Published: 25 February 2021
ERC SOTA No 47
Published: 1 October 2020
The most prevalent form of business around the world is the family business, defined as one where members of the same family own sufficient capital to give them significant influence over the business. In many countries, family businesses represent over two thirds of all businesses. Many of the oldest companies in the world are family businesses and evidence suggests that they may be better survivors than other types of companies: a considerable number are hundreds of years old, having survived world wars, revolutions, and pandemics. This review examines research on how longstanding family businesses ensure their continuity through generations. Family firms who look to the next generation of owners, and the generation after that, may have a long-term perspective and ‘stewardship’ mindset. Family businesses in the UK were more likely to survive through the 2008 recession; the relevance of board and ownership stability to improved ability to survive indicates that long-term orientation is important. Further research is called for to understand variations and test assumptions.
What is the social-economic contribution of family firms in the UK? A review of the evidence. SOTA Review No 45
Published: 30 September 2020
In this review, we present a summary of the evidence on the social-economic contributions that family businesses make to the United Kingdom (UK). First, we explore the research on the economic contributions that family firms make, before exploring the ways in which family businesses contribute to the social fabric of the areas in which they operate. Finally, we argue that there is a gap in the evidence in relation to the interlinked nature of the social-economic contributions made and the need for a wider, holistic view of the way family businesses contribute to society.
Published: 10 September 2020
Promotion and support of youth entrepreneurship is an important aspect of wider entrepreneurship policy and economic growth. It is particularly called for in times of economic crisis as a mechanism for offsetting the negative effects of youth unemployment. Engagement with youth entrepreneurship develops skills, confidence, and attributes such as self-reliance. Benefits to society potentially include job creation and increased innovation. Young people are enthusiastic about entrepreneurship as a career option but are far less likely to take action. Barriers to start-up include lack of awareness, role models, and skills; difficulty accessing finance; and lack of support infrastructure. Policy interventions include enterprise education; access to finance; and mentoring and business support schemes. Research specifically exploring the experience of young entrepreneurs is limited and there is a risk that policy recommendations and implementations may not match the specific needs of young people as a result. Research is particularly needed to explore gender and ethnicity differences, and the reasons behind business success and closure.
Published: 7 July 2020
Self-employment takes a range of forms spanning business ownership, dependent contracting activity and freelancing. The term ‘gig economy’ is used increasingly to describe a range of freelancing activity in sectors such as construction, IT, transport services, and culture and media. Although definitions vary, there is general agreement that the growth in gig-working has been encouraged by the development of internet platforms such as Uber and Deliveroo, and the opportunity to adopt business models which support workforce ‘flexibilization’. The small body of research on ‘dependent’ self-employment over a longer period provides useful insights. However, research on the drivers and impacts of gig-working specifically is sparse, and at present provides little insight beyond describing the size and recent growth of the gig economy. A number of important evidence gaps remain. These include measurement of the sector and assessment of the strength of particular drivers. They also include the impact of employment regulation on the trade-off between the benefits of autonomy and flexibility and the costs of poor earnings and security. Finally further evidence is needed on the question of whether gig-working reflects economic opportunity or is a form of necessity entrepreneurship that crowds out well-performing business start-up.
Published: 11 June 2020
Collaborative links between firms and universities are regarded as an important mechanism for the pursuit of R&D activities within an economy and encouraging innovation among firms. Due to their relative resource constraints, SMEs potentially stand to benefit from these collaborations as a means for leveraging new knowledge and expertise into the firm. This review examines the factors that underpin these collaborations, revealing it to be a socio-technical process reliant upon the ability of those involved to interact and understand one another. Thus, cognitive and relational similarities, i.e. sharing characteristics in terms of mutual networks and a common technical language, facilitate the formation and function of these collaborations.
Published: 10 June 2020
There is significant interest in university-industry collaboration among both academics and policymakers. These collaborative links are regarded as an important mechanism for the pursuit of R&D activities within an economy and encouraging innovation among firms. Due to their relative resource constraints, SMEs potentially stand to benefit from these collaborations as a means for leveraging new knowledge and expertise into the firm. However, perceptions of non-engagement with universities among SMEs are commonplace within the academic literature. In order to investigate this in more detail, this review examines the impact of firm size on university-industry collaborations to assess whether SMEs are in fact distinct. The findings suggest that while SMEs do collaborate with universities, they are subject to differing dynamics as firm size has a significant impact on type of collaboration, the outcomes, perception of barriers, and reliance on local universities.
