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?

comparisons of the performance of the assisted and non-assisted groups
provide little information on the quality of jobs promoted.

The approach adopted follows that of Roper and Hewitt-Dundas (2001) work on the
impact of employment grants in Northern Ireland. It combined the data collected as
part of the basic research model with interview survey data on firm characteristics,
business performance, market position, strategic development, owner-manager
characteristics and external support. Analysis using the basic research model and the
original Impact Indicators database would have provided relatively little information
on the characteristics of assisted and non-assisted businesses other than their location,
broad industrial group, age and initial size. The additional survey, therefore, had two
purposes:

(a) To collect information on a range of characteristics which, in addition to BL
assistance, might have influenced business performance (see, for example,
Storey, 1994; Barkham et al., 1996; Roper and Hewitt-Dundas, 2001). These
included, for example, the aspirations and characteristics of the owner-
manager and the markets in which the firm was operating.

(b) To collect information on factors thought to influence the probability that a
particular firm would have contacted (or been contacted) and received
assistance from Business Links (e.g. PACEC, 1998, pp. 9-23). This is
important as the sample selection models which are used to identify the
‘selection’ and ‘assistance’ effects require a set of variables which are thought
to influence the selection probability (i.e. the probability of receiving BL
assistance) but
not firm performance (e.g. Cosh et al., 1997).

The survey methodology was also designed to reflect the underlying principle of the
Impact Indicators database in that information was only collected from comparator
firms when its matching assisted firm had already been interviewed. This gives
detailed data on a matched sample of assisted and non-assisted firms, which is used as
the basis for the sample selection models.

Interviews were conducted with the owner-manager of each enterprise or another
member of the senior management team. The questionnaire covered the following
areas

(a) Company background - including legal status, main products, export
and domestic sales, innovation and quality certification

(b) Market situation - number of customers and sales concentration,
number of suppliers and competitors

(c) Owner-manager - whether the current owner-manager was the
company founder, his/her equity share, their attitudes to sharing
ownership and their age and qualifications.

(d) Strategic direction - strategic priorities and strategy and degree of
formalisation of business plan.

(e) Management - management style, management systems

(f) Sources of External Help - sources of help, types of help, support from
other sources, ways of contacting business links.

(g) Company performance - turnover and employment from 1996-2000.

Stephen Roper and Mark Hart



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