Abstract
The last 15 years have seen major changes in the availability and usage of broadband in the UK. Despite these improvements, rural areas continue to lag behind urban areas for broadband connection speeds – a divide that is exacerbated by lower rates of broadband adoption among rural Small and Medium-sized Enterprises (SMEs). This paper examines the experiences of SMEs that have participated in a publicly funded programme designed to stimulate demand for broadband in the rural region of Lincolnshire, UK. Drawing on interviews conducted over two periods of policy intervention (2003–2006 and 2010–2015) it examines the variety of business support approaches used and identifies the effects of these on use of Information and Communication Technology (ICT) innovation, and sales within participating SMEs. The results show that while training events provide entry-level support for broadband use, more intensive support such as 1:1 advice and ICT grants leads to the significant changes within the business. Direct access to new technology in spaces such as Technology Hubs is identified as particularly important for rural SMEs. The paper concludes by identifying some common features of the business support that bring about the greatest benefits to SMEs in rural areas.
Introduction
The last 15 years have seen major changes in availability and usage of broadband. Across the OECD (2017a), fixed broadband penetration has increased fourfold since 2003, and within the European Union 80% of broadband subscriptions are now identified as ‘Next Generation Access’ or greater than 30 Mbps (European Commission, 2016a). European countries such as the Switzerland, Denmark, and France are leading the way for broadband adoption, at more than 40 subscriptions per 100 inhabitants (OECD, 2017b).
The UK now ranks fifth out of the OECD countries for the size of its broadband market (OECD, 2017b) and is ninth within the EU-28 countries for NGA coverage (European Commission, 2016b). UK businesses are increasingly adopting ‘superfast broadband’, with 89% of business premises having access to connection speeds of more than 30 Mbps in 2016 compared with 83% in 2015 (OFCOM, 2016). Broadband internet connection is now, according to the UK Federation of Small Business (FSB, 2014), regarded as a utility. It identifies that 94% of small business owners consider a reliable internet connection critical to their business’s success.
Despite these improvements in broadband deployment, a digital divide remains in the availability and speed of broadband services (Townsend et al., 2013). Across the EU, NGA broadband coverage in rural areas lags behind urban areas, at 47% compared with an average of 80% across both urban and rural areas (EC, 2016a). The business case for investing in rural areas, with relatively few customers and sparsely distributed populations, remains challenging for communications providers. However, even where a reliable broadband service is available, the evidence suggests that SMEs in rural areas are less likely to take up broadband or upgrade to a faster broadband connection (Galloway and Mochrie, 2005; Skerratt and Warren, 2003).
There are a number of structural differences in the SME population of urban and rural areas, some of which may explain the differential take-up of faster broadband speeds. Rural areas have long been characterised by a higher proportion of micro-businesses than in urban areas (Smallbone et al, 2003) and a higher proportion of traditional sectors (Keeble, 1993). Agriculture, construction, and manufacturing account for a higher proportion of firms in England’s rural than urban areas, while service sector activities such as finance, and information and communication, are more highly represented in urban areas (ONS, 2018). Existing studies suggest that broadband adoption is lower among both micro-businesses (Booz & Company, 2012; ONS, 2016) and among firms in traditional sectors (Salemink et al., 2015; Warren, 2004). Together with lower rates of broadband coverage and speed, these structural differences may serve to further reinforce the rural digital divide.
To address these disparities in broadband adoption, a number of programmes have been delivered across rural areas of the UK to promote availability and take-up of broadband among communities and businesses. Many of these have been delivered at a local level and led by local authorities using a mixture of European, national government, and local authority funding. Examples include Connecting Cumbria (2018), Superfast Cornwall Development Company (2018), and ‘Onlincolnshire’ in Lincolnshire (Onlincolnshire, 2018). Although each is slightly different in focus, these programmes oversee a number of broadband supply- and demand-related activities. Demand stimulation activities, such as business case studies, business advice, and connection subsidies, are offered to demonstrate the value of upgrading to a faster broadband connection, once available. These activities aim to reduce local disparities in broadband take-up and to ensure that businesses and communities in rural areas are able to access the same breadth of broadband-enabled technology as urban areas.
This paper focuses on the experiences of SMEs that have participated in ‘Onlincolnshire’, a programme designed to stimulate demand for broadband in Lincolnshire, a rural area of England. Drawing on previous research (Price et al., 2007), it compares two specific periods of policy intervention: 2003–2006 and 2011–2015. The paper examines the variety of approaches that have been employed to stimulate demand for broadband take-up and use, and compares the effect of these approaches on use of ICT, innovation, and sales within participating SMEs. The overall aim of the paper is to highlight lessons that can be learned from these approaches and identify the business support interventions which can bring about the greatest benefits for SMEs in rural areas.
