Greater Innovation Could Reduce the Productivity Gap

Hardwiring innovation among small firms within supply chains could help tackle the UK’s productivity gap, new research has claimed.

According to the Federation of Small Businesses (FSB), just 30% of small firms are currently given some sort of help to make positive changes within their business by bigger firms in their supply chain. Of the firms that did receive assistance, the majority (83%) said it had a positive impact on their business.

Of those that received support, one third benefited from their customer sharing workforce expertise and time (33%), while 23% were given help in the design of a product. One fifth (20%) were mentored and given advice, and 15% were assisted with market research.

Through this help over a third (39%) of FSB small suppliers apparently improved their reputation and credibility when they innovated, while 28% increased their turnover.

“Innovation is key to the survival of all small businesses, and integral if they want to grow and increase their productivity,” explained FSB National Chairman, Mike Cherry. “It’s essential that larger businesses are given incentives to encourage them to work with their small UK suppliers and acknowledge their impact on small firms in their supply chains. Government must take responsibility and hardwire this into the Industrial Strategy.”

“Big businesses asking for Government support for their industries in Sector Deals must make clear how sharing knowledge and expertise will benefit the whole supply chain,” he said. “It’s important that Ministers hold them to account to make sure this happens.”

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