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There has been growing discussion of industry 4.0 and the opportunities that it may provide for new and existing manufacturers to redistribute production and re-establish previously offshored activities. We consider the role of cities in this context and suggest that for this case there is limited evidence so far that industry 4.0 activities will provide significant economic opportunity. Any transformative impact of industry 4.0 on the geography of production is hitherto hard to discern, and ownership patterns and the dominance of platform firms in technology sectors may significantly reduce the ability of most cities to generate and retain ‘new’ economic value.

Improving the efficiency of Welsh SMEs is critical to improving Wales’ future economic prospects and responding to the COVID-19 pandemic. The Digital Maturity Survey for Wales 2020 provides evidence on how SMEs are responding to these challenges by adopting and using the digital technologies enabled by broadband access. It draws on Cardiff Business School’s fifth annual survey (and final survey under the Welsh Government’s Superfast Broadband Business Exploitation Programme) and illustrates the growing digitalisation of Welsh businesses and the impact that this is having on their performance. During 2020, the regional (and indeed and the UK and global) economy has faced severe disruption associated with the COVID-19 pandemic. This resulted in periods of national and regional ‘lockdown’ in which economic activity declined, as many businesses either ceased trading or encouraged staff to work from home. These challenges have been reflected in Welsh Government’s strategy ‘Leading Wales out of the COVID-19 pandemic: a framework for recovery’ as well as the introduction of new business support and funding mechanisms, particularly those relating to the Economic Resilience Fund.

Strengthening the efficiency of Welsh SMEs represents a vital means of improving Wales’ future economic prospects. The Digital Maturity Survey for Wales 2019 provides evidence on how SMEs are responding to this challenge by adopting and using the digital technologies enabled by broadband access. It draws on Cardiff Business School’s fourth annual survey and shows how adoption of technologies can not only influence business performance, but also produce impacts for the Welsh economy. Survey findings The Survey findings show positive trends with respect to SME adoption of superfast broadband, with some 63% of businesses reporting access through a fixed connection (up 10 percentage points on 2018). These results, the findings suggest, are set in the context of a growing number of premises now having access to superfast broadband and highlights ongoing potential to encourage more SMEs to access such infrastructure. Figure 0-1 Adoption of broadband by type (% of SMEs) Welsh Economy Research Unit 2 Use of cloud computing services continues to increase in 2019 (Figure 0-2). Here the Survey results point to more SMEs making use of foundational cloud computing services, with use above half of all businesses. While comparatively fewer business make use of more advanced cloud services, increases can also be observed over the period 2017-2019. Limited numbers of SMEs are making use of the leading-edge digital technologies such as artificial intelligence, additive manufacturing (e.g. 3D printing) and internet of things (IoT) technologies. Figure 0-2 Proportion of SMEs using cloud computing services, by category (% of SMEs) Welsh Economy Research Unit 3 SME skills to make use of digital technologies represents an area of concern. While the majority of businesses report that they have 50% or more of their workforce with intermediate or above ICT skills, the results also show a decline from 2017 to 2019 of four percentage points to 66%. The use of digital technologies is further demonstrated in the growing number of businesses reporting e-commerce transactions This shows that one-in-three businesses now report between 76% and 100% of sales serviced online, and that had increased by seven percentage points since 2018. Nearly three in ten businesses transacted between 76% and 100% of their purchase online, also up by seven percentage points from 2018. The findings highlight greater use of digital technologies is associated with SMEs reporting increases in turnover (up by 10 percentage points). Fewer SMEs, however, reported a performance link between broadband and profit, innovation or employment than in the previous year. Figure 0-3 Performance of SMEs with superfast broadband (% indicating positive outcomes) Analysis of the Survey findings identify four groups / types of SMEs in relation to digital maturity (see Figure 0-4). The 2019 survey shows that the proportion of businesses that are in the highest groups of digital maturity – Digitally Embedded and Active Exploiters – have fallen back, with corresponding growth in the proportion of businesses that are less digitally mature. It is noted, however, that the proportion of digitally mature businesses is still higher than it was at the start of this form of analysis (in 2017). Welsh Economy Research Unit 4 Figure 0-4 Digital maturity groups in Wales (% of SMEs in 2019) Digitally Disengaged 15% Passive Exploiters 38% Active Exploiters 31% Digitally Embedded 16% Businesses tending to be standard broadband users, with a high proportion of employees with below average ICT skills. The majority do not use digital technologies and report no sales from online transactions. Businesses tending to have standard broadband, but more likely to have staff with above average ICT skills. Make use of basic cloud-based applications, but their use of online platforms to generate e-sales is low. Businesses likely to have access to superfast broadband and a high proportion of staff with above average ICT skills. Use a wide range of digital platforms and technologies. Nearly half report online channel as the main source of sales. Adopters of superfast broadband with a very high proportion of employees with above average ICT skills. Use a high number of digital applications and secure most of their sales from online transactions. Although the overall picture is one of businesses increasingly adopting and using digital technologies in Wales, the report shows once again that the transition towards digitalisation is likely to be bumpy when viewed at the regional level, with some indicators going up, while others going down. Too much should not be read into individual yearly changes. The multi-year decline in the skills indicator, alongside the composite decline of the digital maturity index is a potential cause for concern and may point to ongoing challenges for businesses to maintain their digital maturity, and for policy intervention to support this.

