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

The evaluation of the impact of public policies to improve the performance of the small business sector has provoked a great deal of debate and research activity in recent years. The debate can be categorised in two broad ways. First, it can be seen in terms of the actual impact measures and schemes of small business support may have in terms of enhanced growth performance of SMEs. Second, the search for appropriate evaluation methodologies which reflect the range of problems associated with the accurate identification of the true effects of policy support. The much publicised "Six Steps to Heaven" paper by Storey (1998) provided a comprehensive overview of the problems associated with evaluation studies in the realm of the small business sector. Storey argued that the vast majority of assessments of the impact of policy support fall within the category of monitoring rather than true evaluation. The intention in this paper is to undertake an evaluation of Business Links in England adopting a methodology which seeks to avoid the methodological pitfalls articulated by Storey and in so doing achieve the approach. This paper describes the methodology employed in a tracker study of businesses that received advice and consultancy from the Business Link network in 1996. The purpose of the study was to assess the impact of Business Link support on productivity compared to a matched comparison group. 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.

"Developing an Evaluative Framework for Industrial Policy in Ireland: Fulfilling the Audit Trail or an Aid to Policy Development?"

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Evaluating the Net Additionality of Industrial Development Assistance in Ireland

In recent years, industrial policy evaluation has been a theme under much debate internationally much of which has been spurred on through the significant EU structural fund transfers of the 1990s. Despite this, there are still few well-established methodologies to aid the evaluation process and this remains a serious issue with which researchers in this field continue to grapple. An important question in any evaluation is what would have happened in the absence of assistance. One of the key questions regarding the effectiveness of industrial policy is the extent to which growth in individual firms can be attributed to the financial assistance provided by the appropriate agency. In reality, all or part of the employment created for example might have come into existence anyway. This is referred to as deadweight. In this paper, two methodological approaches for measuring the impact of grant assistance are developed. The data employed in the evaluative frameworks were gathered during face-to-face interviews with the relevant personnel of 40 firms that received grants from Enterprise Ireland (EI) in the Republic of Ireland (ROI) in the years 2000 and 2001. An important dimension of the analysis will be to investigate whether there are regional deadweight effects in Ireland by structuring the analysis in terms of the Dublin Region, City Regions and Rural areas. Approach 1: The Case Study Approach This approach involved the use of a questionnaire during face-to-face interviews. The aim of this technique was to utilize the views of individuals (firms) directly affected by policy in an attempt to identify a 'counter-factual position'. To assess deadweight directly respondents were asked to answer the hypothetical question of what would most likely have happened if they had not received assistance from EI. This definition of deadweight accounts for the various degrees or levels of deadweight as measured by time location and scale. The paper thus distinguishes between the various degrees of deadweight ranging from 'pure' ('full') and 'partial' to 'zero' deadweight (a dimension which has been overlooked in similar research to date). Approach 2: The Control Group Approach A counter-factual position may be achieved with the use of control groups of non-assisted businesses in Ireland and elsewhere. This approach is based on the principle that any observed difference in the growth performance of assisted and non-assisted businesses can be used to construct estimates of the net additionality of public policy support to assisted businesses. The implication here is that the difference in growth rates, whether measured in terms of employment, turnover, productivity or profitability, can be interpreted as the scale of the impact of the policy intervention - in this case financial assistance by EI. The main problem, as articulated by Storey (2000) and Roper et al (2001) , is that to interpret the difference in the growth rates between assisted and a non-assisted control group as the scale of the impact of financial assistance is fraught with methodological difficulties. The solution is essentially the need to construct a methodology which seeks to explore whether any observed differences between assisted and non-assisted control groups of businesses are due to differences in the characteristics of these groups or can be directly attributed to the effects of assistance. Further, there is a need to accurately isolate the effects of 'selection' and 'assistance' on those assisted businesses that had grown faster than non-assisted businesses. For example, where it is found that assisted small businesses grew faster than non-assisted businesses it is not clear whether their faster growth reflects: · the benefits of assistance; · a tendency for faster growing firms to be keener to apply for assistance; · or, whether assistance was successfully targeted on faster growing firms Within the terms of reference for this study it was not possible to construct a suitable methodology to undertake the necessary econometric modelling to address the separation of 'selection' and 'assistance' effects. Nevertheless, whilst recognising the constraints of the approach we would, however, argue that the use of control groups in this case do provide an important element in the definition of the counter-factual policy position. Finally, a comparison of the results obtained using the two methodological approaches is provided. Of key concern here is to assess the value of proceeding with evaluations which rely solely on asking policy recipients what they would have done in the absence of assistance. Do the results of such studies provide similar or different results from approaches which rely on large-scale databases of assisted and non-assisted controls? Further, is there a need for more elaborate evaluation methodologies in order to guide the nature and scale of industrial policy as operated by development agencies such as EI? Although the evaluative frameworks developed in this paper have been 'tested' in an Irish context, the logic is clear and the evaluative frameworks have a much wider international applicability regarding the evaluation of industrial policy interventions. Industrial policy evaluation is very much in its infancy in Irish academic and policymaking circles. As the adoption of evaluative approaches in the Irish context is set to increase (largely EU driven), the findings of this paper should provide timely and valuable lessons to those charged with the task of carrying out such evaluations.

