Small firms have not hindered productivity claims new research

Chris Papadopoullos
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SMALL business and the self-employed are more productive than previously believed, according to research published today by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA).

Productivity, measured normally by output per worker per hour, has stalled since the onset of the great recession. One suspicion that has been raised is that this in part due to the growing trend toward greater self-employment.

RSA researchers discovered that microbusinesses, of between zero and nine employees, are in fact outgunning larger competitors in 12 of the UK’s 19 sectors. They are faring better on innovation the report said, with smaller firms more likely to develop innovations with markets too weak for big firms to be interested in.

“Often people question the value that small firms bring to the economy – do they have the resources to innovate? Do they only create poor quality jobs? Our research has shown that microbusinesses can thrive under the right conditions and provide far greater value to the UK economy than previously thought,” Benedict Dellot, a senior researcher at the RSA said.

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