UK SMEs Research Articles

Adaptive Scenario Planning Development for Indonesian Digital Health Industry: Case Study of Export Support Services (ESS) in Promoting UK Companies Entering Indonesia

The COVID-19 pandemic, once an unpredictable yet plausible future event, has proven to be a reality, highlighting the urgent need for adaptation. Factors such as varying Universal Health Coverage (UHC) maturity, limitations in healthcare infrastructure, and unpredictable private sector moves, including venture capital investments, add to the uncertainty. Like the COVID-19 pandemic, Brexit was another unpredictable yet plausible event that has become a reality. Export Support Service (ESS), a UK Department for Business and Trade (DBT) initiative, assists UK SMEs in expanding beyond the EU post-Brexit, including Indonesia’s digital health sector. The study refines its strategy to navigate the market’s complexities through adaptive scenario planning. This study identified 25 key factors shaping Indonesia’s digital health future and developed three scenarios: “Cherry Blossom Park,” “Volcano Eruptions Amidst a Forest,” and “High-Tech Greenhouse in a Desert.” Each scenario explores implications and opportunities, providing strategic guidance for ESS.

Navigating the Green Transition: A Mixed-Method Study of Pro-NetZero Actions in UK SMEs

Navigating the Green Transition: A Mixed-Method Study of Pro-NetZero Actions in UK SMEs

IP Awareness and Understanding Among UK SMEs

IP Awareness and Understanding Among UK SMEs

Financing small and innovative firms during COVID-19

ABSTRACT Previous research on the financing of smaller innovative firms has established that being small per se creates problems in accessing finance, but being small and innovative adds another layer of difficulty. This new research explicitly questions whether the Covid-19 crisis has added to the debt access problems of an already disadvantaged group of firms. Using a unique Covid-19 period dataset of 9000 UK SMEs, we find that the most innovative firms had the highest demand for loans during the Covid-19 crisis and evidence that those firms trying to introduce new products and services faced more severe borrowing constraints. As the vast majority of Covid-19 loans in the UK were government guaranteed, we also find that several classes of innovative firms found it more difficult to access government supported loans. It was also not the case that those most impacted by the crisis had the most privileged access to government loan schemes despite a greater need for liquidity. These findings have potential implications for financing innovative firms in the post-Covid-19 world, such as proposing a specific innovation loan guarantee scheme with higher than conventional guarantee rates.

Drivers and outcomes of CSR engagement in UK SMES

ABSTRACTBuilding on insights from the motivation-opportunity-ability (MOA) theory, we develop and test a conceptual framework of perceived antecedents, contingencies, and broader performance outcomes of corporate social responsibility (CSR) engagement within small and medium enterprises (SMEs). By following a micro-level approach and using multisource data including a sample of 219 responses from UK entrepreneurs and objective performance data, we reveal the importance of perceived individual-level characteristics such as the entrepreneur’s personal values and competence, as well as the moderating role of perceived firm-level employee supportiveness in strengthening CSR engagement. We further highlight the positive effects of CSR engagement on a broad range of business, social and environmental performance outcomes as revealed by the entrepreneurs in our sample.

Examining the role of big data and marketing analytics in SMEs innovation and competitive advantage: A knowledge integration perspective

The age of digitisation has resulted in an explosion of studies investigating the benefits of Big Data Analytics (BDA) as a means to enhance competitive advantage in organisations. However, the best way to leverage BDA is still inconclusive. Moreover, there is paucity of studies investigating how SMEs, who are recognised as having high levels of entrepreneurial orientation, can utilise big data and marketing analytics to support innovation and competitive advantage in dynamic environments. This study employs dynamic capabilities as a lens to investigate the nuanced relationships. Adopting a partial least squares (PLS) path modelling method with 194 UK SMEs, this study finds that knowledge integration mechanisms are particularly critical value creation enablers by transforming EO and BDA into organisational wide capabilities in support of innovation and competitive advantage. These novel and nuanced insights are of value to both practitioner and researchers.

