Type
Theme
SOTA Review

If high performance working delivers productivity gains, why isn’t common sense common practice amongst UK firms? SOTA No 14

High Performance Work Systems (HPWS) can be one solution to the UK productivity problem. HPWS involve a transformation in the management of human resources. However few UK firms have HPWS. This briefing note outlines the evidence for HPWS and suggests why adoption of HPWS is low amongst UK firms. It notes that meta-studies find a strong and positive relationship between HPWS and firm productivity, and proponents offer lists of relevant human resource practices. However, barriers to the adoption of HPWS exist. First, there is no consensus on which bundle of practices is indicative of high-performance working. Second, it is not clear when any of these bundles constitute the necessary ‘system’. Third, the measures used are often very blunt and don’t always capture the necessary practices. Fourth, research doesn’t always cover all of the practices and so how they work to deliver productivity gains. Fifth, managers might not be willing and able to introduce HPWS. To overcome these problems, a consensus needs to be generated about what constitutes HPWS and more research to better understanding of how these systems work. Managers also need to be educated in the benefits of HPWS and supported in introducing them.

Authors
Associated Themes
SOTA Review

Defining engagement and its link to productivity. What does the HRM literature tell us? SOTA No 13

Despite its popularity and arguments that it can make a significant contribution to productivity, the concept of ‘engagement’ is not clearly defined and there is limited high quality, methodologically rigorous research on the links between employee engagement and productivity. This review clarifies and compares the concepts of work and employee engagement and evaluates the evidence from HRM literature about their links with organisational performance outcomes. There is evidence that work engagement has a positive effect on the performance of individual employees. However, while it is reasonable to assume that this may lead to improved organisational outcomes, robust evidence is absent. The evidence of a causal relationship between organisational/employee engagement and improved organisational productivity is also limited and comes from case studies. More rigorous studies are needed to demonstrate and understand the links between engagement and organisational outcomes.

Authors
Associated Themes
SOTA Review

Public University Policy and R&D Success. SOTA No12

Today, public university policy is widely accepted as one of the most adopted approaches to spur innovativeness, competitiveness, and growth in a knowledge-based economy. Despite the popularity of public university policy in academia and politics, solid evidence is scarce. Although there is increasing experience in designing public university policy to spur R&D activities and success, little is known about whether such policies actually work. What does the evidence suggest about the relationship between public spending on generating public knowledge spillovers and R&D outcomes? Is public university sponsorship overall beneficial?

Authors
Associated Themes
SOTA Review

What are the barriers to start-up and scale-up in R&D intensive firms? SOTA no 11

R&D investments enhance knowledge, underpin innovation and facilitate the creation of new firms; this recognised source of economic development has become integral to government policy in many countries. While all firms face difficulties engaging in R&D, new and young firms are most affected facing internal and external factors that inhibit investment or impede the process. A decision to invest in R&D often stalls due to concerns about appropriation and/or limited access to appropriate finance, but once engaged the barriers are found in the nexus of knowledge, networks and skills that underpin dynamic capabilities and the enhancement of a firm’s absorptive capacity. In particular, the emphasis placed in the beginning upon science/technology expertise, at the expense of managerial acumen, undermines a firm’s ability to recognise and exploit commercial opportunities.

Associated Themes
ERC Report

Understanding micro-businesses in Northern Ireland

Drawing on new survey data this report provides a profile of micro-businesses with 1-9 employees in Northern Ireland in comparison to UK regional, Irish and US benchmarks. The report provides the first evidence on levels of business ambition, resilience and digital adoption for this group of firms. The Micro-business Britain Survey covered 6,200 firms in the UK - 495 in Northern Ireland – 1,500 companies in Ireland and 2,000 in the US.

Author

Nola Hewitt- Dundas, QUB, ERC and Stephen Roper,WBS, ERC

ERC Report

NI Local Growth Dashboard

The Northern Ireland Local Growth Dashboard has been developed by Queen's University and the Enterprise Research Centro ( ERC ) and provides comparative statistics to the Local Enterprise Partnership ( LEP). Growth Dashboard first launched in June 2014 and Its purpose is to present a set of growth metrics for start-ups and existing Local firms across a range of sub-national geographies in NI with a specific focus on each of the 11 Local Government District ( District Council) areas. Alongside these metrics it includes contextual data for each, including comparisons to the wider UK geographies.

Data Sheet available at : http://www.enterpriseresearch.ac.uk/wp-content/uploads/2018/11/NI-Dashboard-Statistics_final-for-upload.xlsx

Author

Queen's University , ERC

Research Paper

Industry 4.0 is coming: Is digital adoption a new mechanism linking entrepreneurial ambition to business performance? Research Paper No 72

The advent of Industry 4.0 emphasises the potential importance of digital adoption for sustained competitiveness. Here, based on new survey data for over 9,000 firms in the UK, Ireland and USA we consider whether digital adoption provides a new mechanism through which firms’ growth ambition is realised. Our analysis emphasises the commonality of factors linked to adoption in each of the three countries. Four key conclusions emerge.

Associated Themes
  • Innovation and Exporting
SOTA Review

The role of policy mix in driving business innovation. SOTA No 10

Businesses often receive a mix of different innovation policy instruments, a policy mix, to support their innovation activities. For example, they may receive a mix of R&D grants and R&D tax credits. What does the evidence suggest about policy mix’s role in driving business innovation? SOTA studies on the impact of different policy mixes present a complex picture. Internationally, findings range from an increase of 34 percent in business innovation associated with some policy mixes to a decrease in business innovation of 26 percent associated with other mixes.

Associated Themes
  • Innovation, internationalisation and growth
SOTA Review

Identifying Clusters – A Review of Methodological Approaches. SOTA No 9

Although a seemingly intuitive concept, the identification of clusters involves a number of complexities linked to (1) the cluster definition (the industry boundaries) and (2) the spatial determination of clusters.
Over the last 20 years, researchers have proposed a range of methods to address both aspects.
The choice of cluster identification method will depend on the policy question, geographical context, type of industries under investigation and, importantly, data availability.

Associated Themes
SOTA Review

Diversity in Innovation Teams. SOTA No 8

Diversity in the workplace has attracted significant interest in organisations that want to attract and retain talented employees. The increase in functional and demographic diversity of the workforce has led to the question whether diverse teams perform better than homogeneous groups. What is the evidence supporting the ‘value in diversity’ hypothesis? Research surrounding team performance suggests that diverse teams are essential to organisational innovation, creativity and productivity. However, too much diversity can reduce innovation team performance by negatively affecting cohesion, decision-making quality, and members’ commitment to the group – suggesting an inverse U-shaped relationship between diversity and team performance.

Authors
Associated Themes
SOTA Review

Adoption of new technologies and organisational practices: are there innovation benefits? – SOTA No 7

In increasingly competitive environments, the ability to innovate successfully is a key corporate capability, and depends on the wide-ranging, complex decisions faced by firms in their day-to-day operations. International studies report innovation returns from the adoption of advanced manufacturing technologies (AMTs), although these returns may be lagged due to initial disruption effects. Likewise, work practices such as innovation strategies, innovation culture and leadership, team-working and multi-functionality are important for innovation. In addition, adoption decisions are not necessarily made in isolation, and there is evidence of higher innovation returns when adoption decisions are made simultaneously.
Individual business surveys rarely consider all three areas (innovation; technology adoption; work practices), therefore we know little about the importance of organisational culture as a pre-condition for the technology adoption–innovation relationship. In addition, longitudinal or panel data is necessary to investigate possible lags to any cause-and-effect relationships.

Authors
Associated Themes
  • Leadership and management practices and SME performance
SOTA Review

Regional Differences Accessing Finance in UK SMEs: Do they matter? – SOTA No 6

In recent years, there has been a growing body of empirical evidence examining spatial variations in access to bank finance in UK SMEs. The overwhelming bulk of this work suggests a firm’s geographic location plays a crucial role its ability to access finance. Innovative and growth-oriented firms seem those most affected. Regions most adversely affected are peripheral and rural areas with sparse bank branch networks. The main causes of these disparities seem to be connected to the pervasive use of new automated lending technologies and the rapid decrease in the size of the UK bank branch network. The knock-on effect of these trends may be increasing the use of other forms of substitutive finance and increased levels of borrower discouragement within SMEs located in peripheral areas. From the evidence base reviewed, it would appear that regional funding gaps do exist and they do matter. The full impact of their effects on firm performance and wider economic growth remain unknown however.

Authors
Associated Themes
  • Finance and Investment
SOTA Review

What Supports the Adoption of Innovations Within Established (non-frontier) Firms? SOTA No 5

The adoption of innovations can be strongly path-dependent and self-reinforcing in established firms. Policy can play a role in shifting the adoption of innovations away from existing technological trajectories towards new, more effective, innovations. This may have positive impacts on growth and productivity. This review addresses the following questions: What are the factors that affect technology change or inertia in established firms? What role can policy-makers play in over-coming such inertia?

Authors
Associated Themes
  • Innovation, internationalisation and growth
SOTA Review

Organisational Learning and Innovation in Supply Chains. SOTA No 4

Evidence that a company’s Organisational Learning Capability (OLC) and their level of innovation performance are positively related has been the focus
of numerous academic studies over recent years. Whilst a significant body of research exists that focusses on learning at company level, little research
exists on how companies operating in supply chains/networks learn and innovate. The dynamics of ‘power’ that exist between companies in the supply
chain often impede learning and the resulting innovation. However, it is critical that a truly effective collaborative and knowledge-sharing
environment is created so that new ideas and innovative solutions to problems are achieved. This review looks at the issues involved in developing
collaborative learning environments within supply chains.

