No. 238

June 2004

SMALL BUSINESS

RESEARCH

SUMMARY

Small Businesses as Culprits and Clients:

A Comparison of Brownfield Redevelopment 

in Los Angeles and Kuala Lumpur

By Carol S. Armstrong

2004. [72] pages Los Angeles, CA 

under contract no. SBAHQ-02-Q-0011 

This Small Business Research Summary (ISSN 1076-8904) summarizes one of a series of research papers prepared under contracts

issued by the U.S. Small Business Administration’s Office of Advocacy. The opinions and recommendations of the authors of this study do

not necessarily reflect official policies of the SBA or other agencies of the U.S. government. For more information, write to the Office of

Advocacy at 409 Third Street S.W., Washington, DC 20416, or visit the office’s Internet site at www.sba.gov/advo.

This study compares brownfield (contaminated property) redevelopment in two cities, Los Angeles and

Kuala Lumpur, Maylasia, and it identifies why

brownfields are understood differently by small-scale

manufacturers. 

The manufacturing industry in the U.S. is dominated by small businesses—98.5 percent of manufacturing firms are small businesses. In the U.S. most

brownfield policies have been driven by a top-down

regulatory approach where legal liability is assigned

and the resulting antagonistic relationship between

government and business makes small businesses

feel like “culprits.” This is compared to the stakeholder perspective of small firms in Kuala Lumpur.

The main purpose of this report is to examine how

small businesses can participate as “clients” in

reusing former brownfields, especially in communities that depend on the success of small businesses to

survive. In other words, the report looks at brownfields as a solution to job retention and community

renewal. It examines the perspective of small business owners from a variety of manufacturing sectors

and their perceptions of brownfield policies.

Overall Findings

Small manufacturing firms in both the U.S. and

Kuala Lumpur are unaware of brownfield policies.

Small firms in the U.S. feel antagonized as “culprits”

by their local and national governments, while small

firms in Malaysia are treated as “clients.” Both cities

perpetuate their problems by keeping small firms

disengaged from the brownfield solution. The study

discovered that the “culprit-vs.-client” paradox of small

and medium enterprises exists in both cities, but that

Malaysia might be more successful with their cleanup,

since small businesses there are treated as stakeholders in economic development and encouraged to

innovate toward international environmental standards

in order to remain competetive globally.

Highlights

• Although many brownfield cleanup funding and

technical assistance programs exist and are intended

to facilitate public-private sector collaboration in

redevelopment, most small firms in both cities are

unaware of these and are therefore unlikely to take

advantage of them.

• The U.S. Environmental Protection Agency is primarily motivated by protecting public health and

safety through the enforcement of liability and

responsibility for contamination. Meanwhile, the

Malaysian solution to the contamination problem is

dictated by the national government through its real

estate development activities and is motivated by an

interest in promoting global industrial competitiveness. 

• According to the findings, small businesses in Los

Angeles and Kuala Lumpur proved difficult to

engage for various reasons, but primarily because of
the time constraints imposed on them in their regular

business operations. Malaysian firms were difficult

to engage because they tended to be unfamiliar with

brownfields redevelopment.

• Based on the survey, firms in Los Angeles revealed

that there is definitely a “culprit” sentiment present.

Firms indicated that they were overwhelmed by the

environmental compliance requirements placed upon

them regarding air emissions, water quality, and

solid waste disposal, and have a fear of liability

regarding brownfields.

• These two very different cases have ultimately

shown how small firms may be isolated from communities—and concomitantly from responsibility for

pollution management—by physical relocation in the

case of Kuala Lumpur and by isolation in the Los

Angeles case.

Scope and Methodology

The researcher conducted telephone interviews, used

secondary research, and hosted a survey on the

Internet. Approximately 110 telephone calls were

made to firms selected from the 2002 Directory of

Business for Southern California, where they were

identified as businesses in the City of Los Angeles.

Manufacturing firms were identified by their

Standard Industrial Classification (SIC) codes. In

addition, the researcher obtained email addresses of

firms from U.S. Small Business Administration’s

Pro-Net database to transmit the survey. In Kuala

Lumpur, Malaysia, firms were identified from the

Federation of Malaysian Manufacturers Association,

Selangor branch, which included Kuala Lumpur City.

Ordering Information

The full text of this report and summaries of other

studies performed under contract to the U.S. Small

Business Administration’s Office of Advocacy are

available on the Internet at www.sba.gov/advo/research.

Printed copies are available for purchase from:

National Technical Information Service

5285 Port Royal Road

Springfield, VA 22161

(800) 553-6847

(703) 487-4639 (TDD)

www.ntis.gov

Order number: PB2004-104382

Pricing information:

Paper copy and CD-ROM A05 ($31.50)

Microfiche A01 ($14.00)

Electronic Download A00 ($ 8.95)

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