Rural businesses and levelling up: A rural-urban analysis of business innovation and exporting in England's north and midlands

In the face of persistent and widening regional imbalances in economic and social outcomes, the UK Government seeks to ‘level up’ less prosperous communities, reigniting debates on the relationships between geography and business innovation. A key question concerns whether cities provide a more favourable environment for business innovation and exporting. However, the comparative performance of urban and rural Small and Medium Sized Enterprises (SMEs) within less prosperous regions has received little attention. Using Longitudinal Small Business Survey data, we apply Propensity Score Matching to study urban-rural differences in SME performance in the North and Midlands of England. The findings reveal no systematic, significant differences in goods, service and process innovation or exporting between rural and urban SMEs, suggesting that the emphasis on urban focused growth in the levelling up agenda appears misplaced.