Modelling the Effects of Public Support to Small Firms in the UK - Paradise Gained?



Modelling the Effects of Public Support to Small Firms in the UK - paradise Gained?

There has been a mix of government sponsored evaluations and research carried out
by independent researchers (e.g., Ernst and Young, 1996; 1997; Bryson
et. al., 1999).
While some of the focus has been on particular aspects of the operation of BLs, most
notably the work of the Personal Business Advisor (PBA), the overall approach has
concentrated on an:

examination of the rationale and effectiveness of BLs

assessment of the added value they brought to the provision of business
support services

A recent national “Value for Money” evaluation of BLs carried out by PACEC (1998)
and represented a significant contribution to our understanding of the effects of BLs
on the small business community in England. Of particular relevance to this project,
the study sought to provide both a qualitative and quantitative assessment of the
effects on the performance of users and non-users of BL services for the period 1994-
97. However, it should be noted that the PACEC study differed from this BL Tracker
Study in that they did not adopt a matched firm methodology but rather relied on an
assessment of the macro impact of the impact of BL assistance obtained from large-
scale surveys.

PACEC concluded that using BLs had a positive effect, with regression analysis
showing that use of Business Links was a significant variable in explaining growth in
assisted firms' turnover and employment. The analysis implied that Business Link use
per se had added nearly £55,000 to the turnover, and 1.63 workers to the employment,
of the average firm. From the qualitative analysis the results indicated that business
growth can be attributed directly to Business Links. During the three year period
covered by the research, the average firm increased its employment by 0.4 jobs, its
turnover by £76,000, its profits by £9,000, its net assets by £13,000 and its exports by
£6,000 because it had received Business Link support.

The Business Link Tracker Study

Building on earlier evaluations, the opportunity now exists, with more comprehensive
data and for a longer time period, to re-visit the key questions concerning the longer
term impact of BL assistance. This particular project seeks to establish whether BLs
are having the desired impact on assisted firms. This paper presents results of a
study, known as the Impact Indicators Project (IIP), commissioned by the Small
Business Service (SBS) of the Department of Trade and Industry (DTI) which had
two specific aims:

(a) To establish whether small firm support channelled through Business Links is
meeting the DTI’s objectives, specifically by increasing the capacity of small
businesses:

to grow and improve their productivity;

to exploit market opportunities abroad;

Stephen Roper and Mark Hart



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