The Small Business Outlook report, published today by think tank Centre for Cities, examines how smaller companies are performing in several key locations across Britain.
It found that cities which have the highest numbers of small firms in creative, professional and digital sectors are also the most successful places in terms of overall jobs growth, productivity and average wages.
Aberdeen topped the league table and Edinburgh made it into the top ten, while Glasgow performed above the national average. Dundee, however, was ranked within the bottom ten places in the UK.
The Granite City’s high standing in the report comes as a boost to a city which has seen its fortunes suffer amid the slump in North Sea activity, with a subsequent negative impact on areas such as retailing, restaurants and hotels.
As well as showing that there has been significant growth in so-called “new work” SMEs in recent years, the report – supported by insurance giant Zurich – highlights that these firms have a big impact on the wider city economy by increasing demand and jobs in other sectors such as service-based businesses, retail and leisure.
Seven of the top ten cities for creative businesses are also in the top ten places in term of productivity and average earnings, while five of these cities are in the top ten for highest jobs growth.
Alexandra Jones, chief executive of Centre for Cities, said the report had “big implications” for how governments can support and grow cities, and therefore the wider economy.
She added: “In recent decades, small innovative firms, taking advantage of technological advances, have started to play an increasingly important role in driving jobs growth, wages and productivity in UK cities.
“For places to prosper and grow, they need to consider how they can build on their existing strengths to support the kinds of highly-skilled and agile firms found in creative and professional industries, as well as the traditional focus on attracting inward investment from big businesses and multinationals.
“Helping these firms to grow should also be a top priority for the UK government in its efforts to rebalance the national economy.”
Jason Eatock, head of SME at Zurich, added: “This report is a fascinating insight into the development of one of the most exciting and rapidly growing sectors for the UK. It describes how creative, or ‘new work’, SMEs are playing a huge part in the UK’s ever-changing business environment.
“But we must also pay attention to the report’s findings of economic disparity between UK regions, and continue to provide the support that SMEs need as they encounter new risks whilst they evolve and grow.”
The report defined SMEs as businesses with under 250 staff.