Published: 9 June 2020
This review considers research that explores the evidence on the main barriers that are encountered by aspirant entrepreneurs from disadvantaged groups attempting to establish and run their own businesses. Some barriers to entrepreneurship appear to be experienced in common by all or most groups, but others are specific to certain types of individuals (OECD/EU, 2017).
Published: 6 May 2020
In this review we examine the existing literature to highlight what we do (and what we do not) know about online peer-to-peer (P2P) lending and borrowers. Firstly, extensive studies relate different personal attributes to the outcomes of loan application, differences in interest rates, and probability of default. Secondly, information asymmetry is found to be the core issue in P2P lending. Therefore, a growing body of literature addresses financial innovations of P2P platforms, fundamentally new ways of producing and transmitting information. The third important strand of literature attempts to answer if P2P lending is a substitute or a complement of traditional bank lending. While consumer P2P lending attracted much of attention of researchers, P2P business lending is yet understudied. To date, we know little about small businesses who raise funds on P2P platforms, especially what motivates them to choose this particular source of finance, what are the antecedents of their relationship with traditional finance, and what are the outcomes of P2P loans? Overall, there is a need to understand the impact of P2P lending on the SME funding gap and more broadly on financial inclusion.
Published: 13 March 2020
In this review, we present evidence on the assumptions that underlie women’s enterprise policy. Critical policy reviews consistently question attempts to unleash women’s entrepreneurial potential by changing women themselves or making them more able to manage inequality. They suggest that enterprise policy should address gender inequality more directly and challenge the masculine norms on which enterprise policy is founded. Moreover, we present new argument that the real policy problems to which enterprise policy should respond is the poor quality of much women’s self-employment and an associated dearth of choice in terms of quality, flexible employment. We set out the policy implications for these challenges and recommendations to shape diverse enterprise ecosystems and ‘good work’ for women.
Published: 12 March 2020
Despite the increasing scope of the literature studying the influence of gender upon women’s engagement with entrepreneurship, a number of foundational debates persist to inform research efforts – that fewer women create new ventures and when they do, their ventures are more likely to exhibit poorer performance parameters and are less likely to grow when compared to male-led businesses. Regardless of this, there is a generic presumption that entrepreneurship is a desirable career choice for women and moreover, society will benefit if more women become entrepreneurs. Within this SOTA review, we review the evidence that challenges the notion that entrepreneurship is a positive choice for women or indeed, necessarily generates broader socio-economic benefits. We base this argument upon the evidence that despite claims it offers women work-life balance, self-employment can create new time pressures and generate poorer returns than employment, whilst individual employment or State provided benefits such as paid ante-natal support, extended paid maternity leave, subsidised child care are rationed or absent.
What Do We Know About Ethnic and Migrant Women Entrepreneurs? A Review of Evidence. SOTA Review No 36
Published: 11 March 2020
Evidence suggests that ethnic and migrant women are more likely than other women to select into self-employment due to discriminatory challenges which constrain their access to mainstream employment (Dy, Marlow and Martin, 2017). In the case of the UK, such women own and lead approximately 14 per cent of female led ventures, whilst one in seven new start-ups are initiated by migrants per se (CEF/Duedil 2014). From a review of extant evidence, Romero and Valdez (2016) found that the recent expansion in women’s self-employment has been dominated by migrant and Black and Minority Ethnic women (BAME). Within this review, we define migrants as individuals who voluntarily relocate permanently to a country different from the one in which they were born, and ethnic minority as an established community that has different characteristics to the indigenous majority population of the country in which they reside. Whilst there is a body of evidence regarding the entrepreneurial motivations and experiences of migrant and ethnic minorities, this literature tends to be gender blind, assuming a male prototype. There is relatively little evidence focused specifically upon women; this presents a gap given the intersectional challenges of gender, race, ethnicity and migrant status facing such women (von Berlepsch, et al., 2019). BAME and migrant women who enter self-employment have to navigate additional barriers to those encountered by white women including racism, language barriers and, for some, cultural constraints within BAME communities arising from patriarchal concerns about women’s autonomy and legitimacy to act as entrepreneurs (Knight, 2016). The confluence of these challenges has complex and varied affects upon the type of firms that BAME and migrant women create and their potential for sustainability and growth. It calls for policy and support with an intersectional sensibility (Crenshaw, 1991).
