economic impact study of business link local service-uk-2007

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Economic Impact Study of Business Link Local Service

Economic Impact Study of Business Link Local

Service

URN 07/1169

Final Report

ASTON BUSINESS SCHOOL

University of Warwick, Aston Business School and Kingston University 1




CONTENTS

Page

Acknowledgements 8

Glossary 9Executive Summary 10

1. Evaluation Framework and Approach

1.1. The Evolution of Business Support in the UK 211.2. Business Link Implementation Issues 22

1.2.1. Brokerage Model in Action 241.3. Business Link Programme Objectives 251.4. Design of the Economic Impact Study 31

1.4.1. Analytical Approach to the Derivation of Value for Money(VfM) Estimate

32

1.4.2. National VfM Estimates 321.4.3. Qualitative Views of Business Link Impact 331.4.4. Evaluation of Alternative Brokerage Models 341.4.5. Regional Benchmark Analysis 34

1.5. Structure of Report 34

2. Sample Characteristics

2.1. Introduction 362.2. Sample Confirmation and Contamination 362.3. Respondent Profile 372.4. Business Characteristics 40

2.5. Strategic Direction 452.6. Partners, Directors and the Background of the Business Leader 462.7. Main Partner/Managing Director 47

3. Nature Of Business Link Support and Business Performance

3.1. Profiling Business Link Support 503.2. Other External Business Assistance and Support 543.3. Firm Size and Performance 553.4. Summary 56

4. Assessing the Impact of Business Link

4.1. Introduction 584.2. Impact of Business Link Assistance 594.3. Perceived Impact of Business Link Assistance 70

4.4. Assessing the Economy-wide Impact of Business Link Assistance 734.5. Costs of Business Link 764.6. Displacement Issues 774.7. Summary 79





5. The Effectiveness of Alternative BLO Delivery Models

5.1. Introduction 805.2. Previous Categorisations of BLOs 805.3. Bennett-Robson (B-R) Classification 81

5.3.1. Support Service Profile 825.3.2. Impact of BLO Services 84

5.4. Mole Classification 875.4.1. The Information, Diagnostics and Brokerage (IDB) Model 885.4.2. Four Models of BLOs 905.4.3. Operationalising the Models 915.4.4. Support Service Profile 985.4.5. Impact of BLO Services 100

5.5. Summary 103

6. Impact of Business Link Assistance: Evidence from the Face-to-

Face Interviews6.1. Introduction 1066.2. Developing the Topic Guides 1076.3. Case Study Selection 1086.4. Intensively-Assisted Firms 111

6.4.1. Contact with Business Link 1126.4.2. Nature and Delivery of Assistance 1136.4.3. Impact on the Business 117

6.5. Other-Assisted Firms 1206.6. Summary 122

7. Developing a Spatial Perspective on the Business Link LocalService

7.1. Introduction 1247.2. Regional Baselines 124

7.2.1. The Age Characteristics of Respondent Firms 1247.2.2. The Legal Status of Respondent Firms 1287.2.3. Regional Differences in the Sectoral Composition of

Respondent Firms130

7.2.4. Regional Differences in the Strategic Priorities of Respondent Firm

132

7.2.5. Regional Differences in Diversity, Director Numbers and

Firm Size

135

7.3. A Rural Perspective 1387.3.1. Firm Size and Performance 1387.3.2. Perceived Impact of Business Link by Rural Area 142

7.4. Summary 146





8. Conclusions and Discussion

8.1. Introduction 1488.2. Value for Money 1488.3. Comparisons with Previous Studies 149

8.3.1. PACEC (1998) 1498.3.2. Business Link Tracker Study (2001) 150

8.4. Business Link Delivery Models 1528.5. Sub-National Issues 1548.6. Methodological Critique 157

References 158

Appendices 161Appendix A Telephone Survey Questionnaire 162Appendix B Weighting Protocols 201

Appendix C Face-to-Face Interview Topic Guide 203Appendix D Additional Estimation Results Excluding Selection Effects 209Appendix E Excerpt from Conference Paper on Correlates with Impact 215





List of Figures Page

Figure ES.1 Business Link Operator Models and Impact 18

Figure 1.1 Programme Theory for Business Links 28

Figure 1.2 Study Overview and Structure 31Figure 5.1 Models of Business Link Operators: Intensity of intensive assistance

and the proportion of firms intensively assisted.91

Figure 7.1 Satisfaction with BL Service by Assisted Group and Rural Area 144

List of Tables

Table 1.1 A Rationale for Business Link 23

Table 1.2 Business Link Outcomes and Impacts 27

Table 2.1 Respondents’ Position within the business – Selected Categories 39

Table 2.2 Age Distribution of Respondent Groups: All Firms 40

Table 2.2a Age Distribution of Respondent Groups: Rural Dispersed Settlements 41

Table 2.3 Legal Status of Respondent Firms: All Firms 42

Table 2.3a Legal Status of Respondent Firms: Rural Dispersed Settlements 42

Table 2.4 Sectoral Composition of Respondent Firms 44

Table 2.5 Strategic Priorities of Respondent Firms: All Firms 45

Table 2.5 Strategic Priorities of Respondent Firms: Rural Dispersed Settlements 45

Table 2.6 Partners and Directors, Ethnic and Gender Diversity 46

Table 2.7 Highest Qualification of Owner-Managers: All Firms 48

Table 2.7a Highest Qualification of Owner-Managers: Rural Dispersed

Settlements

48

Table 2.8 Age Distribution of Owner-Managers: All Firms 48

Table 2.8a Age Distribution of Owner-Managers: Rural Dispersed Settlements 49

Table 3.1 Frequency Distribution of Contacts between Intensively-assisted firmsand Other-assisted firms and Business Links

51

Table 3.2 Intensity of Assistance Received by Intensively-assisted firms andOther-assisted firms

52

Table 3.3 Proportions of Intensively-Assisted Firms and Other-Assisted FirmsReceiving Different Types of BL Services

52

Table 3.4 Satisfaction with BL Services among Intensively-assisted firms and

Other-assisted firms

53

Table 3.5 Individual Sources of Business Advice and Assistance 54

Table 3.6 Firm Size Distributions: Sales and Employment 55

Table 3.7 Performance Indicators: Sales and Employment Growth, Sales per Employee

56

Table 4.1 Probit Models of the Probability of Receiving Intensive Assistance 61





Table 4.2 Probit Models of the Probability of Receiving Other Assistance 62

Table 4.3 Impact of Intensive Assistance: Full Model 66

Table 4.4 Impact of Other Assistance: Full Model 67

Table 4.5 Impact of Intensive Assistance: Restricted Models 68

Table 4.6 Impact of Other Assistance: Restricted Models 69

Table 4.7 Assisted Firms’ Perceptions of the Impact of Business Link Services 71Table 4.8 Time Horizons for Experiencing the Benefits of BL Assistance 72

Table 4.9 Additionality of Business Link Assistance 73

Table 4.10 National Impact Estimates for Business Links 75

Table 4.11 Income of 43 Business Link Organisations: 2003 76

Table 5.1 Profiles of Intensive Assistance: by Bennett-Robson Typology 83

Table 5.2 Profiles of Other Assistance: by Bennett-Robson Typology 84

Table 5.3 Perceived Impact of BL Services: Intensively-Assisted Firms 85

Table 5.4 Perceived Impact of BL Services: Other-Assisted Firms 86

Table 5.5 Impact Coefficients in Regression Models of Employment, Sales &Productivity Growth

87

Table 5.6 BLO Delivery Models and their Operating Environment 91

Table 5.7 Operationalising the BLO Models 92

Table 5.8 Number of Firms per Accountant in each Business Link Area 93

Table 5.9 Performance Monitoring Descriptive Statistics 94

Table 5.10 Intensity of Help - BLO clusters 95

Table 5.11 Proportionate Intensive Rate - Descriptive Statistics 96

Table 5.12 Proportionate Intensive Rate – Cluster Analysis 96

Table 5.13 Four Models of Business Link Assistance and BLOs Organisations 97

Table 5.14 Significant Correlations between Income and Intensity 98

Table 5.15 Profiles of Intensive Assistance: By Mole Typology 99Table 5.16 Profiles of Other Assistance: By Mole Typology 100

Table 5.17 Perceived Impact of BL Services: Intensively-Assisted Firms 101

Table 5.18 Perceived Impact of BL Services: Other-Assisted Firms 102

Table 5.19 Impact Coefficients in Regression Models of Employment, Sales andProductivity Growth: Mole Typology

103

Table 6.1 Sample Derivation from Telephone Survey 106

Table 6.2 Type of Assistance by BLO 110

Table 6.3 Business Link Model by Urban/Rural Area 110

Table 6.4 Industrial Sector by Employment Size 110

Table 7.1 Age of Firms by Region and Type 126

Table 7.2 Owner Age by Region and Type 127

Table 7.3 Legal Status of Firms by Region and Type 129

Table 7.4 Test Statistics: Sectoral Composition by Region and Type 130

Table 7.5 Sectoral Composition by Region and Type 131

Table 7.6 Proportion of Firms with a Given Strategic Priority: by Region andType

133





Table 7.7 Test Statistics for Regional Differences in Strategic Priorities 134

Table 7.8 Average Firm Characteristics: By Region and Type 136

Table 7.9 Test Statistics for Regional Variation in Firm Characteristics 137

Table 7.10 Assisted Status by Urban/Rural Classification 138

Table 7.11 Urban-Rural Firm Size Contrasts 139

Table 7.12 Urban-Rural Performance Contrasts 141Table 7.13 Proportions of Intensively-Assisted Firms receiving Different Types of

BL Services By Rural Area143

Table 7.14 Time Horizons for Experiencing the Benefits of BLAssistance by Rural Area

145

Table 7.15 Additionality of BL Assistance by Rural Area 146





Acknowledgements

The research team would like to thank all the members of the Steering Group who provided invaluable inputs into the various stages of this evaluation study, and tothose who commented on earlier drafts of this report and advised the project: Prof.Alan Hughes. Director, Centre for Business Research, University of Cambridgeand Rod Spires. Director, Public and Corporate Economic Consultants (PACEC).

A particular debt is owed to the CEOs and their staff in all the 43 Business Linksfor their support in the data extraction exercise from their client managementsystems which facilitated a robust sampling frame for the telephone survey.

Many thanks to OMB Research for their patience as we designed the questionnairefor the main survey, their efficient execution of the survey of 3,448 businessesacross the English regions, and their perseverance as we sought to collect GVAdata for the sample. In particular, we would like to thank them for the delivery of the survey datafile in a ‘ready to go’ format.

A number of consultations were undertaken as part of the design of the evaluationframework and we would like to record our appreciation to those representatives of the BLOs, Chambers of Commerce and the RDAs that provided time for our detailed discussions.

To the owner-managers and senior management of the 34 case studies we wouldlike to express out gratitude to them for allowing us access to their firms in order tounderstand more clearly the way in which individual Business Links interact withtheir business.

To other members of the research team at the three universities: Dr Stuart Fraser (Warwick University) and Dr Li Ying Meng, Will Eadson and Richard Hyde(Kingston University).

Finally, and by no means least, we would like to thank the SBS Evaluation Unitand in particular Phill Lacey (Project Manager, SBS) and George Bramley for their advice, support and patience throughout the project.

The Research Team

November 2006

Dr Kevin Mole (University of Warwick, Project Manager)

Professor Stephen Roper (Aston Business School) Professor Mark Hart (Kingston University),

Professor David Storey (University of Warwick)

Dr David Saal (Aston Business School)





Executive Summary

Introduction

The evaluation assessed the impact of Business Link Local Services on those businesses

that received assistance in the 6 month period April to September 2003 and its impactover the subsequent period to May/June 2005.

The original aims of the report were:a) To understand and quantify improvements in the performance of the network

since the last evaluation in 1988. The network was reorganised in 2001: Howhas performance in the network changed? To what extent can this beattributed to the re-organisation or to other factors that are driving the performance of Business Link operators and the network?

b) Identify examples of good practice and ways of working within the network;c) Update value for money estimates using gross value added (GVA) and other

measures; and,d) Provide a baseline for the new arrangements introduced in April 2005 when

the responsibility for delivery of Business Link services was transferred toRegional Development Agencies.

The study follows on from the previous value for money study conducted on BusinessLinks in 1998 by PACEC and the Business link Tracker study conducted in 2001 (Roper et al., 2001). There are now a number of evaluations of Business Link and this study addsto that body of evidence. This value for money economic impact assessment was builtaround a methodology which included:

(a) An extensive telephone survey of approximately 3,500 firms covering BLintensively and other assisted businesses and a similarly sized control group. Theassisted firms were drawn from the population of assisted firms in the target period. The survey was specifically designed to support an econometric approachdesigned to overcome any systematic bias in the type of assisted firms. Given thedifficulties with the collection of GVA data, business growth (employment andsales) and sales per employee indicators were used as key performance measuresin the models.

(b) A detailed face-to-face interview survey with 34 firms with a focus on those whoreceived intensive assistance. This provided more detailed information on the

more organisational and strategic impact of BL support, particularly on thosefirms receiving intensive assistance.

(c) Interviews with 18 Business Link Organisations (BLOs) and the subsequentdevelopment of a detailed typology of alternative brokerage models.





Analytical Approach

Based on the data obtained from the large-scale telephone survey of assisted and non-assisted firms four main quantitative analyses were undertaken in the evaluation:

1. A national estimate of the value for money (VFM) of the Business Linksnetwork. This will relate specifically to the VfM of BL network assistance provided in the period April to September 2003 and its impact on business performance until the time of the survey (mid-2005).

2. An analysis of firms’ views of the quality and impact of service received from

BL over the same period and their assessment of impact on strategy.

3. An analysis comparing the effectiveness of alternative brokerage models of

assistance on business performance.

4. A spatial perspective which includes two components:

a. a regional baseline analysis (i.e. the 9 English regions) relating to thetype of businesses being assisted by BL in each region to provide anoverview of the similarities and differences between intensively-assisted,other-assisted and non-assisted firms in the different Government OfficeRegions (GORs) across England. Our objective here is to provide a baseline against which future developments in the profile of assisted firmscan be measured. In essence, this extends the analysis of Chapter 2, andhighlights some substantial differences across GORs regions in theattributes and characteristics of assisted firms.

b. A rural perspective to provide headline data on the operation of BusinessLink in rural areas in England. For the purposes of this analysis we adopta typology of rurality which reflects both morphology and context. Weuse the following three-fold classification: urban, rural (less sparse) andrural (sparse).

