Uncertainty is an inevitable consequence of the democratic process. This is true of the independence referendum, irrespective of the outcome. The Scottish government can’t eradicate the uncertainties associated with a Yes vote, since independence would be a process that emerged from negotiation with the rest of the UK and international institutions. A No vote, too, creates uncertainties over Scotland’s place in the Union, the possibility of further constitutional change for Scotland, or for the UK’s relationship with Europe.
This uncertainty colours the environment in which business decisions are made. For instance, the prospect of a ‘Yes’ vote carries uncertainties around changes in fiscal and monetary policies, regulation of industries, what currency might be adopted, participation in international economic and political agreements, and so on. Equally, a vote for the union could also bring with it other uncertainties including access to EU markets and regulatory authority if the UK's future participation in the European Union is in doubt.
Such uncertainties have implications for businesses operating in Scotland, including whether to invest and expand capacity, withdraw from the market, locate operations elsewhere in the UK, Europe or the world, amongst others. Such implications may also vary depending on individual businesses, or between sectors and industries. There is a pressing need to understand – through independent, objective and systematic research - the uncertainties that are of most concern to business leaders and how these affect business decisions, and the ways in which alternative constitutional futures that might flow from the referendum might affect the decisions business leaders make.
My ESRC research fellowship will generate evidence that helps business decision-makers, policy-making officials and the public to understand, assess and predict the implications of the Scottish independence referendum for business decision-making. It involves around 60 interviews with senior business leaders in medium and large companies from across a range of strategically important sectors and industries operating in Scotland.
The project will explore business decision-making in conditions of constitutional and political uncertainty in Scotland and the United Kingdom. It will identify key types of uncertainty that are of concern to business leaders, and will develop a model of the types of possible business decisions against this backdrop of constitutional and political uncertainty. It will also model the likely impact of alternative constitutional scenarios on the decisions business leaders may make after the referendum.
As with the other projects supported by the ESRC programme on the Future of the UK and Scotland, this fellowship aims to replace conjecture with evidence and academic insight. The research will provide business decision-makers, policy-making officials and the public with decision-making tools that can improve and support decision-making in the midst of uncertain futures. Such tools will also be useful for informing the wider public debate on the implications of a Scottish independence vote for business decision-making.
Professor Brad MacKay is ESRC Senior Scotland Fellow, and Head of the Strategy and International Business Group and Chair in Strategic Management, University of Edinburgh Business School. This post was originally published on the University of Edinburgh's Referendum Blog.