Published: 10 March 2020
Women are much less likely to found businesses than men and even less likely to lead growth businesses (ONS, 2019; Rose Review, 2018). Given that the educational attainment of girls surpasses that of boys and women’s economic activity is approaching that of men’s, the scale of this gender gap is startling. As entrepreneurship relies on combining resources to create goods and services for profitable trade (Kitching and Rouse, 2016), this review explores gendered differences in the ownership and command of resources. It focuses on the entrepreneur resources mostly commonly researched: human capital (‘know how’ emergent from education and experience), financial capital (money) and social capital (relationships through which new resources are acquired). It also points to a gap in research concerning how gender shapes ‘labour capital’ (an entrepreneurs’ ability to apply their own or other’s labour to business creation and ownership). Women’s unequal access to resources and the constraints this places on their entrepreneurial activity suggests there is a significant failure in enterprise policies.
Is Time Up for The Hero Male Entrepreneur? A Review of Enterprise Discourse and its Effects. SOTA No 34
Published: 9 March 2020
The contemporary stereotypical entrepreneur is typically characterised as a middle-class, middle-aged, white male (McAdam, 2012) leading a high-growth, high turnover enterprise. In reality, most UK businesses are home based, micro or small firms owned and managed by families, partners or teams, very few of which will ever exhibit sustained growth (Anyadike-danes, Hart and Du, 2013). This stereotype is also highly gendered, with ideal entrepreneurial characteristics closely reflecting those ascribed to men and masculinity (Ahl and Marlow, 2012).
The portrayal of the typical entrepreneur as a high-performing male suggests women do not fit the preferred entrepreneurial prototype (McAdam, 2012) as they lack essential characteristics such as aggression, risk taking and competiveness. This argument forms a popular and policy rationale for why women are significantly less likely than men to create and lead new entrepreneurial ventures. Thus, women are encouraged to ‘step-up’ to this prototype by undertaking training and emulating role models to become more self-confident, ambitious and risk tolerant to unleash their entrepreneurial capabilities (Deloitte, 2016). In becoming more like the prototypical ‘hero male entrepreneur’ (Marlow, 2014) women will be able to create more new ventures, enhance their productivity and contribute to employment and wealth creation. This SOTA review considers the evidence that exists on the effects and implications of a masculine entrepreneurial discourse across entrepreneurship education, enterprise policy and practice.
Published: 29 January 2020
A direct link between entrepreneurship education within Higher Education and business start-up and other economic growth measures is often assumed. The supporting literature on this is limited, however, with few studies looking at impact measures relating to actual venture creation. Where studies do exist, there is evidence of a generally positive relationship between engagement with entrepreneurship education programmes and outcomes such as entrepreneurial intent, acquisition of business-related skills and knowledge, actual business start-up, and company growth. Further research with an increased level of methodological rigour and which follows participants over a longer time period is needed, however, to confirm and better understand the situations in which the impacts important for economic growth can be created.
Published: 10 October 2019
Despite the fact that cooperative firms have been thoroughly studied in the specific fields of Economics and Management, they still constitute a black box with many unknown aspects, among which cooperative performance stands out. These firms are based on specific values such as equity, democracy or solidarity, which make them different from conventional firms. In practice, these values are translated into the so-called “cooperative principles”; a set of specific behaviours that direct the way of developing their business activities and guide their day-to-day tasks. In this context, the research carried out has mainly focused on clarifying whether these particularities of cooperatives do influence their performance and if this performance is different from that of conventional firms.
Published: 18 June 2019
The debate concerning the impact that attracting inward investment can have on local productivity has raged for some 30 years. The essential reason for this is that is that there was a juxtaposition between “cost per job” estimates regarding the benefits of seeking to attract inward investment through subsidy, and the firm-based academic literature that analysed firm internationalisation in terms of the new technology or knowledge that often accompanies foreign direct investment. Cynically, one may argue that the emphasis that was placed on determining the productivity growth effects of inward investment was an attempt to justify such subsidies, even when cost per job calculations were unfavourable, but both the policy-based and academic literature represents increasingly detailed attempts to determine the nature of the wider economic benefits of attracting inward investment.