Derivation of Value for Money (VfM) Estimate

There is a significant positive effect of intensive Business Link assistance on

employment growth, increasing employment growth rate of clients by 2.4 per cent. Thisestimate implicitly allows for additionality. Displacement effects have been testedthrough the use of cross-elasticity on the growth models. These were negative whichindicated that competition was not on the basis of price. Moreover, the impact of displacement on the small firm clients may be to increase ‘productive churn’ which isseen as insignificant for increases in productivity. To estimate the economy-wide benefitsof BL assistance on this basis requires three additional steps:





1. Increments to employment growth based on the econometric models areconverted into absolute employment gains (between 24,915 and 26,908 jobs).

2. These estimates are then grossed up to a national scale based on the number of interventions with intensively-assisted firms (n=49,830)1.

3. These employment impact estimates are translated into value added using ratiosof value added per employee derived from the ABI (i.e. £27,990 per employee).

Following these steps the overall impact on the economy of Business Link interventionsis to generate £697 and £753m of additional value-added per annum, compared to acost of Business Link interventions of approximately £150m for the period April toSeptember 2003. If we then compare the cost to the value added at a midway point between the two estimates (which may in turn be underestimates) – that is, £725m, thenthe value-added for the 6 month period is £362.5m and so for every £1 spent by the

public authorities through the Business Link network (including EU, SRB etc) would

generated £2.26 of value2

. In terms of cost per job if we take the average of the midestimates of jobs created from the restricted and unrestricted models as 25,911 then thetotal cost excluding customer fees is £11,578 per job.

We argue that these figures probably under-estimate the overall impact of BL due to:

• The exclusion from the calculation of any positive effects of other assistance. Theeffect of which on employment and turnover was positive but not significant.

• The de facto exclusion of any bottom line benefits to assisted firms whichoccurred after the survey date.

• The exclusion of any positive multiplier effects which may stem from theadditional demand generated by more rapidly growing employment.

Only 48 per cent of the assisted firms reported that they had realised all the benefits of assistance. Consequently, our estimates of the impact of Business Link intervention may be underestimates by half, if we take these responses at face value.

In terms of a cost-per- job estimate, this can be arrived using the employment estimatederived from the econometric models and the costs of BL interventions. Overall, it isestimated that the cost-per-net-additional-job is £11,578 which is the cost of both

1 This figure is based on the broad definition of intensive assistance, which would have been in operation at

the time of the BL interventions between April and September 2003 (it was defined as "significant"interventions and therefore easier to achieve than the current definition of intensive). The SBS monitoringstatistics estimate the number of intensively-assisted firms to be 49,830 in the period April 2003 to March2004.

2 This is discounted over two years at a rate of 3.5% (source: HM Treasury discount rate) excludingcustomer fees.





intensive (and its effect) and the cost of non-intensive assistance. In our opinion thisrepresents good value for money.

Multipliers and Displacement

The impacts of additionality on other firms can be either positive (multiplier effects) or negative (displacement). Adjustments were made for neither. Non-assisted firms,however, were generally operating in more price sensitive markets than those faced byassisted firms suggesting that the Business Link assisted group appeared less likely tosuffer displacement than other firms. Moreover, the insignificance of own price elasticityin the employment growth model suggests that the firms were operating in lesscompetitive markets where displacement was likely to be low.

Overall, the extent of any displacement from BL assistance is unlikely to be significanteither at local or national level. The small firm context is one where there is a great dealof churn. Business Link advisory services are inevitably involved in that churn.

Nonetheless, Business Link firms are younger than average and more likely to be limitedcompanies; the firms that Business link help are less likely to be competing solely withother local firms; the nature of competition is non-price; and the firms are too small tomake any impact on local labour markets.

Who gets assistance from Business Link?

The type of firm receiving assistance from the BL network is important in the impactassessment. Our analysis shows that the characteristics of intensively-assisted firms,other-assisted firms and non-assisted firms differ substantially suggesting that unlessthese differences are controlled for in the estimation any assessment of the effect of

assistance is likely to be misleading.

Business Link assistance is more commonly used by younger firms with limited liability.In particular, intensively-assisted firms were more likely to be exporting and to haveintroduced new or improved products over the previous two years than other-assistedfirms and non-assisted companies.

There were significant differences in the strategic priorities of assisted and non-assistedfirms. Notably, intensively-assisted firms placed less emphasis on maintaining their sales in current markets and more priority on increasing sales and product developmentfor other new markets than either other assisted or non-assisted firms. In addition to their

own partners directors, around 12.5 per cent of respondent firms also had non-executivedirectors, with significant differences evident in the proportion of firms in each of theintensively-assisted firms (13.6 per cent), other-assisted firms (14.1 per cent) and non-assisted firms (9.7 per cent) having non-executive directors. A similar pattern was evidentin terms of the willingness to share equity in the business, a virtue attributed to 51.4 per cent of the directors of intensively-assisted firms, 35.5 per cent of directors of other-assisted firms and 28.1 per cent of those in non-assisted firms.





Impact of Business Link Assistance

Perceived Impact

The standard additionality approach designed to investigate whether the additionality of

the BL Local Service was ‘full’, or ‘partial’ (using self-assessment questions) revealedthat:

• Two-fifths (40%) of intensively assisted firms and one-quarter (25%) of other-assisted firms reported business outcomes, which, without BL assistance, theywould not have achieved.

• 25 per cent of intensively assisted firms and 20 per cent of other-assisted firmssaid outcomes would have been the same without assistance but BL assistancehelped to accelerate business development.

• 23 per cent of intensively assisted firms and 36 per cent of other-assisted firmsreported that the same business achievements would have been made without BLassistance – i.e. total or 100% deadweight.

Further, of those firms identifying changes in behaviour (i.e., softer indicators of additionality) as a result of BL assistance, around two-thirds of intensively-assisted firmsand 55 per cent of other-assisted firms identified BL as the crucial factor in levering behavioural change within the firm. In each case BL assistance was identified as thecrucial influence by a significantly higher proportion of firms in the intensively-assistedgroup.

Finally, around half of firms (48% of intensively-assisted and 55% of other-assistedfirms) reported already having experienced all of the benefits of BL assistance; theremainder expected the benefits to accrue over future years. Notably, 7.2 per cent of intensively-assisted firms expected the full benefit of BL assistance to take five years or more to be realised.

Some recipients may use Business Links advice alongside other sources of support.Business Link has emphasised its brokerage aspect more and more over the period 2001onwards. In the present study a high proportion of the assistance was provided directly byBusiness Link. Nevertheless, the use of external sources of advice was tested in themodelling of impact but was not significant and therefore is not part of the model

presented in chapter 4. If clients did receive grants it did not seem to reveal itself inincreased impact. Those Business Links that provided more advice on the sources of finance tended to perform less well - see pages 101 and 103

Modelling the Impact

The econometric modelling – based on a two-stage Heckman approach which allows for selectivity – of the impact of assistance on performance produced the following results:





• Intensive assistance is found to have a positive and significant impact onemployment growth increasing firms’ employment growth rate by 2.8 percentage points.

• Selection effects are generally weak and for intensively-assisted firms take variedsigns. For other-assisted firms signs are always positive suggesting the selectionfor assistance of better than average firms.

• In particular, our modelling suggests that while BL assistance has a range of positive impacts on sales growth and productivity (sales per employee) theseeffects are generally statistically insignificant. More robust is the effect of intensive BL assistance on employment growth, which is statistically significantand positive.

Business Link Delivery Models

A network of Business Links was set up in England with some discretion to provide localsolutions for business support. Each Business Link Organisation (BLO) can operate indifferent ways. Therefore, we have included the BLO models as part of the evaluation.Four models which may broadly reflect the range of ways in which BLOs operate weredeveloped as part of this economic evaluation study. The four models can be described asfollows:

Model 1 Light-touch brokerage

• The dominant model. Some BLOs suggest that they were ‘lean andmean’ with low levels of ‘touch’ with their clients and not too muchfollow-up.• Philosophy is ‘Lets solve the business problem there and then’• The pay off is in the high penetration rate• ‘Light touch’ BLOs are likely to be in areas that receive little non-core funding such as EU supported funds.

Model 2 Managed brokerage

• Many BLOs believe that to retain customers they need to manage

the relationships between client, BL and consultant.• The account manager who oversees the process with a projectmanagement role throughout the assistance and follow-up• Almost all now have contracts between the consultant and client -an exception is Northumberland’s three way contract betweenconsultant, client and BLO.

Model 3 Pipeline Forcing





• ‘Trigger points’ to identify firms that may be ‘amenable’ tointensive assistance. They are very keen to get a high proportion of firms through to the end of the funnel• Not too many in; not many fall out

• Generally have a close relationship with the LSC

Model 4 Managed Pipeline Forcing Brokerage

• A combination of both 2 and 3• This option requires high levels of funding per assisted firm.• May be more prevalent in areas with low rates of business stock.

Using these four models, and allocating each of the 43 BLOs to one of the four models,we are able to make the following conclusions about service delivery and impact.

Service Profile

For intensively-assisted firms, significant differences were evident between the profilesof BLO assistance relating to business planning and action plan development, raisingfinance, help with e-commerce and help with IT issues. The key differences between thefour models of BL assistance/BLOs were:

• Managed brokerage BLOs were most likely to be providing intensively-assistedfirms with business planning assistance or action plan development;

• Help with raising finance was also most likely to be offered by managed

brokerage BLOs;

• Managed brokerage BLOs and BLOs operating both managed brokerage andPipeline Forcing managed pipeline forcing brokerage were most likely to be providing assistance with e-commerce and IT.

More significant difference were evident in the service profiles being provided to other-

assisted firms, with managed brokerage BLOs generally providing a higher proportion of client firms with each service than other types of BLO. Key points were:

• Managed brokerage BLOs were providing 42.3 per cent of their clients with help

for raising finance compared to only 19.7 per cent of the clients of light touch brokerages;

• Managed brokerage BLOs were also providing more of their clients help withexporting, e-commerce and IY than other types of BLOs;

• BLOs operating as managed pipeline forcing brokerage were most likely to beoffering their clients help with training.





Impact of the Delivery Model

We consider two indicators of impact – the impact perceived by firms and the

econometrically modelled impact of BLO assistance on business growth.

Reflecting the pattern of service provision for intensively-assisted firms, two significantdifferences were evident between the proportions of Business Link clients in eachcategory in the Mole typology reporting that Business Link services has been animportant catalyst for change within their business.

Intensively-assisted businesses assisted by BLOs classified as Managed Brokerage BLOswere significantly more likely to cite the assistance as being an important source of change in financial sourcing than other types of BLO. They were also more likely to citemanaged pipeline forcing brokerage BLOs as having had an important impact on trainingthan other types of BLO. Only in terms of innovation capability were there significantdifferences in the proportion of intensively-assisted firms citing BLOs as the crucialfactor in change in the firm. Here, light touch brokerages were said to have mostcommonly been the crucial factor.

For other-assisted firms, significant differences between the proportions of firmsreporting BLO assistance as important were evident only for financial sourcing andinnovation capability. In both cases other-assisted firms were most likely to cite ManagedBrokerage BLOs as being an important factor in stimulating change.

The econometric estimates of the growth impact of the different types of BLO in theMole typology reveal that:

• as in the aggregate results, we find no significant effect of Business Link assistance on other-assisted firms for sales or employment growth. Significant positive productivity growth effects are evident with the (positive) effect of light-touch brokerage of more absolute importance.

• no significant productivity effects were evident on intensively-assisted firms fromany type of BLO, although the small group of managed pipeline forcing brokerage BLOs were having a positive sales growth effect. More notable perhapsare the

• employment growth effects where the managed brokerage and light-touch groupsof BLOs both had strongly positive and significant effects. Notably BLOs in themanaged brokerage group had an employment impact (6.9 percentage points)almost three times that of those in the light-touch brokerage group.

• The figure below shows the four different models.





Figure ES.1 Business Link Operators Models and Impact

Owner-Manager Views on the Impact of Business Link Support

The views of the 31 owner-managers of assisted firms (25 intensively-assisted and 6other-assisted) revealed the following points:

• There is a general positive endorsement of the Business Link ‘brand’ whichconfirms the aggregate assessment. The majority of businesses feel that their needs are being served by a Business Link network that has access to a wider poolof expertise (i.e. the ‘unique’ product) at a subsidised price. This would appear to be true for both intensively assisted and other-assisted firms.

• The time-scale is too short over which to measure the economic impact of Business Link assistance received in the April to September 2003 period. Manyof the benefits have still to be realised as much of the assistance relates to‘changed behaviour’ in terms of, for example, strategic focus and staff training – the expectation is for enhanced business performance in the years ahead.

• The distinction between ‘intensive’ and ‘other’ assist is somewhat blurred in anumber of cases which has implications for the impact assessment.

Developing a Spatial Perspective

Regional Baselines

University of Warwick, Aston Business School and Kingston University

High

Proportion of Intensive

Assistance

Low

Low HighIntensity of Assistance

PipelineForcing

Light-touchBrokerage

Managed PipelineForcing Brokerage

ManagedBrokerage

Employment

Sales

Sales per employee

18




The evaluation examined differences between the structural characteristics of intensively-assisted firms and other-assisted firms in each Government Office Region (GOR). Thefollowing main conclusions emerge:

• The implication is that BLOs in different GORs are targeting assistance at

significantly different age cohorts of firms.

• BLOs in different GORs are targeting assistance at groups of firms with differentownership profiles.

• This suggests that in general terms there is effectively some sectoral targeting of assistance by BLOs.

• Finally, it is worth noting that there are also robust differences between regions inthe size distribution of assisted firms. In London and the West Midlandsintensively-assisted firms are, on average, larger than other-assisted firms, the

opposite relationship is evident in the South West.

The differences identified between regions in the characteristics of assisted firms providesome support for the development of differentiated baseline statistics for each region.They also emphasise, however, that significant regional differences did exist during thereference period in the support strategies being adopted by BLOs.

A Rural Perspective

With respect to an urban – rural perspective on the operation of the business link localservice we can conclude that there are differences in the headline performance data for

intensively-assisted firms. Those located in less sparse rural areas perform better than inthe more remote rural areas and urban areas.

We have also seen that the ‘package’ of assistance received by intensively-assisted firmsin the more remote rural areas differs significantly in a number of ways to similar firms inother locations. Satisfaction levels with the assistance received are similar across thethree locations with marginally higher levels reported in rural areas.

The assessment of the perceived impact of Business Link assistance revealed that therewas very little difference in the time horizon over which benefits were anticipated to berealised. The proportion of firms reporting that they would have achieved similar

business outcomes without BL assistance was similar in urban and the two rurallocations. In general, this provides some evidence that the BL ‘brand’ is having broadlysimilar effects in both urban and rural areas across England.