Authors
Associated Themes
  • Strengthening UK supply chains
SOTA Review

How Can We Attract and Retain More Internationally-mobile R&D? SOTA No 3

As the world becomes ‘flatter’ and firms have more locations available in which to site their activities, more and more locations are chasing the ‘holy grail’ of attracting high-tech activity, and particularly R&D. This is, however, often in the absence of a clear strategy of how to retain this investment once it has landed, and how to best encourage interactions between internationally mobile capital to maximise the benefits of that investment for a region. This review explores the empirical literature on the location of R&D and other high- tech or innovation-intensive activities and explores the main findings of this in the context of local economic development or inward investment strategies.

It is important to consider the nature of local labour markets in this context. Attracting high-tech investments often requires a degree of migration into a region. Firms recognise that in these activities they are engaged in a ‘war for talent’ such that earnings growth in these sectors far outstrip more general wage increases. As such, firms need to be convinced that in addition to the pool of labour already in a given location, more can be attracted from elsewhere. This issue is however somewhat at odds with the existing evidence, which focuses on financial incentives or tax policy as the means to attract such investments.

Authors
Associated Themes
SOTA Review

Discouraged Borrowers: Measurement, Determinants and Impact. SOTA No 2

In recent years increasing attention has been paid to SMEs who do not apply for bank finance for fear of rejection - so-called discouraged borrowers. To date, much of the literature has focused on the measurement of discouragement in SMEs. These firms constitute a major proportion of SMEs with some recent research suggesting they number as many as half a million UK SMEs. However, owing to the different definitions of discouragement adopted, comparisons across different studies are problematic. The growing literature on the determinants of discouragement suggests firm size and age are significant, with nascent and smaller SMEs more likely to be discouraged. Entrepreneurs who are older, female from ethnic minority backgrounds with lower levels of human capital and poorer credit ratings, are more likely to be affected. The evidence base on the potential impact of borrower discouragement is less well established. However, available evidence suggests discouragement may result in reduced investment levels and weaker firm performance. The broader and disaggregated definitions of borrower discouragement used in recent studies provide a useful basis for future comparisons and longitudinal tracking.

Associated Themes
  • Finance and Investment
SOTA Review

Innovation and Quality Management – What are the links? SOTA No 1

TQM and ISO9000 are two of the most widely adopted quality improvement approaches. What does the evidence suggest about the relationship between these quality improvement approaches and firms’ innovation outcomes? Internationally, SOTA studies of ISO9000 adoption suggest small positive innovation benefits of 2-13 per cent. International studies of TQM adoption also suggest positive innovation benefits of 4-7 per cent with the strongest benefits arising from the ‘soft’ elements of TQM related to work practices and cultural change. A lack of both survey and population data mean we have no evidence of the implications of either ISO9000 or TQM for innovation and firm performance in the UK.

Associated Themes
  • Innovation, internationalisation and growth
Insight

Exploring the links between design investment, innovation and productivity

The case studies and design survey undertaken for the “Design Economy 2018” have suggested the different mechanisms through which design and designers can contribute to firms’ innovation and performance. Here, we use data from the UK Innovation Survey to undertake a causal analysis of the links between design, innovation of different types and productivity. Our analysis draws on data from around 15,000 UK companies which responded to two consecutive waves of the UK Innovation Survey.
The starting point for our analysis is the UK Innovation Survey indicator of whether or not each firm ‘engages in … design activities, including strategic, for the development or implementation of new or improved goods, services and processes’. Are firms which are engaging with design more likely to be innovating? More specifically, we explore whether firms which are engaging with design are more likely to be engaging in product or service innovation, process innovation and organisational innovation. The second stage of our analysis explores the extent to which each of the three types of innovation results in improvements in firms’ productivity.

Associated Themes
  • Innovation, internationalisation and growth
ERC Report

Under-represented entrepreneurs: A literature review

Some groups of individuals are more likely than others to struggle to find paid employment because they experience systemic disadvantage of some kind. These groups include migrants, people who identify as having a disability, and those with low educational attainment. The entrepreneurship route – essentially becoming self-employed or starting their own businesses - is often suggested as a way into work for these people. However, fewer individuals from these groups engage in entrepreneurial activity of this kind, and those that do succeed in starting their own businesses experience lower turnover and higher failure rates than their mainstream counterparts. These groups of individuals are thus under-represented in entrepreneurship, and this paper reviews published research from both academic and non-academic sources that investigates why this might be.

Author

Maria Wishart, ERC

ERC Report

Business resilience in an SME context: A literature review

We define business resilience as a strategic objective intended to help an organisation survive and prosper. A highly resilient organisation is more adaptive, competitive, agile and robust than less resilient organisations and rebounds from adversity strengthened and more resourceful.
Resilience is clearly highly desirable in business organisations and as a result, business resilience is a growing field of research. To date, three main strands of business resilience research can be discerned, focusing on employees, business models, and organisational efforts to anticipate, prevent and respond to challenges. In fact, business resilience research to date has tended to focus quite strongly on large organisations, and assumed that findings are transferable to smaller businesses, which is not necessarily the case. Perhaps for this reason, resilience research focusing explicitly on SMEs is a small field, but one that is gaining momentum. This report explores academic and non-academic research into resilience in SMEs in particular, and identifies the key strands of work that have been done so far. It also identifies gaps in our knowledge which underpin an agenda for future research.

Author

Maria Wishart, ERC

ERC Report

UK Local Growth Dashboard 2018

The UK Local Growth Dashboard has been developed by the Enterprise Research Centre (ERC) and builds on the LEP Growth Dashboard first launched in June 2014. Its purpose is to present a set of growth metrics for start-ups and existing firms across a range of sub-national geographies in the UK with a specific focus on each of the 38 English Local Enterprise Partnership (LEP) areas. Alongside these metrics it provides some other contextual data for each LEP including the changing sectoral composition of local economies over time.
2018 Data: http://www.enterpriseresearch.ac.uk/wp-content/uploads/2018/06/2018-dashboard-master.xlsx



Author

ERC

Associated Themes
  • Business Demography Research Theme
ERC Report

State of Small Business Britain Report 2018

The report brings together a range of the latest data and insights on the growth and performance of UK SMEs. It sets out key SME trends based on a round-up of the latest research evidence including analysis of the Business Structures Database and the Longitudinal Small Business Survey. It also reports on the key findings from the ERC’s first Micro-business Britain survey, and from the 2018 UK Local Growth Dashboard – an annual publication which presents growth metrics for start-ups and existing firms across a range of sub-national geographies, including LEP areas.
Launched at the ERC’s Annual State of Small Business Britain Conference 2018.

Author

ERC

Research Paper

Management capability, business support and the performance of micro-businesses in the UK. Research Paper 68

This report documents analysis from Waves 1 and 2 of the UK Longitudinal Small Business Survey, focused on the subsample of sole-proprietorships and micro-businesses (less than 10 employees), comprising 3,882 businesses. The report is specifically concerned with the impact of business planning, support and advice on performance outcomes. Performance is captured by indicators of innovation propensity, exporting propensity and intensity and turnover per employee (productivity) and in turn innovation and exporting are conceptualised as feeding into productivity performance.

Associated Themes
Insight

Recent trends in the digital creative sector in Coventry and Warwickshire

The digital creative sector plays a key role both a provider of jobs in its own right and also as an enabler of digital innovation in other sectors. In this note we provide a brief statistical profile of the development of the digital creative sector in Coventry and Warwickshire over the last decade. This is one of a series of papers ERC will be publishing in the run up to Coventry City of Culture 2021.

Associated Themes
Research Paper

An empirical examination of discouraged borrowers in the UK. Research Paper No 69

This paper investigates the differences between small and medium sized firms (SMEs) that apply for funding and those that are discouraged from applying for funding - so-called discouraged borrowers. The dynamics and determinants of borrower discouragement, together with its impact on the activities of SMEs are also investigated. Data from the Longitudinal Small Business Survey suggests that one in ten SMEs (9.3%) can be classified as being a discouraged borrower or as many as half a million UK SMEs could be discouraged borrowers.

Associated Themes
Research Paper

Export status and SME productivity: learning-to-export versus learning-by-exporting. Research Paper No 71

Exporting offers firms the opportunity both to maximise profits from their existing products and services and, through ‘learning-by-exporting’, to identify new innovation opportunities. In this paper, we exploit a unique data source to examine the strategic choices of smaller firms in terms of exporting or non-exporting. We pay particular attention to a substantial group of export-capable firms which state that they have products or services suitable for exporting but have no intention to export.

Associated Themes
Research Paper

Business support and SME performance: exploratory analysis of the Longitudinal Small Business Survey 2015 and 2016 Research Paper No 70

This report presents findings from a study of the relationship between business support and Small and Medium-sized Enterprise (SME) performance. The analysis draws on two waves of data (2015, 2016) from the Longitudinal Small Business Survey (LSBS), a large-scale telephone survey of 15,502 SME employers (e.g. owners and managers).
The survey defines SMEs as businesses with between one and 249 employees, with further sub-group analysis based upon employment size: micro businesses (1-9 employees); small businesses (10-49 employees); and medium-sized businesses (50-249 employees). This report is delivered by the Enterprise Research Centre (ERC).

