How an alternate approach to innovation can drive the Local Economy

By Jamie Hill - 22 November 2018

BusinessExpert Voices

Over the course of the last few decades, the worlds of business and commerce have changed almost beyond all recognition. From the emergence of e-commerce and digitisation to the way in which entrepreneurs fund their startup ventures, it has become easier than ever to realise your commercial vision and enter your chosen marketplace.

At the heart of this is the falling cost of technology, which has become increasingly accessible to small and medium-sized enterprises across the globe. In fact, this has inspired an alternate approach to innovation in the business world, and one that has driven intense competition while removing various barriers to entry.

In this post, we’ll consider this in further detail while asking how this can help to drive the local economy in the future.

The Impact of Technology on the Wider Economy

Historically, high-end technology was exclusive to a select few innovators and large corporations, who had the resources that enabled them to develop advanced solutions to relatively complex consumer issues.

This is no longer the case, however, as the sheer pace of technological innovation has driven the cost of components down and made it accessible businesses of all shapes and sizes.

This has been borne out by the statistics, with figures from the U.S. suggesting that the cost of technological hardware has dropped across almost every sector during the last 18 years despite the fact that the quality of finished products has improved considerably.

From an economic perspective, this has had a profound impact on individual sectors and the cost of bringing products (and services) to market. As a result, we’ve seen more intense levels of competition across an array of industries, with startups and small businesses now capable of claiming a viable market share from large corporations.

Not only this, but it’s also relatively easy for ambitious startups to disrupt market leaders by undermining their core products and services, with this process referred to as ‘unbundling’ by global auditing brand RSM.

This is one of the numerous reasons why we’re seeing a higher volume of technology-driven mergers and acquisitions in 2018, with brands like Apple increasingly looking to invest significant sums on acquiring new startups and strengthening their position in the market.

How is this Impacting on the Local Economy?

This trend is also beginning to have an impact on the local economy in the UK, which is great news for both small businesses and the nation as a whole.

To understand this further, we need to understand the role that small businesses play in driving regional economies on these shores. According to figures from 2017, startups and small firms accounted for a staggering 99.3% of all private sector entities, while 99.9% were classed as SMEs.

These entities also turned over 51% of all private sector turnover in the UK (£1.9 trillion in total), and accounted for 60% of all employment in this space. In total, 16.1 million people worked for SMEs last year, with this number set to increase incrementally in the future.

With these points in mind, it’s clear that technological advancement is playing a key role in empowering small businesses and establishing local economies as key drivers of growth and prosperity.

At the same time, it’s also enabling startup to identify clear and expedited development plans, whether their end goal is to grow significantly or prepare themselves for a future merger or acquisition with a relevant market leader.

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