1. Evaluation Framework and Approach

1.1 The Evolution of Business Support in the UK

There have been up to five distinct phases of business support policy in the UK in the past thirty years. Although the Bolton Committee’s reporting in 1971 provided a rationalefor the Small Firms Service (Bennett and Robson, 2003a) policy towards small firms began, effectively, in the 1980s (Greene, et al., 2004). The most important single policywas the Enterprise Allowance Scheme (1982-1991), which enabled people to draw benefits whilst trying to establish a business. Over its lifetime 600,000 people participated in the scheme (Storey 1994). Other charitable schemes were targeted towardyoung people, the Prince’s Trust and Shell LiveWIRE (Greene, 2002).

A second set of schemes towards the end of the 1980s was the Enterprise Initiative [(EI).

The EI responded to a perceived failure in the market for business advice, in which SMEswere deemed to underestimate the benefits of external advice. The EI was a nationalscheme to encourage the use of external advice through approved consultants at a cost tothe taxpayer (Bennett and Robson 2003a). One of the Enterprise Initiatives was theMarketing Initiative, which was a publicly supported ‘soft’ business support to subsidiseup to 15 days of marketing consultancy in small and medium sized firms. It operated between 1988 and 1994. It was administered by four [then five] regional contractors.Firms eligible for the scheme were British-based firms with fewer than 500 employees.

Wren and Storey (2002) evaluated the DTI’s Marketing Initiative and found that onaverage £1,000 in assistance created one extra job and generated about £30,000 of

increased sales turnover. However, there may have been some displacement effects notincluded in this assessment. Nonetheless, this scheme at first sight would appear to be anoutstanding success.

The lessons learnt from the EI were that grants can enhance the amount of consultancyutilised by small and medium sized enterprise. The EI was a groundbreaker in manyways. It significantly increased the numbers of SMEs using advice from about 1 in every10 to almost 1-in-3 (Bennett and Robson, 2003b).

Scotland’s Expert Help Scheme also shows the consultancy market can be stimulated.This was introduced by the Scottish Office in 1995. It was designed to improve the

performance of SMEs who failed to access external advice due to deficiencies on both thedemand side (uncertainty of benefits) and the supply side. The take-up of advice wasagain increased through the provision of a subsidy (Turok and Raco, 2000).

In the 1990s, policy shifted again, this time towards a more decentralised local businesssupport system (Bennett and Robson, 2003a; Greene, et al., 2004). In Scotland, serviceswere provided through Local Enterprise Companies (LECs). In England and Wales, localagents ran local ‘Business Links’ (‘Business Connect’ in Wales). The local agents had to





The focus in the literature on small business policy tends to be towards policy–makingrather than implementation issues. Hence the previous section focussed on changes to policy but policy only happens when it is implemented. For example, implementation hasgiven rise to serious problems particularly around the issue of ‘targeting’ (Mole, 2002a).The Business Link pre-2001 organisations were to target some of the more expensive

services to those SMEs with the ability to grow. In practice, the support for targetingamongst those delivering the service seemed lukewarm (Mole, 2002a) and the BLTracker study (1996-2000) found that services were targeted, if anything, on larger firmsthat were facing increased pressure on profitability (Roper et al., 2001), rather than onthose with growth potential, although that may be an effect of the urban sample in thatstudy. In the post-2001, phase four, policy was conceived of as not too prescriptive toBusiness link Operators but to buy against 14 key delivery themes, rather than stick to the previous detailed manual.

One of the difficulties with the public sector delivery was the perceived ‘one-size-fits-all’nature of the products. In an attempt to overcome this, a brokerage model was developed

Where the role of the, renamed, business adviser was to assess need and to direct theclient to those best able to fulfil that need. The implementation of brokerage has spawnedmore than one model, including ‘internal’ brokerage where there is modest independence between the broker and client. This provides a clear and significant rationale for theinvestigation into the brokerage model in action.





1.2.1 Brokerage Model in Action

Brokerage is central to the new Business Link model but has been used in the context of many other public and private services, most notably in finance and housing. The brokerage model is not entirely new in the context of SME advice. As noted earlier,

agents acting on behalf of the DTI brokered the relation between SMEs and consultantsas part of the successful Marketing Initiative (Wren and Storey, 2002). Drawing partly onthat experience, Turok and Raco (2000) suggest that the role of the broker and consultantneeds to be carefully managed. Bryson (1997) argued that advisers would be more likelyto work with consultants with whom they have worked previously leading to favouritismand a joint dependency. In turn, managers of brokering organisations need to lightlywatch for favouritism outside the organisation.

Turok and Raco (2000) argue that within the assessment of consultancy support there area number of common issues and dilemmas:

a. Problems with the proliferation of supply. SME owners face difficulties inaccessing knowledge in the marketplace – time pressure, lack of staff and restricted local networks (Bryson and Daniels, 1998). Turok andRaco say ‘Clear, simple and impartial access points are believed to beimportant to guide firms through the complex and fragmented range of business support to help them identify the most appropriate sources…’(2000: 411). There is a role, therefore, for public agencies to act as asingle point of contact which is likely to be publicly funded. The caseis for an agent to make the market putting buyers and sellers in touchas independent brokers.

b. How much is customised? The public sector generally provides discrete programmes whereas firms normally want unencumbered advice andexpertise tailored to their specific circumstances. Improving the long-term competitiveness of an SME may require a more strategicapproach needing ongoing dialogue and considerable time.

c. Are external advisors suitable? Public agencies may not be flexible enough,whereas private sector sources may be distorted by commercial pressures. Consultants may provide pre-packaged solutions and so dolittle to transfer skills: ‘To maximise the value of consultancy, it may be helpful for development agencies to assist inexperienced SMEs to

select consultants who suit their needs, manage their interventions toensure that firms are closely involved in any plan of action that getsdrawn up and that they learn as much as possible from the experience.It may also be necessary to follow through the support to facilitateimplementation of the ideas.’ (2000:413).





d. Targeting to avoid ‘deadweight’ losses is difficult in practice for localmanagers and often is at variance with the wishes of other parties suchas advisers (Mole, 2002a).

It seems clear that the public sector’s SME clients tend to return to the public sector,

although Turok and Raco (2000) showed that this was not confined to the public sector but also occurred in the private sector. Thus, the build up of trust in a relationship led torepeat business. There may be a role for brokerage here for two reasons. First becausethe broker will, in effect, have repeat business and therefore have ‘repeat businessinformation’ and markets work better with repeat business (Storey, 2003). Second, because the broker may become the point of contact to which the business returns. Intheory, therefore, brokerage may have some benefits for support agencies. Consequentlythe post-2001 Business Links were committed to brokerage. The first part of theevaluation examines how this has been implemented.

The IDB model has changed the role of the business adviser within Business Links. In

England, Business Links are to provide customers with information, diagnosis and brokerage (IDB). The information aspect describes Business Link as giving a non-competitive access to all information that is relevant to any business on the basis of need.Diagnosis examines customer needs as a precursor to broker external expertise to actually provide the services. Differences emerge particularly over the extent to which the brokered relationship is managed. As a client moves from the information to the brokerage they shift from being assisted to being intensively assisted.

The Business Link University (BLU) has called for a map of the model of active brokerage used and the performance of a BLO but, in some cases BLOs use more thanone model (Gee, 2004). The type of intervention is critical in understanding the

‘assistance parameter’ that will be used in the investigation of the impact of BL supporton firm performance. Intensive assistance may differ from one BLO to another. Intensiveassistance may involve diagnostics or it may not. We, therefore, need to understand thedifferent models that are employed, perhaps using a checklist to categorise the assistance(Mole, 2004).

1.3 Business Link Programme Objectives

Productivity is at the heart of the UK Government’s concerns about managing theeconomy. For example, the DTI’s public service agreement with HM Treasury for 2003-2006 commits to narrow the productivity gap (with the US, France and Germany) andPSA target 6 includes a target to improve the overall productivity of small firms 4.Previous studies are suggestive of a contribution made by Business Link in this area(Roper et al., 2001).

4 PSA Target 6 Help to build an enterprise society in which small firms of all kinds thrive and achieve their potential, with (i) an increase in the number of people considering going into business, (ii) an improvement

in the overall productivity of small firms, and (iii) more enterprise in disadvantaged communities (DTI,2006).


http://www.dti.gov.uk/about/psa/psa_target_6.htm










The government identified five key drivers of productivity: competition, enterprise,innovation, skills and investment (HM Treasury, 2000). In the 2004 report, HM Treasury(2004) recognised the link between skills and enterprise arguing that management skillsraised entrepreneurship and business performance. The SBS aims to build the capabilityfor small business growth (SBS, 2003) and the advice and support provided by Business

Links are intended to improve the management skills and thereby improve business performance and entrepreneurship. In turn, this means that we need to be mindful to theway in which Business Link works to build the capability for growth.

The task of theory driven evaluation is to understand the nature of a programme andthereby fully understand the purpose and context of an evaluation (Donaldson andGooler, 2003). ‘Programme Theory’ sets out the assumptions and causal links that the programme is based on, the ‘theories of change’ and the realistic outcomes and indicatorsfrom the programme. Based on the programme theory the evaluation is designed to testthe theory and the programme. Donaldson and Gooler (2003) suggest some practicalconsiderations when developing a theory driven evaluation. The first of which is to start

with the outcomes that are desired in the programme. In Table 1.1 the assumptions andrationale are set out.

Table 1.1: A Rationale for Business Link

Rationale Assumptions behind Rationale

Market failure interms of the demandfor business advice

Small firms are unwilling to pay for business support servicesSmall firms lack internal capabilities to analyse their problemsand derive solutionsSmall firms focus on survival rather than development andtherefore do not seek advice

Small firms are uncertain about the quality of business advice soBusiness Link accreditation should increase the confidence inthe use of business advice which will spill-over into increaseddemand for private sector services

Supply sideinstitutional failure

Diversity in service provision leading to inconsistencyDuplication of services Need for a one-stop-shopLack of economies of scale and scope

Market failure interms of the supply of business advice

Location of consultantsBusiness services geared towards the major market in largefirms

Source: SBS pre-2001

The units of advice traded are a combination of both demand and supply at the available prices. In order to increase the uptake of business advice there would need to be either anincrease in supply or an increase in demand for business advice. The supply sideinstitutional failure might by organising information provide a way to more effectivelymatch latent supply and demand.





Given that the rationale describes market failure this ultimate outcome for Business linksmust be to increase the market transactions in business advice in SMEs (see Table 1.2).In order to support a policy to increase the use of business advice, one must have somereason to believe that the result of this interaction would be beneficial to society. Thisappears implicit in the outcome above. Evidence from the earlier Business Link Tracker

study suggested that the ultimate impact was to increase firms’ productivity (Roper et al.,2001) and this is consistent with the performance of the firm.





Table 1.2: Business Link Outcomes and Impacts

Programme Intermediate Outcomes End Outcome Impact

Business Links • Small firms are morecertain about the qualityof business advice;

Increased useof businessadvice by

SMEs

Increased performance of SMEs

• Small firms developmore internalcapabilities to analysetheir problems andderive solutions;


• That Business Link legitimation increasesthe confidence in the business advice;

Increased useof (publicsector sponsored)

business advice by SMEs


• SMEs know where to goto get business supportservices;

Increased useof (privatesector?) business advice by SMEs


• Business Link has highvisibility

Increased useof (publicsector sponsored)

business advice by SMEs


• There are moreconsultants dealing withSMEs.

Increased useof (privatesector) businessadvice bySMEs


Source: derived from SBS





The programme theory for Business Links is set out in Figure 1.1 and is meant to be readfrom left to right. The arrows indicate the direction of causality. Business Links is thenational brand for business support in England and this evaluation focuses on the localservice delivery – that is the operator.

Figure 1.1: Programme Theory for Business Links

Starting from Business Link on the left hand side and moving towards the right the figuresuggests a number of causal links between Business Link and the increased use of business advice. First, that the consultant works for Business Link may confer somelegitimacy for business advice, which increases certainty that should lead to increased useof business advice. Here, then, is the first testable hypothesis:

• Hypothesis 1: That legitimation by Business Link leads to a reduction in the

uncertainty for SME managers surrounding the performance of the ‘hired’

consultant.

The Federation of Small Businesses (FSB) survey of members in 2003 found that only5.3 per cent of members cited unqualified advisers as a factor in not taking up businesssupport. The small number citing this factor was attributed to the brokerage role of Business Links (Rigby, 2004).

A second element is that learning from their involvement with Business Links enablesfirms to develop internal capabilities to analyse their problems and derive solutions. Thisseems to commit the Business Links towards a role where they are facilitating learning byowner-managers it is hoped that, ultimately, the firm will become self-sufficient and havedeveloped their internal capabilities. The resource-based view (RBV) of the firm stressesthe development of capability as a key to competitive success. Differences in thecapability of the management are part of the explanation of productivity differences between firms (Mole, 2002c) yet, to be able to measure management capability is nottrivial. Nonetheless, a second hypothesis is:


Increased use of business advice bySMEs

Small firms more certainof quality businessadvice

More consultants dealing with SMEs

SMEs know where to getbusiness supportservices

BusinessLinkaccreditation

Small firms develop internal capabilities to

analyse their problems and derive solutions

High visibility

BusinessLink

28

IncreasedManagementskills




• Hypothesis 2: That working with Business Link will increase the capacity of

SME managers to analyse their problems and derive solutions

This second hypothesis has strong implications for Business Link business support

services. Effectively, this is asking Business Link advisers to transfer knowledge.Transferring knowledge takes place in an atmosphere of trust. Nevertheless, a programme theory that stresses learning does imply that Business Link work withcompanies on a long-term basis to develop stronger relationships (Bryson and Daniels,1998). The tension between the length of time needed to develop strong ties and the performance monitoring of Business Link has been explored previously by academicsregarding about the impact on the time taken with each firm on the measurement againsttarget of the number of firms advised (see Sear and Agar, 1996; Mole 2002b).

The third hypothesis examines the SME managers’ knowledge of where to go for advice.This part of the programme theory suggests that the high visibility of Business Link leads

to SME knowing where to go for business advice. In the SBS (2004b) evidence base for its action plan the high visibility of Business Link, its brand awareness, is a keydimension to the evaluation of the network.

• Hypothesis 3: That the high visibility of Business Link enables SME owner-

managers to know where to go to find business advice

The 2004 FSB survey of its members, a large but biased sample, found that lack of awareness of the services offered was the major reason that firms did not usegovernment-funded business services (Rigby, 2004) - another 15.3 per cent citedconfusion over services. This suggests that lack of awareness still hampers the take up of

business advice. The SBS’s annual survey of business suggested that: ‘Overall, 68 per cent of all small businesses were aware of Business Link either prompted or unprompted.Just over a fifth (21%) of all SMEs were aware of a national advisory service and couldname it as Business Link unprompted. A further 47 per cent of all small businesses wereaware of Business Link when prompted but did not initially identify the existence of anational service.’ (SBS, 2006: 153). In addition the SBS’s annual survey suggested thatthe reason businesses did not use advice was because they did not have any pressingneed, which is consistent with models of management consultancy (Keogh and Mole,2005)

• Hypothesis 4: That the number of consultants dealing with SMEs has

increased.

