What drives productivity growth behind the frontier? A mixed-methods investigation into UK SMEs. Research Paper No 89
Published: 24 September 2020
International evidence suggests productivity growth is most rapid among ‘frontier’ firms, i.e. those in the top decile of the productivity distribution. Other studies have identified the marked difference in sectoral productivity growth in the UK over the last decade. Here, we consider the drivers of productivity growth in SMEs which are ‘behind the frontier’.
Looking at quantitative data on value added and turnover per employee growth in twelve 4-digit sectors (six in manufacturing and six in services) we find no consistent relationship between firms’ position in deciles of the productivity distribution and subsequent productivity growth.
We also find few significant differences between the observable characteristics of firms behind the frontier which experience rapid and slower productivity growth.
Behind the frontier, firm age, size, number of subsidiaries and investment are only weakly related to productivity growth, at least in the short-term. The lack of influence of these observable influences on productivity growth suggests the potential importance of other externally unobservable factors in shaping productivity growth. We explore these unobservables in in-depth interviews, highlighting a number of factors which characterise high productivity growth SMEs. These include: inspirational leadership, people management practices, strategic investments, data oriented operational management and product, market and tactical innovation.
Few of the factors are sector specific, and none operates in isolation.
Management and Leadership
Productivity and performance
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.
Published: 2 April 2013
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.
Published: 5 July 2018
Enterprise Research Centre
Warwick Business School
University of Warwick
Coventry CV4 7AL
Enterprise Research Centre
Aston Business School
Birmingham B4 7ET
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