Small business development in stabilizing Alberta's economy (Canada)

The post-pandemic recovery presents significant financial challenges for small businesses in Canada, including insufficient demand, cash flow issues, and low profitability. Alberta, heavily reliant on the extractive industry, is particularly vulnerable to global economic fluctuations. While Alberta experienced a recovery in 2021 due to rising oil prices and vaccination progress, future economic growth depends on energy market stability and public health policies. This research focuses on developing policy tools to leverage small businesses for economic stabilization, emphasizing innovation and sustainable practices to attract investment and support the population.

Small businesses constitute a substantial portion of the global economy, contributing significantly to employment and GDP. However, the COVID-19 pandemic severely impacted their financial stability due to limited reserves. Canadian national policy defines small businesses based on employee numbers (1-99 employees). Research highlights that small enterprises are not simply scaled-down versions of larger firms, but rather independent and diversified entities. The pandemic spurred a redistribution of enterprises toward more productive ones, with marketing and social innovations playing a crucial role in business survival. Innovations are defined as new products or processes meeting consumer needs while upholding social responsibility. Collaboration between startups and larger firms is also seen as an avenue for innovation. Key challenges for small businesses include debt burdens, supply chain disruptions, and the transition to digital technologies. Government support measures, while intended to mitigate the crisis, can have negative impacts on competition and growth if not carefully implemented, potentially benefiting less productive, larger firms.

The study employs a three-stage methodology. Stage one involves monitoring Alberta's economy using GDP and population data over a decade (2011-2021) to assess economic stability. Stage two analyzes the small business sector within Alberta's industry landscape, examining business activity (by size), employment growth, and sectoral contribution to GDP (2018, 2020, 2021). This stage utilizes histograms, graphs, and bubble charts to visualize data. Stage three develops policy tools for involving small businesses in economic stabilization. This involves converting quantitative measurements into qualitative definitions of economic principles, represented in a matrix outlining three levels of intervention: macroeconomic conditions, basic conditions, and business landscape diagnosis. Each level includes specific measures to stimulate small business growth and improve the overall economic environment.

Analysis of Alberta's economy (2011-2021) shows consistent growth in GDP and population, except during periods of global crisis (2015-2016 and 2019-2020). The small business sector dominates Alberta's business landscape. While the number of enterprises decreased slightly during the pandemic (2020-2021), there was a shift toward more productive firms, reflecting a quality-over-quantity trend. Employment growth in 2021 was driven by professional services, construction, and retail trade, with significant contributions from mining, real estate, and other sectors. Small businesses accounted for approximately 50% of the added value in key industries during the pandemic. The study proposes a three-level toolkit for small business involvement in economic stabilization: (1) macroeconomic conditions (national-level support), (2) basic conditions (local-level resource provision and support), and (3) business landscape diagnosis (monitoring, strategic management, and statistical analysis).

The findings highlight the crucial role of small businesses in Alberta's economic stability and resilience. The study's emphasis on a three-level approach to support considers both macroeconomic factors and the specific needs of small businesses within the provincial context. The proposed toolkit moves beyond traditional financial aid, addressing challenges like bureaucratic barriers, access to resources, and technological advancements. The results align with research emphasizing the importance of innovation and adaptability in small business success, particularly during economic downturns. The focus on collaboration between different business sizes and the integration of strategic management and monitoring provide a more comprehensive approach to stimulating economic growth.

This study provides a comprehensive framework for involving small businesses in stabilizing Alberta's economy. The proposed three-level toolkit, encompassing macroeconomic support, local-level conditions, and business landscape diagnostics, offers a practical approach for policymakers. Future research could explore the differences in labor organization among businesses of different sizes and delve deeper into the impact of social innovations and corporate social responsibility on various societal spheres.

The study acknowledges limitations due to limited access to comprehensive statistical data on Alberta's small business landscape. This might affect the accuracy of the analysis and the generalizability of findings. Further research with more detailed data would strengthen the study’s conclusions.