Home-based internet businesses as drivers of variety Marco van Gelderen and Janet Sayers Department of Management and International Business, College of Business, Massey University, Auckland, New Zealand, and Caroline Keen Keen Initiatives Ltd, Orewa, New Zealand Abstract Purpose – The purpose of this paper is to show that the way home-based internet businesses (HBIBs) are operated and the reasons for which they are started enable HBIBs to bring about variety, and to argue that this variety has a broader impact on the industry and the economy. Design/methodology/approach – The paper adopts a multiple case study approach, studying the best practices of eight HBIBs. Findings – The study finds that HBIBs generate variety because of the unique way in which they operate, and because of the reasons why they are started. How HBIBs operate can be captured in the acronym SMILES: Speed, Multiple income, Inexpensive, LEan, and Smart. They are founded (amongst other motives) for reasons of autonomy, freedom and independence. Both aspects – the how and why – of HBIBs are conducive to the creation of variety as they facilitate trial-and-error commercialisation of authentic ideas. Research limitations/implications – Five theoretical perspectives posit that variety is important for the industry and the economy: evolutionary theory, strategic management, organic urban planning, opportunity recognition, and the knowledge economy. The findings are discussed in the context of each perspective, showing how HBIBs play a role in each perspective. Practical implications – Policy makers should be aware of the importance of HBIBs, which can be promoted, providing generic facilities for business information, training, and mentoring, and by making compliance burdens more proportional to business size. Originality/value – The paper shows how and why HBIBs are drivers of variety. This paper argues, by means of five theoretical perspectives, that because of the variety HBIBs generate, they contribute to the economy over and above their direct and indirect contributions in terms of revenue and employment. Keywords Electronic commerce, Homeworking, Entrepreneurialism, Internet Paper type Research paper Introduction Cumulative research has established that a positive relationship exists between the number of new and small businesses on the one hand and economic growth on the other hand (Carree and Thurik, 2003; Thurik and Wennekers, 2004). However, the mechanisms (and their respective importance) by which new and small businesses bring about economic growth are subject to considerable debate. Several intermediate linkages have been identified (Wennekers and Thurik, 1999), the most important ones being innovation, competition, and variety. In this paper, our focus is on the The current issue and full text archive of this journal is available at www.emeraldinsight.com/1462-6004.htm The authors would like to thank eight home-based internet business owners for participating, and Ralph Bathurst, Joeri Mol, Roy Thurik and an anonymous reviewer for their valuable inputs. JSBED 15,1 162 Journal of Small Business and Enterprise Development Vol. 15 No. 1, 2008 pp. 162-177 q Emerald Group Publishing Limited 1462-6004 DOI 10.1108/14626000810850900