Literature
SMEs’ use of broadband and broadband-enabled applications
There is a large body of literature that emphasises the importance of broadband adoption to business innovation and competitiveness (Billon et al., 2008; Booz & Company, 2012; Czernich et al., 2011; SQW, 2013; Tranos and Mack, 2016). Access to the internet provides SMEs with access to new markets and alternative suppliers, new ways of marketing and selling their products, and opportunities for time and cost savings (Galloway and Mochrie, 2005; SQW, 2013). For some SMEs, broadband can have a significant impact on process and product innovation (SQW, 2013).
With the introduction of superfast broadband, the variety of technology-enabled applications available to SMEs has increased. One example is cloud computing, which has the potential to reduce the costs of ICT capital (Etro, 2009). Remote working, which boosts productivity by reducing the costs associated with commuting and provision of office space, becomes more practical (Galloway and Mochrie, 2005). Another use facilitated by superfast broadband is social media, and having a web presence particularly via mobile applications is shown to transform how companies connect with their customers (Booz & Company, 2012). Even with the broader range of technology available to superfast broadband users, however, there is some scepticism about whether it will deliver the size of impact associated with the switch from dial-up to broadband (Kenny and Kenny, 2011; Watson, 2012).
Despite the benefits of broadband adoption, patterns of take-up and use vary within the SME population, with a subset of SMEs slow to adopt and maximise the benefit of their broadband connection. For example, employment size is a key factor; larger SMEs are relatively digitally mature while smaller SMEs lag behind their larger counterparts for digitisation (Booz & Company, 2012; Mitchell and Clark, 1999). Research by the UK’s Statistics Agency suggests that while 62% of businesses with more than 1000 employees benefit from broadband speed of 100 Mbps or more, only 5.8% of businesses with less than 10 employees had this internet speed (ONS, 2016). Given the high representation of micro-businesses in rural areas, this is likely to affect superfast broadband adoption rates among rural firms in general.
Sector is important, with SMEs in knowledge-intensive industries such as finance, research, and technical services being more likely to use ICT as a core element of their business than more traditional sectors (Salemink et al., 2015). By comparison, manufacturing and agriculture, both highly represented in rural areas, are associated with lower use of ICT. Previous studies have also shown that farm businesses have a slower rate of internet adoption than those in other sectors (Warren, 2004).
Rural SMEs have been identified as less growth orientated than those in urban areas (Galloway and Mochrie, 2005), and more likely to be locally embedded rather than ‘globally orientated’ (Skerratt and Warren, 2003) which deters use of broadband-enabled applications such as e-commerce. A lack of ICT skills is highlighted as a crucial factor by Huggins and Izushi (2002), which together with a lower propensity to take up ICT training is identified as a particular characteristic of rural SMEs. For these reasons, a number of studies highlight the need for specific targeting of SMEs when developing programmes to improve adoption rates among SMEs (Huggins and Izushi, 2002; Ramsey et al., 2003).
The geography of rural areas is identified as having both a promoting and restraining effect on broadband adoption (Hage et al., 2013). For example, Cairncross (2001) discusses the potential of the internet to reduce the effect of distance, thereby giving rural firms access to markets and suppliers beyond their immediate vicinity. However alongside these opportunities are the risks associated with exposure to competition from elsewhere. Cumming and Johan (2010) show that internet adoption in the most remote communities in Canada is associated with a decline in entrepreneurship. Furthermore, a recent study by Kolko (2012) found that expanding broadband availability in the United States did not change the prevalence of home-working, an application of broadband that was expected to benefit rural areas in particular.
Enterprise policy
The nature of business support at the heart of this paper falls within the broader context of enterprise policy. This can be defined as policy that is designed to both support entrepreneurship and support small business growth (Arshed et al., 2016).
At a European level, the Small Business Act for Europe (EC, 2011) sets out a series of priorities and initiatives to bring about sustainable SME growth. These include overarching activities to foster an entrepreneurial culture, such as through reducing bureaucracy and improving access to new markets, and the launch of the annual ‘European SME Week’. The European Commission also contributes directly to SME support via European Structural Funds, which include the European Regional Development Fund (ERDF), European Social Fund and European Agricultural Fund for Rural Development. These are administered by the government of each member state. ERDF in particular prioritises support to improve SME competitiveness. The programmes discussed in this paper are part-funded via ERDF, with matched funded provided by the local authority.
In England, there have been major changes in enterprise policy since the implementation of business support simplification from 2009. UK Government-funded enterprise support has been subject of streamlining, which has resulted in the number of business support schemes being reduced by more than third (Centre for Cities, 2013; Greene and Patel, 2013; Martin et al., 2013). The regional network of personal business advisors closed in 2011 and Regional Development Agencies, which were responsible for promoting innovation and the administration of European streams of funding, closed in 2012. Although many of these support mechanisms were transferred to Government departments, others disappeared entirely. Arguably, the process of simplification has reduced the ability of the UK Government to offer a differentiated approach needed for the variety of SMEs and their needs (Martin et al., 2013).
