Kevin F. Mole

Differential gains from Business Link support and advice:a treatment effects approach

The provision of advisory support to small firms is almost ubiquitous in OECD countries, although it is organised in different ways and is justified on slightly different grounds. In England publicly supported advisory services are provided through the Business Link (BL) network. Here, we consider two questions: what sort of companies receive advisory support from BL; and, what types of firms benefit most from that support? Our analysis is based on a telephone survey of 2000 firms, around half of which had received intensive assistance from BL between April and October 2003. Probit analysis suggests that the probability of receiving assistance was greater among younger businesses, those with larger numbers of directors in the firm, and those with more gender diversity among the firms leadership team. Our business-growth models suggest that BL intensive assistance was having a positive effect on employment growth in 2003. BL had a positive but insignificant impact on sales growth over the period. Employment growth effects tend to be larger where firms have a management and organisational structure, which is more conducive to absorbing and making use of external advice. The analysis suggests that BL might increase its impact through targeting these larger, more export-orientated, businesses. Employment growth effects differ little, however, depending on either the ethnic or the gender diversity of the leadership team.

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

In England, publicly supported advice to small firms is organized primarily through the Business Link (BL) network. Using the programme theory underlying this business support, we develop four propositions and test these empirically using data from a new survey of over 3000 English SMEs. We find strong support for the value to BL operators of a high profile to boost take-up. We find support for the BL’s market segmentation that targets intensive assistance to younger firms and those with limited liability. Allowing for sample selection, we find no significant effects on growth from ‘other’ assistance but find a significant employment boost from intensive assistance. This partially supports the programme theory assertion that BL improves business growth and strongly supports the proposition that there are differential outcomes from intensive and other assistance. This suggests an improvement in the BL network, compared with earlier studies, notably Roper et al. (2001), Roper and Hart (2005). En Angleterre, l’aide aux petites entreprises, soutenue par le secteur public, est principalement organisée par le réseau Business Link (BL). Nous basant sur la théorie des programmes qui servent de base à ce soutien entrepreneurial, nous définissons quatre propositions que nous testons empiriquement à l’aide d’informations obtenues dans le cadre d’un nouveau sondage réalisé auprès de plus de 3000 petites et moyennes entreprises anglaises. Nous bénéficions d’un grand soutien eu égard la valeur accordée aux agents de BL dont le profil privilégié accroît le pourcentage d’adhésion. Nous bénéficions d’un grand soutien pour la segmentation du marché de BL qui concentre ses efforts à aider les entreprises naissantes et celles à responsabilité limitée. Si l’on tient compte de la sélection d’échantillons, on observe que les “autres” types d’aide n’ont pas d’influence majeure sur la croissance mais, par contre, on note une augmentation considérable de l’emploi suite à une aide intensive. Ces résultats soutiennent en partie la thèse de la théorie des programmes, à savoir que BL accroît l’essor de l’entreprise et soutient vigoureusement la proposition que l’aide intensive et des autres types d’aide sont sources de résultats différentiels. Ces conclusions suggèrent une amélioration au sein du réseau BL, par rapport aux études antérieures, particulièrement celles de Roper et al. (2001), Roper and Hart (2005). En Inglaterra, el asesoramiento a las pequeñas empresas, apoyado por el sector público, se organiza principalmente a través de Business Link (BL),una red de vinculaciones empresariales. Empleando la teoría de programas que sirve de base a este apoyo empresarial, desarrollamos cuatro propuestas y las comprobamos empíricamente con datos obtenidos de una nueva encuesta de más de 3000 PYME inglesas. Encontramos mucho apoyo al valor para los operadores de BL de ocupar un lugar destacado para incentivar la tasa de aceptación. Encontramos apoyo a la división del mercado de BL que concentra la ayuda intensiva en las empresas incipientes y en las de responsabilidad limitada. Teniendo en cuenta la selección de muestras, no encontramos que el crecimiento era afectado significativamente por otros tipos de asistencia, pero se evidencia un aumento considerable en el nivel de empleo debido a la ayuda intensiva. Estos resultados respaldan en parte la aseveración que BL aumenta el crecimiento comercial y apoya totalmente la propuesta que la asistencia intensiva y de otros tipos produce consecuencias diferenciales. Estas conclusiones sugieren una mejora en la red BL en comparación con los estudios anteriores, notablemente Roper et al (2001) Roper and Hart (2005). In England wird die öffentlich unterstützte Unternehmensberatung für kleine Unternehmen hauptsächlich durch das Business Link (BL) Netzwerk organisiert. Mit der Programmtheorie, die dieser Unternehmensbetreuung zugrunde liegt, entwickeln wir vier Vorschläge und prüfen diese empirisch mit Daten aus einer neuen Umfrage unter mehr als 3000 englischen KMUs. Wir finden bedeutende Hinweise, dass ein BL Betreiber einen hohen Bekanntheitsgrad benötigt, damit seine Dienste angenommen werden. Wir finden eine Fundierung für die Marktsegmentierung der BL Netzwerke, die das Ziel hat, intensive Unterstützung speziell für junge Unternehmen und solche mit beschränkter Haftung zu bieten. Unter Berücksichtigung der Stichprobenauswahl finden wir keine bedeutenden Auswirkungen auf das Wachstum durch „andere“ Unterstützung, finden jedoch eine erhebliche Beschäftigungssteigerung durch intensive Unterstützung. Dies untermauert teilweise die Behauptung der Programmtheorie, dass das BL Netzwerk Unternehmenswachstum fördert und bekräftigt die These, dass intensive und andere Unterstützung unterschiedliche Ergebnisse liefern. Dies deutet auf eine Verbesserung des BL Netzwerks im Vergleich zu früheren Studien, insbesondere Roper et al. (2001) sowie Roper and Hart (2005) hin.

