Nine out of 10 firms say new ways of working are here to stay post-covid

the widespread innovation witnessed during the pandemic, albeit forced, could translate into even more innovation in the future
- Capucine Riom

Businesses have rapidly adopted new technologies and new ways of working in response to massive disruption caused by the pandemic. If such innovation continues, it could boost Britain’s economy in the long term, according to economic researchers.

A snapshot survey* by the LSE’s Centre for Economic Performance (CEP) and the Confederation of British Industry (CBI) finds that more than 60 per cent of firms had adopted new technologies or new management practices since the start of the pandemic. And more than 90 per cent of these firms said that they expected to keep the changes in place once the crisis is over.

The survey results feature in a new report The Business Response to Covid-19: the CEP-CBI survey on technology adoption, published by the CEP.

The report highlights the enormous impact of the pandemic on UK firms: more than three-quarters have seen demand for their products or services change; more than 40 per cent have had disruptions to their supply chains; and more than a third have been affected by employee absence due to illness or shielding.

The survey also finds that:

  • Firms that had previously adopted digital technologies have been significantly more likely to adopt new technologies, capabilities and practices – and to introduce new products.
  • Of those firms that have not adopted new digital technologies, a third plan to do so in the near future.
  • The most commonly cited barrier to adopting new technology is uncertainty about the economy, followed by financing constraints.
  • In terms of what firms say would help them take up new technologies or management practices – tax incentives were the most popular form of support.
  • Smaller firms, in particular, also value business grants or vouchers to support innovation while larger firms highlighted the importance of investments in the digital and professional skills of younger people entering the workforce.
  • Most firms expect that these new changes will improve business performance. When asked about the expected impact on the workforce, only a minority (10-15 per cent) consider that the changes will reduce the need for employees over time.

Report co-author Capucine Riom, a PhD candidate at the LSE, said: “We find that firms that innovated prior to the crisis were more likely to innovate during it. Therefore, we believe that the widespread innovation witnessed during the pandemic, albeit forced, could translate into even more innovation in the future. We look forward to testing this hypothesis in our next survey.”

Report co-author Anna Valero, ESRC Innovation Fellow at CEP, said: “Almost all firms tell us they expect these new technologies or practices to raise the productivity of their workers or allow a reallocation of tasks, rather than replace them. This could lead to business growth and increased employment over time. But there are concerns about the uncertain economic outlook and the ability of smaller firms, in particular, to find the money in the short term to finance such changes. Our analysis suggests that there is a policy opportunity into recovery to address barriers to organisational innovation and improve productivity performance.”

A second survey is planned for summer 2021. This will investigate the extent to which innovations introduced during the crisis have persisted and what impact they have had on firms and their employees.


The full report is available here: The Business Response to Covid-19: the CEP-CBI survey on technology adoption

*The survey of 375 UK businesses was conducted in July 2020.