The process of business support simplification has prompted reflection on the overall effectiveness enterprise policy in England (Arshed and Carter, 2012; Arshed et al., 2016; Pickernell et al., 2015). A number of criticisms have been levelled at government-funded business support. Arshed and Carter (2012) suggest that enterprise policy lacks coherence because it has been driven primarily by ministerial interests rather than an overarching national policy framework. There is also felt to be a disconnect between national policymaking and local delivery, with local agents focusing on delivering targets rather than quality enterprise support. This is felt to waste resources and disillusion entrepreneurs and SMEs (Arshed et al., 2016).
SMEs are reported to participate less in government-funded support than large companies (Jones et al., 2014) and are found to perceive it as a lower quality than support offered by the private sector (Bennett, 2012; Ramsden and Bennett, 2005). Reasons for this include perceived skills gaps among personnel (Ramsden and Bennett, 2005) and the difficulty of government agencies in keeping up with technological developments (Thomas et al., 2015). By contrast private providers are perceived as more likely to offer specialist advice and to add more value to performance (Jones et al., 2014). Government-funded support is also reported to suffer from poor brand image, and eligibility requirements such as those used in European-funded programmes are perceived to make access to some government support slow and bureaucratic (Ramsden and Bennett, 2005).
The type of support favoured by SMEs is tailored to their needs and based on specialist knowledge (Ramsden and Bennett, 2005). Where specialists are brought into a company, the advice is felt to be most successful where they are addressing a specific problem or where they are embedded in the longer term processes of the SME (Turok and Raco, 2000). To keep up to date with technological developments, networking and collaboration with other SMEs is identified as more effective than advice given by business support providers (Thomas et al., 2015).
Support for SMEs to take up broadband and broadband-enabled technology
There are relatively few studies on business support designed specifically to assist SMEs’ use of broadband-enabled technology. The importance of accompanying broadband deployment with a programme of business support and/or training is discussed by Thomas et al. (2015) who state that initial adoption of superfast broadband does not necessarily imply increasingly sophisticated use of the medium. Martin et al. (2013) emphasise the importance of accompanying connectivity with practical training to ensure that firms can benefit from new technology.
While there have been many Government initiatives to support SMEs in their take-up of broadband new technology, most of which will have been subject to formal evaluation, there has been little published research on the effectiveness of these. Simpson and Docherty (2004) suggest that the Government’s attempts to assist businesses with broadband-enabled applications, such as e-commerce, have been restricted by the scepticism between SMEs and business advice services, as already discussed. Spurge and Roberts (2005) suggest that more research is needed on the effectiveness of government ICT support.
A growing area of support for SMEs is the development of spaces where individuals and firms can engage with new technology. These include maker spaces, living labs, technology hubs, and hackspaces. These have developed in a variety of settings, including business parks, communities, and libraries, with the aim of facilitating collaboration between users and/or exposing users to emerging technology in order to improve knowledge and generate new ideas. The concept therefore brings users into the system of innovation and improves their ability to use technology to its full potential (Eriksson et al., 2005). The spaces are often shared by a number of stakeholders, such as government organisations, technology experts, firms, and citizens (Guzman et al., 2013), though are primarily publicly funded (Almirall and Wareham, 2011). There is currently limited research on the effectiveness and value for money of living labs and technology hubs (Eriksson et al., 2005).
Policy context
At a European level, the European Commission’s strategy for superfast broadband deployment is set out in Connectivity for a European Gigabit Society (EC, 2016c). This sets out a vision for connectivity offering at least 100 Mbps for all European households by 2025. It extends previous broadband objectives, to supply every European with access to at least 30 Mbps connectivity by 2020. The Commission’s state aid rules allow for the use of ERDF funding for broadband infrastructure, where these investments bring significant change to existing networks.
The UK Government’s strategy for superfast broadband deployment was set out in Britain’s Superfast Broadband Future (BIS and DCMS, 2010), which included a vision for the UK to have the best superfast broadband network in Europe by 2015. The strategy highlighted that underinvestment would lead to the development of a digital divide and emphasised the role of broadband in facilitating SME growth and job creation. It acknowledged the challenging business case for investing in rural areas and identified the need for public sector investment to reduce regional disparities in digital connectivity.
Under this policy, £1bn has been invested to improve broadband and mobile infrastructure in order to fulfil a number of targets, which include increasing superfast broadband coverage to 90% of the UK by 2016 and a basic broadband (2 Mbps) service for all by 2016. This investment has been delivered by Broadband Delivery UK (BDUK) under the Superfast Broadband Programme. The task of procuring broadband providers to extend coverage has been delegated to local authorities who, in turn, have universally contracted BT as the principal contractor to upgrade infrastructure in each area.
