Modelling the Effects of Public Support to Small Firms in the UK - paradise Gained?
priori reasoning to suggest why assisted and non-assisted firms should differ in these
respects, it is nonetheless, a consideration for future studies wishing to expand the
range of possible impact variables.
Other methodological issues relate to the structure of the sample itself which was
based originally on a census of BL assisted clients and comparable controls in specific
geographical areas. In other words while the results are likely to provide an accurate
assessment of the impact of BL in these areas it is not necessarily representative of all
areas covered by the BL network.
CONCLUSIONS AND RECOMMENDATIONS
Using data from the specially constructed Business Link Impact Indicators Database
for the period 1994-2000 together with a survey of assisted firms and non-assisted
firms , and adopting an econometric approach designed to make allowance for both
'assistance' and 'selection' effects, this study concludes that:
• First, we find no evidence that in 1996 BL assistance was being targeted
effectively at faster growing firms.
• Second, we find some, albeit tentative evidence, that BL assistance in 1996
was having a positive effect on productivity growth.
• Third, we identify a positive but statistically insignificant effect of BL
assistance on turnover and employment growth.
• Fourth, our analysis has highlighted a number of other factors which
contribute to productivity, turnover and employment growth. The range of
these factors - embracing market conditions, business strategy, the
characteristics of the owner-manager and the firm itself - emphasise the
complexity of the process of business growth and the consequent difficulties
in both modelling and assisting the process.
The value in maintaining large-scale "tracker" databases to assist in the immensely
difficult task of policy evaluation cannot be understated. Other studies have made
important contributions to the question of the impact of Business Link assistance to
small firms in the UK (e.g., PACEC, 1998; Bryson et al., 1999 and Bennett et al.,
2000), but none have been able to separate out the interaction between 'selection' and
'assistance' effects. It has only been possible to do so in this study due to the
longitudinal databases specifically constructed for this purpose. While many of the
results presented above concerning the precise ways in which BL assistance achieve
these impacts on productivity will be debated among the academic and practitioner
community perhaps the more important message of the paper has been to underline
the value of striving to achieve methodological paradise!
Leaving aside the somewhat qualified positive message of this evaluation study for
the overall priorities of the DTI, in terms of encouraging a more competitive SME
sector, the importance of investing in this type of policy evaluation framework and its
Stephen Roper and Mark Hart
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