Published: 30 May 2019
Over the past decade, much has been made of the growth in the number of social enterprises – businesses with primarily social or environmental aims – as an organisational form (c.f. Teasdale et al, 2013; Kerlin 2010). This is not limited to the UK nor to Europe. Such growth has been discussed in relation to the aftermath of the global financial crisis, even allowing for politically motivated definitional changes (Teasdale et al, 2013). Calls to ‘do capitalism differently’ have continued since the financial crisis, with recent social activism typified by the Extinction Rebellion movement, indicating that market failure associated with the environment and long-term social problems are neither being dealt with by the market nor political systems that focus on the short-term (Economist, 2019). Social enterprise has been touted as the solution to some aspects of such failure and yet much of the early academic literature debated exactly what determined social enterprise status. Empirical analysis of performance, longevity and success will be at best partial and at worst confused without a clear understanding of which enterprises are social and indeed whether this matters or not. This review summarises the dominant arguments in the social enterprise literature and looks at the direction for future research.
Published: 22 May 2019
Issues of employee mental health and well-being have received considerable recent attention. Much less attention has been paid to well-being among entrepreneurs despite the combination of risk and anxiety which starting a business may involve. Entrepreneurial well-being has been defined as "a positive and distinctive mental state that reflects entrepreneurs' affective and cognitive experiences of engagement in entrepreneurship as the process of venture creation". We review the existing evidence on different aspects of entrepreneurial well-being and identify gaps in the evidence base on this ‘darker side’ of entrepreneurial activity.
Published: 21 May 2019
Loan guarantee schemes are the most pervasive and long-standing means of intervening in capital markets to support small business lending in the world. They are popular with small businesses, easy to understand, easy to administer, and allow large numbers of credit constrained small business to access loans that they would have struggled to get. Yet take-up of UK loan guarantees over its 38 year scheme history has varied dramatically. In this review we consider just why, despite its general popularity, the UK scheme has had such a variable past, and show just how sensitive demand for guaranteed loans is to the nuances of the schemes rules.
Published: 1 May 2019
What makes an entrepreneur? The past few years have witnessed a significant increase in research examining the role of biology in entrepreneurship. For instance, evidence shows that the genetic factors explain almost half of the variance in people’s tendencies towards entrepreneurship (Nicolaou, Shane, Cherkas & Spector, 2008). Other research suggests that hormones, such as testosterone and cortisol, affect the propensity of people to become entrepreneurs (Nicolaou, Patel & Wolfe, 2018; Wolfe & Patel, 2017b). Further research argues that entrepreneurs have increased activations in the frontopolar cortex of the brain when engaging in exploration tasks (Laureiro-Martinez et al., 2014). Studies also show that mental conditions, including attention-deficit hyperactivity disorder (Wiklund, Yu, Tucker & Marino, 2017), dyslexia (Logan, 2009), depression (Hessels, Rietveld, Thurik & van der Zwan, 2018), bipolar disorder (Johnson, Madole & Freeman, 2018) and obsessive-compulsive personality disorder (Wolfe & Patel, 2017a), influence the propensity of individuals to engage in entrepreneurial outcomes.
Published: 19 March 2019
As the labour market has recovered following the Great Recession and employment rates in the UK have risen to historically high levels, there has been growing interest in the quality as well as the quantity of employment. In part this reflects concerns about developments in working practices, including the rise of the gig economy, unequal gains from flexible working between employers and workers, employment insecurity and the implications of labour market trends for the ‘productivity puzzle’. The Taylor Review of Modern Working Practices added impetus to ongoing debates on ‘Good Work’ and in setting out its ‘Good Work Plan’ in December 2018 for the first time the UK Government placed equal emphasis on the quality and quantity of work.
Published: 14 March 2019
University research contributes to regional development through the way it becomes incorporated into different kinds of ‘products’ that make technological knowledge more accessible for local innovating companies. However, universities do not exclusively contribute through their research; their expenditure effects can be important, and teaching activities building regional human capital can also contribute to region’s territorial innovation capacity.
