Firm size declared

A key driver of the 'U-shaped' decline in entrepreneurship and small firms over the 20th century was the expansion of employment opportunities for waged labour, especially in large firms and public administration. Worker numbers increased from 6.4m in 1851 to 11.9m in 1901, but went on increasing to a peak of 21.6m in 1961. Total entrepreneur numbers increased much more slowly: from 1.1m in 1851 to 1.8m in 1901, but declined to 1.4m in 1961. Workers were increasingly employed in progressively larger firms. The BBCE data provide these estimates, and for the first time shows that the key change in the firm-size distribution in the 19th century was the decline of the small-medium sized firms, mainly those employing 5-10 people. In England and Wales mean firm size increased from about 7.3 to 11.8 over 1851-81, with firms with over 50 employees increasing from over 3,000 employing about 0.5m workers in 1851, to over 7,000 with about 1.2m workers in 1881.

The Atlas gives 'firm size declared' using the census statements by employers of the workforce they employed. This census question covered only 1851-81 so that the Atlas does not extend to later years. The BBCE database gives the breakdown of the workforce declared as men, women, boys or girls, if that information was given by the employers at the time. Unfortunately these responses were far from complete.

The Atlas maps for the whole of Britain below show how that the geography of firm size changed markedly over time. Average firm size over 1851-81 grew most markedly in urban areas, especially in textiles in the North West and Yorkshire, metals and mining in the Midlands and North East, metals and shipbuilding in the North East and Western Scotland, hosiery and footwear in the South East and Midlands, a wide range of industries in London and other big cities, and for a diverse range of entertainment and accommodation businesses in resorts mainly around the coast.

[Source: RSDs E&W; parishes Scotland; extended from The Age of Entrepreneurship Fig 5.3]

Among the very large firms of 1,000 or more workers in 1881, perhaps 1.6m were employed in fewer than 500 firms. In Scotland firm-size trends were less marked, with higher proportions of small and large firms than SMEs of 20-199 workers. There was perhaps a recovery in Scotland's smallest firms proportions (5-9 size) in the 1880s. By the 1880s the firm size distribution in England and Wales was remarkably similar to that in 2017, but the smallest firms of 5-9 employees dominated in Scotland for longer. The BBCE firm-size data is more complete for the larger firms than the few tables published by the census: see HMJ paper. For large firms a comparison with 'truth' data by Les Hannah shows the need for re-scaling: WP version.

Firms size 1851-81 compared to 2017 BPE (% firms with ≥5 employees)

[Source: BBCE: The Age of Entrepreneurship Table 5.2, England and Wales]

[Source: BBCE Scotland]