In 2013, the Government announced additional funding to extend coverage to 95% of UK premises by 2017 and plans to explore the use of innovative broadband solutions to reach at least 99% of premises by 2018 (HM Treasury, 2013). Progress against these objectives is set out in the Digital Strategy 2017, which stated that over 90% of UK premises could now access superfast broadband, and that it was on track to reach 95% of UK premises by December 2017 (DCMS, 2017). It highlighted that additional funds have been provided to extend delivery to 600,000 more premises by 2020 (DCMS, 2017).
About ‘Onlincolnshire’
‘Onlincolnshire’ is an initiative and brand delivered by Lincolnshire County Council to promote take-up and use of broadband and digital technology among residents and businesses in Lincolnshire, a region of the UK. The initiative was first launched in 2003 with a focus on promoting take-up and use of broadband among a population that was still largely reliant on a dial-up internet connection. More recently, the ‘Onlincolnshire’ brand has been used to encompass all the local authority’s activities related to the roll-out of superfast broadband funded by BDUK, as well as a range of demand stimulation activities.
The research presented in this paper covers two distinct periods of intervention delivered by ‘Onlincolnshire’. These are referred to as phase 1 and phase 2:
Phase 1 included the initial period of delivery between 2003 and 2006. This was funded using £15 million ERDF as well as local authority matched funding. The aim of ‘Onlincolnshire’ during this launch phase was to promote accessibility and take-up of broadband services for SMEs in rural areas of Lincolnshire and bring about a shift from dial-up to broadband. The initiative aimed to achieve this through delivery of a range of demand stimulation services. One thousand three hundred and seventy-two SMEs received supported through the programme, by accessing one or more of the following services. These included: A one-off £200 subsidy to encourage SMEs to connect to a basic ADSL broadband service (defined as a connection speed of up to 2 Mbps); Delivery of a symmetrical broadband service of more than 2 Mbps in selected locations using wireless technology. Subsidies of £100 per month were offered to SMEs to encourage them to connect; Free ICT diagnostic advice delivered to SMEs (30 hours per SME) and the subsequent availability of funding for individual ICT projects to SMEs up to a value of £10,000 or at least 50% of the cost.
Phase 2 included the period of delivery between 2011 and 2015. A much smaller programme of support, this phase was part-funded with £1.4 million ERDF. One hundred and thirty-five SMEs received support via a number of demand stimulation projects, as set out below. These were delivered in parallel to the roll-out of wired superfast broadband, in order to maximise the effect of the new infrastructure. They included: Training events focused on applications of superfast broadband, such as social media and cloud computing, where SMEs could access up to 12 hours of support; 1:1 support where SMEs could receive up to 12 hours advice tailored to their business; The creation of five Technology Hubs where SMEs could access the latest digital equipment, such as 3D scanners, 3D printers, iPads, and Google Glass, and receive up to 12 hours of business support. The Technology Hubs were located in a variety of locations across Lincolnshire, with four out of five in rural locations to ensure accessibility to rural SMEs.
Although both phases comprise a slightly different mix of intervention approaches, the overall philosophy is consistent. The focus, across both, has been on encouraging SMEs to adopt a faster broadband connection and to realise the full benefit of this connectivity through access to business advice and training on broadband-enabled applications. The overall objective of the initiatives has been to bring about an uplift in productivity to businesses operating in rural areas; tying in with the focus of ERDF-related funding to improve the economic structure of European regions.
Because of the use of ERDF funding, the businesses involved in both phases were required to fit with a standard SME definition. Eligible businesses were therefore micro-, small-, or medium-sized with no more than 250 employees and with an annual turnover of no more than EUR £43 million. Sectoral restrictions also applied; SMEs engaged in primary production such as agriculture were not eligible, and restrictions applied to pubs, banks, and shops. Geographical coverage was restricted to Objective 2 for phase 1 (areas experiencing structural difficulties), and Priority Axis 2 (areas with disadvantaged communities). In phase 1, this included almost all of Lincolnshire, with some urban areas excluded. In phase 2, it included three specific geographical areas of Lincolnshire, although with a predominant focus on rural areas as these were demonstrated to have least broadband connectivity and use.
Method
The findings presented in this paper have been developed from in-depth primary research across the two phases of ‘Onlincolnshire’ described above. These two stages of research were undertaken in 2007 for SMEs participating in phase 1 and in 2015 for those participating in phase 2.
