Businesses based in rural areas are twice as likely to have unreliable internet connections as their urban counterparts.
According to research by the British Chambers of Commerce (BCC), 30 per cent of firms based in the countryside do not have a reliable internet service.
By contrast, just 15 per cent of those in towns struggle with the same problem, along with 13 per cent of firms in inner cities and 12 per cent of businesses in suburban areas.
Small businesses are also particularly likely to have connectivity issues, with 24 per cent of sole traders and 21 per cent of micro-businesses saying they have difficulties with their internet service.
Across the business community as a whole, nearly one in five (18 per cent) companies in the UK say their internet connections are unreliable.
This is despite the vast majority (99 per cent) saying a broadband service that is fit for purpose is important to their operations.
The BCC is therefore concerned that connectivity issues are harming the ability of British companies to be competitive and fully embrace the latest innovations.
Indeed, 48 per cent of businesses surveyed said that if they had a more reliable connection, they would be able to use more applications such as cloud-based services, transfer large files and offer remote server access to employees.
Dr Adam Marshall, Director-General of the BCC, commented: "Significant numbers of companies of every size and sector lack reliable internet connectivity - a basic requirement for businesses to operate efficiently in today’s world.
"Unreliable connections stunt productivity, causing needless delays, costs and frustration.
"While businesses in every corner of the UK are affected, our research shows that it’s rural areas and small businesses that are most likely to suffer."
Dr Marshall acknowledged that the government has recently committed to investing in 5G technology and said it wants to build a world-class digital infrastructure in the UK.
However, he said there is still "a long way to go in getting the basics right".
Dr Marshall stated that the priority must therefore be ensuring all companies have connections that are reliable and of sufficient speed.
This, he added, would boost business confidence and encourage companies to maximise opportunities for growth, trade and investment.