This page offers an overview of why we are interested in business advice as a means of encouraging local economic growth and offers insight on what does and doesn’t work in this policy area.
It summarises some of the evidence we already have on what works when delivering these types of programmes, provides guidance on what we know about the effectiveness of different ‘design features’, and offers some thoughts on improving evaluation as well as some case study examples. Throughout the page you’ll find links to further resources including a more detailed discussion of why we look at business advice, our full evidence review and toolkits, as well as evaluation resources.
What do we mean by business advice and how can it deliver local economic growth?
We've focused on programmes that are funded by government and that provide information, structured advice or longer term mentoring to firms. These schemes aim is to increase rates of firm creation, to improve business survival, and to promote business productivity and employment growth – thereby improving economic growth.
There are a number of reasons why government might support business advice. Most of these reflect market failure in the provision of private sector business support. For example, governments may step in where it is believed that firms are:
- Unaware of information and advice that would be valuable to them;
- Unclear about how to access such resources;
- Concerned about the quality of advice offered;
- Facing financial or time constraints on accessing advice which exceed the perceived benefits; and/or worried that confidential information could end up in the hands of competitors
Schemes can support firms through:
- Providing mentors or public advisors
- Offering public grants or vouchers to existing private sector business support firms
- Offering training courses
What does the evidence on business advice show?
Based on our review of the available evaluations, business advice had a positive impact on at least one firm outcome in a little over half of the schemes evaluated.
But results are much more mixed when it comes to specific aspects of firm performance - with only around half of the evaluations reporting a positive effect when looking at these. For example, programmes also reported somewhat better results for sales than they do for employment and productivity.
There is also little available evidence on whether positive effects on individual firms translate in to greater local economic growth. It’s possible that gains to supported local firms come at the expense of other non-supported local firms.
What policymakers need to know when designing business advice programmes
The existing evidence base provides some guidance on how to develop programmes to improve policy effectiveness. This evidence is summarised in our toolkits.
We have policy design guidance on the following programme types:
If policymakers want to use business advice to support local economic growth our toolkits provide a starting point for understanding what works. But we still need more evidence on the most effective ways to deliver these programmes.
What policymakers and academics need to know when evaluating business advice programmes
Too many evaluations of business advice schemes are hampered by a failure of programmes to highlight clear objectives against which success can be measured.
Better evaluations should be undertaken to understand the relationship between business advice and local economic growth, and also around the value for money of different approaches.
We also need to improve evaluations to provide a more accurate assessment of the effect of schemes and to help us understand which aspects of programme design can improve cost effectiveness.
To help practitioners to evaluate business advice policy, we have pulled out some examples of good practice in this area.
Subsidised consulting services for SMEs in Mexico (RCT) This study tests the impact of subsidised consulting services on outcomes for small and medium-sized enterprises (SMEs) in Puebla, Mexico. Read more.
Supporting unemployed people to start businesses (RCT) This study evaluates two US projects designed to support unemployed people to start their own businesses: the Washington State Self-Employment and Enterprise Development Project (SEED), and the Massachusetts UI Self-Employment Demonstration. Read more.
UKTI Programmes (statistical approach) This study evaluates two programmes run by the UK Trade and Investment agency (UKTI). Aftercare which provides support from inward investors already in the UK and the Passport to Export service which supports domestic firms to increase their export activity. Read more.
Regional Business Development Programme in Sweden (statistical approach) This study evaluates the Regional Business Development Programme (RBDP) in Sweden. The RDBP provides support for SMEs operating in rural areas of Sweden. Read more.
You can learn more about how we rank evaluations at this page.