Determinants of SME Growth and Competitiveness in the UK: Key Findings and Implications

Abstract

This study investigates the determinants of small and medium-sized enterprise (SME) growth and competitiveness in the United Kingdom by examining how firm-level characteristics and capability-related factors influence sales performance and export participation. Using firm-level cross-sectional data from the World Bank Enterprise Survey, the study applies Ordinary Least Squares regression to analyse SME sales performance, measured through the natural logarithm of annual sales, and logistic regression to examine SME competitiveness, measured through direct export participation. The explanatory variables include formal finance, firm age, firm size, managerial experience, innovation, and quality certification. The findings show that SME sales performance and competitiveness are related but empirically distinct outcomes. Firm age has a positive and significant association with both sales performance and export competitiveness, suggesting that organisational maturity supports business stability and market development. Firm size is the strongest predictor of sales performance; however, it is negatively associated with export participation once sales performance is controlled. Quality certification emerges as a consistently significant factor, positively influencing both sales and competitiveness, highlighting the importance of standards, credibility, and market readiness. Formal finance is not significant for sales performance but positively predicts export participation, indicating its relevance for internationalization. Innovation shows a negative association with sales and no significant effect on competitiveness, suggesting that innovation may involve short-term costs or delayed returns. Overall, the study concludes that SME growth and competitiveness require different strategic priorities, with domestic performance relying more on firm structure, while export competitiveness depends more on finance, certification, and capability development.