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.

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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.

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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?

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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
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.

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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.

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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