Shining a spotlight on small rural businesses: How does their performance compare with urban?

Highlights

• England's rural firms more likely to report profits than urban counterparts.

• Rural firms are significantly stronger exporters of goods and services.

• Rural firms less likely to create ‘new to the world’ products or services.

• Overall, no evidence rural firms systematically underperform urban equivalents.

• Tailored SME strategies are needed for spatially balanced and inclusive growth.

Abstract

Rural enterprises play an important economic role, contributing to national prosperity and wellbeing but are often a blind spot within rural development and wider economic policies and evidence. This paper presents an urban-rural analysis of a large scale survey of Small and Medium-sized Enterprises (SMEs). It applies Propensity Score Matching to allow for an assessment of the effects of rurality on business performance. Results show that England's rural firms have similar levels of turnover to their urban counterparts, but are more likely to report a profit. The analysis also reveals rural firms to be significantly stronger exporters of goods and services and to have goods or services suitable for exporting. However, there are some weaknesses and obstacles to business success that concern significantly more rural than urban firms, that vary with the rurality of local districts, and which require the attention of policy makers and support providers seeking to achieve spatially-balanced and more equitable economic development.