Implications of the digital divide on rural SME resilience: Fid-Bau Portal

Implications of the digital divide on rural SME resilience

Morris, Jonathan / Morris, Wyn / Bowen, Robert

Abstract This paper examines the implications of the ‘digital divide’ on the capabilities for Small and Medium Sized enterprises (SMEs) to operate in the face of challenging economic times, such as the Coronavirus pandemic. Previous research has shown that rural businesses, especially SMEs, are more impacted by lower levels of digital connectivity than those in urban areas, with this digital divide affecting business' entrepreneurial activity. Using data from a survey of 110 businesses in Wales, the paper investigates the barriers and opportunities associated with the accessibility of high-speed broadband services and its impact on business decisions. Findings show that digital connectivity across rural areas of Wales has improved due to infrastructure investments; however, many businesses were still without reliable digital connections. Logistic regression findings show that location and distance to urban areas are significant variables relating to satisfactory levels of digital connectivity, with the impact of these more evident in rural areas. The implications of which are reduced opportunities for businesses to pursue diversified activities, limiting the ability of these businesses to develop resilience in economically challenging times. Furthermore, the paper considers how the Coronavirus pandemic has driven many business activities online, therefore businesses with less reliable access to digital connectivity and lacking an online presence are likely to be more constrained in their ability to be resilient.

Highlights • Evidence suggests that a digital divide still exists between rural and urban areas. • Rural SMEs are more impacted by the digital divide than urban SMEs. • Small businesses are dependent on reliable digital connections to support basic business activities. • The Coronavirus pandemic has driven businesses to depend on reliable digital connectivity to support basic activities. • Limited digital connectivity in rural areas impacts the ability of rural SMEs to be resilient.