Survey shows new businesses struggle to start exporting
03 May 2017
The International Business and Economics Research Group (IBERG) at Sheffield Hallam University has analysed data from the government’s Longitudinal Small Business Survey, an annual census of economic activity within small and medium sized enterprises (SMEs).
This study shows how much export activity there is among new SMEs which have been trading for five years or fewer, allowing us to better understand the characteristics of those businesses that do export early on in their life.
The findings show that only around a fifth of smaller companies export their output and that new businesses are even less likely to, with just 17% doing so.
This is despite the findings showing that those that have internationalised are, on average, more productive, and generate a higher level of turnover, than their non-internationalised counterparts.
The majority of internationalised new ventures were in the business services sector, which accounted for nearly 60% of these firms, compared with around 40% of all new ventures. Significant differences were also found in other sectors; manufacturing firms accounted for only around 6% of all new ventures and 14% of those that had
Conversely, SMEs operating in consumption based sectors account for around 21% of internationalised new ventures and around 30% of all new ventures.
With respect to the antecedents of internationalised new ventures, a number of factors that have a positive influence on a start-ups engaging in export activity in the first five years of their lifecycle were identified. Consequently, new ventures that have a higher propensity to internationalise are those:
- that have traded for longer;
- that have higher levels of productivity;
- whose innovation activities focus on the introduction of new
- whose main activity is manufacturing, business services, or
consumption-based services sectors;
- that possess greater capabilities in the area of innovation
- that place a higher importance on sales growth; and
- that have raised equity finance.
With respect to the geographic distribution of internationalised new ventures, a number of regions were found to be over-represented with respect to internationalised new ventures given their proportion of new ventures located there. These were London, South East, Yorkshire and Humberside, Wales, and Northern Ireland, suggesting that regions outside the competitive core of the UK are performing well in terms of internationalised new ventures.
Read the full results from the survey here
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