The use and deployment of soft process technologies within UK manufacturing SMEs: An empirical assessment using logit models

This study assesses the adoption of different soft process technologies from a survey of 218 British engineering and electronics small and medium‐sized firms (SMEs). The new process (soft) technologies that were modeled included total quality management, Kaizan, and statistical process control. Logit models demonstrate that the determinants of soft process technology adoption vary significantly from technology to technology. The study questions a blanket approach to technology adoption. Firm‐specific factors make a larger difference to the adoption of process technologies than competitive factors. While on the whole small firms are slow to adopt new techniques, this does not hold for all technologies, and future research might investigate what technologies SMEs adopt and why. Benchmarking, suggestions schemes, problem‐solving techniques and ISO 9000 adoption was unrelated to firm size, which holds out the prospect of soft process technologies as an alternative technological path for small firm productivity growth.

Entrepreneurial leadership, capabilities and firm growth

In this article, we review and synthesize extant research on entrepreneurial leadership, capabilities and their influence on the growth of small- and medium-sized enterprises (SMEs). First, we begin by examining the processes, routines and resources underlying substantive growth capabilities; these are capabilities that enable a firm to grow by competing in its market(s) on a day-to-day basis. Second, we explore leadership in terms of the cognitions motivations and decisions to invest in growth. Third, we examine the dynamic capabilities, which extend, modify or create new substantive (growth) capabilities, to support the sustained pursuit of new opportunities. In so doing, we explore the interrelationships between substantial capabilities, leadership and dynamic capabilities. We conclude the review by highlighting areas of consensus and contention in the literature, from which we propose fruitful areas for future research.

Making policy choices in nonfinancial business support: an international comparison

The paper reports an international literature review of advisory business support. Most industrialised countries provide a degree of business support to small and medium-sized firms, such as information and advice. It is normal for programmes to be justified using arguments about market failure and programme designers tend to weight different aspects of market failure leading to different policy choices. The paper was based upon a literature review of business support in OECD countries conducted in 2004. A visual analogue scale was developed based on the choices made by policy makers across OECD countries which developed a taxonomy of business support choices to enable both a more systematic comparison of, and to differentiate, programmes. There are a considerable number of choices that can be made regarding how a programme is designed and delivered for a specific set of market failures. The key result of the research is to suggest a hierarchy of policy choices. At the top are four choices: Who delivers? What ‘type’ of support? How is it rationed? And how is it funded? At a point in time when there are significant institutional changes in English business support the paper has the opportunity to contribute by making more explicit the policy choices in the area of business advice to small firms.