Associated Themes
Research Paper

Using RCTs as a research method for SME policy research: The UK experience. Research Paper No 66

Randomised controlled trials or RCTs have a number of theoretical advantages over more standard econometric evaluation approaches, particularly the avoidance of selection bias. Over the period since 2010 five publicly funded RCT projects and a range of communication trials have been undertaken in the UK designed to test aspects of small business and innovation policy. We briefly describe the trials and identify the operational and tactical issues which arose. Experience from medical trials also suggests the value of replication and synthesis, epitomised in the Cochrane Reviews.

Associated Themes
Research Paper

Team size, diversity and performance of new ventures and SMEs : a meta-analysis.Research Paper 64

This paper describes what we know about the effect of top managerial teams (TMT) size and diversity on the performance of new ventures and SMEs. It does so by summarising the results of a thorough literature search of quantitative studies published on this topic between 1990 and 2016 and of a meta-analysis on the relationships reported in these studies.
1990 and 2016 and of a meta-analysis on the relationships reported in these studies.
The search revealed 47 studies and 266 measured relationships between TMT size or diversity and firm performance. These studies employed different samples, econometric techniques, geographical and industry sector focus. Almost 77% of the studies in our sample focus on new ventures, 60% on high-tech firms and 36% on SMEs.
While the meta-analysis reveals many significant and positive effects of team size and diversity, the range of effects varies quite widely depending on context, generating a range of effect sizes from small to large. This inconsistency in results suggests that more replicative studies are required to add to the body of knowledge on team effects on performance.

Associated Themes
Research Paper

Organisational capital, exploration and exploitation: Econometric evidence for UK services firms. Research Paper No 65

Across all sectors, firms face pressure to serve their customers better by innovating in the delivery of goods and services. Undertaking innovation involves a range of different activities, however, from exploratory knowledge creation or acquisition to commercial exploitation. This may create tensions due to the very different resource and organisational requirements of effective exploration and exploitation. Here, we draw on new survey data for five UK service sectors which separately identifies firms’ exploratory and exploitative activities, to identify those organisational practices which are associated with effective exploration and effective exploitation. Strong contrasts emerge, with more ‘organic’ practices associated with exploration and more ‘mechanistic’ practices better supporting exploration. We find no evidence, however, that those organisational practices associated with effective exploration have any detrimental effect on exploitation, and vice versa. Our results suggest very different organisational strategies for services firms adopting business models which emphasise exploration, exploitation or both.

Associated Themes
Research Paper

Fast-growth firms in the UK: definition and policy implications. Research Paper No 63

This research note aims to establish an evidence-based understanding about how fast-growth firm definitions differ and what they mean to policy. Employing the UK business population data over 1998-2013, we compare and contrast several popular fast-growth firm definitions based on their coverage in the business population, the contribution to the aggregate economy and their key characteristics, all discussed in context of the conceptual grounds of these definitions. The key message from our finding is that definition matters. Fast-growth definitions in terms of employment and productivity capture rather different sets of firms, indicating potential conflict in goals. It is possible that polices supporting fast-growth of employment may impair productivity growth, and likewise productivity-driving measures may lead to dwindling employment growth. On the whole, employment-based fast-growth firms generate lots of jobs but have mixed productivity records, while productivity-based fast-growth firms have lower job creation records but show productivity superiority.

Associated Themes
Research Paper

The UK’s high growth firms and their resilience over the Great Recession – Research Paper No 62

During the last decade High-Growth Firms (HGFs) – sometimes referred to as ’Scale-Ups’ – have increasingly become an established feature of the UK business policy landscape. Indeed, HGFs are mentioned in the government’s recently published policy document ”Building our Industrial Strategy”, and are now considered sufficiently important that the Minister for Small Business has taken on the role of ”Scale-Up Champion”.
Whilst we know something of the characteristics of these firms – about their age, size, sector and location – we know relatively little about the dynamics of the HGF population as it evolves over time. For the most part attention is focused simply on the annual count which, as we shall see, is not an entirely appropriate measure of HGF activity.

Associated Themes
  • Business Demography Research Theme
Research Paper

Assessing the business performance effects of receiving publicly-funded science, research and innovation grants – Research Paper No 61( Revised )

UK Research Councils spend around £1.7bn pa on supporting research. Here, we provide the first comprehensive assessment of these research grants on the performance of UK firms. Using data on funding and partnership from Gateway to Research on all funded projects by the UK Research Councils over the 2004 to 2016 period and business performance data from the Business Structures Database we have applied a difference-in-differences propensity score matching technique to evaluate the performance of UK firms who participated in publicly-funded research projects. Our analysis suggests five key conclusions. First, firms who participated in research projects funded by UK research councils grew their turnover and employment 5.8-6.0 per cent faster in the three years after the project, and 22.5-28.0 per cent faster in the six years after the project, than similar firms which did not receive support. Second, the impact of participating in projects is larger for firms in high-tech manufacturing and knowledge intensive services. Third, we find evidence that the impact of participating in projects is larger for small firms and those with lower starting productivity (turnover per employee). Growth impacts on firms in the top quartile of the productivity (turnover per employee) distribution are small. Fourth, support relevant to businesses is provided largely by EPSRC and Innovate UK. Participation in projects funded by both organisation increases both employment and turnover growth in the short and medium terms with only marginal differences in their impact. Fifth, the effects of grants vary depending on the size of the project. Participating in projects involving small and very large grants have smaller growth effects than medium-sized support packages. Our results have implications for the extent and targeting of future Research Council funding.
Our analysis is subject to a number of caveats. First, data limitations mean that we measure economic impacts using turnover and employment data rather than value added per worker or hour worked. Secondly, at this point we only consider the direct impacts on firms. Spillovers or multiplier effects may significantly enlarge these effects; displacement may reduce them. Both will be considered in a future study. Thirdly, data linking and the timing of some grant awards in recent years mean we are able to consider growth effects for only around two-thirds of firms which participated in publicly funded science and innovation projects.

Associated Themes
  • Innovation and Exporting
Research Paper

Actual and intended growth in family firms and non-family owned firms: Are they different? Research Paper No 60

This article uses the first wave of Longitudinal Small Business Survey (SBS, 2015), and investigates the role of owner-management structure in affecting the growth behaviours of small- and medium-sized enterprises (SMEs) in the UK. Specifically, the study compares the growth propensities among family firms managed by the family member(s) only, family firms managed by externally sourced manager(s), and non-family-owned small firms. Based on the change-in-amount perspective (Penrose, 1951), growth is measured using three different indicators, including growth in employment size, growth in turnover, and growth in sales.

Associated Themes
Research Paper

Home Alone: Innovation and sales growth intentions among the sole self-employed. Research Paper No 59

It is widely known that solo self-employed entrepreneurs enjoy non-pecuniary benefits from their employment status and earn less compared to those employed. They have greater ‘freedom and autonomy’ in running their business and as such they pursue their intrinsic commercial ambitions relying on their experience, abilities and exploiting the available opportunities from their external environment. In this paper we argue that solo self-employed entrepreneurs’ growth ambitions shape their future innovation strategy. We develop a theoretical framework and empirically analyse the relationship and the determinants of innovation and growth intentions using a large sample of UK self-employed entrepreneurs. In doing so we extend the theory of planned behaviour to incorporate the role of entrepreneurs’ past experience in innovation and growth in shaping their corresponding future intentions. Our empirical results suggest that past innovation performance and achieved growth rates shape future entrepreneurial intentions and ambitions through an adaptive learning process given the level of entrepreneurial capabilities and external environment opportunities.

Associated Themes
  • Innovation and Exporting
ERC Report

Exporting, ambition, finance and SME performance: Exploratory analysis of the Longitudinal Small Business Survey 2015 and 2016

In this report we outline three exploratory analyses of the Longitudinal Small Business Survey (LSBS) for 2015 and 2016, with a focus on the drivers of business performance. The three analyses focus on: the impact of exporting; ambition; and the availability of external finance. In each case the aim is to exploit the longitudinal aspect of the LSBS, relating firms’ performance in 2016 to firms’ strategy, choices and activities in 2015.

Author

Areti Gkypali, Stephen Roper , Bo Grace Peng

Insight

High performing firms and job creation: a longitudinal analysis (1998-2013) ERC Insight Paper

The OECD High-Growth Firm (HGF) measure was a pragmatic solution to a practical problem. It was designed to assist in identifying the small group of firms which contributed disproportionately to job creation. This statistic could be used to inform national policy and to make comparisons across countries, since it could be readily replicated using business register data. The decade since the measure was first published has seen increasing dissatisfaction amongst the academics and policymakers seeking to make use of it. There are two important criticisms. First, it focuses attention on relatively short ‘bursts’ of growth rendering invisible the reality of growth for the majority of businesses, and second, it does not in fact capture some important members of its target group the ‘relatively small proportion of firms that contribute disproportionately to job creation’.
We present a new analysis of job creation in the UK, using data on a cohort of start-ups born in 1998 to identify three different groups of high performing firms. Of these three groups we find that HGFs as defined by the OCED do not create the most jobs, in fact they grow more slowly and have a lower survival rate than the comparators. Notably, though, most of the observed growth in all three groups takes place within the first five years after start-up.

