Survey gives East's image a knock


12-03-2003

The Eastern Region is less dynamic and less innovative than it thinks, according to a new survey.

But Hermann Hauser, acknowledged 'Father of Silicon Fen' pooh-poohs any pessimistic conclusions from the survey, saying Cambridge is now sufficiently mature to have produced several 'beacons' - ARM, Virata, Autonomy.



The Centre for Business Research and the Cambridge-MIT (Massachusetts Institute of Technology) Institute have released the findings from what is the UK's largest ongoing survey of small and medium-size firms (SMEs).



They say the findings largely refute the commonly held view that the eastern region is one of the most dynamic areas driving the British economy.



Figures show that firms in the east are less innovative and have lower growth ambitions than the national average.



Only 16.5 per cent of SMEs in the region expect to grow substantially, of which only 9.8 per cent of micro firms (fewer than 10 employees) expect rapid expansion - down from 17 per cent even in the recession of 1991.



Eastern region firms are also more risk averse when it comes to innovation, citing pay-offs from, and opportunities and capabilities to innovate all lower than the national average.



The survey shows that despite a higher proportion of the region's new companies being spin-outs (38 per cent), rather than fresh start-ups - suggesting more business experience - management, marketing and technical capabilities all appear to be more significant constraints to growth and innovation in the east.



Investment prospects also appear to be deteriorating with a 40 per cent drop over the past decade in the number of companies looking for finance, despite a halving in the number of firms considering availability of finance a crucial constraint to growth, and 84 per cent getting all that they wanted.



'The entrepreneurial spirit did not exist five years ago. It is much more professional now and the quality of people coming into Cambridge is much higher.



'It takes five to 10 years to translate into hundreds of companies and it is like a roulette wheel, with several spins before the hits.'



The survey was done on a sample of more than 2000 SMEs over the past decade.



Full results of the survey will be published and presented at a conference in Cambridge at the end of June.



  • Trade Partners UK, the government body set up to help firms export, reports that although 14,000 companies in the region are involved in supplying IT products and services, only 10 per cent are exporting.



    Mike O'Malley, regional international trade advisor for ICT with Trade Partners, said: 'A distinct competitive advantage for our local firms is that English is the dominant language of IT. You only need to glance at the internet to prove that.



    'The East of England excels in high quality innovative software, especially in banking and finance. The next stage is for these firms to globalise and start winning contracts overseas.'
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