Growth Analysis has been commissioned by the government to develop a method of assessing the impact of initiatives for state-funded business counselling and applying the method to a number of different initiatives.

The Assignment

Growth Analysis has been commissioned by the government to develop a method of assessing the impact of initiatives for state-funded business counselling and applying the method to a number of different initiatives.

Business counselling forms a central part of the government's policy of promoting business activity. The purpose of the assignment is to propose a method for evaluating the impact of state initiatives for the promotion of business activities, and as part of this also to perform a number of empirical evaluations of the impact of state-funded counselling initiatives.

The report is intended for people who are interested in how to evaluate the impact of various kinds of initiative for the promotion of businesses. It also describes the conditions necessary to enable such an impact assessment to be conducted. The report also discusses the extent to which such conditions were present for different counselling initiatives. Based on this, we are able to draw conclusions about the type of initiatives that are suitable for analysis using the proposed method.

The results can be used to formulate clearer objectives, more accurate theories of change and improved monitoring tools to allow better future impact evaluations of the various types of business promotion activities. Such evaluations are necessary for the ability to draw conclusions about the relative economic value of various initiatives.

Results

The evaluation applied the developed evaluation method to four instances of state-funded business counselling initiatives: consultancy subsidies under Regional Grants for Business Development, Enterprise Agencies' counselling to prospective entrepreneurs, parts of Almi's counselling operations and counselling initiatives under the Swedish Agency for Economic and Regional Growth’s program ‘Entrepreneurs with Foreign Background’. The various initiatives represent different forms of state-funded business counselling. Information about participants in different counselling initiatives was gathered especially for this assignment and now forms part of Growth Analysis' microdatabase (MISS) covering state funded business counselling services to industry and commerce as a special type of state support.

Enterprises included in the study which participated in those state-funded counselling initiatives analyzed during the period studied, have higher growth in value added (i.e. the sum of remunerations and profits), employment rate and survival two years after the initiative than similar enterprises in the comparison group. However, the ability to generalize based on these results varies among the initiatives.

Relatively comprehensive initiatives whose purpose was clear in relation to the impact objective have a positive impact on a firms' growth in value added and employment rate. Consultancy subsidies under Regional Grants for Business Development provide examples of this type of initiative in the study. Even minor initiatives targeted at well-delineated groups with a relatively clear theory of change and concordance between the participants' objectives and policy goals have a positive impact on value added and survival. This type of initiative is exemplified by Enterprise Agencies' counselling.

It is not possible to draw any general conclusions in regard to other initiatives with the method used. Counselling initiatives under the Swedish Agency for Economic and Regional Growth’s program ‘Entrepreneurs with a Foreign Background had few participants in the intended target group which makes it difficult to obtain statistically significant results. Almi's counselling service operation is one example of an initiative that is relatively limited in scope for an individual company but which is aimed at a broad target group. The counselling objective can vary greatly from company to company. For example, the counselling objective on the part of a company might apply equally well to expansion as consolidation. The great variation in growth between companies in receipt of counselling means that average impacts are not statistically significant.

Conclusions

There are few impact evaluations of high quality regarding business counselling. One of the contributions from the assessments performed under this assignment is the provision of rough estimates of the anticipated impact of initiatives within business counselling. Because we now have an idea of the size of the impact, it is easier to assess in advance which initiatives can be worth evaluating with the method used in this assignment.

The evaluation method is best suited for initiatives in which an enterprise receives relatively comprehensive support. It is also important that the initiative has a clear logical link between its content and the outcome against which the initiative is being evaluated (theory of change). Small initiatives to broad target groups are not suitable for impact evaluations towards general policy objectives. They should preferably be evaluated towards relatively concrete outcome goals. There should also be a relatively large number of participants in the initiative. Data should be of good quality and contain information about participants, the type of the initiative, date and the size of the initiative in terms of money or time required for the participants.

The method is not suitable for evaluating initiatives that are limit in scope for the individual participating firm, where there are few participants and where the objective of the initiative for the individual participant is unclear and possibly differs from the evaluation objective. The anticipated impact of the initiative would probably be small, which makes it difficult to draw any general conclusions.

Even if an impact assessment cannot always provide the answers to the question of whether it was effective or not, it can still fulfil a function. In such cases, impact evaluations provide valuable information on how preparatory work and monitoring of the initiative can be improved, to create better conditions in the future for conducting worthwhile impact evaluations. Such evaluations are a necessary condition for the ability to determine whether an initiative is cost-effective.

Proposals and recommendations

Growth Analysis proposes that the government establish guidelines for how monitoring of initiatives for business promotion should be structured. Such guidelines should contain necessary participant information and basic requirements for data and a clear theory of change for the initiative.