Marco Marchese
Policy Analyst, OECD Centre for Entrepreneurship, SMEs, Regions and Cities
Productivity growth is a major engine of long-term economic prosperity in high-income places. Yet, debates about reviving UK productivity often focus too much on breakthrough innovation and too little on helping businesses adopt existing technologies.
For SMEs, the issue is not inventing the next big technology. It is knowing which technologies are worth investing in, how to use them effectively and whether the benefits outweigh the risks.
A recent OECD report1 highlights major differences in technology adoption across the UK economy, depending on the type of technology, firm size, region and sector.
Disparities and barriers in adoption
UK firms perform well in adopting mature digital technologies such as cloud computing and data analytics, where many SMEs have narrowed the gap with larger firms. But adoption rates drop sharply for advanced technologies, including robotics and automation, where smaller firms still lag.
London and the South East lead on most indicators of technology uptake, while many regions in Northern England remain behind. These disparities reflect deeper differences in industrial structure, skills, investment and access to local support networks.
Cost remains a major barrier. Many SMEs, especially in manufacturing, face high upfront costs, uncertain returns and difficulty identifying solutions suited to their needs. Many business owners, therefore, adopt a “wait-and-see” approach, investing only after seeing peers using technologies successfully.
It is knowing which technologies are worth investing in,
how to use them effectively and whether the benefits outweigh the risks
Why peer learning matters
This is why peer learning matters. Entrepreneurs are more likely to embrace technologies when they can see competitors or partners benefiting from them. Supply chains can also accelerate diffusion when larger firms help smaller suppliers upgrade their capabilities. Local intermediary organisations, meanwhile, connect firms with expertise, research institutions and public support programmes.
For policymakers, the lesson is clear. Technology adoption strategies must work for ordinary businesses in every region. As a result, financial support is most effective when combined with practical advice, training and trusted local networks that help firms turn technology into productivity gains.
[1] OECD. (2026). SME technology adoption in the United Kingdom. https://tinyurl.com/mu7zvwf.
