Harnessing productivity through inclusive innovation in the North West

Featured image: Kendall Ruth on Unsplash

Dr Lara Pecis
Lancaster University

Income inequalities and unequal distribution of economic growth across regions in the UK has increased since the 2008 financial crisis. But why are region variations present in the first place? A reason for these variations are the different levels of engagement with entrepreneurial activities across areas; engagement is also affected by the access to resources that different groups of entrepreneurs have (e.g. women and ethnic minorities). One of the solutions is to focus on innovation as a resource for productivity and inclusive economic development across different strata of society.

To address this regional productivity gap, my research project (full report), supported by PIN, has focused on the link between inclusivity, social cohesion and policies supporting regional entrepreneurship activities through innovation hubs in the North West (NW) of the UK. These issues were considered through 24 interviews with entrepreneurs, senior managers of hubs and policymakers mostly across Liverpool City Region, Lancashire, Cumbria, and Greater Manchester.

With regards to inclusion, our findings suggest that women and BME entrepreneurs across the NW generally find the entrepreneurial landscape to be challenging. There is a perceived lack of inclusivity of voices on what is relevant for entrepreneurial groups or individuals. In this context, entrepreneurs interviewed feel that the disadvantaged and the disabled are often left behind because of scarce financial resources or lack of connection to influential groups. Ethnic diversity in some of the NW sub-regions is deemed scarce in the context of business. This might also refer to the general population composition of the area. Thus, in terms of diversity in ethnic backgrounds and mental/physical abilities, the data reveals a perceived lack of a promising inclusion.

An interesting insight of the project is that women-focused organisations constitute an excellent place for women entrepreneurs to find help to start their enterprise. Programmes offered by these organisations provide significant help in mentoring and networking at the start-up phase. Women entrepreneurs specifically found mentoring and supporting courses and events immensely helpful to build confidence, which is typically lacking in women entrepreneurs. They also appreciated the flexibility of these organisations to provide courses built around time commitments for women who juggle multiple roles at home and outside. However, our research revealed that the real problem for women-focused organisations is in helping these new businesses develop and grow, to help them find the means for productivity, as well as securing reliable funding for their sustenance.

Emerging from the interviews is an awareness that issues of confidence, stress, and mental and physical health for women, BME and under-represented parts of the population categorized through post-codes limit productivity to a considerable extent. More attention to these issues would be beneficial towards more successful business set-ups, increased economic activity, closing the productivity gap and creating a more equal society.

Common across all hubs interviewed is the constant worry for the serious dearth of public funding that can support investment for promising innovative businesses and help them grow. There is a general perception that for funding and networking purposes hubs should look outwards to build connections with businesses and funders in London. Otherwise, even with a good talent pool, businesses lose out on people and opportunities.

On the policy level, interviews reveal that different sub-regions require different approaches. Policy managers voice concerns for access and support to poor communities and their entrepreneurial needs. Unfortunately, the bias towards the very definition of innovation and the importance of technical over social innovation from broader policy perspectives moves funding away from social innovation projects. Some policy managers emphasize the need for recognition of social innovation and inclusion at a national policy making level. They argue that datasets focusing on health and productivity, measured around access to transport, housing etc. show that much of economic benefit comes from developing the social side of entrepreneurial activities.

Thus, what seems problematic is a definition of innovation at the political and funders’ level as something strongly technical, and that loses out on fostering and funding social innovation that can create avenues for inspiring the youth, help develop local talent and retain them in local jobs. This might represent a solution to reduce unemployment, increase social cohesion and contribute to increased productivity in the NW.

Overall, this project has highlighted a number of important issues policymakers should consider when approaching regional growth and productivity through innovation. In the NW, innovation hubs have been instrumental in helping women and BME entrepreneurs set-up their businesses. They help building confidence, skills, networks and clients and often provide a place to begin their business operations. Unfortunately, lack of funding towards these small businesses often means that the companies cannot grow. Hubs in the NW try to influence policies, but often fail because of regional disparity in funding schemes, the conflicted notion of innovation itself, subtle gender discriminations faced by women hub managers in discussions around policy, and issues of transport and communication that often deprives them of opportunities to lobby in London.

A series of blog posts by Dr Pecis regarding the project are available here.