Does Use of Public Relations Promote a Higher Growth Rate in Small Firms? The Case of Lincolnshire

Examines the role of public relations (PR) and small firm growth and whether practicing PR benefits small firms. The focus is on managing corporate reputation, or the management of the perception of stakeholders. Using a transaction cost perspective, it is suggested that reputation plays a role in reducing transaction costs and fostering trust; thus there is a theoretical link between a good reputation and the growth of small enterprises. The hypothesis is tested that firms that diligently manage their reputation will have a higher growth rate than those that do not. A set of 51 techniques, skills, and activities was identified. A group of 286 small businesses in Lincolnshire, United Kingdom, were surveyed in 2002 to identify the ways they used PR. Only a small number of firms practiced any one of the 51 PR activities. Certain PR activities are shown to enhance the growth rate of firms, but no pattern relating to the type of industry or location of the firm emerges. Four activities are associated with growth: managing government relations, mounting consumer exhibitions, providing media news releases, and writing letters to media. Such uses of public relations, among others, should be included in the skills taught in small business development programs. (TNM)