Scottish Development International (SDI) case study analysis

Scottish Development International (SDI) provides support to businesses by encouraging inward investment and helping Scottish-based companies develop international trade. The report sets out the analysis of 17 case studies undertaken with businesses that have received support from SDI and Scottish Enterprise (SE) either to internationalise their activities or to attract inward investment. The study sought to address the direct and indirect effects of the investment and international trade and the role of the SDI and SE support.

The methodology consisted of a literature review and interviews with the 17 businesses, including 12 inward investment case studies and five internationalisation case studies.

For inward investment, the study found that direct benefits varied considerably by case. All have directly supported employment and most would expect to see improvements in productivity as a result of new investment. Overall, the investments have supported around 2,500 jobs and in almost three quarters of cases are deemed to have improved productivity. Many have brought new products or processes to Scotland, resulting in safeguarded activities that were under pressure from international competition. The support in all cases was judged to have played a major role in either increasing employment or retaining the business in Scotland. While feedback on SE/SDI non-financial support was positive, firms suggested that successfully securing parent company investment was equally down to their own work. These investments are not just important in their direct effects, but also in adding to the status of the plant within the group. A lack of investment makes them vulnerable to future reorganisation. Of the 12 cases, four showed strong conditions for spillover effects i.e. innovative activity, strong networks and part of defined cluster of activity. More specialist firms, with fewer employees and weaker networks were less likely to create spillovers. International management experience and innovation were identified as motivators for internationalisation. These cases are more linked into the Scottish economy and make more use of domestic suppliers. They also have more domestic competition, making their international expansion more likely to be followed by others. Economic conditions were identified as the main factor for all these firms. There was little evidence of spillover effects. There was some evidence of learning within the company as a result of internationalisation, with one case believing it had directly impacted on productivity. The conclusions on SDI interventions were very positive. In all cases there was a tangible sales value attributed to the support.

The report found that plants must have clearly defined roles within an international group, in order to retain activities in Scotland. For SE/SDI, the importance of international management experience and innovation for internationalisation points towards the value of improving leadership, and specifically assisting in bringing in management with international experience. These cases also highlight the importance of linkages and networks in providing a starting point in new overseas markets.