Yay or nay, Scottish businesses ‘need to innovate’ (Wired UK)


While the voting was underway for the historic Scottish
referendum, both Brits and Scots alike were on tenterhooks for the
outcome. But behind all the high-octane emotion and political spiel
from both sides of the Yes-No campaign was another burning issue:
Scottish businesses need to innovate if they’re going to secure
economic prosperity. 

It’s something Paul Tracey, Professor of Innovation and
Organisation at the Judge Business School at the University of
Cambridge, flagged up in a recently published article. Taking a step back from utopian
nationalist visions trumped up by “Yes” politicians, Tracey
observed that — in or out of the union — as it stands, Scotland
simply lacks the innovative clout and entrepreneurship to drive the

According to Tracey, any successful economy requires a “vital
six percent” consisting of “high-growth firms, both new
entrepreneurial ventures and established companies”. These firms
“drive gains in productivity, national competitiveness, and
ultimately living standards”. These haven’t yet multiplied in the
Scottish business landscape.

Contrasted against its current sluggish growth, during the
Industrial Revolution, Scotland was
something of an economic powerhouse. Speaking to Wired.co.uk,
Tracey explained that as a centre of engineering, industry, and
manufacturing, back in the day, Scotland supplied both knowledge
and materials to the whole of the British Empire. Only in the
aftermath of the First World War did this development slump –
leaving Scotland to lag behind in innovation.

“Sometimes it can be a disadvantage to be a first mover,” said
Tracey. “Scotland is a relatively small place, it’s less prominent,
and the world was a much less competitive place [in the past].”
Commenting on the rapid development of systems of innovation in
Silicon Valley, Tracey said it was difficult for smaller places to
compete in such a climate without substantial government support
and investment.

The US government has traditionally played a proactive
investment role in order to nurture its venture capitalists and
entrepreneurs. Such bold moves are, according to Tracey, lacking in
both the UK and Scotland, where governments have mostly relied on
the private sector to do the investing.

“The R&D spending per capita by governments in both Scotland
and the UK is relatively small — both need to think carefully
about the role of government,” said Tracey. One way for Scotland to
kick-start its innovation campaign and
build a better business base is to become “more attractive to
multinational companies abroad”, he says. “In order to do that,
however, Scotland must first work on fostering the right
environment for investment.” 

The region needs to focus on developing the skills of its labour
force. It could invest more in educational institutions and
science, and provide more funding for venture capitalists, as this
would lay the groundwork to attract more foreign multinationals

In past weeks, “Yes” politicians might’ve been trumpeting the
long-term economic benefits that Independence would bring. Though,
curiously, not much evidence was provided for this miracle growth.
Policy document Scotland
Can Do: Becoming a World Leading Entrepreneurial and Innovative
 published in 2013 by the Scottish government
pointed in the right direction.

However, according to Tracey it offers no more than a
theoretical charmed future. He stated the document provided only “a
series of superficial case studies and cherry picked claims about
entrepreneurship in Scotland” and
inspires “little confidence that a future SNP-led administration
would be able to be able to deliver on its economic objectives post

So regardless of a yea or nay vote, it seems it might be an idea
for Scottish politicians to cut the spiel, pump up the investment,
and secure an “interventionist policy infrastructure that promotes
entrepreneurship and innovative firms” if it wants to revitalise
the Scottish economy.

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19 September 2014 | 3:19 pm – Source: wired.co.uk


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