The impact of flexible work on SME Performance: An analysis of flexible working arrangements, innovation and productivity in Scotland

Research Paper

The impact of flexible work on SME Performance: An analysis of flexible working arrangements, innovation and productivity in Scotland

Published: 19 November 2024

ERC Research paper No 115

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Associated Themes

Innovation
Management and Leadership
Productivity and performance

One out of three jobs currently advertised in Scotland offers flexible working (Timewise, 2023) and recent legislation — the Employment Relations (Flexible Working) Act 2023, effective from April 6, 2024 — grants employees the right to request flexible working from day one in a new job. This new legislation highlights the increasing demand for flexible work arrangements (FWAs), addresses the recruitment difficulties due to an increased level of economic inactivity post-pandemic, offers the possibility of a better work-life balance to workers while adapting to their needs, and potentially improves productivity and innovation as several studies have found around the world. However, the factors behind FWAs adoption and its impact on business performance for small and medium enterprises (SMEs) in the UK remain underexplored. Drawing on data from Scottish SMEs in the Longitudinal Small Business Survey (LSBS) between 2015 and 2022, this report provides a comprehensive evidence-based analysis of the determinants of FWAs adoption and its relationship with SME productivity and innovation.

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