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Most small businesses happy to stay at current size

Wednesday, 3rd April, 2019 4:02pm

A new UCC study has found that while Government policy is to grow small businesses, that may not be what many owners themselves want.

Most small Irish businesses are happy to keep their business at their current size rather than looking to become a national or international business.

Micro-Businesses in Ireland: from Ambition to Innovation shows that only one in four are looking to grow into a national or international business. The study is one of the first reports to examine the micro-businesses sector in Ireland, and to compare it with micro-businesses in the UK and the US.

Micro-businesses are firms with between one and nine employees, and constitute 90 per cent of business in Ireland, employing over 400,000 people. Microbusinesses account for almost 20 per cent of all gross value added in the Irish business economy.

Over 1,500 micro-businesses were surveyed to identify their ambition, innovation and adoption of digital technology, and this information was compared to the responses of over 6,000 micro-businesses in the UK and over 2,000 in the US.

“These businesses are our plumbers, our builders, our accountants and our mechanics, they play an important role in the fabric of Ireland’s national and local economy. This study lifts the lid on their ambitions, innovation and growth aspirations and presents an in-depth economic picture of where Irish microbusiness are, versus their international competitors. Government policy is to grow small business but this may not be what small businesses want,” commented the report’s co-author Dr Jane Bourke, economist, Cork University Business School, UCC.

The report found that:

- 71 per cent of Irish micro-businesses are keen to keep their business similar in scale to how it operates now

- Just 27 per cent of micro-business in Ireland want to build a national or international business

- Adoption of digital technologies by micro-businesses in Ireland is strong and growing. In fact, uptake of digital technologies by micro-businesses in Ireland compares well with those in the UK and is considerably higher than those in the USA

- Three in five small business are failing to adopt digital technologies such as cloud computing

- Microbusiness in the west are amongst the most ambitious in the country

- Dublin micro businesses are not markedly more ambitious than micro-business across the country.

- Levels of innovation in Irish micro-business in Ireland are higher than those in the UK and USA, but innovation varies across Ireland and is lower in peripheral regions – particularly the South East and Border regions

- The benefits of being your own boss are of particular importance to Irish small business owners, with most emphasising ‘freedom and autonomy’

- 77 per cent of micro-businesses in Ireland are family owned, the ratio of male to female owners is 2:1 and the ambitions of male and female owners are broadly similar

- Owners of micro-businesses in the south-west do not appear to be particularly motivated by business ambitions, but do consider accumulating great wealth as a higher priority than micro-businesses in other regions

The Irish Government has plans of improving small and medium sized enterprises’ (SME) productivity by one per cent by per year to 2025. Future Jobs Ireland has identified the need to incentivise SMEs to invest in new technologies.

“Micro-businesses are the cornerstone of our economy, but we know far too little about what motivates the owners of these businesses,” commented Senator Pádraig Ó Céidigh, who launched the report.

“This report is invaluable to help us understand the ambitions and innovativeness of these entrepreneurs, and so better support these micro-enterprises and strengthen our economy. Policy should be based on evidence, and that is why this report is vitally important for enterprise policy in Ireland.”

This report was authored by Dr Jane Bourke and Professor Stephen Roper at Warwick Business School and is a collaboration between the Spatial and Regional Economics Research Centre at CUBS, and the UK’s Enterprise Research Centre.

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