Modelling the Effects of Public Support to Small Firms in the UK - paradise Gained?
• to increase economic growth, opportunities and competitiveness in
the regions.
(b) To provide a baseline of the impact of Business Link support on the
performance of the firms that they assist.
The origins of the project date back to 1996 when it was decided that serious
evaluation of the impact of public sector business support to the small firm sector
demanded a longitudinal and detailed database in order to overcome many of the well
known deficiencies of previous studies (see Storey, 1998). The study is confined to an
examination of significant interventions by BLs in small firms in the period January
to June 1996.
One way of addressing the methodological concerns associated with previous
evaluation studies is to undertake a comparative analysis between assisted and non-
assisted firms. However, the necessity here is to construct a methodology which
seeks to explore whether any observed differences between these groups are due to
differences in the characteristics of the assisted and non-assisted groups or can be
directly attributed to the effects of assistance. The chosen methodology will examine
the effect of business support on a range of performance indicators and, using an
approach to identify separately the ‘selection’ and ‘assistance’ elements of the
performance differential between assisted and non-assisted firms.
This paper can be divided into two halves. The first is the development of an
appropriate methodology that is both ambitious in approach and logistically feasible.
The second is the reporting of the studies findings on the impact of BL support on
SME performance.
METHODOLOGY
The BL Tracker Study, as originally designed by the DTI, was modified towards the
end of the research period to draw on methodological developments in measuring the
impact of public subsidy on SME performance, mostly notably Roper and Hewitt-
Dundas’s work on the impact of employment grants (Roper and Hewitt-Dundas,
1998, 2001). What follows is a reporting of the basic, or original, research model and
the enhanced model proposed to the DTI by the research team at the Small Business
Research Centre (SBRC) and the Northern Ireland Economic Research Centre
(NIERC) in association with Prism Research Ltd.
Basic Research Model
As stated above a critical element in any evaluation of the impact of public policy on
SME performance is to undertake a comparative analysis between assisted and non-
assisted firms. The DTI decided early on in the development of the methodology that
the "Impact Indicators Project" should be a tracker study so that the medium term
rather than just immediate effects of intervention by Business Links (BLs) (mainly
advice and consultancy as opposed to grants) could be explored. It was also decided
to use administrative data to reduce the level of sample attrition by non-response,
drawing on the Inter Departmental Business Register (IDBR) which pulls together
Stephen Roper and Mark Hart