Associated Themes
  • Business Demography Research Theme
Research Paper

Rural business aspirations, obstacles and support: an analysis of the Longitudinal Small Business Survey 2015 Research Paper No. 58

A rural-urban analysis of the UK’s Governments Longitudinal Small Business Survey (LSBS) responses for 2015 has been undertaken to understand spatial variations in performance and uptake of external support services. The analysis is based on 15,500 survey responses from across the UK and uses official rural-urban classifications. Approximately 28 per cent of survey responses to the LSBS are classified as rural. Within the rural context, conclusions relating to growth have previously been hampered by difficulties in separating out whether rural location has a distinctive effect or whether spatial variations in business performance reflects differences in size, sector and age of business. Therefore this analysis used Propensity Score Matching (PSM) to control for these and other profile variables, allowing for an assessment of rural effects on business performance.

Associated Themes
Research Paper

Accessibility, utility and learning effects in university-business collaboration. Research Paper No 57.

UK government reports have emphasised the potential role of universities in driving localised economic development. There may be a utility-accessibility trade-off, however, between the accessibility of local university knowledge and its ‘fit’ with the specific needs of local firms. Here, using data from UK Innovation Surveys (UKIS) covering the period 2004 to 2012, we examine this trade-off and how it differs for firms of different sizes. Our analysis suggests four main empirical results. First, we find support for the predicted inverted-U shape relationship between the distance between collaborators and the innovation benefits. Second, we find evidence, in accord with the utility/accessibility trade-off, that local university collaboration benefits only small and medium firms. Third, we find that learning effects from previous collaborations with customers, suppliers etc. increase the probability of collaborative activity. Fourth, we find strong evidence of the persistence of university collaborations. Our results re-affirm the evidence from other studies of the value of university collaboration and suggest the value of policy action to address market failures which arise in the formation of university-small business collaborations.

Associated Themes
  • Innovation and Exporting
Research Paper

Does learning from prior collaboration help firms to overcome the “two worlds” paradox in university-business collaboration? Research Paper No 55

There is now substantial evidence on the positive contribution universities can make to helping firms’ innovation. Building university-business collaborations, however, confronts the ‘two-worlds’ paradox, and the difference in institutional logics and priorities between businesses and universities. Here, we consider whether firms’ experience from prior collaboration can generate learning which can help to overcome the two-world’s paradox and improve their ability to generate new-to-the-market innovations in collaboration with universities. Based on panel data for UK companies, we find evidence of significant learning effects in the commercialisation pipeline for new-to-the market innovation. Firms working with, say, customers in one period are significantly more likely to collaborate with universities in subsequent periods. Further down the pipeline, collaborating with universities increases the probability of a firm making new-to-the-market innovations (as opposed to new-to-the-firm innovation) by 21-24 per cent regardless of firm size. The commercial benefits of collaborative, new-to-the-market innovation are concentrated in medium and larger firms with no significant effect for small companies. There is the potential for policy intervention both to increase levels of small business-university collaboration and assist smaller firms to maximise the commercial benefits of collaborative, new-to-the-market innovations.

Associated Themes
Research Paper

The relationship between middle market firms’ access to finance and internationalization intentions. Research Paper No 54

This article examines the relationship between middle market firms’ access to finance and their exporting intentions. We hypothesise that this relationship is positive but moderated by a firm’s age. We test our hypotheses using a novel dataset of middle market firms across four large EU economies. Our analysis demonstrates that the relationship between middle market firms’ access to finance and their exporting intentions is different for younger and older firms. When younger firms have ready access to finance they are less likely to enter new geographic markets, while when older firms have ready access to finance they are actually more likely to enter new geographic markets.

Associated Themes
Research Paper

Assessing the characteristics, determinants and spatial variations of internationalised new ventures in the UK. Research Paper No 56

This study focuses on internationalised new ventures, here defined as firms that have been trading for 5 years or fewer and which have already engaged in selling their goods and/or services abroad. The report presents analysis of data from the Longitudinal Small Business Survey that: 1) examines differences between internationalised and non-internationalised new ventures, 2) assesses the factors which determine whether a new firm is likely to engage in export activity early in its lifetime; and 3) maps the geographic distribution of these internationalised new ventures across the UK.

Associated Themes
Research Paper

The effectiveness of regional, national and EU support for innovation in the UK and Spain. Research Paper No 52

Innovation policy aims to stimulate innovation and hence firm-level productivity and growth. Here, we use data from the national innovation panel surveys in the UK and Spain over the 2004 to 2012 period to explore the effectiveness of regional, national and EU innovation support in promoting the extent of innovation activity, its novelty, and market success. Allowing for potential selection effects, our results suggest that regionalised support is most influential in increasing the probability of undertaking both process and organisational innovations. For both the UK and Spain, national innovation support is associated with a higher probability of product or service innovation, and the degree of novelty of product or service innovations. In terms of innovation success (sales) we see a rather different pattern in the UK and Spain. In the UK only regionalised support is associated with increased innovative sales. In Spain, innovative sales are influenced by both regional, national and EU support measures. Our results suggest that moves towards more centralised innovation policy in the UK since 2012 may reinforce a focus on leading edge, novel product and service innovation while placing less emphasis on broadly based process and organizational innovation.

Associated Themes
  • Innovation and Exporting
Research Paper

Exploring the success and barriers to SME access to finance and its potential role in achieving growth. Research Paper No53 ( Revised )

Exploring the success and barriers to SME access to finance and its potential role in achieving growth
What are the potential growth impacts of external finance on UK SMEs? Who seeks it, who gets it, and who is discouraged? Drawing on analysis of the 2015 UK Longitudinal Small Business Survey of 15,502 SMEs and interviews with six senior staff from Oxford Innovation who provide finance support to high growth firms, we provide robust contemporary evidence and key policy implications.

Associated Themes
Research Paper

The contribution of alternative finance to business growth. Research Paper No 51

This paper analyses the characteristics and activities of firms that use crowdfunding, using data from the Longitudinal Small Business Survey (LSBS). Our aim is to better understand the role that crowdfunding plays in the business lending market, and potential implications for policymakers

Associated Themes
Research Paper

Persistence in exporting: cumulative and punctuated learning effects. Research Paper No 50

Persistence in exporting matters, because firms with continuous exposure to export markets derive greater benefit from exporting than do sporadic exporters. Conceptually, however, export persistence is poorly understood, and is typically explained by sunk costs leading to high export exit costs.

Associated Themes
Research Paper

Market failures in open innovation: implications and policy responses

Open innovation provides significant advantages for individual firms and may generate wider social benefits. Positive externalities related to knowledge sharing may result from openness itself, and enhanced levels of innovation may lead to otherwise unachieved innovation spillovers. A number of studies have suggested, however, that average levels of OI activity remain well below the level which maximises innovation outputs. Here, we identify four market failures which arise in the process of OI partnership formation and which may be limiting firms OI engagement. Information failures occur which mean firms are unaware of the benefits of OI, lack information on the capabilities of partners and their trustworthiness. Appropriability issues may also mean that levels of OI remain below the social optimum. We develop policy responses to each market failure linked to the development of an OI intermediary and develop a related logic model.

Associated Themes
Research Paper

Decomposing UK aggregate labour productivity and growth: 1998-2013 using the ONS business structure database data. Research Paper No. 48

This study provides a comprehensive analysis of UK labour productivity patterns and contributing factors over the 1997-2013 period. Based on the ONS Business Structure Database (BSD), we present a full picture of the UK firms’ productivity patterns in the whole economy over the examined period and in particular during the “Great Recession”, at aggregate level, sector level, and among heterogeneous groups. We observe significant business demographic changes underlying UK aggregate productivity change, featuring an increasing number of small businesses especially single-employee firms, less entrants and more exits and discuss the implications of these changes in explaining the productivity decline. When differentiating firm growth types, we find “Growth heroes” and “Decline by efficiency loss” firms over-contribute to aggregate labour productivity compared to their weight in the business population. In contrast, an already large group of ‘Decline by contraction’ firms surged over the recent recession and under-contribute to aggregate labour productivity. We highlight that within firm productivity improvement has been mainly responsible for aggregate productivity changes in the UK while resource allocation on average played a limited role in driving the aggregate productivity change.

Associated Themes
  • Business Demography Research Theme
Insight

Understanding self-employment – ERC Insight Paper

This Insight Paper presents the key findings of studies presented at the "Understanding Self-Employment” workshop organised by the Microbusiness Research Portal with the support of the Centre for Enterprise and Economic Development Research (CEEDR) at Middlesex University Business School on the 7th June 2016. The seminar explored the recent increase in self-employment in the UK, discussed the problems related to the definition of self-employment and presented the implications for policy development.

Authors
Associated Themes
Research Paper

Ambitious Entrepreneurship and Migration A Multi-Level Study across the Local Authorities in England and Wales. Research Paper No 47

We consider why both immigrants and regional migrants may embark on different types of entrepreneurial projects: high versus low aspiration; opportunity driven versus necessity driven. Next, using Global Entrepreneurship Monitor data, we construct a multiple-years sample of UK working age population with wide spatial coverage, and apply a multi-level multinomial logit model to test and compare propensities of migrants to enter into different forms of entrepreneurship. We find that – compared with those who are not spatially mobile – both internal (regional) migrants and immigrants are more likely to start new ventures characterised by high growth aspirations. Immigrants are more likely than non-migrants to engage in both opportunity-driven and high-aspiration entrepreneurship, but, unlike regional migrants, not in necessity-driven and low-aspiration entry.

