Spencer, C 2011, 'How the Plain English and Free Access to Law movements may have opened up an area of opportunity previously unavailable to most small businesses', DBA thesis, Southern Cross University, Lismore, NSW.
Copyright 2011 C Spencer
It has been long established that small and large businesses do not operate under the same level playing field. Generally, large businesses have excess to resources such as capital, technology and new markets that most small businesses do not. In terms of law, small businesses also do not have the same level of access as most large businesses generally do. For example, large businesses can afford to hire corporate lawyers (Marks 1999; McWilliams & Michael 1992; Hoadley 1992; Williams & Williams 1994) to interpret the law and explain what it meant to their businesses (O’Brien 2006), whereas small businesses are generally small-scale, independent enterprises that are managed, funded and operated by its owners; and whose staff size, financial resources and assets are comparatively limited in scale (Schaper and Volery 2007). In this research it is argued that the playing field between small and large businesses has been comparatively uneven in the particular aspect of ascertaining possible new business opportunities.
This research investigates how two recent law reforms, the Plain English and Free Access to Law movements, have opened up an area of opportunity to seek new business opportunities that was previously unavailable to most small businesses; creating a level playing field for small and large business in terms of having access to this aspect of law; thus enabling small businesses to do the things that large businesses can do, in terms of applying the law to the business plan, in search of new business opportunities. To illustrate:
(1) This research proposes that changes brought about by the Plain English movement have made it possible for the small business sector to better understand what the relevant laws mean to their particular industry (Munter 2004). For example, certain industries may be restricted by a new law (federal, state or local) whereas others may enjoy new government grants or concessions. These laws were previously written in ‘old style’ legalese (Kimble 2005) and only large businesses were able to make use of such laws in their business plans because only large businesses could afford to hire corporate lawyers (Marks 1999) to interpret the laws and explain what they meant to their businesses (O’Brien 2006).
(2) This research proposes that changes brought about by the Free Access to Law movement have made it possible for small businesses to research the internet for laws that are relevant to their particular industry. For example, websites such as AustLii, LexisNexis, Comlaw and FindLaw, contain legislation, case laws, and journal articles that are freely available to the public, and arguably, the Free Access to Law movement has obviated the need for any upfront or membership fees that were previously required to gain access to such materials (Marks 1999).
However, this research does not define the meaning of ‘business law’ (Gibson & Fraser 2009; Corbin 2002; Adams et al. 2002), discuss ‘corporate governance’ (Redmond 2009; Ferrell et al. 2010), or identify what laws can or cannot be used in any particular business or industry. This research does not suggest that the need for legal advice is now obviated by the two law reforms. The purpose of this research is to establish that large businesses (generally) have traditionally been considering the laws in their business plans, whereas small businesses have been largely limited by their individual capacity and financial resources; and the thesis argues that the Plain English and Free Access to Law movements have opened up an area of opportunity previously unavailable to most small businesses in relation to possible new business opportunities. This thesis will argue that this part of the playing field between small and large businesses has been levelled by the two law reforms, and there is now a real potential for small businesses to achieve competitive advantage (Porter 1985; Thompson et al. 2008; Baye 2009) through the consideration of laws in their business plan.
In terms of research topic area, this may be a novel research because there was virtually no prior research, studies or articles written in the topic area. This was even more the case during the conceptual stage of this research. As such, this could be an exploratory study, or perhaps the first stage in a sequence of future researches arguing that the playing field between small and large businesses has been levelled by the two law reforms. This research adopts a mixed-method methodology. An internet survey was conducted on 417 SMEs, of which 381 (91.3%) were located in the Sydney metropolitan area and five personal interviews were conducted. The internet survey was promoted by the Small Enterprise Association of Australia and New Zealand, the Small Business Development Corporation and the Australian Retailers Association. It is estimated that at least 1,500 SMEs were invited to participate in the survey and the results will have relevance beyond the Sydney metropolitan area.
Summary of findings
Although some of its findings confirm the expectations of the extant literature, this research contributes a number of new issues or propositions that are not raised in the literature. Some of the new themes or additions to knowledge arising from findings are:
(1) Today, now that 93% of small businesses are connected to the internet, more small businesses are using the internet to research laws relevant to their area of interest and are applying what they learn to their business plans as a critical success factor.
(2) There is now a real potential for individual businesses in the small business sector to achieve competitive advantage (Porter 1985; Thompson et al. 2008; Baye 2008) through the consideration of the relevant laws in their business plans.
(3) The Plain English and Free Access to Law movements have opened up an area of opportunity previously unavailable to most small businesses and the playing field between small and large businesses have been levelled by the two law reforms.
(4) Legal matters are no longer the exclusive domain of lawyers as small businesses are now able to look up the internet for information on the laws that affect their businesses.
Some of the findings that did confirm the expectations of the extant literature are:
(5) ‘Government restraints’ is listed in each of the categories on the five forces model of competition (Porter 1980; Thompson et al. 2008; Baye 2009). Laws that are prescribed by the federal, state, and local governments can influence what organisations can and cannot do.
(6) Asymmetric (or unevenly held) information could stymie an optimal market structure and cause it to collapse (Akerlof 1970; Corones 2010, p. 20). Therefore, governments should promote conditions which enable small businesses to be better informed so that they will be more efficient.
(7) Political and legal information such as the general political stability of the countries in which a business is operating, and the specific attitudes that elected officials have toward a particular industry, are two of the factors that should be included in a business plan (Robbins et al. 2003).
(8) Today, businesses in general are increasingly accountable to multiple legal, regulatory and ethical standards and this forces management to make difficult choices and deliver results while behaving responsibly in an increasingly litigious environment under increasing regulatory restrictions (Morris et al. 2008; Thompson et al. 2008; Corones 2008).
(9) Legal costs have an effect on how small businesses view legal advice because they find legal services to be a hindrance to production and moneys could be better spent elsewhere (Marks 1999, p. 6).
Although this research has demonstrated that the two law reforms have levelled the playing field between small and large businesses in terms of gaining access to the law, the broader question of more complex and serious legal issues may need further investigating. Arguably, the ‘litigious end’ of law is best avoided by careful and accurate planning, and this could be as relevant to business planning today. This research has found that 45% of small business owners are not appreciating the value of legal information, or law in general, as an important aspect of their business planning process. Therefore, it is an area worth further exploring.