The implications of public sector small business advisers becoming strategic sounding boards: England and Scotland compared

Changes have been made to systems of publicly funded business advice to implement a ‘strategic sounding board’ role for business advisers. Previous literature has shown how this role could be modelled in a ‘coupole’. The ‘coupole’ administers a programme but does not deliver it. The shifting of policy towards this strategic sounding role takes place within the context of existing organisations, however. We review three streams of the literature on business advice: small firm policy, critical management consulting, and organisational development consulting. We introduce a triad of producer, process, and client to understand the implications of changes to the business advisers role. The paper examines two case studies where public policy has changed to shift business advisers into this sounding board role: England and Scotland. The research suggests: (1) that the new role increases the skills demanded of public sector business advisers; (2) that changes to one part of the triad impacts on all the others; (3) the existing organisation contributes to the way in which the producers react to change in the other parts of the triad. The responses in the networked English support organisations have been innovative but fragmented with little evaluation. In the more hierarchical Scottish organisations, the response has been more measured, both in the sense of being cautious and in the sense of being evaluated.

Systems theory and the common‐sense view of advisers

UK Business Link provides bespoke advice to small to medium‐sized enterprises (SMEs) through business advisers. The Small Business Service’s consultation paper, “Integrating the business support infrastructure for SMEs”, advocated “customer‐driven, not supply‐led” publicly funded business support, where personal business advisers (PBA) signpost the company to advice. Advisers must assess their client’s needs using their business experience, which results in the advisers developing heuristics (or “rules‐of‐thumb”) to understand the essential components of the flourishing firm. The paper contends that an inductive methodology can uncover advisers’ heuristics, developed to derive a practical “model” of success. In total, 29 business advisers participated in individual semi‐structured interviews and a focus group of ten public sector business advisers provided a qualitative element of the research. The model borrows concepts from systems theory to conceptually represent how practical business advisers view the world of the small firm manager. This suggests that there is a tension between the focus of business advisers on a “closed” system of management, whereas owner‐managers concentrate on a more concrete open system of sales, cash and production.

Tacit knowledge, heuristics, consistency and error signals : how do business advisers diagnose their SME clients?

Purpose – This paper aims to consider the methods used by publicly supported business advisers to assess their client businesses. These business advisers are increasingly required to diagnose the problem or opportunities that face their clients before recommending types of business support.Design/methodology/approach – The study reports semi‐structured interviews with 39 business advisers, from accountants to publicly funded Business Link business advisers.Findings – The study suggests that one of the key to understanding the way in which advisers assess businesses is through congruence, that is does the business reflect the aims and objectives of the management in its operations and processes. Failure to be congruent can deliver error messages to advisers that suggest a problem diagnosis.Practical implications – Business advice is shown to be a process that involves judgemental decision making. In turn, this may enable advisers to focus on solutions to these identified problems.Originality/value – This p...

Liquidity constraints in the first year of trading and firm performance

This article uses a survey of new businesses for three regions of England – Buckinghamshire, Shropshire and Tees Valley – and focuses on the effect of liquidity constraints experienced within the first year of trading on firm growth (measured using employment) and ‘partial survival’ (the probability of remaining in activity). We control for a range of firm characteristics, management traits and strategy variables. The empirical framework adopted allows for sample censoring arising from firm exit. Fewer firms in the less wealthy area reported liquidity constraints. Our results suggest that the experience of the first year is critical to the survival and subsequent resilience of the firm but has no effect on growth.

Which SMEs seek external support? Business characteristics, management behaviour and external influences in a contingency approach

To improve SME growth and competitiveness, governments often encourage business owner-managers to make use of external sources of support. Whether they seek this depends on the degree to which they perceive themselves to need assistance. Additionally, its use can be constrained by market failures. In this paper, we model whether SME owner-managers seek information and advice from formal sources, including public and private providers. In 2011, the researchers conducted a telephone survey of 1202 SMEs (1–249 employees) in England to assess the use and non-use of external support between 2008 and 2011. Using a contingency approach, we model various influences on the use and non-use of formal support and identify those owner-managers who face more concerns but have less confidence in their capabilities. We find that the demand for support, especially from private providers, is fuelled by a firm’s objective to grow and a size threshold, although this is moderated by various concerns which increase the likelihood of using public sources. The willingness to take informal advice can act as a stepping stone to using formal sources. Whilst market failures affected less than a fifth of firms, those with women directors were particularly affected as were newly founded firms.