Associated Themes
Insight

Sustaining growth – the HR dimension HR practices and management and leadership skills of High Growth SMEs

This research set out to investigate human resource management (HRM) practices and leadership behaviours in UK SMEs that represent a small proportion of firms to have achieved long-term growth. We interviewed 30 senior leaders of such SMEs and found that most leaders espouse key high performance work practices such as selective hiring, employee development, open communication, and, to a varying degree, performance management and employee participation. Through flexible informal practices, SME leaders tap into employee’s intrinsic motivation to enhance performance and to develop personal trust and reciprocity. Overall, our research paints a picture of HRM in growth-oriented UK SMEs as a complex phenomenon where a number of formal and informal HR levers interact, guided by a compelling vision, and creating a positive company culture in the process.

Associated Themes
ERC Report

Sustaining growth – the HR dimension HR practices and management and leadership skills of High Growth SMEs

Prior business demographics research conducted by the ERC identified that only a small minority of UK SMEs experience sustainable growth over an extended period of time. For instance, of the firms that were newly established in 1998 just 6% showed an appreciable employee growth by 2013. What lies behind such a remarkable performance on the part of so few companies? In this paper, we investigate the leadership behaviours and high performance work practices (i.e. those HR practices that are intended to align employees’ performance with organizational goals through self-regulation rather than sanctions) that are associated with growth.

Author

Oksana Koryak, Nicos Nicolaou

ERC Report

Human resource practices and firm growth: an exploratory analysis from the matched employer skills survey and the ONS business structure database A statistical report produced by the Enterprise Research Centre for UKCES

This project aimed to explore the role of Human Resource (HR) practices in driving firm growth. Central to the project is the use of the 2011 Employer Skills Survey (ESS) which provides detailed information on the HR practices adopted in individual workplaces. These observations were matched to establishment data derived from the longitudinal Business Structure Database (BSD) which provides time-series information on employment and turnover for all UK firms and establishments registered for VAT and/or PAYE.

Author

Karen Bonner, Stephen Roper , Mark Hart

ERC Report

Innovation and HR practices in five professional service sectors A report for the UK Commission for Employment and Skills

Innovation and HR practices in five professional service sectors, A report for the UK Commission for Employment and Skills
We investigated the link between human resource practices, innovation, growth and productivity growth in 900 firms across five UK service sectors: Software & IT Services, Accountancy, Architectural Services, Consultancy and Specialist Design.

Author

Stephen Roper, James Love, Jane Bourke

Associated Themes
  • Innovation and Exporting
Research Paper

Modes of firm growth. Research Paper No 46

There is now a general consensus that high growth firms (HGFs) are economically important, and governments across the world have targeted resources to help firms achieve high growth. Yet while there is a large evidence base on the nature of HGFs, little research considers ‘how’ potential HGFs are trying to grow and ‘what’ is preventing firms from achieving sustained growth (i.e. the barriers firms face to sustain a longer period of rapid growth). This report aims to better understand the nature of growth processes within high growth firms (HGFs).

Associated Themes
Research Paper

(Seeking, Acting on and Appreciating) the Value of Business Advice. Research Paper No 44

Previous evidence shows that business advice helps businesses and that more advice is generally better [1-4]. Most firms will take advice from outsiders at some point in their development but fewer firms take advice than seems warranted by the evidence [5]. The reasons for the reluctance to take advice are varied and have been relatively intractable; moreover our understanding of the ‘subtle processes’ within advice has been hampered by the few inductive investigations [6] with recent exceptions [7-9]. These ‘subtle processes’ imply that advice is not a single process but is made up of a series of sub-processes.

Authors
Associated Themes
  • Leadership
Research Paper

Work organization and innovation in legal services: analysis from a ‘deep dive’ study. Research Paper No 45

Despite its potential social and economic benefit, innovation in legal services has to date received little academic attention. Drawing on the largest survey of legal services innovation ever undertaken (c. 1500 firms) this paper explores the strategic, resource and environmental drivers of service and delivery innovation among solicitors, barristers and other legal service providers.

Associated Themes
  • Innovation and Exporting
Research Paper

The market for Technology Licensing in the UK. Research Paper No 43.

The social benefit of a patent system lies in its ability to underpin the circulation of technology in the economy through technology licensing and in facilitating the growth of technology markets. This evidence brief considers the main dimensions of the technology licensing market in the UK, drawing on expenditure data from the Community Innovation Survey in order say more about the characteristics of buyers in the market. This is an area which remains relatively under explored and can provide a useful basis upon which to develop effective policy. We estimate the size of the technology licensing market, highlight the temporary nature of licensing expenditure and explore the participation of firms. We find small firms are more frequent purchasers of technology licensing but large firms account for the larger shares of spending. Similarly, R&D services firms are large buyers of technology licenses and dominate spending in the technology licensing. We also find the participation of innovative firms dominates that by non-innovative firms.

Associated Themes
Research Paper

Absorptive capacity and ambidexterity in R&D: linking technology alliance diversity and firm innovation. Research Paper No. 42

The aim of this study is to examine how firms realize the benefits associated with a diverse range of technology alliances. We propose and test the hypothesis that firms’ knowledge combination capabilities mediate the relationship between technology alliance diversity innovation. Using panel data for Spanish manufacturing companies during the period 2004-2011, we provide evidence that firms’ absorptive capacity and ambidexterity in R&D serve as mediating mechanisms between technology alliance diversity and innovative performance Our study advances the literature on technology alliances by showing how firms use their portfolios of technology alliances to form their combination capabilities, and subsequently, to enhance innovation outcomes.

Associated Themes
  • Innovation and Exporting
Research Paper

The roles and effectiveness of design in new product development: a study of Irish manufacturers. Research Paper No. 41

Investments in design can make a significant contribution to successful new product development (NPD). However, there is insufficient evidence on the most appropriate or effective role that design could play. Previous case-based research has identified alternative roles for designers in NPD, but there is only tentative evidence over such roles’ contribution to NPD outcomes. Using data on a large sample (c. 1300) of Irish manufacturing plants we are able to examine the effectiveness of three different levels of involvement of designers in NPD and their impact on NPD novelty and success.

Associated Themes
  • Innovation and Exporting
Research Paper

Local and firm-level influences on innovation performance: linkages, climate and externalities. Research Paper No. 40

Interest in the local dimension of economic development has intensified in recent years with changes in the English policy landscape emphasising local policy action. In this paper we use an augmented version of the UK Innovation Surveys 4-7 to explore firm-level and local area influences on firms’ innovation performance.

Associated Themes
  • Innovation and Exporting
Research Paper

The legacy of public subsidies for innovation: input, output and behavioural additionality effects. Research Paper No 21

In many countries significant amounts of public funding are devoted to supporting private firms’ R&D and innovation projects through subsidies or grants, loans, and other instruments such as loan guarantees or R&D tax credits. Our interest here is in exploring the mechanisms through which these positive effects occur and in evaluating the legacy effects of public subsidies for private innovation.

Associated Themes
  • Innovation and Exporting
Research Paper

Firms’ innovation objectives and knowledge acquisition strategies: a comparative analysis . Research paper No 38

External partnerships play an important role in firms’ acquisition of the knowledge inputs to innovation. Such partnerships may be interactive – involving exploration and mutual learning by both parties – or non-interactive – involving exploitative activity and learning by only one party. Examples of non-interactive partnerships are copying or imitation. Here, we consider how firms’ innovation objectives influence their choice of interactive and/or non-interactive connections. We conduct a comparative analysis for the economies of Spain and the UK, which have contrasting innovation eco-systems and regulation burdens

Associated Themes
  • Innovation and Exporting
Research Paper

The marketization of higher education: A causal analysis of innovation in UK universities . Research Paper No 39

Higher education is increasingly a marketised service sharing many characteristics with other professional services such as legal, medical or financial services. With marketization comes competition, and the need for HEIs to develop and maintain attractive undergraduate programmes to attract and retain strong faculty and fee-paying students. Here, we consider the drivers of programme innovation – the introduction of new programmes – and the withdrawal of existing programmes in UK universities. Using panel data for all UK universities provided by UCAS we identify significant resource, internationalisation and business engagement effects. Financial stringency encourages both programme innovation and withdrawal. More extensive international market engagement and research collaboration with business have similar effects increasing programme innovation. The results have both strategic and systemic implications.

Associated Themes
Insight

Spatial Incidence of High Growth Firms.

High-Growth Firms (HGFs) are a very small proportion of the UK business population yet they have a disproportionate impact on job creation.
We present data at local economic area level over time to show that there is a very distinct geography emerging for the incidence rate of HGFs since the recession.

