Productivity in the South West
We have been carrying out research into productivity since the 1990s with a focus on how factors influence and enhance firm-, local-, regional- and national-level productivity. The rhetoric behind the productivity debate is that higher productivity means greater effort and less wastage of energy and materials. We use a variety of methods from large data set number-crunching to small scale semi-structured interviews with small firms.
In 2015, Professor Don Webber, Dr Sebastian Berger, Dr Peter Bradley and Gail Webber initiated a project to examine productivity in the South West. Most academics have focused their research on large organisations or used large data sets which tend to follow large organisations over time, and hence such research tends to ignore the important contributions of smaller firms. This research focused on smaller firms and on the district with the lowest productivity in the whole of England and Wales: West Somerset.
As West Somerset is dominated by the tourism industry and because we were also interested in sustainability and food waste initiatives, we decided to conduct semi-structured interviews with restaurant managers about their business, pricing strategies and managerial objectives, and about the local market context.
The results highlight that these managers are not focused on achieving higher productivity as traditionally measured. Although they pay close attention to minimising waste and keeping costs down, they are more geared towards providing a product that they can be proud of, supplying high quality fare, and giving consumers good value for money. A point that reoccurred during the interviews was that the managers were not interested in maximising their revenue or charging higher prices; instead they emphasised that they are not driven by greed and that changing consumer prices was not a ‘fair way of trading’.
The upshot of these community- and lifestyle-related managerial objectives is that the measured productivity of the local area is very low. However, at the same time we found no evidence to suggest that they were wasting resources or being productively inefficient. The standard measure of productivity is therefore providing a misleading picture of the productive practices of firms in this area. Interestingly, although West Somerset has the lowest level of productivity of any district in England and Wales, it also has the fourth highest wellbeing and a high life expectancy. An academic paper on this topic is available on request.
Government policy is geared towards enhancing productivity. We argue that there is strong evidence to suggest that the focus of government policy on current narrowly defined productivity measures should be reconsidered and other indicators of economic success and progress be considered. Indeed, it is possible that encouraging firms in West Somerset to enhance their productivity could reduce overall wellbeing in the area.
Don is always keen to conduct similar policy-relevant investigations and is open to suggestions. He is currently conducting some research into productivity across medium-sized firms in Somerset to gain information on how local government can support these firms in their drive to increase sustainability and understand their productivity in greater depth.