Great Expectations? Insights into UK SMEs’ Optimism From the Inside and Outside View

Great Expectations? Insights into UK SMEs’ Optimism From the Inside and Outside View

Brexit and Covid-19 Shocks: Investment and Growth among UK SMEs

Brexit and Covid-19 Shocks: Investment and Growth among UK SMEs

Organisational capabilities and small and medium sized firms’ attainment of innovation outcomes: the moderating roles of exports and formal business networks

PurposeThe authors examine the influence of planning and execution capability (PEC) and operational improvement capability (OIC) on small-and-medium-sized firms’ (SMEs) attainment of different innovation outcomes under the conditions of exports and formal business networks, based on the capability-based perspective and organisational learning literature.Design/methodology/approachThe authors analyse time-series data about UK SMEs, extracted from the 2015 and 2016 UK Longitudinal Small Business Surveys (LSBS).FindingsThe authors failed to find any direct effects of PEC and OIC on product innovation outcomes. However, the authors discovered that OIC supports the generation of process innovation outputs more strongly than PEC. Additionally, exports and formal business networks provide SMEs with different learning opportunities. The authors find limited support that exports amplify the beneficial effect of PEC on product innovation outcomes more than formal business networks. On the other hand, formal business networks strengthen the effect of PEC on process innovation outcomes more than exports. As a result, exports reduce the beneficial effect of OIC on product innovation outcomes more than formal business networks. However, formal business networks weaken the beneficial effect of OIC more than exports.Originality/valueThe authors distinguish between two types of organisational capabilities – PEC and OIC – and examine their impact on SMEs in achieving innovation outcomes. The authors also identify SMEs’ involvement in exports and formal business networks as the important boundary conditions for such effects. xD; xA; xD; xA;

The Effect of Outward and Inward Internationalisation on Different Types of Innovation: Evidence from UK SMEs

This paper empirically examines the effect of outward internationalisation, inward internationalisation activities and outward-inward internationalisation (i.e., exporting and importing) on different types of innovation undertaken by UK SMEs. Specifically, we differentiate between product innovation and process innovation and examine the potential effect that they can generate individually and in combination. The results show that both inward and outward internationalisation support product and process innovation in SMEs. However, such an effect is found to be stronger for the combined outward-inward internationalisation operations than for the single mode undertaken by SMEs. The results are found to be robust across the different types of innovation. However, sub-sample analysis shows that, although innovation responds to different internationalisation operations in micro and small firms, for medium-sized firms, only the combination of outward and inward internationalisation operations increases the probability of undertaking both innovations. Using the organisational learning theory, we argue that engaging in both internationalisation activities simultaneously enables firms to acquire a more diverse and richer set of knowledge and key information — through double loop learning, which is translated into increased levels of innovation. Hence, our results have important theoretical, managerial, and policy implications and stimulate the existing debate in the area.

Capital structure of UK SMEs: an integrated understanding

This study contributes with an integrated understanding of SME capital structure patterns at the nexus of internal (firm-specific) and external environment determinants. The hypotheses draw on pecking order theory (POT), agency theory, and business cycle theories, and estimates are obtained from a data panel of 424 UK SMEs, over a ten-year period. Furthermore, the findings and discussion draw on both static and dynamic models of capital structure. The results between the static and the dynamic model are qualitatively similar, illustrating that firms change their capital structure over time, which is consistent with the POT and agency theory. In contrast to previous results on capital structure choices, the present study reveals that size relates to long-term debt borrowing only in the short-term, and SME growth is not positively linked with gearing ratios. The findings also offer evidence that support macroeconomic conditions as having a nonlinear, convex relationship with the gearing ratios of the sample firms.

Capital structure of UK SMEs: an integrated understanding

Capital structure of UK SMEs: an integrated understanding

High-performance work practices and labour productivity: a six wave longitudinal study of UK manufacturing and service SMEs

This study utilises both evolutionary resource-based view (EBRV) and open systems theory to investigate the long term impact of high-performance work practices (HPWPs) on labour productivity in UK manufacturing and service sector SMEs. We investigate both forward and reverse causality and the moderating role of owner-manager strategic orientation, and whether such relationships are influenced by firm size and age. Utilising a longitudinal data set (a balanced panel) comprising 284 UK SMEs and six waves of data collection over a ten-year time period (2007–2017), we found support for both forward and reverse causality. Prior investments in HPWPs were positively associated with subsequent firm labour productivity and prior labour productivity was positively associated with future investment in HPWPs. The size of the estimated coefficients for these relationships were consistently larger for small firms than for medium sized firms, however there were not significant for firm age. We additionally found that owner-manager strategic orientation towards HR moderated both forward and reverse causality relationships and that this relationship increased over time. The size of the estimated coefficients was larger in small firms compared to medium-sized firms. Overall, our findings support calls to investigate both forward and reverse causality and to better understand potential differences between small and medium sized firms.