The fourth hypothesis is that the number of consultants for SMEs will increase. Thedemand for consultancy by SMEs induces greater numbers of consultants to offer services to smaller companies, rather than large. One might expect that this may create avirtuous circle. If demand induces supply then the extra supply through competitionmight improve the quality of business services which induces demand for consultancyand so on. Accordingly the line between supply and the outcome of more SMEs taking





advice is double arrowed indicating that causality runs both ways. Nonetheless, there is aclear hypothesis suggested here:

The evaluation of business links itself does not test this factor. Alternative sources for this data may be suggestive. VAT statistics show that the end of year stock of VAT

registered businesses in SIC 741 which includes legal, accounting and marketingconsultancy services grew from 75,620 in the end of year 1994 to 133,035 in the end of year 2003 – one of the highest growth of any three digit sector in the UK over this period.Whilst this does not prove the case it is indicative of a potential increase in the supply of business consultancy.

Finally, the SBS rationale for intervention states that there is an assumption that once thesubsidy ends businesses go on to seek more external advice from either the private or the public sector at full market cost. Therefore, a final hypothesis that can be tested is:

• Hypothesis 5: That once subsidy ends former Business Link clients are more

likely to seek further external advice

Typically, a summative evaluation suggests that a programme adds to the economicwelfare if it benefits the participants over and above the costs of the programme and thatthese benefits would not have happened anyway (additionality) or is not simply captured by one group at the expense of another (displacement). The programme theory outlinedhere, however, is one where the benefits may accrue over a long period of time and mightnot be immediately apparent. Whereas a programme like the Enterprise Initiativeattempted to solve a perceived problem of, say, a lack of sales in an SME, Business Linkshave a less specific set of programmes designed over time to improve the quality of the business that takes up its services. Essentially, if a programme sets out to stimulate a

market and can show that the programme does indeed increase the number of transactionsand actors within that market, then the programme has achieved its aims.

Summary

Following a ‘Programme Theory’ framework for the evaluation of the Business Link programme has resulted in the identification of five hypotheses that may be tested:

• Hypothesis 1: That legitimation by Business Link leads to a reduction in the

uncertainty for SME managers surrounding the performance of the ‘hired’

consultant.

• Hypothesis 2: That working with Business Link will increase the capacity of

SME managers to analyse their problems and derive solutions

• Hypothesis 3: That the high visibility of Business Link enables SME owner-

managers to know where to go to find business advice





• Hypothesis 4: That the number of consultants dealing with SMEs has

increased.

• Hypothesis 5: That once subsidy ends former Business Link clients are more

likely to seek further external advice

The next stage might be to examine these hypotheses in the evaluations of businesssupport. In turn the results may have implications for the way that Business Link isdelivered.

1.4 Design of the Economic Impact Study

The study consisted of two main stages which broadly corresponded to the methodologyset out in the SBS Evaluation Plan for the New Business Link Network. These are setout in Figure 1.2. Stage 1 enabled the research team to develop a clear understanding of the various forms of BLO models in operation and to seek to build a more appropriate‘assistance’ parameter in the quantitative analysis and econometric modelling. Stage 2 isthe economic impact component of the evaluation and involved econometric treatmentmodelling, structural equation modelling and selected qualitative intensive interviewswith assisted firms.

In terms of research activities the study had three opportunities to gather data. In the first,the researchers interviewed a number of representatives of Business Link Organisationsin order that we might better understand the BLO model. In the second, the studyconducted a telephone survey of over 3,000 businesses to support the main econometricmodelling. In the third, the study conducted case studies of programme recipients to

understand and better interpret the econometric findings. The major thrust of theevaluation is the econometric evidence but the researchers were anxious to provide someinterpretation to the evidence that may help to develop the programme theory.

Figure 1.2: Study Overview and Structure


Stage 1: Operation of

BLO Model

• Mapping of BLOs

• Taxonomy of BLO Model

• Testing of Taxonomy

Stage 2: Economic Impact

• Sampling

• Design of Questionnaire

• Survey of intensively assisted andmatched comparison group

• Coding and Database construction

• Econometric Modelling

• Case Studies

Assistance

Parameter

Project Outcomes

• Estimates of Net Benefits and VfM measures

• Models of Good Practice Business Support• Regional Baselines




1.4.1 Analytical Approach to the Derivation of Value for Money (VfM) Estimate

Based on the data obtained from the large-scale telephone survey it is proposed to do four main quantitative analyses, which will provide:

1. A national estimate of the value for money of the Business Links network.

This will relate specifically to the VfM of BL network assistance provided inthe period April to September 2003 and its impact on business performanceuntil the time of the survey (mid-2005).

2. An analysis of firms’ views of the quality and impact of service received

from BL over the same period and their assessment of impact on strategy.

3. An analysis comparing the effectiveness of alternative brokerage modelsof assistance on business performance.

4. A regional baseline analysis relating to the type of businesses being assisted by BL in each region and the perceived impact of BL support.

In addition, two other derivative analyses will be undertaken focussing first onimprovements in the BL service between the last VfM survey (see PACEC, 1998) and thecurrent study, and second a ‘path analysis’ focussing on identifying the possible ways inwhich BL assistance impacts on company performance. The latter analysis will use astructural equation modelling approach and its application is regarded as experimental in

the context of the current study.

1.4.2 National VfM Estimates

The starting point for these estimates are the responses from the telephone survey. In particular, given the difficulties with the GVA data collection, business growth and sales per employee indicators will be used as key performance measures. The output from thiselement of the study will be a value for money estimate of BL assistance provided between April and September 2003 based on its impact over a period of 12-18 months.

The calculation will involve a number of different steps:

a. Weighting and descriptives – as the telephone survey was structured weighting isnecessary to ensure a representative response. Weights have been constructed toensure the sample results are representative of the whole BL assisted group. Non-assisted responses have been weighted to match the assisted group. This allowsthe non-assisted group to be used as a control-group for the assisted firms in thedescriptive analysis. Bivariate, descriptive analysis relating intensively-assistedfirms, other-assisted firms and non-assisted firms will be conducted.





b. Impact modelling – the impact of BL assistance on firm performance wasmodelled econometrically using a 2-stage Heckman approach. This allowed for selectivity bias in the estimate of the impact of assistance, while a multivariateapproach allowed for differences in the other characteristics of the assisted and

non-assisted groups. The key output from this stage of the process will beestimates of the contribution of BL assistance to firms’ employment growth, salesgrowth and sales per employee over the 2004-05 period. These implicitly allowfor additionality and include variables to test extent to which displacement islikely to occur.

c. GVA estimates and grossing up – at this stage the individual sales andemployment impacts derived at (b) will be scaled to the whole of the assisted population. These can then be translated into GVA using industry and size bandratios derived from the Annual Business Inquiry. This provides the ‘benefit’element of the VfM cost-benefit analysis.

d. Attributable Costs – derived from BL accounting data this will reflect the costs of providing the BL service during the period April to September 2005. For comparative reasons the methodology used here should reflect that used in theearlier VfM study.

VfM estimates will then be derived as the difference between (c) and (d). We would wantto stress, however, the conditionality which will apply to our estimates of VfM and thelikelihood that our estimates are likely to under-estimate the true longer-term effect of BLassistance. This is because only one year’s performance data is going to be available.

1.4.3 Qualitative Views of Business Link Impact

As indicated earlier the VfM estimate for BL will provide a quantitative indicator of BLassistance over the 12-18 months after the assistance is provided. This is only part of the picture, however, due to the potential longer-term capability benefits of BL assistance.Indeed, only around half of the respondents to the survey indicated that the full effect of assistance would be realised within 12 months. The qualitative element of the analysiswill reflect:

a. Firms’ assessment of the time horizon over which BL assistance will influence performance.

b. The areas of their operations on which BL assistance had some influence andthose on which it had a ‘crucial’ impact.

c. Firms’ overall satisfaction with the BL assistance they received.





1.4.4 Evaluation of Alternative Brokerage Models

The aim of this exercise is to evaluate the impact of alternative brokerage models beingused by BL during 2003 in terms of their impact on business performance. The analysis

will be based on variants of the same impact model as the VfM analysis. The key stagesin the modelling will be:

a. Classification of BLOs – using quantitative management data the first step will beto develop a grouping of BLOs according to the extent and type of brokeragemodel they are using. The impact of each different type of brokerage model on business performance will then be evaluated separately.

b. Estimation of business performance effect – using similar models to the VfManalysis we propose to estimate impact models for each different brokeragemodel. This will allow us to estimate the ‘assistance’ effect of each type of

brokerage model and develop some comparisons.

Again, however, we would want to stress the strong conditionality which would apply tothis procedure. In particular, the fact that only one year’s performance data is going to beavailable is likely to mean that we underestimate the effect of BL assistance. Moreover, if the time profile of performance effects of the alternative models of assistance is different – as it might be if they emphasise different forms of company support – the inter-modelcomparisons may also be somewhat misleading.

1.4.5 Developing a Spatial Perspective: Regional Baselines and a Rural Perspective

The final element of our analysis relates to the derivation of a set of regional baselines for the RDAs moving forward with the Business Link network. These will again be cross-tabulations by region which can be used to provide an indication of the structure andcharacter of BL assisted firms. This chapter focuses on differences between intensively-assisted, other-assisted and non-assisted firms in the different Government Office regionsto provide a baseline against which future developments in the profile of assisted firmscan be measured. In essence, this highlights some substantial differences acrossGovernment Office regions in the attributes and characteristics of assisted firms. A finalelement will be to present headline performance data on the assisted groups of firmsdisaggregated by urban and rural areas with the latter defined in terms of morphology and

context following DEFRA’s classification of rural areas (i.e., less sparse and moresparse).

1.5 The Structure of the Report

The initial analysis concentrates on the descriptive analysis of the telephone survey andexamines the characteristics of what type of businesses use Business Link (Chapter 2)and the impact of that use (Chapter 3). Chapter 4 sets out the impact analysis and value





for money estimates using the econometric models. Respectively Chapters 5 and 6discuss the variety of Business Link models in operation throughout the network and thequalitative analysis from the face-to-face interviews with the owner-managers of assistedand non-assisted businesses. Chapter 7 has the regional baselines and a brief rural perspective on the headline impact analysis. The report concludes with a summary

discussion of the findings.





2. Sample Characteristics and the Nature of Business Link Support

2.1 Introduction

This chapter presents a brief overview of the descriptive results from the telephonesurvey of 3,448 small businesses: 1,130 intensively-assisted; 1,166 other-assisted and1,152 non-assisted small businesses. These businesses were surveyed between May andJuly 2005. The chapter is organised around the main structure of the telephone surveyquestionnaire (see Appendix A). The key sub-sections are:

Sample Confirmation and Contamination

Respondent Profile

Business Characteristics

Strategic Direction

Partners, Directors and the Background of the Business Leader

Main Partner/Managing Director

Weighting has been applied to the responses to take into account sample structuring (seeAppendix B). Appendix B reports the numbers of firms receiving intensive assistance andother assistance from Business Link in the period April – September 2003. Theweighting means that the sample population and survey population have the samecharacteristics for firm size (less than 10, 10-49, 50-250) and for broad sector (primary, production, construction and services).

For a number of Tables we compare the findings for all firms with the pattern for sparserural settlements to ascertain whether there are different patterns that emerge in thoseareas. Sparse rural settlements are based on DEFRA definitions and derived from the postcodes. There are tables 2.2a, 2.3a, 2.5a, 2.7a, and 2.8a

2.2 Sample Confirmation and Contamination

In the sampling, respondent firms were classified as either intensively-assisted or assisted based on data provided directly by the BLOs. Firms’ use of Business Link’s services wasconfirmed in the telephone survey, however, using a simple question asking whether

firms had actually used BL services during the reference period (April to September 2003). The vast majority (96.5 per cent) of firms classified as ‘intensively assisted’confirmed their use of BL services between April and September 2003, with only 3.5 per cent reporting no BL use over this period. Similarly, the vast majority (96.2 per cent) of other assisted firms also confirmed their use of BL services over the reference period. In





this group 3.8 per cent recalled no BL contact during this period (April to September 2003)5.

A more general question relating to BL use over the last two years largely confirmed this pattern of response with 58 intensively assisted firms reporting BL use compared to 57

other assisted firms. Larger proportions of firms reported using BL prior to April 2003 – 63.8 per cent of intensively assisted firms and 60.3 per cent of other assisted firms.Similarly high proportions of assisted firms were either engaged with BL at the time of the survey or were planning to use BL services at some time in the future - 73.9 per centof intensively assisted firms and 64.0 per cent of other assisted firms. Notably the proportion of intensively assisted firms continuing to use or planning to use BL serviceswas statistically significantly higher than the proportion of other assisted companies inthis category (t=-4.79, ρ<0.001).

In terms of the assisted group, this initial analysis suggests the overall validity of thesample. Key points are:

• It is reassuring that assisted firms’ recall of BL usage during the reference periodlargely reflects the original sampling data provided by the BLOs.

• It is also reassuring that levels of contamination due to continued BL use betweenthe reference period and the survey date were relatively low.

• The high proportion of assisted firms which were intending to make use of BLservices in the future provides a positive initial indicator. Particularly interestingis the higher proportion of intensively assisted firms intending to make future useof BL services.

Similar initial questions to the non-assisted sample were intended to confirm that theyhad not received assistance from BL and to estimate any contamination. Of the non-assisted respondents, 13.8 per cent reported using BL as a source of advice or assistanceat some point in the past, with the majority of these (92.4 per cent) confirming that thisBL assistance had been provided prior to the start of the reference period (i.e. beforeApril 2003). The remaining 7.6 per cent were unable to be certain about the timing of theBL assistance they had received. The suggestion is, however, that the extent of anycontamination of the non-assisted sample is low, and that they will therefore provide avalid control group. In the non-assisted group 43.1 per cent responded negatively whenasked whether ‘they had ever heard of Business Links before this interview today’.

2.3 Respondent Profile

5 Note these are weighted responses, derived using the relative weights. The actual number of respondentsidentified as intensively-assisted and other-assisted by BL but reporting no BL use during the reference period were: 36 intensively-assisted firms and 44 other-assisted firms.





