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GOING FOR GROWTH FEATURE T


HE ENTERPRISE RESEARCH Centre’s (ERC) website declares on its front page that it was established in February 2013 to answer one central question. What drives


SME Growth? And unlike most academics, its director, Professor Stephen Roper, can answer the question in one word. It is “Ambition.” He explains that while many entrepreneurs


are keen on making money, they can have a range of other motivations, including a desire for work autonomy, or to make the most of a specific invention or business opportunity. Ambitious entrepreneurs, those interested in significant growth, operate in a wide range of industries from high technology to carpet retail, and all over the country from London to Northern Ireland. But they share one feature – a strong desire for success. And while the entrepreneurial spirit is in


evidence across the country, the same is broadly true of the ERC. It is a distributed organisation, with its main base at Aston and Warwick business schools and other staff based at Birmingham and Strathclyde universities and at Imperial College. Roper, who is Professor of Enterprise at Warwick, is quick to point out that the ERC shares many of the characteristics of a small business drawing on a range of sources of funding. “It involves 28 academic and support staff and is costing £1 million a year between 2013 and 2016,” he explains. “ESRC is paying half of that.” The other half is coming from BIS, the government department for Business, Innovation and Skills, and from the four big banks via the British Bankers’ Association. ERC has attracted this broad base of support


because of official enthusiasm for new, growing businesses as the key to British economic success. ERC is adding to our knowledge of these firms, especially by a detailed study of the 250,000 UK companies founded in 1998. They were 15 years old when ERC was launched. Says Roper, “60 per cent of these firms no longer exist, and most of the rest have stayed small. But one really interesting group of 1,200 of these firms started with fewer than five staff each, and have created a quarter of the UK’s net new jobs in the following 15 years.” Politicians would love to know how to make more businesses like these. Professor Roper thinks that when set against major economic factors such as the recession, changing exchange rates or reforms to employment legislation, it is hard for government assistance to small business to be a decisive factor. But we do know some measures that work, such as grant support for innovation, and we know that companies that make use of the external support that is available perform better in the long term. Professor Roper adds that these companies


do worry about issues such as labour shortages, especially of skilled engineers, and about the difficulty of importing skilled overseas labour. But their number one concern is with the internal workings of a growing business. He says: “Their


biggest set of issues are linked to leadership, strategy and management, especially how to run a business as it gets bigger, or how to take key decisions. Is it better to invest in advertising, or in new machinery? These are questions that are sometimes less pressing for bigger businesses, because they have an internal resource of skilled management, and stronger financial resources”.





Activities of high- growth companies from the 1998 cohort include waste management and recycling as well as fish processing.


The fastest-growing small


businesses tend to become international at an early stage


Professor Mark Hart, deputy director of ERC and based at Aston University business school, says that the Centre is closely involved in communicating these messages to government, the banks and other key interest groups. For example, he says: “Our research indicates that the fastest-growing small businesses tend to become international at an early stage. So we are telling the banks that it is important to look after small businesses that are starting to trade internationally.”





He adds that around 2,000 high-growth companies that emerged from the 1998 cohort of micro-enterprise start-ups are still continuing to grow rapidly. Professor Hart says: “These companies now average 55 staff and a turnover of £8.5 million. They are in all sectors of the economy and include such activities as waste management and recycling as well as fish processing. Our research shows that 400 of them are adding turnover faster than their jobs growth, in other words that they are increasing their labour productivity.” This is of national importance because of the well-recognised problem of low productivity in the British economy.


SUMMER 2015 SOCIETY NOW 15





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