Small firms' awareness and knowledge of their legal environment

Small firms constitute the overwhelming majority of enterprises in the UK and are viewed by
government as engines of job and wealth creation. There has been a revival of the small firm sector
in the UK in recent years but this has coincided with an increase in the volume and complexity of
legislation. Political concerns have been expressed about whether the law places too great a burden
on small firms and this is the problem giving rise to the present study. There has, however, been a
dearth of academic work on the relationship between small firms and the law. In particular, there
has been very little empirical enquiry into small firms’ awareness and knowledge of their legal
environment. The present study seeks to add to knowledge and understanding in this area.
It adopts a qualitative methodology and draws on semi-structured interviews carried out with
twenty-one small firm owner-managers and eight small business stakeholders. It analyses the extent
of small firm awareness and knowledge and the factors affecting it. Because of the dearth of
academic literature, legal awareness and knowledge is conceptualised as legal expertise and seen as
part of the wider subject of small business support. The literature is interpreted as providing an
emerging theory of business support and this is adopted as the theoretical framework for the study.
Levels of awareness and knowledge varied widely but acquisition was a low priority unless
necessity dictated otherwise. The results do not paint a picture of the small firm ‘burdened down’
under the weight of regulation. The main theoretical development is the identification of factors
affecting awareness and knowledge. These related to the firm, the law and the legal system, and the
closeness between the work of the firm and the law. There are also policy implications.