Unlocking innovative firms policy briefing
Published
April 2008
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Unlocking innovative firms 79KB
Description
The UK is an increasingly hospitable environment in which to start a new firm, and many entrepreneurs are availing themselves of this opportunity. The country’s highly favourable regulatory framework, well-developed capital markets and world-class science base are all preconditions for success in many important and emergent sectors of the economy. Yet the UK has produced no ‘gorillas’ – innovative new firms that grow rapidly into world-leaders, such as Microsoft and Google.
British entrepreneurs are not lacking in ambition and the general business climate is good. But a mix of conditions, institutions and attitudes is holding firms back. New UK firms do not have access to a large domestic market like the US. Excessive family ownership, encouraged by a skewed inheritance tax system, can produce weak, unprofessional management. UK contract enforcement is relatively poor, damaging vital business relationships. And a culture of amateurism still prevails in attitudes to management. Government should use policy to address these weaknesses thereby unlocking the innovative, high-growth potential of the UK’s small firms.