Machine Learning Cybersecurity Adoption in Small and Medium Enterprises in Developed Countries

In many developed countries, the usage of artificial intelligence (AI) and machine learning (ML) has become important in paving the future path in how data is managed and secured in the small and medium enterprises (SMEs) sector. SMEs in these developed countries have created their own cyber regimes around AI and ML. This knowledge is tested daily in how these countries’ SMEs run their businesses and identify threats and attacks, based on the support structure of the individual country. Based on recent changes to the UK General Data Protection Regulation (GDPR), Brexit, and ISO standards requirements, machine learning cybersecurity (MLCS) adoption in the UK SME market has become prevalent and a good example to lean on, amongst other developed nations. Whilst MLCS has been successfully applied in many applications, including network intrusion detection systems (NIDs) worldwide, there is still a gap in the rate of adoption of MLCS techniques for UK SMEs. Other developed countries such as Spain and Australia also fall into this category, and similarities and differences to MLCS adoptions are discussed. Applications of how MLCS is applied within these SME industries are also explored. The paper investigates, using quantitative and qualitative methods, the challenges to adopting MLCS in the SME ecosystem, and how operations are managed to promote business growth. Much like security guards and policing in the real world, the virtual world is now calling on MLCS techniques to be embedded like secret service covert operations to protect data being distributed by the millions into cyberspace. This paper will use existing global research from multiple disciplines to identify gaps and opportunities for UK SME small business cyber security. This paper will also highlight barriers and reasons for low adoption rates of MLCS in SMEs and compare success stories of larger companies implementing MLCS. The methodology uses structured quantitative and qualitative survey questionnaires, distributed across an extensive participation pool directed to the SMEs’ management and technical and non-technical professionals using stratify methods. Based on the analysis and findings, this study reveals that from the primary data obtained, SMEs have the appropriate cybersecurity packages in place but are not fully aware of their potential. Secondary data collection was run in parallel to better understand how these barriers and challenges emerged, and why the rate of adoption of MLCS was very low. The paper draws the conclusion that help through government policies and processes coupled together with collaboration could minimize cyber threats in combatting hackers and malicious actors in trying to stay ahead of the game. These aspirations can be reached by ensuring that those involved have been well trained and understand the importance of communication when applying appropriate safety processes and procedures. This paper also highlights important funding gaps that could help raise cyber security awareness in the form of grants, subsidies, and financial assistance through various public sector policies and training. Lastly, SMEs’ lack of understanding of risks and impacts of cybercrime could lead to conflicting messages between cross-company IT and cybersecurity rules. Trying to find the right balance between this risk and impact, versus productivity impact and costs, could lead to UK SMES getting over these hurdles in this cyberspace in the quest for promoting the usage of MLCS. UK and Wales governments can use the research conducted in this paper to inform and adapt their policies to help UK SMEs become more secure from cyber-attacks and compare them to other developed countries also on the same future path.

International R&D partnerships: the role of government funding in reducing transaction costs and opportunistic behavior

The innovation management and policy literature suggests that government support generally has a positive effect on SMEs’ R&D, innovation performance, and fostering international links. However, research in this field has mainly examined the outcomes, overlooking the impact during the course of the R&D partnership, especially in an international context. Using longitudinal data and a transaction cost (TC) approach, we conduct an in‐depth case study of a UK–China innovation program aimed at supporting and facilitating R&D partnerships between UK SMEs and Chinese organizations. Examining 11 UK SMEs with 12 R&D partnerships in this program, we identify four stages of the R&D partnership with Chinese organizations, revealing that government support both positively and negatively affects TCs at each stage. Based on these positive and negative effects, we offer empirical and theoretical contributions, as well as managerial and policy implications to support international R&D partnerships.

