One major problem faced by researchers in their study of the small-scale sector is the issue of definition. Firstly, there is no consensus as to what term to use to describe small scale concerns. Three terms are often used interchangeably: small firm, small
business and small enterprise. However, some authors, notably. Garland, Hoy Boulton and Garland (1984), Gibb (1987) and Birley (1989), have attempted to distinguish between the terms small business and entrepreneurship. However, as argued by Goss (1991), it seems preferable for the two terms to be used in their loosest forms (i.e. as synonyms) but to specify particular types (italics his) of entrepreneurial activity (e.g., technological entrepreneurship) as and when appropriate (p. 48). Hence small business and small enterprise will be used interchangeably.
Secondly, there is no universally acceptable definition of what constitutes a small business, firm or enterprise. As has been observed by Page and Steel (1984), small is relative, and what is small in one economic setting may not be in another. Nelson (1987) also noted that most definitions appear to be governed by the interest of the perceiver, the purpose of the definition and the stage of development of the particular environment in which the definition is to be employed. Gonsequently different quantitative and qualitative criteria are employed in the definition of a small business all over the world. Thus Harper (1984) concluded that there is no point in attempting to produce a universally or even a nationally acceptable standard and that the scale of a business needs only to be defined for a specific purpose. However, Hertz (1982) has on the other hand argued in favour of an agreed international definition of a small business for the promotion of economic co operation and communication.
Neck (1977a) and Harper (1984) referred to the results of a survey of definitions of small enterprises covering seventy five countries undertaken in 1975. The study identified more than 50 different definitions. Harper noted that a majority of the countries used quantitative measures and those preferring qualitative measures were more likely to be industrialised countries. The number of employees is the most commonly used quantitative measure because of its simplicity. But some factors such as seasonal nature of many small enterprise employment, prevalence of part time work and extensive use of unpaid family labour, including children, limiting the accuracy of this measure have been generally observed. Though the value of capital employed is also frequently used, this measure poses more difficulties than the number of employees. In most small businesses there is usually a lack of distinction between the owners' personal property and that of their business, book keeping and accounting practices are notoriously poor. Inventories or stocks, plant and
machinery may be valued in a number of different ways, even if undertaken, the value of old and home-made machinery in particular may be difficult to determine, while buildings are often used as dwellings as well as workshops.
Other quantitative measures that have been used in the definition of small enterprises include sales turn-over, value added and some technical measures such as installed horse power or kilowatts, the number of vehicles, hotel rooms, looms or other machinery, or the output capacity of the equipment (Harper, 1984, p.4). However, he also observed that these measures are effective for comparing enterprises in a single industry but are inapplicable for comparing businesses in different industries. Furthermore, inadequacies of a single quantitative measure has often resulted in the use of a mix of measures, for example, number of employees and turnover, employees and assets.
Qualitative measures describe the unique operating characteristics of small firms which distinguish them from the large firms. Such characteristics include location and share of market, ownership, management structure and administrative style. Though qualitative criteria are considered more profound, stable, reliable and accurate in their description, their detriment lies in difficulties in their verification (Hertz, 1982). She noted also that verification rests with the opinion of the definer and the applicator as well as on the accumulation of data, research and a thorough understanding of the essential components of the term defined. She concluded therefore that because of these difficulties, qualitative criteria have been rarely used as evidenced by only five out of seventy five countries using qualitative criteria in the study also cited by Neck (1977a) and Harper (1984). Thus subjectivity and difficulties in obtaining adequate data to verify criteria make qualitative definitions less practicable especially in developing countries where data required may not be available or easily obtainable.
It is obvious that employing either qualitative or quantitative measures alone may not provide definitions that will be clear, practical and easy to apply across many industries or nations. Hence it has been observed by Osoba (1987) that definitions usually advanced all over the world for small-scale enterprises are based on an arbitrary mix and match of quantitative and qualitative criteria based on local conditions and relative factors. Even in a country, it will be virtually impossible to apply a uniform upper limit for any definition criterion across the industries in view of the inherent differences that exist in the operating
characteristics of enterprises. This was reflected in the definitions proposed by the Bolton committee (1971) for the various industrial sectors. As has been observed by Mohammed (1988), each researcher gets around lack of consensus on the definition of small-scale enterprises by having his/her own working definition. Therefore for the purpose of this study, the definition proposed by Hertz (1982) will be adopted. That is
"....a small business is a business that is managed bv not more than three managers, or whose workforce does not exceed one hundred persons" (p. 433).
This definition is adopted because of its simplicity. The criteria used are very broad and will probably encompass all small businesses. The definition describes a small business in two ways using either quantitative or qualitative measures. As a business managed by not more than three persons, the emphasis is on the management structure - a qualitative measure. And as a business with a work force not exceeding one hundred persons, the emphasis is on the number of employees - a quantitative measure. The major advantage of the definition proposed by Hertz is that only one of the parameters need be applied. Furthermore, the definition is practicable and can be easily measured. It is very realistic in that either of the parameters will describe the largest proportion of enterprises included in the small-scale sector in most developed and developing countries, if not all.