The SMEs that participated in the research had all received support via the ‘Onlincolnshire’ programme. The following methods were used in each phase:
Across both phases, the interviews explored the following: (i) drivers of broadband adoption; (ii) how broadband was being used within the business and the applications it supported; (iii) the effects of broadband adoption on the business in terms of use of ICT, innovation, and sales. The research cannot be described as longitudinal, as none of the businesses consulted as part of phase 1 were included in phase 2 of consultation. Nevertheless, the survey and interview pro forma included a core set of questions that would enable the results to be compared across the two phases. As the use and effects of broadband would have changed significantly in the intervening period, the pro forma used in 2015 included other elements identified from the literature and provided the flexibility for participating SMEs to put forward alternative responses.
Results
Sample composition
As Table 1 shows, the majority of businesses that participated in the interviews were micro-businesses, defined as those with 10 or fewer employees (European Commission, 2017). Micro-businesses accounted for more than 80% of the response set across both phases of research, and those with fewer than four employees accounted for more than 60%. This is characteristic of the business demography of Lincolnshire and is typical of rural areas; 89% of enterprises in the local area are micro-businesses, and 76% have fewer than four employees (ONS, 2017a).
Employment size and sector of phase 1 and phase 2 businesses.
aThe total number of SMEs in the sample for phase 1 was 150. However, 20 did not provide details of their employment size and so are excluded from this sample composition table.
Most of the businesses across both phases were involved in the service sector, accounting for 89% of the response in phase 1 and 73% in phase 2. Manufacturing businesses accounted for 7% of the response set in phase 1 and 21% in phase 2, with construction accounting for 4% in phase 1 and none in phase 2. As per the ERDF funding requirements, there were no businesses involved in primary production. However, the sample included some land-based businesses, such as those involved in agricultural supplies and landscape architecture. These represented just three businesses in each phase. In the local business population, services account for 68% of businesses, agriculture 13%, construction 13%, and manufacturing 5% (ONS, 2017b). The response set across both phases therefore includes an over-representation of manufacturing and service sector businesses and an under-representation of businesses involved in agriculture and construction. Given the lower propensity of farmers to take up internet technology (Warren, 2004), and the greater propensity of service sector firms (Salemink et al., 2015), this may have implications for the overall results. The sample of SMEs may have a greater propensity for broadband adoption than one that includes a representative proportion of SMEs from all sectors of the local economy.
Table 2 shows the breakdown of interventions received among SMEs that participated in the interviews. As the table shows, some businesses received more than one type of intervention, resulting in a greater number of interventions than businesses. In phase 1, those in receipt of the basic broadband subsidy represented the largest group in the sample, with strong representation also from those that had received diagnostic support and/or the ICT grant. Those that had received the advanced broadband subsidy comprised a smaller group, at 46 interventions. In phase 2, those that had participated in training events represented the largest group, at 39, along with those receiving 1:1 support, at 26. By comparison users of the Technology Hubs represented the smallest group of users in the sample, at 12.
Breakdown of interventions by phase 1 and phase 2 businesses.
ICT: Information and Communication Technology.
The multiple interventions received by some participating SMEs mean that it can be difficult to identify the specific support activities that bring about changes within the business. As a result, the following analysis has been conducted using the proportion of interventions, rather than of SMEs. However, the caveat remains that each intervention may have been delivered simultaneously or in addition to others, rather than in isolation.
Table 3 shows the breakdown of interventions by the employment size and sector of SMEs. Among phase 1 businesses, 70% of those subscribing to basic broadband employed fewer than four people, with none employing more than 50 people. By contrast, SMEs receiving the advanced broadband subsidy and diagnostic support/grant included a higher proportion of small- and medium-sized businesses. This is supported by analysis from ONS (2016) which suggests that firms with fewer than 10 employees are less likely to adopt faster broadband connections. The sector breakdown shows a greater proportion of manufacturing firms receiving the advanced broadband subsidy (9%) and diagnostic support/grant (12%) than the basic broadband subsidy (3%).
Percentage breakdown of interventions by employment size and sector.
ICT: Information and Communication Technology.
Among phase 2 SMEs, those attending training events and receiving 1:1 support showed a similar profile for both employment size and sector. Users of the Technology Hubs were mostly very small businesses employing fewer than four people, with two SMEs employing more than 50 people. The hub users included a higher proportion of manufacturing businesses however, at 33%, than those that attending training events and received 1:1 support (23%, respectively). This suggests that the equipment offered by the hubs, such as 3D printers and scanners, are more relevant to SMEs involved in manufacturing than those in other sectors.
Changes to the business as a result of the support received
Businesses were asked if participating in the ‘Onlincolnshire’ programme had resulted in any changes to their business. These changes were largely self-reported in the sense that – for most of the measures – SMEs were not asked to provide evidence for the perceived changes. The exceptions to this were measures of turnover and employment. For these, SMEs were asked to provide details of their turnover and employment for the financial year before the programme started and for the latest full financial year. Where an SME had experienced turnover and/or employment growth, they were asked whether they were able to say (or not) a proportion of this could be attributed to the support received via the Onlincolnshire programme.