As part of the survey the gender and position of respondents within the company wasidentified. Overall around two-thirds of survey respondents were male, with nosignificant difference in the proportion of male respondents between the intensivelyassisted (69.8 per cent), other assisted (67.0 per cent) and non-assisted (68.1 per cent)firms (χ 2 (2)=2.161, ρ=0.339).

More significant were differences in the position of respondents within the business witha wide range of job titles being reported (Table 2.1). Managing directors accounted for alarger proportion of respondents in intensively-assisted firms, while owner-managerswere more common in the other-assisted and non-assisted groups. This distribution islikely to reflect the greater number of limited liability companies in the intensivelyassisted group, and conversely the higher proportion of sole traders in the groups of other-assisted and non-assisted firms.





Table 2.1: Respondents’ Position within the business – Selected Categories

Intensively-

assisted firms

Other-

assisted

firms

Non-

assisted

firms

All

Surveyed

Firms

% % % %

Owner/proprietor 22.0 32.2 34.2 29.5Managing Director 35.6 23.5 20.5 26.4

Partner 7.6 10.0 11.3 9.6

Director 10.7 11.7 7.7 10.0

Senior Manager 3.6 3.6 4.3 3.9

Company Secretary 2.3 2.9 5.1 3.5

General Manager 4.0 2.8 4.3 3.7

Chief Executive (CEO) 1.1 .6 .4 .7

Chairman .4 .7 .4 .5

Office Manager 1.4 2.2 3.4 2.3

Accounts/Account

Manager .7 .9 1.2 .9Admin Manager/Officer .7 .5 .7 .6

Business DevelopmentManager

.4 .2 .2 .2

HR Manager/Director .7 .4 .3 .5

CommercialManager/Director

.2 .2 .2 .2

OperationsManager/Director

.9 .9 .4 .8

DesignEngineer/Manager

.2 .1 .1 .1

Engineer .1 .1 .1

Executive Officer .3 .1

FinanceDirector/Manager

1.3 .6 1.2 1.0

PA/Secretary .4 .7 .4 .5

IT Manager .1 .1 .1

MarketingManager/Director

.9 .2 .3 .4

Production Manager .2 .2 .3 .2

Project Manager .1 .2 .1 .1

Sales .4 .3 .2

Sales Manager/Director .5 .6 .3 .5

Training Manager .1 .1 .1

Transport Manager .1 .1 .1

Other Manager 1.7 2.0 .6 1.4

Other Director .4 .1 .2 .2

Other .8 1.3 1.6 1.2

Consultant .4 .4 .3

Source: BL Telephone Survey (2005)





2.4 Business Characteristics

Previous studies of small business growth have emphasised the role of firmcharacteristics – such as age, sector, legal status etc. – as determinants of businessgrowth. Identifying the impact of BL assistance requires us to ‘control’ for the influence

of these factors. Importantly, these factors may also differ between assisted and non-assisted respondents shaping their patterns of differential growth. In this section wetherefore focus on a brief comparison of the characteristics of the businesses in the threegroups of respondents (i.e. intensively-assisted, other-assisted and non-assisted).

Company age has in previous studies been linked negatively to business growth rates, i.e.younger firms tend to grow faster. Table 2.2 summarises sample data on the age of respondent firms and suggests that the groups of assisted firms – both intensively andother – are significantly younger than the non-assisted group (χ 2 (10) =78.42, ρ<0.001).For example, only 8.7 per cent of non-assisted firms were established in the last 2-3 yearscompared to 13.0 per cent of intensively assisted and 11.3 per cent of other-assisted

firms. Similarly, nearly two-fifths of non-assisted firms had been established for morethan 20 years compared to less than a third of assisted firms. Two implications follow.First, it seems clear that BL assistance is more commonly used by younger firms, or perhaps that BL assistance is being targeted at younger firms. Secondly, if our expectation that younger firms tend to grow faster is realised, we would expect, all other things unchanged, the assisted groups to be growing faster than the non-assisted group.

Table 2.2: Age Distribution of Respondent Groups: All Firms

Intensively

-assisted

firms

Other-

assisted

firms

Non-

assisted

firms

All

Firms

When did your business start?

% % % %

2-3 years ago 13.0 11.3 8.7 11.03-4 years ago 6.9 7.4 4.1 6.14-5 years ago 8.3 6.7 5.5 6.85-10 years ago 20.0 18.8 15.3 18.010-20 years ago 24.6 27.8 25.6 26.0More than 20 yearsago

27.3 28.0 40.7 32.0


Note: Reponses are weighted to give representative results.

Table 2.2a provides a comparison for the rural dispersed settlements. This produces amore pronounced pattern with the younger firms being more likely to be assisted (χ 2 (10)=2068.60, ρ<0.000).





Table 2.2a: Age Distribution of Respondent Groups in Rural Dispersed Settlements

Intensively

-assisted

firms

Other-

assisted

firms

Non-

assisted

firms

When did your

business start?% % %

2-3 years ago 12.3 6.2 8.43-4 years ago 5.0 6.1 0.44-5 years ago 6.6 7.1 4.55-10 years ago 18.0 22.5 13.010-20 years ago 27.0 22.2 16.2More than 20 yearsago

31.0 35.9 57.5


Note: Reponses are weighted to give representative results.

Another factor which has been linked to business performance in previous studies is legalform. Again among respondents significant differences were evident between the legalform of the assisted and non-assisted groups (χ 2 (18)=137.44, ρ<0.001), with somedifferences also evident here between intensively assisted and other-assisted respondents(Table 2.3):

• Intensively-assisted firms were less likely to be sole traders than either other-assisted or non-assisted firms. Sole traders accounted for nearly a quarter of other-assisted and non-assisted firms but only 1:7 intensively-assisted businesses.

• Limited liability companies comprised around 70 per cent of intensively-assisted

firm, 60 per cent of other-assisted firms and 40 per cent of non-assisted businesses.

• Social enterprises accounted for 2.0 per cent of the whole group of respondents but were less likely to be in either of the assisted groups.





• The overall proportion of sole traders was higher and sole traders were morelikely to gain assistance in the rural dispersed settlement than in the overallsample.

• Social enterprises accounted for 3.6 per cent of the whole group of respondents

but were less likely to be in either of the assisted groups.

Our expectation – based on the results of previous studies – would be that firms withsome form of limited liability would grow faster than those without such legal protection.In this case, and ceteris paribus, the larger proportion of intensively and other-assistedfirms would suggest that these groups would again tend to grow faster than the non-assisted group.

Another characteristic which might be important in determining growth is whether or notfirms were part of multi-site organisations. In fact, broadly similar proportions of firms ineach category were part single and multi-site businesses, with around four-fifths single

site organisations (81.8 per cent of intensively-assisted plants; 82.9 per cent of other-assisted plants and 86.5 per cent of non-assisted firms) (χ 2(2)=9.58, ρ=0.008).

Sectoral composition of assisted and non-assisted groups also differed significantly(χ 2(26)=155.41, ρ<0.000) with a concentration of intensive and other assistance onmanufacturing companies and a relatively small proportion of assisted companies in theretail, wholesale and repair categories (Table 2.4).





Table 2.4: Sectoral Composition of Respondent Firms

Sample Group

Intensively-assisted

firms

Other-assisted

firms

Non-assisted

firms

AllFirms

% % % %

A - Agriculture, hunting & forestry 5.8 4.2 4.9 4.9

B - Fishing .0 .1 .3 .1C - Mining & quarrying .0 .1 .0D - Manufacturing 23.4 19.0 18.8 20.3E - Electricity, gas and water supply

.3 .3 .2

F - Construction 5.5 6.5 5.6 5.9G - Retail, wholesale and repair of motor vehicles

14.7 17.9 28.1 20.3

H - Hotels and catering 4.3 5.6 8.3 6.1I - Transport, storage andcommunication

3.1 2.5 3.0 2.8

J - Financial intermediation (Finance)1.0 .8 1.8 1.2

K - Real estate, renting and businessactivities

27.6 30.9 16.6 25.0

M - Education 2.0 1.6 1.0 1.6 N - Health and social work

6.6 5.5 5.8 6.0O – Other community, social and personal service activities 5.8 5.4 5.5 5.5


Intensively-assisted firms (28.8 per cent) were also more likely to be exporting than other assisted firms (20.2 per cent) and non-assisted companies (14.7 per cent) (χ 2 (2)=69.10,ρ<0.000).

Intensively-assisted firms were also more likely to have introduced new or improved

products over the previous two years (64.6 per cent) than either other-assisted (55.2 per cent) or non-assisted (39.8 per cent) firms. Similarly intensively-assisted firms were alsomore likely to have introduced new or improved processes (49.8 per cent) compared toother assisted (38.4 per cent) and non-assisted firms (26.0 per cent). In each case therewere statistically significant differences between the propensity of firms in eachrespondent group to introduce new products (χ 2 (2)=142.66, ρ<0.000) and processes (χ 2

(2)=133.49, ρ<0.000).





In terms of the markets in which assisted and non-assisted groups were operating, a high proportion of each group reported intense competition. Non-assisted firms, however,were generally operating in more price sensitive markets than those faced by assistedfirms. There are two implications: first that the assisted firms had ‘better strategies’ interms of having non-price factors that they were able to compete on. Second, the higher

levels of price elasticity may indicate that firms were in a zero sum game where one firmsgain was at the expense of another. In a zero sum game, displacement effects are morelikely; consequently the Business Link assisted group appeared less likely to suffer displacement. Two-thirds (64.3 per cent) of intensively assisted firms identifiedcompetition in their main market as ‘very intense’ or ‘intense’, a larger proportion thanother assisted (58.9 per cent) or non-assisted firms (60.7 per cent) (χ 2(2)=7.107, ρ=0.029).High own price elasticities (i.e. >2) were more common among non assisted firms (9.3 per cent) compared to intensively assisted (7.6 per cent) or other assisted (5.0 per cent)firms. These differences were significant at the 1 per cent level (χ 2 (2)=14.84, ρ=0.001).High competitors price elasticity (i.e. >2) were also more common among non-assistedfirms (9.7 per cent) than among either intensively assisted (8.1 per cent) or other assisted

(4.4 per cent) firms. As before these differences were significant at the 1 per cent level (χ 2

(2)=22.98, ρ<0.000).

2.5 Strategic Direction

In addition to the differences in firm characteristics noted earlier, significant differencesin the strategic priorities of assisted and non-assisted firms were also evident. Notably,intensively assisted firms placed less emphasis on maintaining their sales in currentmarkets and more priority on increasing sales and product development for other newmarkets than either other assisted or non-assisted firms (Table 2.5). The strategic priorityof each group of firms, however, was to increase their sales in the markets they currently

served. Moves into new market areas within existing or new products had a lower priority.

Table 2.5: Strategic Priorities of Respondent Firms:All FirmsIntensively-

assisted

firms

Other-

assisted

firms

Non-

assisted

firms

% % % Significanceχ 2(2) (ρ)

Maintain sales in present markets 22.7 30.9 36.2 50.56 (<0.000)Increase sales in current markets 55.5 52.7 49.9 7.109 (0.029)Increase sales in new markets 19.3 14.2 10.3 36.95 (0.000) New products for existing markets 9.0 7.4 5.8 8.58 (0.14) New products for new markets 4.4 2.4 1.6 17.165 (0.000)


Table 2.5a: Strategic Priorities of Respondent Firms: Rural Dispersed SettlementsIntensively-

assisted

firms

Other-

assisted

firms

Non-

assisted

firms

% % % Significance






• No significant differences were evident between intensively-assisted firms andother-assisted firms in terms of either the mean number of directors (t=0.306, ρ =0.760), gender diversity (t=0.010, ρ = 0.992), or ethnic diversity in their group of

partners/directors (t=-1.473, ρ = 0.141).

• More significant differences were evident between intensively-assisted firms andnon-assisted firms in terms of the number of directors and partners in the business(t=2.589, ρ = 0.010), although the two groups of firms had similar levels of gender (t=1.086, ρ = 0.278) and ethnic diversity (t=0.363, ρ = 0.716).

• Significant differences were also evident between other-assisted firms and non-assisted firms in terms of the number of directors/partners (t=2.398, ρ = 0.017)and ethnic diversity (t=1.770, ρ = 0.077).

In addition to their own partners directors, around 12.5 per cent of respondent firms alsohad non-executive directors, with significant differences evident in the proportion of firms in each of the intensively-assisted firms (13.6 per cent), other-assisted firms (14.1 per cent) and non-assisted firms (9.7 per cent) having non-executive directors((χ 2(2)=12.104, ρ=0.002).

2.7 Main Partner/Managing Director

The final set of questions related to the characteristics of the main partner or owner-manager of the firm. These questions were included as the characteristics of the owner-

manager have been shown to be a key determinant of small business growth in a range of previous studies. Key contrasts were:

• Around 86 per cent of main partners/managing directors were equity holders (>20 per cent) in respondent firms, with no significant differences evident betweengroups (χ 2(2)=0.116, ρ=0.944).

• 72-76 per cent of main partners/directors were also involved in other businesses.Again there was no significant difference between respondent groups((χ 2(2)=2.153, ρ=0.341).

• More important differences were evident in the proportion of main partners/directors who had been involved in founding other businesses.Percentages were significantly different between respondent groups ((χ 2(2)=32.43,ρ<0.000), and highest among intensively-assisted firms (40.1 per cent) and other-assisted firms (36.0 per cent) than among non-assisted firms (28.4 per cent).

• A similar pattern was evident in terms of the willingness to share equity in the business (χ 2(2)=97.55, ρ<0.000), a virtue attributed to 51.4 per cent of the





directors of intensively-assisted firms, 35.5 per cent of directors of other-assistedfirms and 28.1 per cent of those in non-assisted firms.

Educational attainment has also been shown to be a key factor in shaping the growth potential of smaller firms. Grouping the educational qualifications of owner-managers

into four categories suggests significant differences between respondent groups(χ 2(6)=54.8, ρ<0.000) , with owner-managers in intensively-assisted firms more likely tohave degree level qualifications, while those in non-assisted firms are more likely to haveno post-school qualifications (Table 2.7).

Table 2.7: Highest Qualification of Owner- Managers: All FirmsIntensively

assistedfirms

Other assisted

firms

Non-assisted

firmsAll

Firms

% % % %

Degree or equivalent qualification 64.3 62.4 49.6 59.3

NVQ3 or apprenticeship qualification 18.1 17.5 20.5 18.6

Other post-school qualifications 2.1 1.7 1.3 1.7

No post-school qualifications 15.5 18.4 28.6 20.4


In rural sparse rural settlements the pattern was repeated with slightly fewer qualified atdegree level and slightly more at NVQ3 level, and slightly more with no post-schoolqualifications (Table 2.7a).

