ERC research programme overview 2014

ERC’s research ambition

• ERC set out to answer one central question:

What drives SME growth?

• Key aspects designed into the programme – Building a more contextualised view– Emphasising leadership and capability – Recognising different ways of growing - organic,

acquisition– And, questioning the meaning of ‘growth’ itself!

… but ERC has a wider mission than research alone…

• Research goals – Conducting World Class Research– Develop a multi-level, dynamic and longitudinal approach to

understanding business growth– Building a ‘leading edge’ Hub for SME research on SME

performance in UK and Internationally

• Policy and institutional goals – Contribute to shaping policy and strategy in the UK, informing

policy design, and through policy commentary and challenge– To establish ERC as the ‘go to’ reference point for policy makers, the

media through long term structured engagement as well as more opportunistic, timely policy challenge.

ERC Activities - overview

Entrepreneurial leadership• Theme 1: Entrepreneurial Ambition and Growth• Theme 2: Entrepreneurial Leadership, Capabilities and Growth • Theme 3: Diversity and SMEs in the Emerging Economy

Strategy and Performance• Theme 4: Finance and Growth • Theme 5: SME Innovation, Exporting and Growth – An Embedded

Perspective • Theme 6: Firm Dynamics, Job Creation and Productivity Growth

Emerging priorities

Theme 1: Entrepreneurial Ambition and Growth

• Entrepreneurial Ambition, Resources and SME Growth (project 1.2)- recent evidence suggests that high-aspiration early-stage entrepreneurship is associated with subsequent macro-economic growth. This project will examine the effect of regional, local, peer-group, firm-level, and individual-level factors that influence both the propensity to engage in ambitious entrepreneurship and to achieve rapid realised growth.

• Analysis would be built around the concept of national systems of entrepreneurship using the GEDI framework and based on the UK Global Entrepreneurship Monitor database of around 200,000 individuals and the Business Structure Database (BSD) which contains information on all HMRC registered businesses.

Theme 2: Entrepreneurial Leadership, Capabilities and Growth

• Entrepreneurial leadership and growth (Projects 2.2 and 2.3). - fieldwork is now in progress with focus on role of leadership and capabilities in shaping SME growth. Early results April 2014.

• Leadership and capability – case studies (Projects 2.2 and 2.3) – longitudinal case studies will start and run over next two years.

• Leadership and management skills in SMEs – (BIS funded project) to examine issues and impact on SME performance. Early results September 2014.

Theme 3: Diversity and SMEs

• Mapping and Activating Support for Diverse Business Networks (Project 3.4) – supported by a newly appointed Research Fellow at Birmingham this project this will involve: – (a) Mapping the landscape and barriers to development of enterprise support for diverse

entrepreneurs in five cities– (b) Staging awareness events and acting as a catalyst for the creation of new networks and groupings

to support minority businesses.

• Understanding the Connection between Households and the Decision to Finance and Grow Diverse Businesses (Project 3.3) - longitudinal case studies of thirty entrepreneurial households stratified across diverse social groups to investigate: – the factors influencing enterprise participation among under-represented groups– variance by household life cycle and business lifecycle and performance– perceptions of disadvantage and unequal treatment by banks and other resource providers that

inhibit participation and lead to discouraged borrowers – how Government, banks and other agencies can increase the level of successful and sustainable

enterprise in these groups.

Theme 4: Finance and Growth

• Discouraged Borrowers (project 4.4 revised) focussing on the ‘arc of discouragement’ project focuses on questions such as: – Who are discouraged borrowers (DBs)?

– Why are there DBs? – What are the impacts of discouragement?– What would encourage DBs back to seeking loans?

• Growth, survival & types of firm ownership (Project 4.2) – will focus on growth and finance in different types of companies. Research will continue through spring 2014 with a focus on family firms, spin-offs, buyouts.

• Financing early stage ventures (Project 4.3) - using German data this project

focuses on the profile of early stage funding in Germany and its growth implications. UK analysis to follow. with an initial focus on family firms.

•

Theme 5: SME Innovation, Exporting and Growth

• From knowledge to value added (Project 5.3) – will trace the pathway from knowledge to value added in SMEs and focus on four main research areas. Key questions are:– What determines ‘openness’ in SME innovation?– What are the key drivers and barriers of enhanced innovation and

exports in UK SMEs? – What factors influence SME’s ability to successfully exploit new

innovations?

• SME Exporting and internationalisation (Project 5.3) – key focus here will be on: persistent v. intermittent exporters, the relationship of exporting to business owner characteristics and the speed and extent of internationalization in SMEs.

Theme 6: Firm Dynamics, Job Creation and Productivity Growth

• Firm Dynamics and Job Creation in the UK – geographical focus (Project 6.2, continued) – where does growth occur? Business demography based on firm-level longitudinal data provides valuable insights into how the private sector evolves over time. This analysis will focus on local areas to examine how the drivers of job growth vary between areas.

• Firm Dynamics and Job Creation in the UK the impact of recession? (Project 6.3) The period since 2008 has been marked by massive economic upheaval. But how has this period affected business demographics across the UK regions and nations? This project would examine the ‘recession’ cohorts in the period since 2008 and their contribution to growth. – leading to an ERC White Paper “Impact of Recession on Firm Dynamics in the UK”

Emerging priorities• A number of emerging discussions with different potential partners also

reflect other aspects of SME growth and development:

– Comparative data on firm dynamics across UK regions and countries– Local supply chains and clustering and implications for growth –

building on recent work for BIS on clusters– Conversations with CDFA around the growth of micro-businesses– Rural enterprises face rather particular problems and might also be

interesting– Medium sized-businesses what drives their growth and development?

Potential data (BIS) and action research projects