Figure 1 shows the overall percentage of phase 1 and phase 2 businesses reporting a change, regardless of the type of intervention received. Overall, a higher proportion of phase 1 businesses reported changes, with the exception of those reporting an increase in overseas trade and placements of students/interns. Among phase 1 businesses, almost half reported better use of ICT (46%), increased turnover (47%), and innovation in products and services (50%). These three outcomes were also the most frequently reported among phase 2 businesses, but by a lower proportion of businesses. These results, at an aggregate level, suggest the programme had less of an impact on SMEs in phase 2 compared with phase 1. This may be related to the lower level of resources allocated to phase 2, but also the lower impact associated with the transition from to superfast broadband compared with dial-up to a basic broadband service (Kenny and Kenny, 2011; Watson, 2012).
Graph showing outcomes of participation in ‘Onlincolnshire’: 2007 and 2015. ICT: Information and Communication Technology.
Table 4 provides a more detailed breakdown of the reported changes by intervention type. All phase 1 interventions were more strongly associated with increases in employment and sales turnover than those in phase 2, and this was the case for many other reported changes to the business. However, there are exceptions to this. Placements of students/interns were most likely to be reported by those that had received 1:1 support in phase 2. Increase in overseas trade and better use of ICT were most likely to be reported by those that had used a Technology Hub. The phase 2 interventions were less consistent in the changes they led to within the business, but the Technology Hubs were associated with the highest rate of reported changes within phase 2.
Reported changes within the business by phase and intervention type.
ICT: Information and Communication Technology.
The three most frequently reported outcomes of increase in ICT use, innovation in products and services, and increase in sales turnover are analysed in Figures 2to 4.
Graph showing per cent businesses reporting better use of ICT, by phase and type of intervention.
Graph showing per cent businesses reporting innovation in products and services, by phase and type of intervention.
Graph showing per cent businesses reporting increase in sales turnover, by phase and type of intervention.
More than half of phase 1 businesses receiving the diagnostic/grant reported better use of ICT, which suggests that tailored ICT support with grant funding helped many SMES to improve the way ICT was used within their business.
For phase 2 businesses, an even greater proportion of SMEs using the Technology Hubs reported improvements in their use of ICT, which suggests that access to experts and new technology at the hubs may have benefited ICT adoption and use. However, for phase 2 businesses that participated in training/networking events or 1:1 support, fewer than half reported better use of ICT within their business.
Around a quarter of phase 2 businesses that had received 1:1 support and just 8% of those that attended a training or networking event reported innovation in goods and services. This suggests that the training was not designed to encourage innovation or that it was not sufficiently in-depth or tailored to the business needs to enable innovation to occur.
A third of phase 2 businesses that received support from a Technology Hub reported an increase in sales turnover as a result. However, fewer than one in five recipients of training or 1:1 support reporting an increase in sales turnover, which suggests that these approaches did not assist the majority of businesses to expand their customer base or sell a greater volume of goods/services.
Discussion and qualitative feedback
This section discusses the relative effectiveness of each type of support intervention in bringing about improvements in ICT use, innovation, and sales growth. This section is supported by qualitative comments received by SMEs that participated in the interviews. It therefore draws on 40 face-to-face interviews in phase 1 and five face-to-face interviews in phase 2, along with responses to semi-structured questions in the telephone interviews from across the sample.
Subsidised broadband connections
Subsidising basic broadband was shown to result in increasing ICT use for more than half of SMEs. However, the lower level of increased ICT use associated with advanced broadband adoption suggests that there was indeed less of an impact associated with further upgrades after the transition from dial-up to broadband (Kenny and Kenny, 2011; Watson, 2012). By contrast, however, those upgrading to advanced broadband were more likely to report innovation in products and services, which suggests that faster internet speeds were a prerequisite for use of more advanced broadband technologies.
The qualitative interviews revealed that SMEs benefitted from the upgrade to a basic broadband in simple ways that included time savings and improvements in efficiency. For example, one SME that ran commented, ‘I can get things done quicker, the relationship between me and my assistant has improved in terms of the amount of information that I can get to him and he can reply so much faster.’ However some with little prior knowledge of internet technology benefited from a broadband connection in a limited way. One phase 1 SME commented, ‘there’s no point having broadband if you don’t know how to use it’ and another ‘having now given us £200 towards having broadband can we have £100 worth of tuition to go with it?’. This suggests that provision of a faster connection speed had more impact when offered with other support, such as diagnostic advice or training.
