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Developing a Robust Evaluation Evidence Base for Business Support - Professor Kevin Mole (ERC)
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Developing a Robust Evaluation Evidence Base for Business Support - Professor Kevin Mole (ERC)

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  • 1. Developing a Business Support Framework – where does the evidence lead us? Kevin Mole (ERC) Associate Professor
  • 2. Business Support Framework Which way forward for business support policy? From previous UK evaluations > Business Link From an International review of support: > Syntens and Growth-houses
  • 3. Choices for business support policy broader or deeper? Evaluation of Business Links mid 2000 Historically the network model had local Business Link Organizations as franchisees SBS the funders of the programme wanted to explore good practice in local Business Link Organizations Mole K F, Hart M, Roper S, Saal D S, 2011, "Broader or deeper? Exploring the most effective intervention profile for public small business support" Environment and Planning A 43 87 - 105
  • 4. Business Link Organisations had choices Sma l l Bu si n e ss Se r v i c e Ba se l i n e £ Learning and Skills Council £ European Social/Structural Funds £ Regional Development Agencies
  • 5. How many firms helped versus how much each was helped Low High High High-Low Pipeline Forcing High-High Managed Pipeline Forcing Brokerage Low Low-Low Light-touch Brokerage Low-High Managed Brokerage Intensity of assistance ProportionofFirmsassisted
  • 6. Clustering Managed Brokerage 0 200 400 600 800 1000 1200 1400 BLO Tyne and Wear South Yorks Durham N. Manch Merseyside Nrthumbria E.Lancs Herts B'ham Salop All bar Costperintervention
  • 7. Model 3: Forcing Clients through the Pipeline/Funnel ‘Trigger points’ to identify firms that may be ‘amenable’ to intensive assistance. BLOs are very keen to get a high proportion of firms through to the end of the funnel
  • 8. Broader versus deeper Low High High High-Low Pipeline Forcing High-High Managed Pipeline Forcing Brokerage Low Low-Low Light-touch Brokerage Low-High Managed Brokerage Intensity of assistance ProportionofFirmsassisted
  • 9. Impact Coefficients in Regression Models of Employment E mp l o y me nt Gr o wt h Co e f f t - st a t A. I nt e nsi v e l y - a ssi st e d f i r ms L i g h t - t o u c h 0 . 0 25 2. 7 5 7 M a n a g e d Br o k e r a g e 0 . 0 69 4 . 1 1 7 P i p e l i n e F o r c i n g 0 . 0 1 8 1 . 2 7 5 M a n a g e d p i p e l i n e f o r c i n g 1 . 7
  • 10. Significant differences between the profiles of BLO assistance The key differences between the four models of BL assistance/BLOs were: > Managed brokerage BLOs were most likely to be providing intensively-assisted firms with business planning assistance or action plan development > Help with raising finance was also most likely to be offered by managed brokerages; > Managed brokerages and BLOs operating both managed brokerage and Pipeline Forcing managed pipeline forcing brokerage were most likely to be providing assistance with e- commerce and IT.
  • 11. But timing of BL impact means that we may be too early to judge… 0 10 20 30 40 50 60 already next year next 2 3>5 5+ none Intense Other
  • 12. Data linking shows that effects can take place after considerable time lags…
  • 13. Syntens in The Netherlands Many SMEs are not innovative Syntens reaches beyond… > Engaging groups of ‘missing’ companies through Futurized businesses > Diagnosing innovative capacity > Providing a tailored innovation roadmap
  • 14. Futurized Businesses identified a middle group of late adopters 1. First, they used Chambers of Commerce data to identify companies with no previous contact that had five plus employees in : manufacturing, construction, wholesale, transport and business services. 2. A team from Syntens, the Chamber of Commerce and other regional partners prioritized this list based on the importance of sectors, and the potential of the companies. 3. small local areas were selected for a campaign > including talking to local representatives, and > gaining publicity in local papers and radio. 4. SMEs were phoned by well prepared and experienced Syntens consultants, who listened to the challenges that faced owner and tried to arrange a meeting with the SME manager (consultants had a 50% success rate whereas a call centre had a 1-in-10 rate)
  • 15. Consultants Visited Consultants prepared a profile of the > ambition, > willingness to change, > opportunities, > innovation capabilities and > current problem and needs. The profile and current problems leads the consultant to offer activities or referrals to third parties. The consultants also followed up with extra information because they argued that this group of firms were poor at searching for new knowledge.
