The impact of the recent economic downturn on the training practices of British small and medium-sized enterprises- An empirical investigation of the Yorkshire and the Humber region

This thesis investigates the impact of the recent economic downturn on the training practices of British small and medium-sized enterprises (SMEs). Extant research has paid only limited attention to the impact of the recent recession on training, while the training responses of SMEs to the economic crisis remains an unexplored area. Given the importance attached to the SME sector for the growth of the British economy along with the key role that skills play in addressing social and economic challenges, it is important to examine how, and indeed if, SMEs were impacted by the recession. The study focused specifically on SMEs operating in the Yorkshire and the Humber region. The research was exploratory in nature and its ontological and epistemological stances were influenced by critical realism. The data were gathered through a multi-method approach that included a survey of local SMEs, semi-structured interviews with key informants from peak-level organisations and a qualitative investigation of small firms themselves. The study found that the impact of the recent recession on the training practices of British SMEs was not universal. A key argument, therefore, is the need for a more fine-grained evaluation of the conventional wisdom that training provision is one of the first casualties of an economic downturn. The study revealed that the training investment within SMEs was largely dependent on a number of factors that can influence the extent and intensity of the effect of the recession. Specifically, it was found that the industrial sector that SMEs operate in can play a key role in levels of training investment during the recession, with firms operating in the construction, manufacturing, hospitality and the financial industry, being severely hit by the recent recession and, therefore, resulting in larger decreases in training expenses compared to other industries. The degree of formality that SMEs adopt towards training proved to be an additional factor, with SMEs adopting a less strategic approach towards training being more inclined to cutbacks in training during the recession and vice versa. The degree of formality towards training appeared to be related to the size of the firm, suggesting that small firms were less likely to adopt a formal training approach than medium-sized firms. Consequently, firm size was an additional factor that influenced SMEs’ training provision. Furthermore, the supply chain seemed to affect the training investment within SMEs, suggesting that firms had to comply with their supply chain’s training requirements (where it was applicable) irrespective of the general economic climate. Within such a context of economic hardship, state support was found to be insufficient. Although a number of training policy initiatives had been introduced that were designed to assist SMEs and their skills development, they were inevitably focused on the supply-side of skills formation. Yet, there was a lack of focus by the state support on the actual skill needs of the SME sector, resulting in low levels of engagement of such establishments with the initiatives available. A key contention, therefore, is that state support for skills upgrading within SMEs needs to adopt a more sophisticated and integrated approach that fits with the specific skills needs and demands of SMEs themselves.