Modelling the Effects of Public Support to Small Firms in the UK - paradise Gained?
downwards the overall assistance impact, effectively underestimating the ‘true’
positive impact on productivity growth of BL assistance.
Other factors which influenced productivity growth over the 1996 to 2000 period
were as follows (Table 4):
• Company Characteristics - larger firms tended to have faster productivity
growth although this effect was not statistically significant. Previous
productivity growth also had a negative effect on productivity growth over the
1996 to 2000 period. This is suggestive of a growth - consolidation phasing in
business growth and perhaps underlies a ‘catch-up’ motivation for firms to
seek BL assistance in 1996.
• Strategy - Firms having an export growth objective tended to have lower
growing productivity than other firms (an effect which is also evident in sales
growth). Other aspects of business strategy were less significant although
positive productivity effects were associated with strategic aspirations to
increase firms’ market shares in their current markets and develop new
products for new markets.
• Owner manager - small firm experience had a positive effect on productivity
growth but more significant were negative effects associated with the age of
the owner-manager and whether or not s/he was willing to share equity in the
business. In particular, firms run by owner-managers in the 40-50 age group
tended to have lower productivity growth than those run by younger owner-
managers. Willingness to share equity in the business also weakened firms’
productivity growth performance.
• Location - this proved to be an important element of productivity growth
linked to the relatively strong locational effects on turnover growth. Firms in
the rural and industrial city clusters both increased their productivity more
rapidly than those in the Birmingham and London clusters.
Stephen Roper and Mark Hart
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