Table 2.7a: Highest Qualification of Owner- Managers: Rural Dispersed

Settlements

Intensivelyassistedfirms

Other assisted

firms

Non-assisted

firmsAll

Firms

% % % %

Degree or equivalent qualification 64.5 60.8 40.2 52.8

NVQ3 or apprenticeship qualification 16.9 23.1 19.1 20.9

Other post-school qualifications 4.0 0.5 2.7 1.7

No post-school qualifications 14.6 15.6 38.1 24.7


Age has also been shown to be an important factor in shaping the success of owner-manager’s firms. Here again significant differences were evident between intensively-

assisted firms, other-assisted firms and non-assisted firms (χ 2 (10)=31.648, ρ<0.000),although these tended to be concentrated at the extremes of the age range. Morespecifically, a relatively high proportion of the owner-managers of non-assisted firmswere in the 65 plus age group compared to the groups of assisted firms (Table 2.8).

Table 2.8: Age Distribution of Owner-Managers: All Firms

Intensively

assisted

Other

assisted

Non-

assisted

All

Firms





3. Business Performance and Assisted Status

3.1 Profiling Business Link Support

Our main objective in this section is to profile – at national level - the support receivedfrom BL by each group of assisted firms. The profiles reflect both the form andfrequency/intensity of firms’ contacts with BL and the focus of the assistance theyreceived (i.e. for marketing, innovation, ITC etc). This is important because itdefines the packages of assistance received by firms from BL, and it is the impactof these packages of assistance on performance which form the basis of the overallimpact assessment6 .

Three main groups of firms are considered here – intensively-assisted firms are definedhere – as in the rest of the report - as those classified by the BLOs themselves as having

received intensive-assistance during the reference period. Other-assisted firms are allother companies which received assistance over this period. Non-assisted firms are thecontrol group of firms which received no assistance from BL either during the reference period or subsequently. What is clear, however, from our analysis of different deliverymodels (Chapter 5) and our regional analysis (Chapter 7) is that what constituted‘intensive-assistance’ or ‘other-assistance’ did differ between BLOs and regions.

In the next Chapter, where we focus on national effects, we abstract from thesedifferences which are considered in more detail in later sections. It is also worth bearingin mind that the context for the impact assessment is the 2003-2005 period. This was a period of rapidly changing GDP growth which rose from around 2.2 per cent per annum

in 2003Q1 to 3.6 per cent per annum in 2004Q2, before falling again to 2.0 per cent per annum in 2005Q1. These movements in GDP growth – and more general economic prospects – influenced both the assisted and non-assisted firms, however, effectivelycontrolling for changes in the economic climate.

Before looking at the intensity and type of assistance received by intensively-assistedfirms and other-assisted firms, however, it is probably worth considering briefly thedifferent routes by which firms actually got in touch with BL. Here, some markeddifferences were evident between different respondent groups:

• While 90.7 per cent of intensively-assisted and 90.1 per cent of other-assisted

firms reported receiving mail shots from BL, this was true of only 16.8 per cent of non-assisted firms (χ 2(2)=1847.12, ρ<0.000).

• Similarly, 67.3 per cent of intensively-assisted firms reported using BL websitescompared to 63.5 per cent of other-assisted firms and only 4.6 per cent of non-assisted firms (χ 2(2)=1146.3, ρ<0.000).

6 More specific differences between BL operators in the way services are delivered, and the effectiveness of different brokerage models are considered in Chapter 5.





• A lower proportion of firms in each category had received direct approaches fromBL staff but the proportions of firms contacted were still notably higher amongintensively-assisted firms (54.0 per cent) and other-assisted firms (41.9 per cent)than among non-assisted firms (4.9 per cent) (χ 2(2)=671.36, ρ<0.000).

• Around a third of intensively-assisted firms were referred to BL by friends (31.6 per cent), a larger proportion than that of either other-assisted firms (21.7 per cent) or non-assisted firms (4.1 per cent) (χ 2(2)=287.94, ρ<0.000).

• Smaller proportions of firms were referred by external advisors: intensively-assisted firms (15.0 per cent), other-assisted firms (9.4 per cent) and non-assistedfirms (1.1 per cent) (χ 2(2)=144.05, ρ<0.000).

Once in contact with BL, it is clear that the frequency of contacts between intensively-

assisted firms and BL was, on average, greater than that for other-assisted firms (Table3.1) (χ 2(7)=76.12, ρ<0.000).

Table 3.1: Frequency Distribution of Contacts between Intensively-assisted firms

and Other-assisted firms and Business LinksIntensively-

assisted

firms

Other-

assisted

firms

All

Assisted

firms

% % %

Every week 2.6 2.1 2.3

Every fortnight 3.6 2.7 3.2Every month 17.9 12.6 15.2

Every 3 months 28.3 19.1 23.6

Every 6 months 21.7 21.7 21.7

Once a year 12.0 21.0 16.6

Less often 11.7 17.6 14.7

(Don t know) 2.2 3.2 2.7


Differences in the type of advice received by different groups of respondents reflected

these differences in contact frequency. Factual advice and basic advice were received bysimilar proportions of intensively-assisted firms and other-assisted firms (Table 3.2),while in-depth assistance and ‘long-term or intensive-assistance’ was received bysignificantly more firms in the intensively-assisted group (25-28 per cent) than by other-assisted firms (14-21 per cent).





Table 3.2: Intensity of Assistance Received by Intensively-assisted firms and Other-

assisted firmsIntensively-

assisted

firms

Other-

assisted

firms

% % χ2(2) ρ

Factual information 40.6 42 0.467 0.494

Basic advice 47.5 48.4 0.165 0.684

In-depth advice 25.4 20.8 6.714 0.010

Long term or intensive assistance 28 14.4 63.392 0.000

Something else 10 6.9 7.344 0.007


More thematically, it is clear that during the reference period (i.e. April to September 2003) intensively-assisted firms consistently received more different types of supportthan other-assisted firms in the group of respondents (Table 3.3). In all cases thesedifferences were statistically significant. For example, around 14 per cent of intensively-

assisted firms reported receiving help with business benchmarking or diagnosis comparedto only 7.0 per cent of other-assisted firms.

Table 3.3: Proportions of Intensively-Assisted Firms and Other-Assisted Firms

Receiving Different Types of BL ServicesIntensively-

assisted

firms

Other-

assisted

firms

% % t ρ

General business information 57.3 56.5 0.43 0.67

Business benchmarking or diagnosis 13.6 7.0 5.17 0.00

Business planning, action plan development 39.7 23.9 8.18 0.00

Information on regulation and compliance 34.9 24.1 5.63 0.00Help with finding external consultants 22.9 11.5 7.21 0.00

Help with raising finance 35.5 22.9 6.61 0.00

Help with making cost/quality improvements 15.4 7.8 5.63 0.00

Help with marketing 35.4 20.7 7.88 0.00

Help with R&D or NPD 12.3 9.8 1.89 0.06

Help with exporting 13.5 7.6 4.58 0.00

Help with training 41.0 30.5 5.20 0.00

Help with e-commerce 16.2 9.4 4.85 0.00

Help with IT issues 21.0 13.9 4.42 0.00

Anything else 7.0 7.3 -0.25 0.80


It might have been expected that a similar proportion of BL assistance to intensively-assisted firms and other-assisted firms would have been provided by BL staff. In fact,however, 65.2 per cent of intensively-assisted firms (79.6 per cent of other-assisted firms)reported that all of this support was provided by BL staff, with 34.8 per cent of intensively-assisted firms and 20.4 per cent of other-assisted firms reporting that someservices were referred to an external party (χ 2(1)=57.99, ρ<0.000). The suggestion is that





external brokerage was more common in the provision of services to intensively-assistedfirms. The process of brokerage may have been only worthwhile for intensive assistanceor the BLO may have been capable of providing routine services.

Another potentially important indicator in terms of the nature of the brokerage process is

whether or not firms paid for the services being provided. Among survey respondents,around a quarter of intensively-assisted firms (27.5 per cent) and a sixth (15.5 per cent) of other-assisted firms reported paying for BL services (χ 2(1)=47.2, ρ<0.000). In other words, it would appear that internal brokerage – to a fee-paying service within BL – wasoperating for around a quarter of intensively-assisted firms and a sixth of other-assistedfirms. More surprising perhaps is that only 51.7 per cent of intensively-assisted firms and30.6 per cent of other-assisted firms reported paying for externally referred services(χ 2(1)=24.5, ρ<0.000). Therefore, considerable external brokering by BL staff was tonon-fee paying services rather than market based services.

Over the whole sample of BL assisted respondents, 75.6 per cent reported either being

satisfied or very satisfied with the services they had received, although there wasgenerally a higher level of satisfaction among intensively-assisted firms (χ 2(4)=39.7,ρ<0.000) (Table 3.4). Satisfaction tends to decay over time so these figures are high,although repeat assistance would tend to increase the satisfaction rate by reducing thetime for the decay.

Table 3.4: Satisfaction with BL Services among Intensively-assisted firms and


Intensively-

assisted firms

Other-

assisted

firms

All

Firms

% % %

1 - Very dissatisfied 5.7 5.8 5.7

24.6 5.1 4.8

310.3 17.4 13.8

444.1 46.4 45.3

5 - Very satisfied35.3 25.3 30.3






3.2 Other External Business Assistance and Support

Aside from BL, around one in five respondents (20.5 per cent) reported using other external sources of information, advice or support to develop their business over the previous two years – that is in the period 2003 to 2005. This proportion was significantly

different between groups of respondents (χ 2 (2) = 42.4, ρ<0.000), being highest (26.6%)among intensively-assisted firms, and lower among other-assisted (20.1%) and non-assisted firms (15.2 per cent). Table 3.5 summarises the most common forms of other business information and support, although survey respondents reported a wide variety of sources of ‘other’ advice and help.

Table 3.5: Individual Sources of Business Advice and AssistanceIntensively-

assisted

firms

Other-

assisted

firms

Non-

assisted

firms

All

Firm

s

% % % %χ2(2) ρ

An Accountant 3.4 3.3 3.2 3.3 0.043 0.979

Consultants (excl. management) 5.2 2.7 2 3.3 20.295 0.000

A Trade Association 2.7 2.5 2 2.4 1.155 0.561

A Bank 1.9 1.2 2.7 1.9 6.883 0.032

A Management Consultant 1.2 2.1 1.3 1.5 3.679 0.159

Another business owner 1.5 1.0 0.7 1.1 3.557 0.169

Chamber of Commerce 2.4 0.7 0.3 1.1 24.400 0.000

Friends or relatives 0.9 0.9 1.4 1.0 1.995 0.369

A Solicitor 1.2 0.9 0.9 1.0 1.101 0.577

Dept of Trade and Industry 1.1 0.9 1.0 1.0 0.300 0.861

Customer or Supplier 1.0 0.5 1.3 0.9 3.946 0.139Regulatory body (e.g. HSE) 1.2 0.5 1.1 0.9 3.279 0.194

Employers federation 0.8 0.6 0.7 0.7 0.319 0.852

Enterprise Agency 0.8 1.2 0.2 0.7 8.611 0.130

Inland Revenue 0.3 0.2 0.3 0.3 0.688 0.709

Other 7.7 6.2 3.4 5.7 20.220 0.000


The key points to note are that:

• Accountants were the most common form of business advice and information for the whole group of respondents, used by 3.2-3.4 per cent of firms in all

respondent groups.

• Other consultants – excluding management consultants – were also used by 3.3 per cent of the sample; their use was significantly more common, however,among intensively-assisted firms.





• Trade associations, management consultants, banks and other business ownerswere the other most common sources of advice and information. Chambers of Commerce may have an organisational connection to Business Link.

Some recipients may use Business Links advice alongside other sources of support.

Business Link has emphasised its brokerage aspect more and more over the period 2001onwards. In the present study a high proportion of the assistance was provided directly byBusiness Link. Nevertheless, the use of external sources of advice was tested in themodelling of impact but was not significant and therefore is not part of the model presented in chapter 4. If clients did receive grants it did not seem to reveal itself inincreased impact. Those Business Links that tended to provide more advice on sources of finance performed less well see pages 101 and 103.

3.3 Firm Size and Performance

Sales and employment provide a basic indication of firm size and are the primaryindicators reviewed here. Average employment for all respondents was 23 persons in2004 and 24 persons in 2005 with other-assisted firms slightly larger than the mean(Table 3.6). In each group of firms median employment is below 10, suggesting thatmore than half of the firms in each category fall into the ‘micro’ category, i.e. those with1-10 employees. The suggestion is of a very skewed distribution with a strongconcentration among smaller companies. This table contains all the firms in the samplewho provided employment and sales data and it is not recommended that the population be compared because this would be misleading. For a comparison of like-for-like seetable 3.7.

Table 3.6: Firm Size Distributions: Sales and Employment

Intensively

assisted

firms

Other

assisted

firms

Non-

assisted

firms

All

FirmsEmployment 2004 Mean 22.7 27.2 18.8 22.9

Median 8.0 6.0 5.0 6.0

StdDeviation

67.892 308.739 71.542 188.673

Valid N N=1096 N=1126 N=1092 N=3314

Employment 2005 Mean 24.3 28.6 18.7 23.9

Median 9.0 6.0 5.0 7.0

StdDeviation

69.085 332.619 71.471 201.772

Valid N N=1106 N=1128 N=1098 N=3331

Sales 2004 (000s) Mean 2,093.8 2,843.5 2,630.7 2,464.8

Median 570.0 298.0 318.3 430.6

StdDeviation

7,528.5 18,244.3 14,116.7 13,221.9

Valid N N=507 N=318 N=410 N=1235





Sales 2005 (000s) Mean 2,432.5 3,604.4 3,000.4 2,911.1

Median 600.0 353.4 380.8 500.0

StdDeviation

7,967.8 20,250.1 14840.8 14,183.7

Valid N N=599 N=353 N=474 N=1425


Sales data suggests a similar picture with average sales among sample companies in thefinancial year 2004-5 being £2.91m. Again median sales in each group is significantlysmaller (£350-600,000) suggesting a preponderance of smaller firms. Intensive-assistedfirms have a median sales figure in 2004-05 of £600,000 compared to between £350-380,000 for the other groups.

Mean employment growth for the sample as a whole is positive (10.4 per cent) over the2004-2005 period with larger increases in employment in the intensively-assisted andother-assisted firms compared to non-assisted firms. Intensively-assisted firms grewmore rapidly than other-assisted firms in between 2004 and 2005. Similarly, mean salesgrowth was strongly positive for each group with notably higher average growth for intensively-assisted firms and other-assisted firms compared to the non-assisted group.Turnover per employee – an indication of productivity – was, however, slightly lower among intensively-assisted and other-assisted firms compared to the control group of non-assisted firms (Table 3.7).