  • 16. Innovation Quick Scan (web based) Innovator Follower 7 5 Natural Systematic InnovationPotential 10 0 8
  • 17. Innovation Quick Scan (web based) Innovator Follower 7 5 Innovation Urgency Ambition Natural Systematic InnovationPotential 10 0 6 8
  • 18. Syntens Process …producing a roadmap… Syntens cost €40m in 2009 to act as a sounding board, point of referral and innovation specialist. Synten’s tailored consultancy is time-rationed: companies can receive a maximum of 16 hours per year per company. The consultants determine the innovation ability of a business looking at 10 enablers of innovation success, which are very broad including: strategy, organization, culture, finance, skills, getting knowledge and technology, generating ideas, realizing ideas, marketing new products and the exploitation of new products. The outcome from the 2 days of tailored consulting is a roadmap of where the company might need to improve to match their innovation capability with their innovative ambition. In this sense the programme, responds to the need for SMEs to have a strategic sounding board and a space for reflection.
  • 19. Prospects for Syntens Syntens say that 55% of firms followed up their contact to become more innovative “..it is sound policy to invest time and effort in less innovative companies but only if you work in a demand driven (“listen”) way and ensure that the visits are performed by experienced consultants” However, there is no rigorous evaluation beyond the take- up evidence
  • 20. The Growth House as a Central Hub
  • 21. The nine objectives of the GHs for 2012 (Contract of requirements) 1 A minimum of 2.650 high-growth enterprises is selected each year through business diagnosis and these are provided a growth plan and further undertake a user evaluation. 2 At least 80 % of the selected enterprises are referred to intermediaries. 3 At least 70 % of the selected enterprises will recommend GHs to others. 4 At least 80 % of the intermediaries are satisfied with the particular GH. 5 At least 80% of local collaborators are satisfied with the GHs. 6 At least 70% of the selected enterprises will refer intermediary to others. 7 High-growth enterprises will increase employment by at least 10% in comparison to similar enterprises in the control group from 2011 to 2012. 8 High-growth enterprises will increase turnover by at least 15% in comparison to similar enterprises in the control group from 2011 to 2012. 9 High-growth enterprises will increase export by at least 10% in comparison to similar enterprises in the control group from 2011 to 2012.
  • 22. The Growth Wheel Startup Company (vaeksthjulet.dk)
  • 23. Growth House managers assessments of system strengths… • Firms receiving GH services have higher growth rates than firms in the control group (confirmed by DBA evaluations). • The face-to-face interaction with firm owners is a major strength of the programme. • The GHs have highly educated programme advisers, commonly with several years of experience from private companies either as business owners or employees, and this is highly respected by firm owners. • Business diagnosis can change a firms’ view of its major challenges; a change necessary to unleash its growth potential. • Changing the mind-set of owners is key to the firms’ success. • The GHs can ‘push’/motivate the firms into receiving necessary consulting services, which they may otherwise have hesitated to take actions to receive. • The GHs do not compete in the market of private consultant .
  • 24. …and weaknesses Operational • Programme advisers are limited in the amount of time that they can spend with the firm, before referring it to intermediaries. • Private intermediaries are not publicly screened or evaluated other than online user evaluations. There are 2537 private consultants to choose from at the GH internet site. Evaluation • Activities need to be evaluated more thoroughly on qualitative measures to provide specific answers to the antecedents of growth in firms. • The evaluation only gives insight into the satisfaction on an aggregate level –GHs only learn informally (through direct contact with client firms) whether the companies are satisfied with the services. • the GH programme is evaluated on the firms satisfaction with private intermediaries, but GHs have no right to influence the firm’s choice of the specific private intermediary to avoid any distortion of a freely competitive market.
  • 25. International Evidence Authors Title Programme Method Finding Cumming, D. J. & E. Fischer (2012). Publicly funded business advisory services and entrepreneuria l outcomes The Innovation Synergy Center in Markham Controls are included for endogeneity and/or Heckman- sample selection corrections. Adviser hours increased both sales from the firm and their likelihood to obtain intellectual property rights Hoffmann, A, Hoeg-Kock and Storey, D J (2012) Theory and practice of entrepreneurs hip policy: gazelle hunting by government Growth Houses, 2008 and 2009, and 2010-11 Control group analysis using population wide control groups Growth house clients grew sales faster (or their sales fell less) than control group firms
  • 26. International Evidence Authors Title Progra mme Method Finding Kosters S. and M. Oschonka (2011) Public business advice in the founding process: an empirical evaluation of subjective and economic effects Start-up advice Propensity score matching No evidence found for better start-up performance with advice, but indications that advice helps those with fewer resources to overcome barriers in the founding process Jarmin, R. (1999) Evaluating the Impact of Manufacturin g Extension on Productivity Growth MEP (technic al but also soft support) Difference- in- difference, fixed-effects models, two-stage selection model Positive impact of programme confirmed, with larger productivity growth effect for small firms (rather than for large firms). Value added also significantly higher than for control group.
  • 27. Conclusion >Existing businesses are more likely to survive >SME owner-managers can be encouraged to reflect on their performance >The mechanism for business support is to develop the business plan >‘Deeper’ approaches like Syntens and Growth houses diagnose and develop action plans to spur action

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