Olson Triumphant? Recruitment Strategies and the Growth of a Small Business Organisation
| Author | Grant Jordan,Darren Halpin |
| Published date | 01 October 2004 |
| Date | 01 October 2004 |
| DOI | http://doi.org/10.1111/j.1467-9248.2004.00489.x |
| Subject Matter | Article |
Olson Triumphant? Recruitment
Strategies and the Growth of a Small
Business Organisation
Grant Jordan
University of Aberdeen
Darren Halpin
Central Queensland University
This article looks at the emergence and maintenance of interest groups. We systematically iden-
tify a range of membership incentives that underpin mobilisation and apply them to a case study,
the Federation of Small Businesses (FSB), focusing on the recruitment literature rather than the
special niche literature on trade associations. The FSB was created in 1974 and membership was
‘flat’ at about 40,000 until recruiting method changes were introduced in the early 1990s. The
total now approaches 200,000. This account of FSB recruitment argues unsurprisingly that the
group resulted from a combination of diverse influences rather than the Truman type of ‘auto-
matic’ mobilisation. More surprisingly, it notes that while early membership is accounted for by
the perspectives of Truman, Salisbury, Wilson, Moe, Opp and Sabatier, the major increases of the past
decade requires attention to the contribution of face-to-face marketing and Olsonian incentives. The FSB is
an unusually good example of group entrepreneur activity that illustrates how entrepreneur
incentives are different from those salient to members. Groups can experience different phases
and forms as they grow. We exploit a ‘natural experiment’ by illustrating how the FSB addressed
membership stagnation by changing the recruitment package in a broadly Olsonian direction.
The ‘before and after’ patterns of recruitment allow a ‘test’ of these techniques. It also raises
the issue of how different recruitment efforts produce a membership with different political
characteristics.
Small business was not on the 1960s political agenda. The Bolton Committee of
Inquiry on Small Firms observed that ‘The most telling criticism of Government in
this field is not that its policy towards small business is misconceived or hostile,
but that it has no policy ...’ (Bolton, 1971, p. 95). It noted the absence of political
activity attracting governmental attention. It suggested this was ‘in large part the
fault of small businessmen themselves who, in spite of their numbers, have been
extremely ineffective as a pressure group’ (p. 93).
The Federation of Small Businesses (FSB) was created in 1974 under the label of
the National Federation of Self-Employed (NFSE). Contrary to the conclusions of
the Bolton Committee, since the 1970s all governments, at least in their rhetoric,
have shown a concern for small business. Thus, at least in part, the Federation has
been successful. By 1984, the leader of the Labour Party, Neil Kinnock, was telling
the NFSE conference that ‘no plan for society can be envisaged in which the self-
employed sector does not play a large and increasing part’. When the 25th anniver-
sary history of the Federation was published, the prime minister, Tony Blair, said
POLITICAL STUDIES: 2004 VOL 52, 431–449
© Political Studies Association, 2004.
Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
432 GRANT JORDAN AND DARREN HALPIN
in the preface that it ‘is now one of Britain’s most important representative bodies’
and claimed that
Large firms are central to the competitiveness of a country. But small
firms are its lifeblood ... From small firms come growth, jobs and wealth.
From small firms come innovation and new approaches. From small
firms comes the future. (Bettsworth, 1999)
The emergence of the FSB was part of a phenomenon described by King and
Nugent (1979) as the ‘respectable rebels’ – the mobilisation of the British middle
classes against the emerging social and economic partnerships between business,
labour and government. With that emergence, the Bolton Committee’s interest
group void appeared to be filled, but the group has seen two distinct organisational
eras. It grew quickly at first, based on members seeking to identify with protest,
but then membership levels stagnated. The subsequent powerful growth followed
a change in recruiting strategy. Understanding the basis of this growth is our key
aim here. Importantly, we describe a group that in different phases has deployed
very different ‘membership drivers’. Ironically, this group initially shared a group
mobilisation explanation with social movements based on distress and anger
(Walker, 1991, p. 52), rather than the usual ‘story’ of ‘insider’ business groups.
The NFSE was relabelled the FSB in 1991 in an attempt to make it more ‘mar-
ketable’ (seeking a broader small business base than the ‘self-employed’). This, in
itself, is a signal of a more supply-side approach to recruiting (see Jordan and
Maloney, 1997). By 1999 it had five freehold buildings, an annual turnover of £10
million and a permanent staff of more than sixty people. It currently has over
185,000 (2003) members, but this evolution into stability and an established pre-
sence was neither inevitable nor seamless.
Group Formation Issues
Truman assumed that a link between individuals with shared concerns and
joining was automatic – that the growing complexity of society would be reflected
in a matching group diversity (1951, p. 53). He also noted that ‘disturbances’ may
result in new groups to restore political equilibrium (pp. 31, 40). He thus articu-
lated a common-sense belief that individuals join to pursue a common object
(Wilson, 1995, p. 19). Although the prolific creation of groups in the past four
decades might be in line with Truman’s expectation (see Hirschman, 1982, p. 78),
is the mechanism as expected? Is growth simple and irresistible? Or, as most sources
would now suggest, does membership reflect the selection of techniques and the
incentives (and entrepreneurial skill) of groups? Olson (1965), in contrast to
Truman, and failing to anticipate the explosion of group numbers, argued that
group membership was an activity pursued by potential recruits following a
test of economic rationality. He suggested agreement with group goals was
not in itself a reason to join: individuals join for rewards only available through
membership.
Olson essentially argued that groups could overcome membership resistance by
offering rewards conditional on joining (not free-rideable). He also suggested that a
group with a small potential membership might well face an easier task. A small
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