Associated Themes
  • Business Demography Research Theme
Research Paper

Waves of Professionalization Before, During and After Management Buyouts and Buy-ins of Private Family Firms. Research Paper No 37

We explore the process of professionalization pre- and post- buyout (MBO) or buyin (MBI) of former private family firms using longitudinal evidence from six UK family firms undergoing an MBO/I in 1998. Professionalization behaviour was monitored up to 2014. Previous studies have conceptualized professionalization as a threshold to be attained. We demonstrate that professionalization is a complex process occurring in waves, triggered by changes in firm ownership and management. Waves of professionalization converge during the MBO/I process. Buyouts provide a funnelling mechanism enabling diverse control
systems to be standardized. Post-MBO/I, divergence in the professionalization process reoccurs contingent on firm-specific contexts. Professionalization focuses on operations when stewardship relationships predominate, but on agency control mechanisms when there is increased potential for agency costs. Buyout organizational form is an important transitory phase facilitating the professionalization process. Professionalization is not a once for all development stage.

Associated Themes
  • Finance and Governance Research Theme
ERC Report

Unlocking UK Productivity

UK productivity to be boosted by increasing exporting and innovation among small and medium-sized firms.

Britain’s productivity is falling behind other economies because it is slower to turn ambitious smaller firms into exporters of innovative new products and services, according to a new report.

With more support, it is estimated that up to 110,000 small to medium-sized enterprises (SMEs) could become regular exporters, adding an extra £1.15 billion in Gross Value Added (GVA) to the economy in the first year alone in the form of new and higher value jobs.

The report published today, “Unlocking UK Productivity” has been co-authored by Goldman Sachs, the Enterprise Research Centre (ERC) and the British Business Bank (BBB).

Its findings draw heavily on the core research themes of ERC for the past three years.

Author

ERC , Goldman Sachs , British Business Bank

Research Paper

Investigating Schumpeter’s creative army: what drives new-to-the-market innovation in micro-enterprises? Research paper 36

Schumpeterian arguments related to creative destruction place small, entrepreneurial firms at the centre of the innovation process. The exclusion of micro-enterprises (with less than 10 employees) from most innovation surveys means, however, that we know relatively little about innovation among this group of firms. Here, using new survey data on a thousand micro-enterprises we explore the determinants of new-to-the-market innovation, the basis for the Schumpeterian creative destruction (CD) process. Our results provide strong support for the interactive nature of micro-enterprise innovation and suggest the potential value of developing a model of interactive creative destruction (ICD). Our results also suggest that family-owned firms are more likely to introduce new-to-the-market innovations and therefore play an important role in the ICD process. In organisational terms, our analysis emphasises the range of technical and co-ordination capabilities required by micro-enterprises to innovate successfully. Policy implications relate to promoting awareness among micro-firms of the support available for innovation to reduce the impact of financial and risk constraints.

Associated Themes
  • Innovation and Exporting
Research Paper

Profiling UK university spin-outs. Research Paper No 35

This report presents the results of a comprehensive survey of UK university spin-out businesses.
In an effort to enhance our understanding of this sector, a database of 1044 active USOs was compiled from individual university records and internet searches, and matched to a published list of UK university spin-outs.Telephone interviews were conducted with USOs and a final sample of 350 was achieved. Non-response bias was tested for and weights were constructed to ensure that the findings were representative of the UK population of USOs.

Associated Themes
  • Innovation and Exporting
Research Paper

Resources and innovation in family businesses: The Janus-face of family socio-emotional preferences. Research Paper No 34

ERC Research Paper No 34. Resources and innovation in family businesses:The Janus-face of family socio-emotional preferences.

Family business socio-emotional preferences are often Janus-faced: Some strive to create a strong business they can pass on to offspring by building innovation-promoting resources such as human, relational and financial capital. Other family firms cater to family desires for unqualified nepotism, altruism towards undeserving kin, and appropriation of firm assets to fulfill parochial desires that erode these resources.
We explore how some such preferences, together with their impact on resources and the innovation demands of their markets, shape the approach to innovation.

Associated Themes
Research Paper

Understanding the social role of entrepreneurship. Research Paper No 33

There is a need to rethink and redefine the social value added of entrepreneurial activities to society. In this paper we develop five pillars on which the evolving social role of entrepreneurship can rest and have its impact: (1) connecting entrepreneurial activities to other societal efforts aimed at improving the quality of life, achieving progress, and enriching human existence; (2) identifying ways to reduce the dysfunctional effects of entrepreneurial activities on stakeholders; (3) redefining the scope of entrepreneurial activities as a scholarly arena; (4) recognizing entrepreneurship’s social multiplier; and (5) pursuing blended value at the organizational level, centring on balancing the creation of financial, social and environmental wealth. In a final section we discuss implications for practices and for further research.

Associated Themes
  • Finance and Governance Research Theme
Research Paper

Academic entrepreneurship: time for a rethink? Research Paper No 32

Academic entrepreneurship, which refers to efforts undertaken by universities to promote commercialization on campus and in surrounding regions of the university, has changed dramatically in recent years. Two key consequences of this change are that more stakeholders have become involved in academic entrepreneurship and that universities have become more “strategic” in their approach to this activity. We assert that the time is ripe to rethink academic entrepreneurship. Specifically, theoretical and empirical research on academic entrepreneurship needs to take account of these changes, so as to improve the rigor and relevance of future studies on this topic. We outline such a framework and provide examples of key research questions that need to be addressed to broaden our understanding of academic entrepreneurship.

Associated Themes
  • Finance and Governance Research Theme
Insight

Contribution to Job Creation by High Growth SMEs.

High-Growth Firms (HGFs) are a very small proportion of UK businesses population yet they have a disproportionate impact on job creation. We re-visit the issue to confirm that typically, over a three year period, high growth SMEs represent less than 1% of established businesses, but generate 20% of all job growth amongst established businesses which grow

Associated Themes
  • Business Demography Research Theme
Research Paper

Innovation, quality management and learning: a dynamic analysis. Research Paper No 30

ERC Research paper No 30
Quality improvement and innovation are central strategies for firms in an increasingly globalised marketplace. Implementing both quality improvement and innovation, however, poses significant managerial, organisational and technical challenges and may also involve significant lags before benefits are realised. Here, using panel data on a large group of Irish manufacturing firms and econometric analysis, we establish the dynamic influence of firms’ adoption of quality improvement methods (QIMs) on firms’ innovation performance. Our study highlights the short-term disruptive and longer-term beneficial effects of QIM adoption on innovation.

Associated Themes
  • Innovation and Exporting
Research Paper

Creating value from embodied knowledge – the link between advanced manufacturing technologies and innovation. Research Paper No 31

Research paper No 31
The ability to innovate successfully is a key corporate capability, depending strongly on firms’ access to knowledge capital: proprietary, tacit and embodied. Here, we focus on one specific source of embodied knowledge – advanced manufacturing technologies or AMTs – and consider its impact on firms’ innovation success.

Associated Themes
  • Innovation and Exporting
Research Paper

Feasibility Study – Exploring the Long-Term Impact of Business Support Services. Research Paper No 29

This report is a feasibility study examining whether it is possible to observe a longer term impact of business improvement schemes in general using the old Business Link (BL) offer in England in 2003 as an example. The report covers the methodological issues of assessing the economic impact of business support interventions over an extended time period, although the findings will be of interest to policy makers. Building on the published evaluation of BL in 2006 this new analysis uses 7 additional years of employment and turnover data from the ONS Business Structure Database (BSD) to demonstrate the value of longitudinal evaluation time frames.

Associated Themes
  • Business Demography Research Theme
Research Paper

The origin of spin-offs – A typology of corporate and academic spin-offs. Research Paper No 26

We provide a typology of corporate and academic spin-off types, distinguishing spin-offs involving new ventures from those that concern existing activities. We summarize the papers published in this special issue, relating them to the typology we develop. We conclude by developing an agenda for further research on spin-offs.

Associated Themes
  • Finance and Governance Research Theme
Research Paper

Experience, age and exporting performance in UK SMEs. Research Paper No.28

It has often been argued that smaller firms face particularly strong resource constraints in developing an international market profile. Here we consider the determinants of SMEs exporting using a survey of internationally engaged UK SMEs. We first develop a theoretical model incorporating organisational and prior managerial learning effects. Our empirical analysis then allows us to separately identify the positive effects on exporting from the international experience of the firm and the negative effects of firm age. Positive exporting effects also result from grafted knowledge – acquired by the recruitment of management with prior international experience. Innovation also has positive exporting effects with more radical new-to-the-industry innovation most strongly linked to inter-regional exports; new-to-the-firm innovation is more strongly linked to intra-regional trade. Early internationalisation is also linked positively to the number of countries to which firms export and the intensity of their export activity. We find no evidence, however, relating early internationalisation to extra-regional exporting providing further evidence that firms tend be ‘born regional’ rather than ‘born global’. Implications for policy and practice are discussed.

Associated Themes
  • Innovation and Exporting
Research Paper

Firms’ innovation objectives and knowledge acquisition strategies. Research Paper No 27

External partnerships play an important role in firms’ acquisition of the knowledge inputs to innovation. Such partnerships may be interactive – involving exploration and mutual learning by both parties – or non-interactive – involving exploitative activity and learning by only one party. Examples of non-interactive partnerships are copying or imitation. Here, we consider how firms’ innovation objectives influence their choice of interactive and/or non-interactive connections. Four empirical results emerge. First, we find strong and consistent support for complementarity between non-interactive and interactive connections across firms in all sectors and sizebands. Second, we find that innovation objectives related to new products and services are linked only to non-interactive connections. Third, we find tentative evidence that where firms have innovation objectives which relate to product or service improvement they are more likely to establish non-interactive rather than interactive connections. Fourth, the extent of firms’ interactive and non-interactive connections are strongly related firms’ human capital endowments. These latter results suggest interesting second-order innovation effects from human capital improvements.

