A Review of Previous Research into the Unquoted Sector in the United Kingdom

The purpose of this chapter is to draw on some of the previous research on the unquoted sector in the United Kingdom to provide a background for the subsequent analysis of the book. There are two strands in this literature. The first concerns itself particularly with small firms. The most comprehensive work in this area was done by the Bolton Committee of Inquiry on Small Firms.1 While much of this literature is very interesting, it is important to reiterate at the outset that it is somewhat tangential to our main interests. It is certainly true that all small companies are likely to be unquoted, but not all unquoted companies are small. Since our focus is on the problems faced by all unquoted business, the small-firm literature is too restricted in scope. This is not merely an academic point. ‘Small firms’ are identified as a particular problem for policy, and a certain amount of legislative preference already exists (e.g. the lower rate of corporation tax on taxable profits less than a certain figure, or the exemption from VAT for small traders). The logic of applying these benefits to a rather ill-defined small-business sector only makes sense if it can be shown that the problems are related exclusively to size. This is far from being self-evident. The second strand of literature is of more interest to us. It basically aims to compare the performance, and business and legal environment of different kinds of firms.