Brexit and SME strategy: evidence from the UK’s post-referendum business environment

We investigate the potential impact of Brexit perceptions on SME strategic behaviour (investment, innovation, internationalisation, growth plans) in the UK's post-referendum business environment. Using data from the UK Government Longitudinal Small Business Survey, we find that around a quarter of SMEs view Brexit as a major barrier to business success. SMEs holding this view are less likely to plan overseas capital investment and to plan the development and launch new products or services, but more likely to plan R&D investment, pursue future export expansion, and target sales growth, while no statistically significant effect is found for UK capital investment. These findings relate to SMEs’ forward-looking plans over the next three years. Export-oriented SMEs appear particularly affected, with a higher probability of attributing anticipated declines in sales turnover to Brexit. Results suggest that Brexit has become embedded in managerial expectations and is associated with a heterogeneous reconfiguration of UK SME strategic behaviour.