Policy entrepreneurs have been identified as playing an important role in the emergence of public policies for innovation. Despite the growing number of studies, the role of context has only recently begun to be explored in detail. This article contributes by investigating the interplay between the institutional context and the strategies of policy entrepreneurs, in the successful introduction of new policy ideas for services innovation. Building on insights from institutional theory, it argues that policy entrepreneurs are embedded in a multidimensional context of field-level conditions, multi-level standard operating procedures for policy development, and the social position of actors. It explores the activities of policy entrepreneurs in two countries—Finland and Ireland—and finds that differences in the institutional context help explain why some entrepreneurs are able to develop and implement new policies, while others fail. The article draws on comparative case study evidence including documentary analysis and interviews.

This paper examines the policy mix for broadband infrastructure deployment, and asks what role is there for coordination agents. While research has begun to examine coordination of policy, analysis has largely focused on organization and structures. This paper seeks to develop this further by examining the informal role that coordination actors play in managing synergies and tensions in the policy mix. The research highlights shared synergies in policy objectives for broadband deployment at multiple levels of governance – EU, UK, regional and local authority. Tensions, however, are found in the deployment process at the regional level, as broadband policy objectives interact with those for highways and planning agendas. In seeking to manage these tensions it highlights three coordination roles – champion, troubleshooter and monitor - and shows how these help to address conflicts and tensions that emerge. While the research suggests such tensions are impossible to fully eliminate, the findings show how the work of these informal actors helps to mediate their effects and support the deployment of broadband. These findings are drawn from an in-depth study of broadband policy in Wales between 2012 and 2017, including interviews with the policy community, analysis of news articles and review of policy documentation.

The Welsh Government and Cardiff Business School were successful in 2015 in gaining European Regional Development Funding (ERDF) for a programme of business support to assist Small and Medium Enterprises (SMEs) across Wales to engage with superfast broadband infrastructure, other e-connectivity and consequently enabled technologies. This programme of support – The Superfast Broadband Business Exploitation (SBBE) programme - went live in January 2016 for a period of five years. \udCardiff Business School is providing a research and intelligence function surrounding the programme of business support. The first substantive output from the research and intelligence function was to provide a report on the methods to be followed in developing a Digital Dashboard for Wales and a resulting economic impact assessment showing how SMEs have benefited from services levered by superfast broadband (WERU, 2016). \udThis report then provides details of WERU’s first annual Digital Maturity Survey (2016). It sets out the results from a survey of 166 businesses in Wales, including their adoption of superfast broadband, their infrastructure and IT capabilities, and performance. The framework adopted for the annual digital maturity survey is set out in the Figure 0-1 below. This framework has been developed from a review of existing studies on digital maturity, and is intended to reflect the processes by which superfast broadband adoption both shapes, and is shaped by a businesses’ resources, the use and exploitation of broadband, and the subsequent performance impact. \ud\udThe main findings of the Digital Maturity Survey 2016 are that: \ud- Most SMEs that participated in the survey have standard broadband, while only a third have adopted superfast broadband (defined as SMEs being able to achieve download speeds of at least 24Mbps). The majority of standard broadband users, however, are aware of, or interested in superfast broadband. Superfast broadband adoption rates vary significantly by business size, industry sector, geographical area and region. SMEs with superfast broadband are more likely to engage in innovation activity than standard broadband users. Innovation focus, however, is not influenced by broadband type, with both standard and superfast broadband users innovating in new service and products. \ud\ud- Only 15% of responding businesses had a dedicated IT budget. Although medium sized businesses have the highest average expenditure on broadband subscriptions in absolute terms, micro businesses have a higher average spend per employee on monthly broadband subscriptions. As businesses grow larger, high IT investment does not lead to improvements in performance amongst respondents. \ud\ud- Most SMEs have access to staff with adequate IT skills and capabilities. Nearly 60% of sampled SMEs employed staff with intermediate and above IT skills, 50% of SMEs have staff with knowledge of using cloud enabled services at business, and nearly two thirds of businesses in the whole sample have access to IT support. \ud\ud- SMEs with high IT capability – defined by the level of SMEs’ human IT-related resources - are concentrated in the information and communication and business services sectors. Micro and young SMEs, however, are the most digitally advanced businesses; yet their access to superfast broadband was reported to be constrained by its high associated costs. \ud\ud- SMEs are more confident in using e-commerce than wider digital technologies. Even businesses with high IT capability find it difficult to successfully implement digital technologies in their business. Overall, the more digitally mature businesses in the sample tended to perform better in terms of growth and innovation.