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

The evaluation of the impact of public policies to improve the performance of the small business sector has provoked a great deal of debate and research activity in recent years. The debate can be categorised in two broad ways. First, it can be seen in terms of the actual impact measures and schemes of small business support may have in terms of enhanced growth performance of SMEs. Second, the search for appropriate evaluation methodologies which reflect the range of problems associated with the accurate identification of the true effects of policy support. The much publicised "Six Steps to Heaven" paper by Storey (1998) provided a comprehensive overview of the problems associated with evaluation studies in the realm of the small business sector. Storey argued that the vast majority of assessments of the impact of policy support fall within the category of monitoring rather than true evaluation. The intention in this paper is to undertake an evaluation of Business Links in England adopting a methodology which seeks to avoid the methodological pitfalls articulated by Storey and in so doing achieve the approach. This paper describes the methodology employed in a tracker study of businesses that received advice and consultancy from the Business Link network in 1996. The purpose of the study was to assess the impact of Business Link support on productivity compared to a matched comparison group. 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

When moving information online diminishes change : advisory services to SMEs

Small firms perform poorly. How to support SMEs effectively has occupied policymakers for decades. Previous work suggests weak competition as a cause of ‘the problem’. Therefore, the means of delivering support matters little. Accordingly, the government moved support online rather than be delivered in face-to-face exchanges between advisers and clients. However, we suggest adopting internal management practices to build capabilities does require face-to-face contact, so practices diffuse in a pattern like an ‘epidemic’. In support a multinomial logit model of 1334 cases of advice found SMEs that took advice to enhance internal management practices were more likely to be referred by other firms. Hence, we argue that moving online diminished change within these SMEs

Honeybee visual cognition: a miniature brain’s simple solutions to complex problems

PhDIn recent decades we have seen a string of remarkable discoveries detailing the impressive cognitive abilities of bees (social learning, concept learning and even counting). But should these discoveries be regarded as spectacular because bees manage to achieve human-like computations of visual image analysis and reasoning? Here I offer a radically different explanation. Using theoretical bee brain models and detailed flight analysis of bees undergoing behavioural experiments I counter the widespread view that complex visual recognition and classification requires animals to not only store representations of images, but also perform advanced computations on them. Using a bottom-up approach I created theoretical models inspired by the known anatomical structures and neuronal responses within the bee brain and assessed how much neural complexity is required to accomplish behaviourally relevant tasks. Model simulations of just eight large-field orientation-sensitive neurons from the optic ganglia and a single layer of simple neuronal connectivity within the mushroom bodies (learning centres) generated performances remarkably similar to the empirical result of real bees during both discrimination and generalisation orientation pattern experiments. My models also hypothesised that complex ‘above and below’ conceptual learning, often used to exemplify how ‘clever’ bees are, could instead be accomplished by very simple inspection of the target patterns. Analysis of the bees’ flight paths during training on this task found bees utilised an even simpler mechanism than anticipated, demonstrating how the insects use unique and elegant solutions to deal with complex visual challenges. The true impact of my research is therefore not merely showing a model that can solve a particular set of generalisation experiments, but in providing a fundamental shift in how we should perceive visual recognition problems. Across animals, equally simple neuronal architectures may well underlie the cognitive affordances that we currently assume to be required for more complex conceptual and discrimination tasks

Using smartphones in cities to crowdsource dangerous road sections and give effective in-car warnings

The widespread day-to-day carrying of powerful smartphones gives opportunities for crowd-sourcing information about the users' activities to gain insight into patterns of use of a large population in cities. Here we report the design and initial investigations into a crowdsourcing approach for sudden decelerations to identify dangerous road sections. Sudden brakes and near misses are much more common than police reportable accidents but under exploited and have the potential for more responsive reaction than waiting for accidents. We also discuss different multimodal feedback conditions to warn drivers approaching a dangerous zone. We believe this crowdsourcing approach gives cost and coverage benefits over infrastructural smart-city approaches but that users need incentivized for use

Joining the dots : building the evidence base for SME growth policy

This introductory article to the special issue on building the evidence base for small and medium-sized enterprise (SME) growth policy reviews the themes covered by the contributions to the special issue and identifies a number of directions for future research and policy

Assessing the effectiveness of business support services in England: evidence from a theory based evaluation

In England, publicly supported advisory services for small firms are organised primarily through the Business Link (BL) network. Based on the programme theory underlying this business support services we develop four propositions and test these empirically using data from a new survey of over 3,000 English small firms. Our empirical results provide a broad validation of the programme theory underlying BL assistance for small firms in England during 2003, and more limited support for its effectiveness. More specifically, we find strong support for the value of BL operators maintaining a high profile as a way of boosting take-up. We also find some support for the approach to market segmentation adopted by BL allowing more intensive assistance to be targeted on younger firms and those with limited liability status. In terms of the outcomes of BL support, and allowing for issues of sample selection, we find no significant effects on growth from ‘other’ assistance but do find positive and significant employment growth effects from intensive assistance. This provides partial support for the programme theory assertion that BL support will lead to improvements in business growth performance and stronger support for the proposition that there would be differential outcomes from intensive and other assistance. The positive employment growth outcomes identified here from intensive assistance, even allowing for sample selection, suggest something of an improvement in the effectiveness of the BL network since the late 1990s