Small firms 'think local'

Two fifths of small businesses define themselves as local rather than national or international, according to a new report.

As part of research by Microsoft which sought to uncover the extent to which SMEs are defined by the region in which they operate and whether their success is dependent on the overall prosperity in that area, 43% of small company bosses thought of their organisation as local rather anything else.

The report found that half of respondents were set up due to regional or social factors motivating the owner or managing director, while a quarter said their business was established because the owner saw an opportunity to serve a local need. Another 25% had gone into business due to a lack of employment opportunities in their region.

In almost every region, managers expressed concern about the strength of skills, innovation and economic diversity. Almost half considered skills only average or poor. The issue was of particular concern to business in the South West and North West, where 61% and 57% respectively bemoaned the lack of skilled employees.

Innovation was even more lacking, Microsoft said, with 59% of managers saying it was poor in their region.

Clare Barclay, Microsoft's head of small business, said: "It's worrying that SME managers are concerned about the level of skills and innovation in their regions, especially as Britain will be increasingly reliant on its knowledge economy in coming years, and there is likely to be a greater emphasis on job creation in knowledge based industries."