Table 3.7: Performance Indicators: Sales and Employment Growth, Sales per

Employee

Intensively

assisted

firms

Other

assisted

firms

Non-

assisted

firms AllFirms

Employment Growth Mean 16.6 9.9 4.7 10.4

Median 0.0 0.0 0.0 0.0

StdDeviation

69.4 43.6 26.8 50.0

Valid N N=1093 N=1122 N=1088 N=3302

Sales Growth Mean 27.2 50.9 11.2 27.7

Median 8.3 11.1 0.2 7.1

StdDeviation

96.8 184.3 29.5 113.1

Valid N N=496 N=284 N=382 N=1161

Sales per employee Mean106,894.9 99,388.7 123,749.9 110,635.7Median 54,035.0 50,000.0 60,000.0 54,545.5

StdDeviation

254,105.2 216,975.6 229,230.9 237,352.8

Valid N N=592 N=341 N=461 N=1394


3.4 Summary





The analysis of BL assistance confirmed, as expected, that the nature and extent of assistance differed markedly for the intensively-assisted and other-assisted groups. Moreimportantly, in the context of the evolving nature of the BL local service since 2001 wasthe finding that external brokerage was more common in the provision of services to

intensively-assisted firms. More surprising perhaps is that only 51.7 per cent of intensively-assisted firms and 30.6 per cent of other-assisted firms reported paying for externally referred services. Therefore, a considerable external brokering by BL staff was to non-fee paying services rather than market based services.

In terms of external business advice accountants were the most common form of businessadvice and information for the whole group of respondents, used by just over 3 per cent of firms in all respondent groups. Intensively-assisted firms were more likelyto use ‘other consultants’ (excluding management consultants).

The observed differences in the performance of the assisted groups of firms and the non-

assisted group were marked but must be treated with some care. There is an obvioustemptation to read into these differences the effect of BL assistance but that would bemethodologically flawed and misleading in terms of the implications for policy. Aswe have set out in Chapter 1, the evaluation methodology designed to isolate theeffects of assistance are based upon an econometric approach which includes twoimportant dimensions – a test for selection bias and the inclusion of a set of controlvariables (e.g., size, sector, owner-manager characteristics, strategy, innovativeness,market orientation) which may also have an impact on firm performance. The nextChapter presents the results of this approach.





4. Assessing the Impact of Business Link

4.1 Introduction

In this Chapter we provide evidence on the impact of Business Link support on bothintensively-assisted firms and other-assisted firms. Section 4.2 sets out an econometricapproach to the impact evaluation of BL assistance, while Section 4.3 then profiles firms’qualitative assessment of the timing and extent of BL assistance on their business as wellas the extent of additionality. Section 4.4 develops our value for money assessment. Thisis developed in four main stages7:

1. First, we use an econometric approach to estimate the impact and significance of BL assistance on the performance of individual intensively-assisted firms andother-assisted firms. As it turns out, BL assistance does have a significant and

positive effect (2.2-2.4 per cent) on the employment growth of intensively-assisted firms.

2. Second, we scale up these impacts on individual firms to reflect the number of firms which received intensive assistance during the reference period. This givesus the aggregate employment effect of BL assistance over the year.

3. Third, we translate this employment effect into a national value added estimateusing data from the ABI on value added per employee. This gives us the totaladdition to national value added due to BL support.

4. Fourth, this is then compared to the cost of the BL network to give a value for money estimate.

In assessing the results of the value for money calculation it is important to acknowledge,however, that the earlier discussion of the timing of the impact of BL support on firm performance suggests that in the majority of cases benefits are spread over some years.This has implications for the interpretation of our econometric analysis which measuresthe impact of BL support over an 18-24 month period. In particular, it means that our econometric analysis is likely to under-estimate the true impact of BL assistance on firm performance, a factor which is also reflected in some contrasts between our qualitativeand quantitative impact assessments. These issues are discussed in more detail in Section

4.4.7 Our original approach to the estimation of BL value added was slightly different, although it followed thesame general pattern. In particular, we aimed initially to estimate econometrically the impact of BL on thevalue added created by individual firms, which would then have been grossed up to provide a nationalvalue added estimate. In the company survey, however, we only obtained complete value addedinformation for a small number of firms (around 7% of the sample). This provided too few observations for the econometric analysis and a potentially atypical response. Our preference was therefore to use the moreindirect approach of estimating employment and turnover impacts using an econometric approach, and thento use ABI data on value added per employee to allow us to calculate aggregate value added.





4.2 Impact of Business Link Assistance

Two main issues arise in estimating the impact of BL assistance on an individual firm.

First, as indicated in Chapter 2 the characteristics of intensively-assisted firms, other-assisted firms and non-assisted firms differ substantially suggesting that unless thesedifferences are controlled for in the estimation any assessment of the effect of assistanceis likely to be misleading. This emphasises the importance of a strongly multi-variateapproach which explicitly allows for differences in the characteristics of assisted andnon-assisted companies, their strategic orientations and the strengths of their owner-managers and managerial teams. Second, previous studies have also emphasised theimportance of clearly identifying any selection effect to avoid any potential bias due tothe selection by BL of either better or worse than average firms to assist. Addressing thislatter point can be done through a two step procedure that involves the estimation of tworelated statistical models – a model for the probability that a firm will receive assistance

and a second model relating to the effect of selection and assistance on business growthor performance. This two step approach allows an identification of the ‘selection’ and‘assistance’ effects as well as explicitly allowing for differences between thecharacteristics of assisted and non-assisted firms. In setting up the modelling in thismanner the significance, or otherwise, of the selection parameter allows a ‘test for selection’.

The first stage is therefore the development of a series of Probit models of the probabilityof receiving assistance. These are reported in Tables 4.1 for intensively-assisted firms andTable 4.2 for other-assisted firms8. In each case three models are reported with slightlydifferent specifications to give an indication of robustness, with Model 3 in each case

providing the preferred model specification. Models both for the probability of receivingintensive and other assistance performed well, with high proportions of correct predictions and a number of significant variables. Key findings were:

• Limited liability firms were 28 to 36 per cent more likely to be intensively-assisted firms but other-assisted firms were no more likely to have limited liabilitythan non-assisted firms. Legal partnerships, however, were 16 to 25 per cent lesslikely to be in the other assisted group than remain unassisted.

• There was no evidence that firm size was important as a determinant of the probability of receiving either intensive or other assistance.

• Firms established for five years or more had a significantly lower probability of receiving intensive assistance than younger firms. Other assistance was equallycommon among firms less than 20 years old. Firms that were more than 20 yearsold were less likely to receive other assistance.

8 In each case sample sizes are dictated by the combined number of sample respondents of intensively-assisted firms and non assisted firms (Table 4.1) and of other-assisted firms and non-assisted firms (Table4.2). In both tables a number of specifications are reported, some exclude insignificant variables.





• Information sources play an important role in determining the probability thatfirms fell into the groups of intensively-assisted firms or other-assisted firms.Receipt of BL mail shots, use of the BL website, direct contacts with BL, andreceiving an introduction from an advisor all led to statistically significant

increases in the probability of receiving both intensive and other assistance. Incontrast, while receiving a referral from a friend resulted in a statisticallysignificant increase in the probability of receiving intensive assistance, this wasnot the case for other assistance.

• Ethnic diversity in firms’ teams of directors had no impact on the probability of assistance but firms with higher gender diversity among their directors were morelikely to be receiving both intensive and other assistance.

• Clear patterns between industry and the probability of receiving assistance can beidentified, particularly in Model 3, which excludes insignificant industry

dummies. Firms in the Agriculture, Hunting, and Forestry; Manufacturing;Construction; Transport; Real Estate; Health and Social Services; and Other Services industries all have a statistically significantly greater probability of receiving intensive assistance than other firms. In contrast, while firms in theConstruction and Real Estate Industries have statistically higher probability of receiving other assistance, firms in the Retail, Wholesale; Financial Services; andHotels and Catering industries have statistically lower probability of receivingother assistance.

In other words, younger, limited firms with boards of directors exhibiting higher gender diversity were more likely to take up intensive assistance. Other assistance was also being

targeted at younger firms with statistically weaker evidence of a similar gender effect.Also, clear evidence exists that firms in different industries have different probabilities of receiving assistance. However, a clear distinction also exists between which industriesare likely to receive intensive or other assistance. Finally, in both cases direct action byBL to recruit contacts seems to have substantially increased the probability of using BLservices.





Table 4.1: Probit Models of the Probability of Receiving Intensive Assistance

ConstantFirm Charact

Legal PartnersLtd Liability Co

Other type of Notes: Hotels and Catering is the excluded Industry Dummy in Models 1 and 2; Chi-Squared Statistic Indicates that ρ<0.000 in allmodels; Coefficients values reported are marginal values computed at variable means; Marginals for Dummy Variables relate to theimpact of a change from 0 to 1.





Table 4.2: Probit Models of the Probability of Receiving Other Assistance

ConstantFirm Charact

Legal PartnersLtd Liability Co

Other type of Notes: Hotels and Catering is the excluded Industry Dummy in Models 1 and 2; Chi-Squared Statistic indicates that ρ<0.000 in allmodels; Coefficients values reported are marginal values computed at variable means; Marginals for Dummy Variables relate to theimpact of a change from 0 to 1.





• Other assistance is found to have a positive but statistically insignificant effect onsales growth, increasing sales growth by 4.2 percentage points.

• Other assistance has a positive but statistically insignificant effect on firms’labour productivity, increasing productivity growth by 5.0 percentage points.

Other factors also prove important, however, in the determination of employment, salesand productivity growth. :

• Firm age has statistically significant impact on growth. Firms aged more than 10years are found to have significantly lower employment, sales, and productivitygrowth, and these effects are particularly significant in the intensively-assistedmodels. While not as strongly evident as in the intensively-assisted models, theother-assisted models suggests that firms aged 3-4 years have significantly higher sales growth (Table 4.5 and Table 4.6). Since Business Links are working with

younger firms then that suggests that Business links are working with firms thatare more likely to grow.

• That firm size is not significant may in part be due to the sampling strategy thatmatched firms on size.

• Firms with limited liability are found to have more rapid employment growth inthe other-assisted firms model but this growth is restricted by statisticallysignificant market factors related to high numbers of competitors and lesssignificantly in markets where firms’ own price elasticity is high (Table 4.6). Thelevel of price competition is an indicator that growth is ‘harder to come by’ and is

more likely to give rise to displacement effects.

• Own Price elasticity has a negative and statistically significant effect on both thesales and productivity growth in the other assisted firms model. (Table 4.6) Thiseffect is also evident for productivity growth in the intensively-assisted firms’model, but is statistically insignificant (Table 4.5)10.

• Multi-plant firms are found to have significantly higher employment growth inthe other-assisted models (Table 4.6). Although this effect is evident for intensively-assisted firms in the full model reported in Table 4.3, it becomesstatistically insignificant and is not included in the preferred specification reportedin Table 4.5.

• Several strategy focus variables proved to be important and statisticallysignificant. Both models suggest that employment growth is faster in firms that

10 No significant effects were evident in any of the growth models from a variable reflecting cross-priceelasticities. This variable was, therefore, dropped from the models reported.





focus on developing sales growth in their current markets. However, this strategyhas a negative impact in the other-assisted model. (Tables 4.5 and 4.6).

• In contrast, a strategy focused on sales in new markets was found to have aconsistent positive statistically significant impact on sales and productivity

growth in both models. (Tables 4.5 and 4.6). This suggested that the promotion of sales in new markets both increased the productivity of firms and sales growth assuch this strategy may increase labour productivity significantly. At the same timethe own-price elasticity suggests that competing on price is ‘bad’.

• Business planning has a positive statistically significant effect on employmentgrowth for intensively-assisted firms (Table 4.5).

• Firms with owner managers aged 55 or older are found to have significantly lower employment growth but (insignificant) faster productivity growth (Table 4.5)

• In the other-assisted models, evidence is found to support a positive relationship between sales and productivity growth and Owner Managers who have foundedmultiple companies. (Table 4.6).





Table 4.3: Impact of Intensive Assistance versus No Assistance: Full Model

Excluding Selection Effects

EmploymentGrowth

SalesGrowth

ProductivityGrowth

Coeff t-stat Coeff t-stat Coeff t-stat

Constant 0.009 0.351 -0.034 -0.482 -0.027 -0.347

Firm Characteristics

Firm Size 0.000 -0.544 0.000 -0.202 0.000 0.769

Size squared 0.000 0.273 0.002 0.844 0.000 -0.008

Firm age: 3-4 years -0.023 -1.265 0.039 0.821 0.009 0.165

Firm age: 4-5 years -0.013 -0.766 0.022 0.488 0.010 0.200

Firm age: 5-10 years -0.009 -0.647 -0.011 -0.314 -0.051 -1.237

Firm age: 10-20 years -0.015 -1.114 -0.049 -1.397 -0.068 -1.694

Firm age: 20 plus years -0.023 -1.698 -0.052 -1.464 -0.057 -1.400

Legal Partnership 0.009 0.742 0.024 0.772 0.021 0.614

Ltd Liability Company 0.013 1.328 0.029 1.107 0.012 0.436Other type of company 0.003 0.088 -0.013 -0.155 -0.001 -0.015

Multi-plant firm 0.029 2.572 -0.019 -0.697 -0.025 -0.813

Exporter 0.000 -0.022 0.004 0.182 0.018 0.801

Market Characteristics

No. of competitors -0.009 -1.128 -0.008 -0.415 0.027 1.367

Own Price Elasticity -0.006 -0.488 -0.020 -0.670 -0.048 -1.505

Business Strategy

Focus: Sales in currentmarkets 0.024 3.129 -0.006 -0.339 -0.013 -0.636

Focus: Sales in new markets 0.017 1.592 0.077 3.403 0.048 1.963Focus: New products, newmarkets 0.012 0.864 -0.010 -0.319 -0.019 -0.534

Formal Business Plan 0.026 3.212 0.007 0.377 -0.031 -1.472

Non-executive Directors -0.004 -0.356 0.030 1.046 0.017 0.528

Owner Manager

O-M has equity 0.001 0.120 0.033 1.196 0.019 0.642

O-M age 25-34 0.020 0.970 0.044 0.822 0.015 0.260

O-M age 35-44 0.003 0.183 0.017 0.399 0.018 0.413

O-M age 45-54 -0.006 -0.336 0.044 1.094 0.057 1.345

O-M age 55 plus -0.016 -0.907 0.021 0.513 0.045 1.060

Serial Founder -0.003 -0.341 0.013 0.734 0.013 0.656

Intensively-Assisted Firms 0.022 2.831 0.028 1.432 -0.012 -0.577

Note: Models Also Include a Full Set of Industry Dummies to Control for Industry Specific Differences in

employment, turnover, and productivity growth. Models with selection effects are included in Table 4.3.





