given to these enterprises.

Contemporary research has revealed the high growth and export ambitions of home-based businesses, highlighting their potential value for job creation and local and national economies (Mason et al., 2011; Enterprise Nation, 2014). However, there is limited research capturing firm performance in home-based businesses and whether and how they can achieve these ambitions. Utilizing a sample of small private enterprises (< 50 employees) from the 2015 UK Longitudinal Small Business Survey, this paper presents a quantitative study of the complex link between small business performance, internationalization and the home, in the UK.

Linking the small business literature with socio-spatial theories from economic geography, the empirical analysis reveals that the home is a key site of internationalization. However, against expectations, home-based businesses with a local customer base generate more employment and turnover than their internationally orientated counterparts. Performance outcomes associated with internationalization in women-owned businesses are further considered and implications for policy and future research in the wake of the COVID-19 pandemic are discussed.