When the rainy day is the worst hurricane ever: the effects of governmental policies on SMEs during COVID-19

We investigate the impact of COVID-19 on 42,401 UK SMEs and how government intervention affects their capability to survive the pandemic. The results show that, without governmental mitigation schemes, 59% of UK SMEs report negative earnings and that their residual life is reduced from 164 to 139 days. The analysis shows that government support scheme reduces the number of SMEs with negative earnings to 49% and allows extending the residual life for SMEs with negative earnings to 194 days. In addition, the support scheme reduces the number of jobs at risk in our sample by around 20%. However, our results suggest that weaker firms benefit more than strong ones. Besides, industries that are worst hit by COVID-19 are not those that benefit most from the government support scheme. We ascribe this result to the fact that the schemes do not discriminate between those firms that deserve support and those that do not deserve it.

Brexit and skill shortages: an empirical analysis of UK SMEs

This paper examines the perspectives of SMEs on Brexit and skill shortages using cross-sectional data of 2,969 SMEs from a UK Government’s Small Business survey for 2016. The logistic regression with clustered standard errors is applied to analyse the association between SMEs considering Brexit as a major business obstacle and the probability of SMEs identifying skill shortages in their businesses. The results show that firms with a shortage of managerial skills/expertise have a 6.5% higher probability to report that Brexit will affect their businesses, followed by difficulties in staff recruitment (4.5%) and shortage of skills within external labour markets (3.8%). Policy recommendations are provided.

Impacts of the Covid-19 Crisis: Evidence from 2 Million UK SMEs

We introduce a novel data set to analyze the impact of the Covid-19 crisis on SME cash flows. The crisis led to a sharp drop in economic activity in the UK, which hit SMEs harder than larger businesses. The data set comprises monthly information on all 2 million SMEs that have current accounts or debt with nine major banking groups, with roughly 5 billion data points in total. We document a few basic facts on UK SME cash flows during Covid-19. (1) The virus and the public health interventions coincided with a 30 percentage point reduction in turnover growth for the average SME. (2) There was significant heterogeneity in the turnover shock across SMEs, with the biggest reductions for younger SMEs in consumer-facing sectors in Scotland and London. (3) Cash flows were broadly flat on average and there was much less heterogeneity across SMEs. (4) SMEs with average turnover growth in 2020 were most likely to use the main government-guaranteed loan scheme for SMEs, as well as those in the hospitality sector in more affluent areas of the country. Our analysis provides a framework to monitor SMEs as the sector recovers from the pandemic.

Did the Covid-19 Local Lockdowns Reduce Business Activity? Evidence from UK SMEs

This paper analyses the local lockdown measures introduced to contain the spread of Covid-19 in the UK. We use a spatial regression discontinuity design to assess whether the fall in business activity during the lockdowns was driven by the policy measures or by other factors, such as voluntary social distancing. We conclude that the local lockdowns did causally reduce business activity but that activity would have probably fallen substantially even in the absence of the lockdowns. During the local lockdowns, the average turnover growth for SMEs in the UK was around -20%. SMEs that were up to two kilometres inside the lockdown boundaries had 8 percentage points lower turnover growth than those up to two kilometres outside. This implies that the local lockdowns accounted for two fifths of the overall drop in business activity at most. The estimates are largest for restaurants and non-food retail (eg clothes shops), which were directly targeted by the restrictions. Costs fell by much less than turnover, reducing cash flow.

The role of anchor institutions in creating value for SMEs: insights from North East of England owner-managers

ABSTRACT The roles universities are seen to play have changed significantly over the last 25 years. The concept of higher education has, and, continues to morph from a distanced, unengaged ivory tower to a highly engaged community-based concept. Yet there is little in the literature about how universities viewed as ‘anchor institutions’ support organisations. Further, there is an omission of specific detail about the impact of universities on SMEs; they are mentioned but only in broader terms. This empirical study is based on the results of a leadership and business development intervention for 50 UK SMEs. The intervention was facilitated and delivered by a North East University we recognise to be an ‘anchor institution’. The study is longitudinal and embeds innovative composite measurement within a value creation framework with a specific focus on identifying how a North East anchored institution creates impact and value for SME owner-managers. Findings include leadership salience to SME owner-managers, increases in SME turnover and significant gross value added. This study contributes to understanding about what the role of a university, as an anchor institution, is in terms of role, SME impact and value creation, with potential for international application.