1:1 advice and support
A consistent proportion of SMEs, around half of those in receipt of the diagnostic/grant, reported improvements across ICT use, innovation, and sales turnover. By comparison, fewer than a third of SMEs that received 1:1 support in phase 2 reported such improvements. Key differences between the two interventions include the allocation of time that is available for support (30 hours in phase 1 versus 12 hours in phase 2) and the availability of a grant in phase 1. The difference in effects could therefore be related to the allocation of time available for business advisors to spend with the SME and the availability of funding to purchase new equipment/technology as recommended by the business advisor.
The qualitative comments reveal that 1:1 support is favourably reviewed by SMEs, with many commenting on the benefit of having support that is tailored to them. For example, one phase 1 SME commented about the diagnostic service, ‘we didn’t expect the size of the report that we got and it was obviously well done and in depth’ and a phase 2 SME stated, ‘1:1 support was very good, and tailored to business needs’.
The need for 1:1 support to be ‘pitched’ at the right level was highlighted by some businesses, however. In phase 1, some respondents felt that the advice was too ICT- and insufficiently business-focused, which resulted in a feeling of alienation for some SME owners. For example, one stated about the advisor, ‘I couldn’t understand him and I was out of my depth and felt stupid.’ Another phase 2 business identified the opposite problem, ‘the 1:1 support was ok but not really relevant to my business. I’m already familiar with digital technology. However it seemed well constructed and would be useful for other non-digitally minded businesses.’
The insufficiency of 12 hours of support in phase 2 is also cited as a restriction. One phase 2 SME stated, ‘12 hours does not allow for business progression. Support over a longer period would help.’ Even where 30 hours of support was available under phase 1, the lack of flexibility in offering support beyond the allocated time was a problem for some: ‘I expected them to phone back and follow it up and talked through what to do and how to do it, but that was 6 months ago and they still haven’t phoned.’
Training or networking event
SMEs that had participated in up to 12 hours of training were least likely to report changes in ICT use, innovation, or sales turnover. In particular, just one in 12 reported an increase in innovation as a result of this support. Qualitative feedback on the effectiveness of the training was mixed, with some appreciating the opportunity to have free training but others feeling that the content of the training too generic. One phase 2 respondent commented, ‘some workshops were too simplistic and put people off’, while another stated, ‘it was difficult for the trainer as they had different levels of IT knowledge of people on the courses’.
Training was felt to be most useful by SMEs that had little prior ICT knowledge or where it led to more tailored support. For example, one phase 2 business commented ‘we were so pleased to have had the training. It gave us a starting point and has led us to offering services which we had wanted to do’. Another commented on the value of peer support offered by workshops, ‘the later workshops were better – we took our own laptops, it was more interactive and we were able to share experiences’. However, others felt the need for more dedicated support, ‘we had to wait until [name of advisor] came to analyse our needs on a 1:1 basis. He gave insight into what was needed and signposted us to better, more useful support’.
Technology Hubs
SMEs that had received support via the Technology Hubs were the most likely of all to report improvements in ICT use and were as likely to report innovation in products and services as those that had received and advanced connection or diagnostic/grant in phase 1. Of particular value were access to ‘experts’ and the opportunity to use a dedicated space where they could test out and make use of new technology. In effect, the Technology Hubs under phase 2 provided a similar service to the diagnostic grant in phase 1, in that they offered 1:1 support and also access to new technology, albeit technology in a shared space rather than at their own premises.
The hub users had used the Technology Hubs in diverse ways. Some had visited for taster days and training workshops, others had borrowed iPads, while some had used the laser printing/cutting services and 3D printing equipment to develop prototypes. The geographical dispersal of the Technology Hubs was valued by some users. One phase 2 SME called for this to be increased to accessibility, ‘I do think it would be good to have a Hub in Skegness as in other towns in Lincolnshire.’
The hub users represented a small group, but were very keen for them to continue. One respondent commented, ‘we need to ensure the continuation of the Technology Hubs … Onlincolnshire needs to think about the longer term outcomes for businesses, not just outputs’ and another stated ‘[we] hope the hubs continue – we’re able to visit and talk to someone about our business’. There was a feeling among hub users that they needed to be better promoted, ‘the Technology Hubs need to be used more, they seem under-used. It’s important to demonstrate the value for new technology for small businesses’. Another SME commented, ‘there needs to be more support/training for manufacturing technology – how to make ideas work using IT technology’. The feedback suggests a general lack of awareness of the hubs and that they could perhaps link more to relevant sectors such as manufacturing and creative industries.
Summary
The analysis shows a large difference between the effects of support interventions on SMEs at phase 1 and phase 2. This is partly accounted for by the differing levels of resource and therefore the availability of time and funding for participating SMEs. However, it also reflects the changing technological context. Phase 1 represented the move from dial-up to broadband. Although only associated with a 2 Mbps connection speed, this was arguably a more significant change than the incremental shift towards superfast broadband service during phase 2.