Associated Themes
  • Innovation and Exporting
Research Paper

Does Entrepreneurship Make You Wealthy? Research Paper No 25

There is growing interest in entrepreneurial earnings; however prior studies have typically focused on incomes derived from business ownership - a highly problematic measure, which fails to fully capture the rewards of entrepreneurship. In contrast, wealth comprises a stock of accumulated assets providing a more robust measure of relative success and economic well-being over the life-course of the business and the individual entrepreneur.

Associated Themes
  • Diversity
Insight

LEP Innovation Benchmarks 2002. 2010

The UK Innovation Survey provides information on product/service and process innovation as well as the barriers to innovation activity for a relatively large number of UK firms.
In this paper we present the first local economic area analysis of this data derived from four surveys covering the 2002-04, 2004-06, 2006-08 and 2008-10 periods.

Associated Themes
  • Innovation and Exporting
Research Paper

Public R&D policies and Private R&D investment: Research Paper No23

The importance of R&D investment in explaining economic growth is well documented in the literature. Policies by modern governments increasingly recognise the benefits of supporting R&D investment.
This paper offers the first systematic review and critical discussion of what the R&D literature has to say currently about the effectiveness of major public R&D policies in increasing private R&D investment. Public policies are considered within three categories, R&D tax credits and direct subsidies, support of the university research system and the formation of high-skilled human capital, and support of formal R&D cooperation's across a variety of institutions. Crucially, the large body of more recent literature observes a shift away from the earlier findings that public subsidies often crowd-out private R&D to finding that subsidies typically stimulate private R&D. Tax credits are also much more unanimously than previously found to have positive effects. University research, high-skilled human capital, and R&D cooperation also typically increase private R&D. Recent work indicates that accounting for non-linearities is one area of research that may refine existing results.

Associated Themes
  • Innovation and Exporting
Research Paper

Fear of Failure and Entrepreneurship: A Review and Direction for Future Research – Research Paper No 24

One of the most common fears among entrepreneurs is called the fear of failure (Bosma et al. 2008). Drawing on psychological and socio-psychological theories, the experience of fear of failure can be described as the appraisal of threats in evaluative situations with the potential for failure (Conroy 2001). These situations activate cognitive schema or beliefs associated with the aversive consequences of failing and may cause different behavioural responses: approach the threat aggressively (fight), avoid facing the situation (flight), or be paralyzed in the situation (freeze) (Conroy 2004; Gray 1971; Elliot 1997). However, an examination of the entrepreneurship literature shows that the fear of failure is predominantly assumed to be a barrier to entrepreneurship.

Associated Themes
  • Leadership
White Paper

Out of the shadows: Growth from non-farm rural enterprises: ERC Evidence White Paper No. 10

This White Paper contains summaries of presentations given at a workshop on rural, non-farm enterprise supported by the Enterprise Research Centre and hosted at Aston Business School on 27th February 2014. The final contribution by Roger Turner, who co-ordinated the event for ERC, provides a summary of the discussions from the day and some of the issues which arose.
The Enterprise Research Centre has a dual objective: to carry out leading- edge research on small business growth and development and to ensure that where evidence does exist it is made available as widely as possible. The ‘Out of the Shadows’ event was linked to the second objective, and brought together academics and other researchers conducting research on rural business development with those formulating policy for and directly supporting rural enterprises.
The ERC is grateful to all of the contributors for their input at the ‘Out of the Shadows’ event and their permission to include material in this summary report.

Authors
Associated Themes
  • Innovation and Exporting
Research Paper

ERC Research Paper. Creating Value in Ecosystems. Research Paper No 22

CREATING VALUE IN ECOSYSTEMS:CROSSING THE CHASM BETWEEN KNOWLEDGE AND BUSINESS ECOSYSTEMS

Associated Themes
  • Finance and Governance Research Theme
Research Paper

The legacy of public subsidies for innovation: input, output and behavioural additionality effects

The Legacy of Public Subsidies for Innovation

Associated Themes
  • Innovation and Exporting
Research Paper

Knowledge context, learning and innovation: an integrating framework. Enterprise Research Centre ( ERC ) Research Paper No 20

Knowledge context, learning and innovation: an integrating framework. Enterprise Research Centre ( ERC ) Research Paper No 20
In this paper we develop a framework to identify those elements of firms’ knowledge context which are important for innovation, and the mechanisms through which that knowledge impacts on firms’ innovation performance. We make four main contributions to the existing literature. First, our characterisation of knowledge context provides the basis for a more specific identification of which elements of firms’ knowledge environment are important for innovation, discriminating between spatial, industrial and network influences. Second, we reflect the role of innovation ambition in shaping firms’ knowledge search strategies. Third, we differentiate between firms’ interactive and non-interactive knowledge search activities and recognise that these may be complemented by unanticipated and serendipitous knowledge spillovers. Finally, we introduce the notion of encoding capacity to reflect firms’ internal ability to assimilate and apply external knowledge. Our framework provides an integrating mechanism for existing empirical studies, suggests a number of new research directions related to the determinants of innovation performance and the heterogeneity of innovation outcomes.

Associated Themes
  • Innovation and Exporting
White Paper

Small firm-large firm Relationships

Small firm-large firm relationships and the implications for small firm innovation: what do we know?

Associated Themes
  • Innovation and Exporting
Insight

UK’s Hidden Growth Champions

The Enterprise Research Centre (ERC) has developed an alternative approach to identifying groups of fast-growing firms which contribute disproportionately to job creation and output. This will have significant implications for policy discussions on the relative importance of SMEs and which types of firms drive growth in the economy.

Associated Themes
  • Business Demography Research Theme
Insight

Growing Global – Moving Up the Exporting Ladder

Much has been done to support SME exporting in the UK in recent years. Only around a quarter of UK SMEs currently export, however, and a very small group - only 6 per cent of SMEs - currently export more than 50 per cent of their sales. For a very significant proportion of UK SMEs, therefore, the potential opportunities provided by exporting remain unexploited. Who are these SMEs? This question is important if we are to effectively target support and enable these firms to reap the growth benefits of exporting. ERC research helps to identify some markers of export potential which should allow more effective profile-led marketing of export support.

Associated Themes
  • Innovation and Exporting
Insight

Financing Growth

Recent ERC research provides new insights into bank borrowing among UK SMEs and emphasises the potential value of effective company boards in helping firms to access appropriate finance. The evidence suggests that only around 1 in 7 small businesses in the UK seek bank funding. Yet we know that firms which do utilise external finance grow more rapidly. As the upswing takes hold what can be done to encourage more small firms to seek external finance to support their growth? Recent ERC research provides some of the answers and highlights other ‘known unknowns’.

Associated Themes
  • Finance and Governance Research Theme
Insight

Explaining the US-UK Ambition Gap

Data from the Global Entrepreneurship Monitor highlights a persistent gap between the US and the UK in the proportion of business owner-managers with high growth expectations. Professor Jonathan Levie examines the evidence and finds that employers in the UK and the US are in fact equally likely to be ambitious. He concludes that the ambition gap is a result of a rising proportion of new self-employed with no employees and relatively low growth ambition in the UK and a significant increase in the number of established business owners with employees in the US.

Associated Themes
  • Ambition
Research Paper

Unpacking open innovation .Research Paper No 19

We explore the relationship between two key aspects of open innovation in small firms – absorptive capacity and external relationships – and their effects on growth in the US and European biopharmaceutical sectors. Results from an international sample of 349 biopharmaceutical firms surveyed in the US, UK, France and Germany suggest that realized absorptive capacity plays an important role in determining firms’ growth. In terms of the interaction between firms’ absorptive capacity and external relationships, we find that engagement with exploratory relationships depends strongly on the continuity of R&D, while participation in exploitative relationships is more conditional on firms’ realized absorptive capacity.

Associated Themes
  • Innovation and Exporting
Insight

Innovation or imitation: Which boosts growth in recession?

Innovation or imitation which leads to faster growth? Innovation – introducing products or services which are new to the market – may yield first mover advantages. Imitation – introducing new to the firm but not new to the market products or services is a safer, more conservative strategy. Drawing on data from UK innovation surveys, Stephen Roper, Director of ERC identifies some key trends

Associated Themes
  • Innovation and Exporting
Research Paper

The Financing of Diverse Enterprises: Evidence from the SME Finance Monitor .Research Paper No 18.

This paper contributes to our understanding of the finance issues currently facing diverse SMEs by presenting a new analysis of the SME Finance Monitor. While prior studies have contributed substantial evidence regarding the effects of either gender or ethnicity on finance outcomes, these analyses have typically focused on either women-owned or ethnic minority owned enterprises. This study considers the experiences and outcomes of both women-owned and ethnic minority-owned enterprises, including the interaction effects of ethnicity and gender.

Associated Themes
  • Diversity
White Paper

Back to Borrowing? .White Paper No 8.

