Microbusiness Britain

Lead Research Organisation: University of Warwick
Department Name: Warwick Business School

Abstract

The "Micro-business Britain" project will be led by Professor Stephen Roper (ERC) and Professor Mark Hart (ERC) and managed by Katherine Hathaway. Katherine is an experience project manager and was until March 2016 a Deputy Director of ERC. Prior to working with ERC, Katherine was a Deputy Director in the Enterprise Directorate in BEIS.

Central to the project will be a large-scale survey of micro-firms (covering c. 8-10k firms) which will provide place-based data to identify specific challenges these micro-businesses face in terms of growth and raising productivity. This size of sample is necessary to ensure robust comparisons between the home nations and inform both place-based policy and national initiatives around ambition, skills, innovation, internationalisation and scale-up. It would create a baseline against which future policy actions could be measured and, through data-linking, allow place-based policy impacts to be monitored and compared. Small (c. 1.5-2k) companion surveys in the US and Ireland will provide benchmark information on ambition and growth intentions (US) and supply chains and internationalisation (Ireland). The databases created will be deposited in anonymised form in the ESRC Data Archive and will, therefore, be available for use by both the research and policy communities.

The focus of the project will be micro-employers (i.e. firms with 1-9 employees) which have been in business for more than three years. This will exclude the self-employed (with no employees) and also exclude start-ups with little trading history and which are liable to particularly high failure rates. Commercially available sampling frames will be used in each country permitting structured, random sampling. Telephone interviews will be conducted with a member of the leadership team of each firm. This approach has been used extensively by the team in previous studies and provides high quality information within a tight timeframe.

Questionnaire design is crucial to the value of this project and we will engage with BEIS colleagues and other interested parties to identify topics and metrics to include in the survey. In addition to detailed information on the enterprise and its leadership team, key areas of focus (reflecting the main concerns of the Industrial Strategy) will be:
Ambition - the strategic objectives of the firm in terms of growth, profitability, productivity etc.
Resilience - attitudes and strategies for dealing with future uncertainty
Market profile (buy side and sell side) - internationalisation, position in supply chains, public sector customers (procurement)
Performance - growth, profitability, productivity (value added per employee)
Innovation and diffusion - innovation activity (product/service, process), IP, links to science base, barriers
Training and skills - workforce, management and leadership skills
Finance - external finance - debt, equity, alternative finance; investment profile.
E-business and digital adoption - digital profile of business, ITC access and use
Eco-system factors - competition, infrastructure, business networks and policy supports (LEPs, Growth Hubs), other sources of advice

There will be two deliverables from the project by end-March 2018:
Survey databases (3) which are usable by other academics and policy analysts at local and national level;
A draft headline report (c. 20-30 pages) "Micro-business Britain" providing an overview of key insights from the UK and international benchmark survey datasets. Publication is likely to be April 2018 given standard ERC publication protocols.
Further statistical and econometric analysis will continue as part of the ERC Phase 3 research programme using the "Micro-business Britain" data and data-matching.

Planned Impact

The key beneficiaries of this project will be policy makers with an interest in the development and success of smaller firms at both local and national level. At national level this relates primarily to teams in BEIS which at the moment have very limited information on micro-businesses and particularly in areas such as the take-up of digital technologies, the barriers to such diffusion, and any information on management practices in micro-firms. These are key determinants of the productivity gap and due to the coverage of previous surveys we have little idea how these work in micro-businesses. Other aspects of the survey address other gaps in our understanding. How for example do levels of ambition in UK micro-businesses compare to those in the US where firms are generally thought to be more growth oriented? The US comparison survey will provide a robust benchmark. How well are UK small firms integrated into international or local supply chains? The Irish survey will provide some useful benchmarks here. The survey will also cover entrepreneurial and business resilience, both key issues as the UK continues in a period of significant macro-economic uncertainty.

The survey will help to complete the picture of our understanding of innovation across the population of UK firms. Innovative activity is well understood for larger firms due to the UK Innovation Survey but this only covers firms with 10 or more employees with much more limited information available for smaller firms.

The project will therefore address significant knowledge gaps in the UK and provide a robust basis for policy making in relation to digital diffusion, management and leadership practices and innovation in micro-firms. Each of these is a key theme in the development of the Industrial Strategy and on-going attempts to address the productivity gap between the UK and its international competitors. This will be important at both national and local level.

Publications

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