This Briefing Note considers recent trends in specialisation, outsourcing and offshoring of businessservices.Specialisation within a firm happens when a firm organises an activity in a specialised unit, for example,when a firm moves payroll activities out of the back office of a factory, and...

The UK’s poor productivity performance relative to the US has been a focus for government policy and analysis in recent Budgets and Pre-Budget Reports. Figure 1, where the UK business sector is scaled to 100, shows that US business sector labour productivity (value-added per worker) was just...

Offshoring – the practice of sourcing business services fromoverseas – ignites controversy. The loss of UK jobs in businessservices to foreign providers makes headline news. Theimplication is that the UK has become less competitive in thebusiness services market. But what is the reality?...

This paper exploits a quasi-experimental setting to estimate the impact that a multi-dimensional group incentive scheme had on branch performance in a large distribution firm. The scheme, which is based on the Balanced Scorecard, was implemented in all branches in one division, but not in another...

Clusters are systems of localised economic activity and innovation. This report reviews current evidence on clustersand develops policy recommendations for the UK. It argues that clusters include multiple firms from related sectorsthat are co-located within a web of complex linkages and a...

This paper considers the impact that information and communicationtechnology (ICT) has on firms’ choices over organisational form. In particular,the decision over whether to produce in-house or outsource services,and the decision over the location of activity. ICT reduces the transactionand...

We investigate the empirical usefulness of a new measure of the degree of competition in a market, proposed by Boone (2000). This measure is based on the reduction in profits that firms experience as a result of cost inefficiencies. We compare this with measurescommonly used by policy makers and...

We examine whether discretionary government grants influence thelocation of new plants. Grants have a small effect in attracting plants to specificgeographic areas, but their effectiveness increases with agglomeration externalities,measured by the number of other plants in that location in the...

Clusters are systems of localised economic activity and innovation. This report reviews current evidence on clustersand develops policy recommendations for the UK. It argues that clusters include multiple firms from related sectorsthat are co-located within a web of complex linkages and a...

The ability to create a competitive and thriving economy is partly dependent onknowledge production and innovation. So how well is the UK performing in theseimportant areas? To assess the UK’s comparative performance, and gauge how itmight perform in the future, it is a useful exercise to...