Are UK SMEs with active websites more likely to achieve both innovation and growth?

Purpose: This paper examines the impact of developing more active Websites and increasing E-commerce on the relationship between innovation and growth performance in SMEs. Using the existing literature and empirical analysis the study considers the potential of engagement with the Internet to achieve the often hard to attain ambition of both innovation and growth. Design/methodology/approach: In order to examine the relationship, data is drawn from the Federation of Small Businesses (FSB) 'Lifting the Barriers to Growth Survey'. In order to establish whether the use of more sophisticated Websites is associated with being an innovative high performance business, whilst controlling for other firm and entrepreneurial characteristics, multivariate approaches in the form of multinominal logits and discriminant function analysis are utilised. Findings: The results suggest that although theoretically Websites with tools allowing interaction with customers or suppliers could benefit SMEs through a reduction in transaction costs and wider access to information, enabling them to jointly experience innovation and growth, in practice there is less evidence that this occurs. If anything those firms with active websites are more likely to be innovative, but no more likely to be both innovative and achieving growth. Implications: These results suggest that further work must be undertaken to establish whether SMEs should be encouraged to make such investments and if so what additional help is required to ensure that investments in this digital infrastructure achieves an appropriate return on investment. Originality/Value: The results are of importance to both SMEs and policy makers providing insight into the nature of potential benefits from Website development using a large dataset. A clear need to investigate further how more innovative SMEs can benefit from company Websites and ecommerce to grow is identified