Revealing the factors which drive innovation, growth and productivity in small and medium-sized enterprises

Impact Area: Small Businesses

Institution: Aston Business School and Warwick Business School

Leading Academic: Professor Mark Hart and Professor Stephen Roper


The Enterprise Research Centre (ERC) led by Warwick and Aston Business Schools is dedicated to explaining the factors which drive innovation, growth and productivity in small and medium-sized enterprises (SMEs).

Funded by the ESRC, BEIS, the British Business Bank, Innovate UK and the IPO, it has the following core themes for the next three years: finance and investment; innovation and growth; leadership, management and performance and diffusion and productivity.

ERC is the ‘go to’ place for a wide range of UK and international policymakers and practitioners for intelligence on SME growth and performance. For example, by producing the Local Growth Dashboard and Benchmarking Local Innovation reports for Local Enterprise Partnerships (LEPs) and the Devolved Administrations it provides robust evidence against which the impact of policies which affect SMEs can be monitored. ERC also organises an annual ‘State of Small Business Britain’ conference to disseminate its work to a very diverse set of stakeholders. Aston Business School is accredited by the Small Business Charter, managed by the Chartered Association of Business Schools.

Benefits and impacts

Analysis by the ERC of the Gateway to Research (GtR) database in 2017 showed that firms in receipt of grants from UK Research Councils (including Innovate UK) grew their turnover and employment 5.8-6.0 per cent faster in the three years after the grant than similar firms which did not receive support; and 22.5-28.0 per cent faster in the six years after the grant. The net effect is a 6.2 per cent productivity boost after 6 years.

Building on the ground-breaking work for NESTA in 2009 on High-Growth Firms (the ‘vital 6%) ERC has continued to inform the work of policymakers in Whitehall on how best to support ambitious and fast-growing small firms across the UK. In particular:

  • We have demonstrated the irrelevance of HGFs as defined by the OECD to solving the productivity puzzle in the UK.
  • The ‘High Growth’ section in the recent ‘Small Firms Finance Markets 2017/18 report for the British Business Bank was based on the ERC’s work on fast-growing firms.
  • Our work on firm growth and productivity has led us to be invited to be members of the Ministerial Steering group for the ‘Long Tail Productivity Review’

In 2018 the ERC undertook an assessment of the scale and importance of the ‘design economy’ for the Design Council. In particular, we showed that:

  • The Design Economy now employs 1.69m people and there are 78,000 firms in the design industries.
  • The economic contribution of the design economy to the UK in terms of aGVA has increased by 10% from 2014 to £85.2 billion in 2016.
  • Analysis of the UK Innovation Survey (UKIS) revealed for the first time the causal links between design, innovation of different types and productivity. Design engagement increases the probability that firms will undertake both product/service and process innovation.