Discouraged Borrowers (DBs) are businesses which would like to borrow but which do not apply for bank finance because they either feel they would be turned down (‘indirectly discouraged’), or they've made informal enquiries but not proceeded with their application because the bank seemed reluctant to lend (‘directly discouraged’). We know a lot about who discouraged borrowers are but little about what influences whether a small business owner is discouraged or not. This paper explores those factors in more detail and identifies SME's dissatisfaction with their banking relationship as a key driver.

Associated Themes
  • Finance and Governance Research Theme
Research Paper

Innovation, Innovation Strategy and Survival. Research Paper No 17

Innovation has a recognised effect on survival. Undertaking more risky innovation may increase the risk of business failure, while incremental innovation may reduce the risk. This paper investigates how firms’ innovation strategy choices affect the relationship between innovation and firm survival. The research suggests the notion of “survival additionality”, i.e. firms receiving public support derive more persistent benefits from innovation than firms which did not receive public support.

Associated Themes
  • Innovation and Exporting
Research Paper

Is There An Entrepreneurial Culture? Research Paper No 16.

Understanding the impact of national culture alone and in interaction with other contextual factors, is important for refining our knowledge of how entrepreneurs think and act. This paper presents a review of the literature on the link between cultural values and entrepreneurial beliefs, motives and behaviours. It suggests that there may not be a single entrepreneurial culture and suggests areas for future research.

Associated Themes
  • Leadership
Insight

Moving on from the ‘Vital 6%’

High-Growth Firms (HGFs) represent only a small minority - the ‘Vital 6%’ - of the UK business population yet they have a disproportionate impact on job creation and innovation. This paper confirms the headline conclusion for job creation: that is, a small number of job creating firms (mostly small firms) are responsible for a significant amount of net job creation in the UK. It also suggests the existence of a smaller group of 'extraordinarily prolific job creating firms' who were micro firms in 1998 and now employ almost 100,000 people.

Associated Themes
  • Business Demography Research Theme
Research Paper

Localisation of Industrial Activity across England’s LEPs: 2008 & 2012 .Research Paper No 15.

The Department for Business, Innovation & Skills commissioned the ERC to undertake an analysis of industrial clusters in the UK and to use the new Local Enterprise Partnerships (LEPs) as the sub-national spatial frame in England. The analysis is designed as an information source for the LEPs as they prepare their new strategic economic plans.

Associated Themes
  • Business Demography Research Theme
Research Paper

Developing Alliance Formation Process Capabilities. Research Paper No 13.

This paper examines the processes that firms use to form strategic alliances. Drawing on data from 1063 US based firms who created R&D consortia over a 22 year period, it considers whether companies replicate existing approaches, gained from prior experience, in forming subsequent alliances or whether they can develop new skills as they adapt to changing conditions. It suggests that prior experience is a significant factor affecting subsequent formation processes and longer experience tends to increase the chances that firms will replicate a given approach. It also finds that smaller firms may be more able to flex their approach.

Associated Themes
  • Leadership
Research Paper

Openness and Innovation Performance: Are Small Firms Different? Research Paper No 12.

Traditionally, literature on open innovation ( the number of links a firm has to customers, suppliers and other firms) has concentrated on analysis of larger firms. This paper explores if and how the benefits of openness in innovation are different for small firms compared to medium and large ones. It suggests that small firms can benefit disproportionately from adopting open innovation approaches but that they reach the benefits of this approach at lower levels than medium and larger firms making the choice of innovation partner critical.

Associated Themes
  • Innovation and Exporting
Insight

UK Mid-Market – ‘Overlooked Middle’ or Lair of the Hidden Champions?

This paper highlights two alternative views of the UK mid-market. The ‘overlooked middle’ perspective emphasises that UK economic policy in relation to Medium Sized Businesses (MSBs) has been symbolic rather than substantive, lacking scale and consistency. The 'Hidden Champions' perspective recognises the rapid growth of leading MSBs and the lack of acknowledgement they receive in the UK.

Associated Themes
  • Innovation and Exporting
Research Paper

Entrepreneurship as Ethnic Minority Liberation. Research Paper No 11.

Entrepreneurship has long been seen as a route to socio-economic advancement for disadvantaged communities. This paper explores to what extent ethnic minority entrepreneurship promotes socio-economic advancement and suggests that the context in which the entrepreneurship exists is an important determinant and that entrepreneurship itself cannot be seen as the only or preferred route.

Associated Themes
  • Diversity
Research Paper

Entrepreneurial Families and Households . Research Paper No 10.

The role of Households and Families in influencing entrepreneurship has long been underestimated. This paper explores the intricate relationship between the Household and the enterprise including the role it plays in identifying business opportunities and providing resources to new and existing ventures.

Associated Themes
  • Diversity
Research Paper

Who Takes Advice? Research Paper No 9.

This paper explores the characteristics of small firms who take advice and those that do not. It finds a number of factors associated with taking advice including the longevity of an owner-managers education, whether the business has growth objectives and, most significantly, a size threshold at 10 employees at which taking advice becomes much more likely. It suggests that significant challenges arise in making the transition to 10 employees or more and that further research is needed to understand this transition.

Associated Themes
  • Leadership
White Paper

Supporting Sustained Growth Among SMEs. White Paper No 7.

Among SMEs high growth is often episodic and not sustained. This paper reviews a number of international support measures designed to give SMEs the capabilities and resources to sustain fast growth.

Associated Themes
  • Business Demography Research Theme
  • Innovation and Exporting
Insight

Gearing up for Growth Vouchers

This paper suggests some key lessons for the Growth Vouchers scheme based on the experience of the Nesta Creative Credits Project.

Associated Themes
  • Innovation and Exporting
Research Paper

Private Equity, Buy-outs, and Insolvency Risk. Research Paper No 8.

Private Equity restructuring using debt has been criticised for increasing financial distress and bankruptcy. This paper compares the insolvency hazard of various buy-out types within the corporate population and investigates the risk profile of the companies pre-buyout.

Associated Themes
  • Finance and Governance Research Theme
Research Paper

Burden or Benefit? Regulation as a dynamic influence on SME performance. Research Paper No 7.

This paper contributes to contemporary debates concerning the impact of regulation on small business performance in the UK.

Associated Themes
  • Business Demography Research Theme
Research Paper

Paradigm Shift or Business as Usual? Research Paper No 6.

This paper explores the claims of a ‘paradigm shift’ towards firms using open innovation as a conscious strategic choice.

Associated Themes
  • Innovation and Exporting
Research Paper

HRM, Organisational Culture and Entrepreneurial Capabilities. Research Paper No 5.

This paper explores the role of individual and collective knowledge processes in the capacities for acquiring, integrating and exploiting new knowledge and the influences they exert on long term organisational performance and growth.

Associated Themes
  • Leadership
Research Paper

An Experimental Approach to Industrial Policy Evaluation: the Case of Creative Credits. Research Paper No 4.

This paper considers the arguments for applying experimental methods to industrial policy measures and proposes an experimental policy evaluation approach

Associated Themes
  • Innovation and Exporting
Research Paper

Understanding Fear of Failure in Enterpreneurship. Research Paper No 3.

There is a broadly held assumption within the entrepreneurship literature that fear of failure is always and only an inhibitor of entrepreneurial behaviour. This paper provides a theoretic framework of the antecedents, moderators and consequences of fear of failure.

Associated Themes
  • Leadership
Research Paper

Accounting for Job Growth .Research Paper No 2

It has recently been recognised that conclusions about firm size were confounded by the effect of the age of the firm. This paper explores the role of size, controlling for age, by comparing the cohorts of firms born in 1998 over their first decade of life.

Associated Themes
  • Business Demography Research Theme
Research Paper

Business Survival and the Role of Boards. Research Paper No 1.

This paper examines the question of whether family firms are more likely to survive than non-family firms, focusing on the role of board composition.

Associated Themes
  • Finance and Governance Research Theme
White Paper

Firm Dynamics and Job Creation in the UK. White Paper No 6.

A consistent theme in the discussion of attempts to stimulate economic recovery in the UK is a recognition of the need to unlock the growth potential of the private sector. This paper explores the simple question – “What types of firms create the most jobs in the UK economy?”

Associated Themes
  • Business Demography Research Theme
White Paper

SME Innovation, Exporting and Growth. White Paper No 5.

SMEs which have a track record of innovation are more likely to export, export successfully and generate growth from exporting than non-innovating firms. This paper explores the existing evidence.

Associated Themes
  • Innovation and Exporting
White Paper

What Do We Know About The Relationship Between Entrepreneurial Finance and Growth? White Paper No 4.

This paper explores what we know about the relationship between entrepreneurial finance and growth in SMEs in the UK.

Associated Themes
  • Finance and Governance Research Theme
White Paper

Diversity and SMEs. White Paper No 3.

This paper explores the existing evidence, complexity and policy tensions that exists for diverse groups operating SMEs in the UK.

Associated Themes
  • Diversity
White Paper

Entrepreneurial Leadership, Capabilities and Growth. White Paper No 2.

SME growth depends upon substantive growth capabilities, which are shaped by the upstream issues of leadership and capability development. This paper presents a review of the existing evidence.

Associated Themes
  • Leadership
White Paper

Growth and Growth Intentions .White Paper No 1.

This white paper summarises what we know about the connection between entrepreneurs’ growth intentions and realised enterprise growth.

Associated Themes
  • Ambition