University research contributes in many different ways to regional development, not only through formal commercialisation activities and supporting human capital development, but also through informal engagement & strategic leadership activities. Universities’ main role is as a connection point to global knowledge resources in ways that make that knowledge more easily available to local partners. This means that universities’ regional development contributions are strongly shaped by the regional absorption capacity for the knowledge they import: in less favoured regions their contribution needs infrastructure to help less-innovative firms absorb new knowledge. Moreover, regional development is never a core mission for universities in comparison to teaching and research: stimulating a regional mission involves creating opportunities for mutually beneficial interaction between universities and regional partners.
Published: 5 March 2019
Apprenticeships are paid jobs incorporating on- and off-the-job training. Traditionally they have been seen as a route for young people to transition from education to productive skilled employment. In practice apprenticeships are very diverse – in terms of age of apprentices and levels and quality of apprenticeships.
In England an ongoing programme of reform is seeking to increase the number of apprenticeships while at the same time rationalising the range of apprenticeships available, making them more attuned to employers’ skills needs and enhancing their quality. Perhaps the single most prominent reform is the introduction of an apprenticeship levy for large firms in 2017, which was followed by a reduction in apprenticeship starts.
The evidence suggests that there are positive returns to individuals in terms of earnings from apprenticeships but their size varies markedly by gender, sector and apprenticeship level, with bigger returns for men than for women (in part explained by gender segregation by sector) and for advanced, higher and degree level than for intermediate level apprenticeships. Employers benefit from the supply of skills provided by apprenticeships but in their decision-making about investing in apprenticeships are concerned to trade-off costs (e.g. wages, training and supervision costs) versus benefits (i.e. the productive contribution of apprentices). Net costs and benefits and associated payback periods vary markedly by sector and apprenticeship level.
Published: 28 February 2019
Rapid growth in self-employment in some economies, of which the UK is a notable example, has raised the salience of whether growing self-employment (SE) contributes to economic growth and regional development (RD). The UK experience is that self-employment growth is not spatially uniform (Henley, 2017), and so this question is often framed in terms of local economic benefits. While researchers typically argue that SE is an indicator of entrepreneurialism, higher SE also raises concerns about the growth of employment casualization and the gig economy (Taylor, 2017). Nevertheless, more prosperous locations, such as in and around London, appear to experience stronger local SE activity. The key research issue here concerns whether this self-employment, through its impact on entrepreneurial dynamism, causes improvements in RD, or is merely a reflection of it.
This review places this question in its wider context and reviews the relatively limited range of extant analysis on the SE-RD nexus. The findings from this literature are, prima facie, consistent and supportive of a positive link. However, the review identifies a number of concerns, both conceptual and empirical, and in doing so highlights gaps in the available evidence base.
Published: 26 February 2019
Employee engagement has been a hot topic in recent years among both academic researchers and practitioners. It is often believed that employee engagement can drive productivity and creativity and improve business performance. But what does the evidence suggest about the relationship between employee engagement and business performance? This SOTA review examines studies at individual and business unit/organisational levels to assemble the quantitative evidence to date on the relationship between the two.
The evidence suggests that at the individual level there is relatively solid evidence that there is a positive association between employee engagement and individual task performance. The evidence also suggests that employee engagement is likely the antecedent. At the business unit and organisational level, however, the small number of studies available makes it too early to draw valid conclusions. Initial findings reveal a positive association between collective engagement and business unit/organisational performance. However, the causal order is not clear.
Published: 19 February 2019
With growing interaction among firms in the innovation process, the need for efficient protection of intellectual property rights (IPR) also increases. The high costs and lengthy processes associated with patenting call for firms to use other methods of protecting their intellectual property (IP). The low costs and high revenues associated with the use of trademarks entice the adoption of this measure. For SMEs however, recent evidence questions the long-term benefits of trademarks, and suggests that industrial designs may be a more efficient form of IP protection. There is little evidence for or against using copyright, possibly due to difficulties in measuring this IPR. As product cycles are shortening, firms increasingly protect IP through speed-to-market and secrecy. However, more research is needed as to how secrecy relates to more formal methods of IP protection.
