Partnering with Policymakers
Strengthening SME policy to address growth and productivity
Small and Medium Enterprises (SMEs) drive the UK’s economy. The Enterprise Research Centre (ERC), led by Professor Stephen Roper, has become a hub of excellence for research into these small businesses. Based jointly at Warwick and Aston Business Schools, the ERC has transformed the approach taken by UK Government to measuring SME performance and improving firm-level productivity, contributing to the UK’s economic performance.
SMEs – firms with fewer than 250 employees – are vital to the UK economy, making up 99.9% of the business population, yet many firms have limited growth potential and aspiration. The vast majority of UK SMEs do not survive past the first few years of operation. The ERC’s research collects much-needed data on the behaviour of SMEs, enabling policymakers to better understand issues with firm survival and growth, and feeding into the development of policies by government to address the UK’s productivity problem.
The ERC regularly provides crucial insights from its research on the drivers and barriers to SME performance to government departments and agencies. This research has:
Informed the design of the annual Longitudinal Small Business Survey (LSBS), funded by the Department for Business, Energy and Industrial Strategy (BEIS)
Provided new insights on the behaviour of the smallest firms via ‘Microbusiness Britain’, a groundbreaking survey of 10,000 firms with fewer than ten employees
Provided analysis of geographic clusters of innovation amongst SMEs
Provided evidence on the factors influencing technology adoption in SMEs
Provided evidence on the links between management practices and business performance
Explored business resilience and crisis planning amongst SMEs.
Research by the ERC has informed key areas of public policy.
Professor Roper’s input on the Longitudinal Small Business Survey (LSBS) has led to changes in method that improved the quality and quantity of the data collected. The survey is now considered to be a “gold standard” data source by researchers and policymakers.
The Microbusiness Britain research revealed an association between the adoption of digital technology and improvements in productivity. The research showed that doubling the adoption of digital technology by SMEs could deliver a ‘digital dividend’ boost to the economy of £16.6 billion. This research, which also included research in Ireland has fed into the development of a national strategy to foster growth in the country’s SMEs.
Professor Roper's research has raised awareness of the important role of innovation in SME performance and has informed the UK Government’s Industrial Strategy, in which innovation was identified as one of five underpinning foundational themes. ERC’s findings have also influenced decisions about the allocation of innovation funding taken by Innovate UK, the UK’s innovation agency, with Professor Roper advising on the development of a UK 5-year Innovation Strategy.
The ERC’s research has also led to new government investment in a series of initiatives designed to improve firm productivity. The Centre’s research on management and leadership was used in the UK Government’s Business Productivity Review. The Review led to an investment of £31m to boost productivity and the introduction of the Small Business Leadership Programme providing management training to SMEs, with an ambition to train 10,000 people per year by 2025. This programme has subsequently been re-orientated to give business leaders the confidence and leadership skills they need to ensure business recovery from the impacts of COVID-19, with the ERC directly involved in advising on the design of the new programme.
The impact of Professor Roper and the ERC’s research on the growth, innovation and productivity of SMEs has been profound and has helped to shape better policies and practices that can enable the UK’s SMEs to thrive.