Nearly all UK small businesses (97 per cent) have embraced the internet, but only 16 per cent feel it has increased their operational efficiency, according to research.

And a third (33 per cent) of small and medium-sized enterprises (SMEs) strongly feel the internet has made it harder to protect information.

Many SMEs have come to rely on the web more than they realise, said Professor Andrew Burke of Cranfield University, who carried out the research.

"There is no question that the internet has enhanced the performance of SMEs by enabling them to negotiate better with suppliers, make greater use of outsourcing and to operate more flexible working hours," he said.

But SMEs felt that that the internet hinders direct contact with customers and other businesses, with 46 per cent saying it had increased the complexity of their day-to-day business functions.