Ml and productivity
This document summarizes research on productivity in the UK. It discusses: 1) Interviews with leading businesses that found productivity is a complex issue influenced by both internal factors like technology and management as well as external factors like regulation and commodity prices. 2) While large, "frontier" firms often lead in productivity growth, some small and medium enterprises also see rapid productivity increases through a focus on customer-focused innovation, investment, valuing staff, and being responsive to market conditions. 3) There are opportunities for government to influence external factors and encourage sharing of best practices, but productivity challenges remain complex with no single solution. Productivity metrics also differ from business priorities on efficiency and short-term goals.
Ml and productivity
- 1. Productivity: meaning, measurement and management beyond the frontier Carol Stanfield
- 2. Contents: two ERC Research Reports • Understanding value added per employee in six UK sectors: The insiders’ view • What drives productivity growth behind the frontier? • Conclusions and implications
- 3. Explaining the productivity puzzle • OECD – Frontier firms leading the way/low tech diffusion • Haldane – long tails • Factors which have helped explain productivity in the past are becoming less relevant • UK research: Rigidities in between-sector resource allocations; within sector competitiveness; intra-firm factors • Riley (2018): productivity slowdown in sectors which experienced strongest growth pre-recession; more than half labour productivity gap is accounted for in small number of sectors • Why? • Interviews with leading businesses/industry bodies in oil and gas, beverages, pharma, transport manufacture, finance, insurance.
- 4. Structural explanations of productivity
- 5. Language and metrics • Businesses don’t use the language or the metrics of productivity Productivity metric is longer term: business focussed on short term Productivity is outside their control: efficiency (resource, asset, labour) is in their control Other metrics matter – e.g. delivery schedules
- 6. Drivers of ‘productivity’/efficiency Internal Factors Technology Management and leadership Innovation External factors Competition Regulation Commodity prices Tax regimes Patents All subject to sector nuances
- 7. Learning from the best SMEs • Productivity growth is significantly more rapid among ‘frontier’ firms in the top decile of the productivity distribution. • Usually large firms • What about smaller firms ‘behind the frontier’?
- 8. Are most productive SMEs also fastest growing? E.g. Manufacturing
- 9. Again, the usual suspects don’t apply…
- 10. Complex interplay of factors in SMEs Leader Product and Market Customer focussed innovation Investment Operational management Valuing staff Government activity Reactive, responsive Strategic, tactical Data driven, routinised Performance culture Market conditions Autonomy, agility All subject to sector nuances
- 11. Conclusions and Implications for Government • Increasingly complex productivity puzzle • Good practice can happen in small firms too – esp. where learning from big firms • Bridge the language and priority divide – is it always possible? • Awareness and acknowledgement of Government influence on the external sphere • Government procurement influences firm behaviour and practice • Importance of management and leadership ‘getting through’ but acted upon? Why not? • But insufficient on its own
- 12. Thank you For further details please visit : www.enterpriseresearch.ac.uk @ERC_Uk ERC Funded by