Subsidising a broadband connection was shown to be an effective way of increasing ICT use among SMEs, and this was observed more among those subscribing to a basic service. However, an advanced broadband connection was clearly important for more advanced use of broadband-enabled technology and more important for larger firms (ONS, 2016).
Training and networking events were identified as a useful way to gain entry-level support for SMEs. Accessed by the majority of SMEs in phase 2, the training workshops are clearly a cost-effective way to deliver support to many beneficiaries. However, the feedback on the training workshops suggests that meeting the needs of all attendees in workshop environment is not easy. Where attendees had a similar level of knowledge or wished to learn about a specific application, the training was more successful. However, where there were differing levels of knowledge and no prior evaluation of need, the events received a more mixed evaluation. The need for support to be tailored to the needs of SMEs, as observed by Ramsden and Bennett (2005), is clearly supported by the findings here.
The tailored advice and financial support offered by the diagnostic/grant service in phase 1 produced the most consistently positive outcomes of all the interventions examined. This is in contrast to the 1:1 support in phase 2 where fewer SMEs reported positive effects on ICT use, innovation, and sales. A key difference between the two is the allocation of time with an advisor, with more than twice the allocation of time available in phase 1 compared with phase 2. The insufficiency of 12 hours support was raised by respondents in phase 2, and the findings emphasise the need to embed support in the long-term processes of SMEs, as identified by Turok and Raco (2000). The availability of grant funding in phase 1 provides SMEs with the opportunity to access to new technology and also ensures that the changes recommended by the ICT advisor are acted upon and embedded within the business.
The access to both technology and experts at the Technology Hubs in phase 2 was clearly valued by hub users, who were the most likely of all beneficiaries, across phases 1 and 2, to report increased use of ICT within their business. The hubs therefore demonstrated their value as a space where beneficiaries could be exposed to new technology and new ideas. As Eriksson et al. (2005) observed, the users of such spaces demonstrated an improved ability to use technology to its full potential. The geographic dispersal and accessibility of the hubs was also valued by some rural SMEs. The hub users, however, represented a small subset of the sample. Those that had used the hubs frequently commented on their value, but also the need to promote them further and encourage greater use. So while those that used the hubs improved their use of technology, these SMEs represented a niche group among all the beneficiaries. While the support offered by the Technology Hubs was not appropriate for all SMEs, it is evident that they were also under-promoted and/or not clearly understood by those that might have potential to benefit from them.
Conclusions
This paper has compared a number of different approaches for supporting SME use of broadband-enabled technology over a period when broadband availability has evolved rapidly. The approaches are varied and represent the efforts of a local authority-led programme to offer support that suits the differing needs of its rural SME population. Despite the variety of interventions examined here, it is possible to isolate some common factors that have been shown to bring about improvements in ICT use, innovation, and sales growth in SMEs.
Provision of tailored and differentiated support ensures that, where needed, SMEs can access expertise to address their needs and specific problems within their business. Where the support is delivered in the form of training, there is benefit in evaluating the needs of SMEs to ensure that ICT knowledge and skills are pre-assessed and that mixed ability groups are avoided. The alternative is provision of generic training that does not meet the needs of all beneficiaries and risks undermining the reputation of the public sector business support among the local SME population.
Related to the need for tailored support is the need for a flexible approach to the allocation of time to each SME. For some SMEs, 4 hours of training is all that is required, while others benefit from 30 hours or more, particularly those implementing new technology within their business, developing new products, or making changes to business processes. Funding rules, such as those that apply to European funding, do not always allow for a flexible approach to time allocation, however.
Whether support is delivered as training or 1:1 advice, SMEs benefit from access to the right expert. Trainers and advisors who can offer a blend of both ICT- and business-related support are better able to advise SMEs on how broadband-related technology can help to achieve their business model. The alternative is business support that is too ICT focused and that risks alienating SME owners who do not possess sufficient ICT skills to engage with it.
Providing access to new technology is a key feature of interventions that bring about improved use of ICT within the business. This can be grant funding to enable SMEs to embed new technology within their business or technology that can be accessed in a shared space such as a Technology Hub. For rural areas with dispersed settlement structures, SMEs should be able to access new technology at a variety of locations.
In order to ensure that support reaches the most relevant SMEs, there is a need for promotion beyond existing support provider relationships, ensuring that relevant sectors are targeted. This is particularly the case for creative spaces such as the Technology Hubs, which are most relevant to SMEs in manufacturing and creative industries.
Footnotes
Acknowledgements
The authors would like to thank Professor Andrew Atherton and Dr Hannah Noke for their help in the first phase of the research presented in this paper.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The research presented in this paper was supported by funding provided by Lincolnshire County Council and the European Regional Development Fund.