Published: 7 February 2019
What does the evidence suggest in relation to the relationship between unregistered IP rights—including unregistered design rights, unregistered trade marks, and copyrights—and the innovation outcomes of firms? While some argue that unregistered IP rights incentivise innovation due to the convenience and savings—both in terms of time and costs—associated with a process that requires neither registration nor maintenance, others argue that unregistered IP rights hinder cumulative innovation and increase monopoly power. Yet, the influence on innovation seems to depend on firm size and sector, industry lifecycle length, and on the stage of the collaborative innovation process. It’s been proposed that a lack of reported litigation suggests that unregistered IP rights work more in terms of restricting copying than as enablers of prosecution for an infringement. Other than review articles, there is a dearth of empirical evidence pertaining to potential impacts on innovation outcomes of firms. By gathering data from firms on the use and experience unregistered IP rights and firm innovation outcomes, future research could shed light on this topic.
Trade marks and registered designs: Evidence on the links to innovation and business performance. SOTA No 19
Published: 6 February 2019
Applications for trade marks and registered designs have risen sharply in recent years with the application numbers for trade marks in 2017 being more than double what they were in 1995, and the application numbers for registered designs in 2016 reaching their highest point since 1995. In light of this, what does the evidence suggest about the relationship between trade marks/registered designs and innovation output?
Compared to that of patents, the literature examining trade marks and registered designs and the links to innovation is more limited with much of the empirical evidence largely confined to the examination of firms’ private returns. The empirical evidence, in general, suggests a positive relationship between trade marking activity/registered design activity and innovation/firm performance.
Published: 5 February 2019
Patents are the first choice innovation protection instrument. This SOTA Review outlines the evidence on the value of patents, the factors influencing patent value and highlights the gaps in our understanding of patent value in the UK. The focus of the review is on the value of patents to the innovating firm. It is worth noting that patents also have broader implications for societal welfare. The private value of patents is influenced by many factors (most notably by the degree of innovativeness or quality of innovation) and so these estimates also represent more than the value of the protection instrument itself.
Published: 28 January 2019
The importance of R&D and innovation in explaining economic growth and productivity is well documented in the research literature. Government policies also increasingly recognise the benefits of supporting firms’ R&D and innovation. In the UK, for instance, research and innovation have been placed at the heart of the Industrial Strategy, receiving investments of around £3bn pa.
Published: 8 January 2019
While the participation of women in entrepreneurship has increased in recent years, women’s access to venture capital (VC) has not moved at the same pace. The gender gap in VC funding persists, as is also the case in other equity financing markets. Recent studies using socio-psychological perspectives indicate that the gap is associated with gender biases, which affect whether and how women entrepreneurs seek funding and how decision-makers evaluate business opportunities. From the demand side, this relates to some women’s tolerance for risk and their perceptions about external equity capital, which can lead to lower aspirations to seek business growth and to apply for VC funds. From the supply perspective, gendered beliefs about what makes a successful business founder, and lack of female role models may impact negatively on the evaluation of businesses led by women. These barriers may require interventions that go beyond a focus on just improving women’s financial or technical skills.
Published: 13 December 2018
SMEs (firms with fewer than 250 employees) make an important contribution to employment and value creation across Europe, and so ensuring that they are able to withstand adversity is of interest to many varied stakeholders. However, most resilience research to date has focused upon large organisations, with the implicit assumption that findings also apply to small organisations. This ignores the unique contextual and structural characteristics that define many SMEs. Where SMEs have been considered, resilience research has focused on SME characteristics and capabilities and on the individual resilience of the leaders of SMEs. Little research has considered practical interventions which may improve resilience in SMEs. Exploring contextual aspects unique to SMEs that may work to their advantage in developing resilience, interrogating the link between leader resilience and organisation resilience, and exploring SME resilience in the context of the organisation’s geographical location offer potentially fruitful avenues for future research.
If high performance working delivers productivity gains, why isn’t common sense common practice amongst UK firms? SOTA No 14
Published: 5 December 2018
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.
Published: 4 December 2018
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.
Published: 21 November 2018
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?
Published: 14 November 2018
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.
Published: 6 November 2018
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.
Published: 23 October 2018
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.
Published: 22 October 2018
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.
Adoption of new technologies and organisational practices: are there innovation benefits? – SOTA No 7
Published: 16 October 2018
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.
Published: 15 October 2018
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.
Published: 19 September 2018
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?
Published: 19 September 2018
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.
Published: 19 September 2018
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.
Published: 19 September 2018
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.
Published: 19 September 2018
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.