Three Ways to Drive Economic Growth Through Broadband


We know better broadband alone does not drive improvements in business productivity and performance. It is the things that businesses do differently with their improved connections that create economic benefits.

Our recent research to explore the economic and wider benefits of Greater Manchester’s Connection Voucher Scheme has underlined this point. Our research found positive economic returns were generated by the voucher programme and indicated that there is a good case for cities in the UK to invest in improving ultrafast broadband connectivity for businesses. Our research also highlighted three important lessons about maximising the impact of voucher schemes. These insights should be considered in developing future digital connectivity initiatives.

1. Target Vouchers Towards SMEs with Greatest Potential to Create Large Impacts 

Difficult choices need to be made about where to focus investment. Our work in Greater Manchester suggests that:

  • SMEs that made wide ranging changes to the way they use the internet reported the largest impacts. This is hardly surprising although it has important implications as a substantial proportion of voucher recipients report no or very little change to their internet use. Services could maximise their impacts by more explicitly targeting support to businesses that have a clear plan for how they plan to make more use of digital connectivity in the way the run their business.
     
  • SMEs with higher levels of IT literacy and sophistication report the largest impacts. More than half of the total GVA impact of Greater Manchester’s Connection Voucher Scheme was created by the c20% of businesses that started off with more advanced IT skills. This does not necessarily mean that schemes should close their doors to less sophisticated users but it does provide a strong case for a degree of simple prioritisation.
2. Encourage and Support Clients to Adopt Higher Impact Technologies

Our evidence suggests that some internet enabled technologies are more closely associated with improvements in business performance than others. We explored the relationship between various technologies and bottom line impacts on business performance. SMEs adopting video conferencing, cloud storage and file sharing, or advanced / interactive software to report larger impacts on their business performance.

 
Fewer than half of the supported businesses adopted these higher impact technologies. This suggests that there could be scope to drive up impact by encouraging adoption of these high impact technologies.
 
3. Work with Existing Providers of Business Support 

We know from our wider work on business support that SMEs will make changes and investments when the commercial case is clear. 

SMEs looking at internet enabled technologies may require help to explore and understand the range of options and benefits for their own business. Some businesses may also benefit from additional support to manage the operational change process, particularly in the case of the more wide ranging changes to business operations, which appear to generate the greatest impacts.

In many cases, it could be business advisors and other businesses via peer support, rather than technology specialists that are best placed to encourage and enable businesses to adopt higher impact technologies. This type of wide-ranging support might already be readily available via local Growth Hubs. The starting point for all broadband schemes should be a conversation with local Growth Hubs to explore how existing services and networks might be used as referral routes and complementary support to ensure businesses make the most of their improved connectivity.
 
For any questions about our digital and broadband work please contact Simon Hooton or Kate Downes.
 
Kate Downes
Posted by Kate Downes on 07 November 2016

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