Deployment and effective use of broadband infrastructure and digital technologies lies at the heart of addressing Wales’ regional economic performance challenges. The Digital Maturity Economic Impact Report for Wales 2019 provides data on how the Welsh economy is adapting to the digital transition. It highlights the continued adoption and use of digital technologies by businesses and the impacts this has on regional productivity in Wales. This is important for Wales in order to bridge the regional prosperity gap with the UK. Economic impacts are evident in the business case studies presented in the Report. These findings highlight that digitisation within a business is an ongoing process rather than an end in its own right. They point to growing use of technologies such as social media, cloud computing and videoconferencing across multiple business processes. They further demonstrate growing SME confidence in digital technology use, and its role in enabling efficiencies, improvements in the customer interface and innovation. These results highlight the importance of businesses gaining digital capabilities that will help them continue to evolve and sustain productivity benefits. The Report draws on evidence from the Digital Maturity Survey for Wales 2019 to estimate the effect of digital technologies and their potential impact on SME performance. It shows that 43% of SMEs that responded to the Survey had increased their turnover as a result of use of standard or superfast broadband. Positive effects were also noted with respect to employment, with 23% of SMEs reporting increased staffing as a result of broadband use. The findings show that more than half of SMEs, who were able to estimate the percentage change in turnover due to superfast broadband use, reported an increase of up to 10%. Of those SMEs that had adopted superfast broadband and who provided an estimate of the employment change as a result of adoption, some 22.6% reported an increased effect. It should be noted however that several businesses pointed to the difficulty of providing precise percentages. Analysis reveals that broadband enabled technology adoption and use could have improved turnover prospects for 110,800 SMEs (up from 102,600 SMEs in 2018) in Wales, of which 63,800 were superfast broadband users. Based on a conservative assessment of a 1% increase in turnover in affected SMEs, it is estimated that the total turnover for SMEs attributable to broadband adoption and use in Wales could be £186.4m (£124.0m was associated with superfast broadband users). Welsh Economy Research Unit 2 Estimates of the number of SMEs that may have seen employment effects are provided. This shows that 46,700 SMEs (of which 22,600 were superfast broadband users) could have seen a sustained employment increase resulting from broadband adoption and use. Based on the same illustrative 1% conservative assessment of the increase in employment in affected SMEs, it is estimated that employment attributable to broadband adoption could have increased by 1,586 (946 new employment opportunities were associated with superfast broadband users).The analysis shows that the employment and turnover benefits attributable to broadband adoption and use in standard adopters has declined, while superfast broadband adopters have seen an increase in both turnover and employment affects (see Figure 0-1). This points to the growing importance of faster broadband speeds to the outcomes achieved by businesses. Figure 0-1 Estimated Welsh SMEs employment and turnover benefits from broadband adoption and use, by broadband type The case-study data points strongly towards greater digital maturity and SME productivity improvements resulting from adoption and use of digital technologies, and that there continues to be an ongoing challenge of measuring economic impacts on the Welsh economy. To address this uncertainty the research team continue to use conservative measures for its assessment of the number of SMEs that have been positively affected in terms of turnover and employment. Analysis of these findings will continue and will be presented in the final report of the project due by the end of 2020. To support this analysis and modelling of the economic impacts the research team will seek a robust survey response from SMEs during the Digital Maturity Survey 2020. Alongside the final report the research team also plan to hold a conference in the latter part of 2020.