COMPANIES WHICH embrace technology grow faster as a result, and although many small firms are taking up the benefits of IT, Scotland is still in danger of falling behind the digital curve.

The IQ Of The British Network survey, which claims to be the most detailed view of British businesses' use of technology yet undertaken, demonstrates a clear relationship between strategic high-tech adoption and commercial success. It shows that 80% of Scottish business leaders now believe that IT is vital to their company.

Published today by Cisco, the report shows that the UK's fastest growing firms are those where the latest advances have been adopted.

"If you invest wisely, technology will deliver greater efficiency and improved communication throughout your business. In many ways this survey only confirms what technologists have been saying for years, but now it's down there in black and white," said Gordon Thomson, head of Cisco's Scottish operation.

"High-growth companies where turnover has increased by more than 15% in the past year are twice as likely to have flexible working capabilities and seven times more likely to offer wi-fi networking across their offices than firms with static growth."

This is not an unfamiliar mantra, yet despite decades of being sold the benefits of technology the survey found that 32% of Scottish organisations believe they are being held back by an inability to respond to change, considerably more than the 20% figure reported in England and Wales. Underlining a worrying trend, the study found that while only 5% of firms south of the Border where technically incapable of supporting advances such as teleworking, in Scotland that figure rose to 11%.

"I am often amazed by the reluctance of some companies to adopt tech- nologies like videoconferencing. These advances are key to overcoming Scotland's remote geographical position and I think its time the entire business community faced up to the reality that they have no choice; they must embrace IT or face the consequences," said Thomson.

The picture is not entirely black however. New research published by BT shows that, as the explosive MySpace phenomenon sinks its hooks deeper into the business world, Scottish companies have been first to respond. Hundreds of SMEs across the country are actively promoting themselves online via social networking communities, with Aberdeen and Elgin enjoying the greatest concentration of blogging businesses in Britain.

"There is a distinct feeling amongst the SME community that technology has taken the personal touch out of business, and they're using web 2.0 to put it back. Having a website is not enough, and online networking is emerging as an important new form of marketing," said Ivan Croxford, head of market development at BT Business.

"Our experience is that Scottish businesses have been amongst the first to embrace this. There's a lot of enthusiasm north of the Border and statistically take-up there has been significantly faster than in the rest of Britain."

The research demonstrates a keen awareness among SMEs of the potential marketing benefits of digital interaction. About 57% of the decision makers surveyed said that economic life had become less personal as a result of technology, and with 75% listing personal recommendations as the top reason to do business with a company, 27% are now using the internet to network with potential partners and customers.

It is a movement driven by the question of profits and trust. While 52% of the respondents claimed that as much as half of their new business is now generated by personal introductions, 20% of sole traders never trust companies of which their only experience is browsing a website. There is a gap there, and an increasing number of companies are attempting to bridge it by presenting a more personal face online.

BT's Tradespace portal is being touted as the tool to help deliver these benefits. Billed as a fully customisable, multi-dimensional tool for marketing and interaction, visitors to the portal are presented with the most popular content generated by the 8000 businesses currently signed up to the service, which was soft launched in April. Allowing buyers and sellers to rate each other's services, collaborate or converse, the service is currently attracting new members at a rate of 100 per day.

In Scotland, the hottest action has been in the crafts, holiday accommodation and women's fashion verticals, but a wide variety of firms are now clambering aboard the web 2.0 bandwagon. From Edinburgh's Stripped Art Gallery to cleaning specialists Arrow Supplies of Falkirk, hundreds of Caledonian companies are using a blend of blogs, photos and videos to put a human face on their operations.

"There has been a lot of hype about social networking, but the fact is that if you get it right it works," said Richard Mahony, senior analyst at Ovum. "Using blogs, podcasts and sites like Facebook can improve your business's profile and deliver revenue, but it's not just about sales and marketing. It's another example of the way the web changes our ability to deliver goods and services."