Table 4.4: Impact of Other Assistance versus No Assistance: Full Model Excluding

Selection Effects

Employment

Growth

Sales

Growth

Productivity

Growth

Coeff t-stat Coeff t-stat Coeff t-statConstant 0.030 1.338 0.106 1.247 0.020 0.222


Firm Size 0.000 -0.666 0.000 -1.479 0.000 -0.281

Size squared 0.000 0.732 0.000 1.219 0.000 0.012

Firm age: 3-4 years -0.003 -0.169 0.101 1.668 0.117 1.687

Firm age: 4-5 years 0.000 0.020 0.008 0.128 0.058 0.855

Firm age: 5-10 years -0.008 -0.592 -0.030 -0.588 0.047 0.803

Firm age: 10-20 years -0.013 -1.048 -0.051 -1.032 0.028 0.495


Legal Partnership 0.006 0.602 -0.007 -0.195 0.004 0.106

Ltd Liability Company 0.019 2.334 0.036 1.236 0.005 0.157

Other type of company -0.025 -1.023 -0.090 -0.943 -0.070 -0.679Multi-plant firm 0.027 2.650 0.058 1.573 0.028 0.708

Exporter 0.003 0.382 -0.021 -0.729 -0.026 -0.854




Business Strategy


Focus: Sales in new markets -0.008 -0.710 0.057 1.878 0.077 2.345Focus: New products, newmarkets 0.030 2.266 -0.072 -1.604 -0.065 -1.315


Non-executive Directors 0.004 0.342 -0.012 -0.347 -0.001 -0.018

Owner Manager

O-M has equity -0.021 -2.014 0.019 0.553 0.030 0.810

O-M age 25-34 0.011 0.649 -0.005 -0.080 0.007 0.110

O-M age 35-44 0.017 1.190 -0.005 -0.109 -0.012 -0.249

O-M age 45-54 0.013 0.967 0.019 0.411 -0.009 -0.188

O-M age 55 plus 0.000 0.013 0.010 0.213 0.021 0.434

Serial Founder 0.009 1.256 0.028 1.187 0.044 1.747

Other-Assisted Firms 0.008 1.177 0.042 1.705 0.050 1.902

Note: Models Also Include a Full Set of Industry Dummies to Control for Industry Specific Differences inemployment, turnover, and productivity growth. Models with selection effects are included in Table 4.4.





Table 4.5: Impact of Intensive Assistance versus No Assistance:

Restricted Models Excluding Section EffectsEmployment

Growth

Sales

Growth

Productivity

Growth


Constant 0.009 1.111 0.040 0.904 0.020 0.443Firm Characteristics

Firm age: 5-10 years -0.055 -1.955

Firm age: 10-20 years -0.014 -1.683 -0.061 -3.275 -0.068 -2.581



No. of competitors -0.019 -1.251 0.027 1.472

Own Price Elasticity -0.041 -1.435

Business Strategy

Focus: Sales in currentmarkets 0.022 3.360

Focus: Sales in new markets 0.072 3.771 0.042 1.868

Formal Business Plan 0.031 4.558

Non-executive Directors 0.037 1.551

Owner Manager

O-M has equity 0.032 1.436

O-M age 45-54 -0.014 -1.928 0.038 1.922

O-M age 55 plus -0.019 -2.332 0.030 1.320


Note: Models Also Include a Full Set of Industry Dummies to Control for Industry Specific Differences inemployment, turnover, and productivity growth. Models with selection effects are included in appendix D.





Table 4.6: Impact of Other Assistance versus No Assistance: Restricted

Models Excluding Section EffectsEmployment

Growth

Sales

Growth

Productivity

Growth


Constant 0.040 2.530 0.090 1.906 0.072 1.497Firm Characteristics

Firm age: 3-4 years 0.101 2.471 0.075 1.720

Firm age: 10-20 years -0.013 -1.717 -0.038 -1.501

Firm age: 20 plus years -0.022 -2.852 -0.048 -1.975

Ltd Liability Company 0.016 2.458

Multi-plant firm 0.025 2.616


No. of competitors -0.014 -2.144


Business Strategy

Focus: Sales in currentmarkets 0.020 3.045 -0.048 -2.277



Owner Manager

O-M has equity -0.013 -1.359

O-M age 55 plus -0.013 -1.670

Serial Founder 0.041 1.982 0.056 2.510


Note: Models also include a full set of Industry Dummies to Control for Industry Specific Differences inemployment, turnover, and productivity growth. Models with selection effects are included in Table 4.6

One interesting question here is why BL assistance was having a larger short-term effecton employment growth than it was on sales. One possibility – found in both theinnovation (e.g. Love and Roper, 2005) and small business research literatures (e.g.Roper and Hewitt-Dundas, 2001) - is a type of restructuring effect in which assistanceencourages the firm to explore new opportunities which require new employees, butwhich take some time to have a sales or productivity benefit11. If this was the case, theinitial effect observed would be employment growth with subsequent productivity growthas the opportunity developed. If BL assistance – particularly intensive assistance – wasencouraging firms to adopt this type of development path the observed effects would beanticipated. Of course, this also means that our estimates based on the impact of assistance over an 18-24 month period are also likely to underestimate the longer-term benefits of each project.

11 See Roper, S and Hewitt-Dundas, N (2001) ‘Grant Assistance and Small Firm Development in Northern

Ireland and the Republic of Ireland’, Scottish Journal of Political Economy, 48, 1, 99-117. Love, J H andRoper, S (2005) ‘Innovation, Productivity and Growth: An Analysis of Irish Data’, Presented at the EARIEAnnual Congress, Porto.





4.3 Perceived Impact of Business Link Assistance

Three factors are considered here. First, we are interested in behavioural additionality, i.e.the extent to which BL assistance was significant or crucial in changing the way in whichthe firm does business. This is important because it is these changes in behaviour or

capability which, in the longer term, will lead to improvements in growth and performance. Secondly, we are interested in firms’ view of the time-horizon over whichthe benefits of BL assistance will impact on firm performance. As suggested earlier thisis important in terms of our understanding of our modelling of the impact of BLassistance. Finally we consider additionality and firms’ qualitative assessment of the performance impact of BL support.

As part of the survey firms were asked about two levels of behavioural impact 12. First,firms were asked whether as a direct result of receiving BL services certain changes incapability or operations had been made. In this case BL support may have been one factor among many causing the change to take place. Second, firms were asked whether BL was

the critical factor in leading to change. Table 4.7 summarises firms’ responses, giving the proportion of firms in the intensively-assisted firms and other-assisted firms groupsexperiencing each type of change, and the proportion of those firms suggesting that BLsupport was the crucial factor in levering behavioural change.

12 This analysis is based on questions C11a and C11b (see Appendix A) with firms allowed to select one or more effects as appropriate.





Table 4.7: Assisted Firms’ Perceptions of the Impact of Business Link ServicesIntensively-

assisted

firms

Other-

assisted

firms

% % t ρ

Part A: BL Services Important for Change (% of all respondents)

More inclined to use external support services 28.69 16.59 6.84 0.000

More inclined to use specialist consultants 29.69 15.66 7.95 0.000

Image of business has improved 39.61 25.45 7.16 0.000

Technical capability has improved 17.98 12.98 3.23 0.001

Financial management has improved 28.51 19.12 5.20 0.000

Better at planning 39.93 27.08 6.44 0.000

Export capacity has improved 13.65 7.60 4.64 0.000

Financial sourcing has improved 32.20 16.98 8.39 0.000Regulation and compliance capability hasimproved 33.09 19.67 7.20 0.000

Invested more in training 30.43 19.13 6.18 0.000

Increased innovation capability 21.02 11.95 5.74 0.000

Improved product or service quality 25.10 14.77 6.11 0.000

Part B: BL Assistance Critical to Change (% of those experiencing

change)

More inclined to use external support services 65.53 51.63 3.03 0.003

More inclined to use specialist consultants 67.36 54.80 2.72 0.007

Image of business has improved 75.99 60.43 4.28 0.000

Technical capability has improved 71.43 49.57 4.02 0.000

Financial management has improved 71.37 59.14 2.81 0.005

Better at planning 71.70 57.44 3.92 0.000

Export capacity has improved 74.29 67.69 1.06 0.292

Financial sourcing has improved 68.05 60.06 1.79 0.074

Regulation and compliance capability hasimproved 69.67 62.18 1.79 0.073

Invested more in training 76.23 59.73 3.91 0.000

Increased innovation capability 63.73 49.87 2.55 0.011

Improved product or service quality 67.30 56.23 2.28 0.023


In each category, a higher proportion of intensively-assisted firms identify changes in behaviour influenced by BL than other-assisted firms. Given the profile of assistancediscussed earlier this is not perhaps surprising. Importantly, however, nearly a third of intensively-assisted firms – and nearly a fifth of other-assisted firms – reported that theywere more inclined to use external support services as a result of their support from BL.

The most commonly reported impacts of BL assistance were on company image (40 per cent of intensively-assisted firms, 25 per cent of other-assisted firms), planning capability(40 per cent and 27 per cent) and firms’ ability to deal with regulation and compliance(33 per cent and 20 per cent). Least common were effects on export capability (13 per cent and 7 per cent) and technical capability (17 per cent and 13 per cent).

Of those firms identifying changes as a result of BL assistance, around two-thirds of intensively-assisted firms and 55 per cent of other-assisted firms identified BL as the





crucial factor in levering behavioural change within the firm. In each case BL assistancewas identified as the crucial influence by a significantly higher proportion of firms in theintensively-assisted group (Table 4.7, part B).

This type of behavioural change is important but will take some time to impact on firm

performance. To help to gauge these time-lags firms were asked about the time horizonover which they expected their performance to reflect the benefits from BL assistancereceived during the previous two years. These profiles differed significantly betweenintensively-assisted firms and other-assisted firms (χ 2(7)=70.93, ρ<0.000). Around half of firms, a slightly larger proportion of other-assisted firms, reported already havingexperienced all of the benefits; the remainder expected the benefits to accrue over futureyears. Notably, 7.2 per cent of intensively-assisted firms expected the full benefit of BLassistance to take five years or more to be realised (Table 4.8)

Table 4.8: Time Horizons for Experiencing the Benefits of BL Assistance

Intensively-

assisted firms

Other-

assistedfirms

All

Firms

% % %

You have already realised all the benefits 48.1 51.7 49.9

You expect to realise all the benefits in thenext year 13.3 14.1 13.7

You expect to realise them in the next 2 years13.2 7.2 10.2

In the next 3 years 3.0 2.0 2.5

In the next 4 years 1.0 .5 .8In the next 5 years 1.5 1.1 1.3Or it will take more than 5 years to fullyrealise all the benefits of BL support 7.2 2.6 4.9

(No benefits experienced from Business Link support) 12.7 20.8 16.8


An additional approach to assessing the perceived impact of BL assistance is the standardadditionality approach, designed to investigate whether additionality was ‘full’, or

‘partial’ (Table 4.9)13. Responses were again significantly different between intensively-assisted firms and other-assisted firms (χ 2(5)=101.8, ρ<0.000):

• 23 per cent of intensively-assisted firms and 36 per cent of other-assisted firmsreported that the same business achievements would have been made without BLassistance – i.e. total deadweight.

13 This is based on the responses to survey question C20, See Appendix A.





• 25 per cent of intensively-assisted firms and 20 per cent of other-assisted firmssaid outcomes would have been the same without assistance but BL assistancehelped to accelerate business development.

• Remaining firms (40 per cent of intensively-assisted firms and 25 per cent of other-assisted firms) reported business outcomes which, without BL assistance,they would not have achieved.

• A relatively high proportion of firms (16 per cent) provided no response to thisquestion (or responded ‘none of these’). This may reflect the lack of any short-term impact on performance in some cases as suggested by Table 4.8.

Table 4.9: Additionality of Business Link Assistance

Additionality Question Response Intensively-

assistedfirms

Other-

assistedfirms

AllFirms

% % %

Deadweight We would have achieved similar business outcomes anyway 23.2 36.3 29.8

Partial

Additionality

We would have achieved similar business outcomes, but not as quickly 25.1 19.6 22.3

We would have achieved some but not

all of the business outcomes 27.3 17.0 22.0

Full

Additionality

We probably would not have achievedsimilar business outcome 9.6 5.2 7.4

We definitely would not have achievedsimilar business outcomes 2.6 2.4 2.5

No Response (None of these) 12.3 19.6 16.0 Source: BL Telephone Survey (2005)

4.4 Assessing the Economy-wide Impact of Business Link Assistance

As indicated earlier, our preferred approach to estimating the economy-wide effects of BL was to estimate the impact of BL assistance on value added at company level andthen to scale this to reflect the number of BL interventions in the given period. Theweakness of the survey response to the GVA questions, however, rendered this approachinfeasible and potentially misleading. The econometric analysis of the previous section,however, does suggest that BL intensive assistance had a statistically significant and





positive effect employment growth. More specifically, the models suggest thatemployment growth in intensively-assisted firms is 2.2 – 2.4 percentage points higher than that in the absence of assistance. Other effects reflected in the equations were also positive but were statistically insignificant – i.e. we cannot be confident that these effectswere statistically different from zero. In particular, the point estimate of the impact on

sales was insignificant suggesting a positive but heterogeneous impact of Business Link on sales. We therefore base our estimates of BL impact on the positive and significantemployment growth effects identified. As suggested by the econometric models, these positive and significant effects relate solely to the group of intensively assisted firms.

In taking this approach to the value for money estimate, we make an assumption thatfirms do not create jobs without the real prospect of future sales implicitly accepting thatthere is a type of restructuring effect in which assistance encourages the firm to explorenew opportunities which require new employees, but which take some time to have asales or productivity benefit14 see page 69.

To estimate the economy-wide benefits of BL assistance on this basis requires threeadditional steps:

• Increments to employment growth based on the models in Tables 4.5 and 4.6 areconverted into absolute employment gains. These are positive and statisticallyrobust only for intensively-assisted firms.

• These estimates are then grossed up to national scale based on the number of interventions with intensively-assisted firms.

• These employment impact estimates are translated into value added using ratios

of value added per employee derived from the ABI.

These steps are reported in Table 4.10 which also gives the standard 95 per centconfidence interval attaching to each estimate.

14 See Roper, S and Hewitt-Dundas, N (2001) ‘Grant Assistance and Small Firm Development in Northern

Ireland and the Republic of Ireland’, Scottish Journal of Political Economy, 48, 1, 99-117. Love, J H andRoper, S (2005) ‘Innovation, Productivity and Growth: An Analysis of Irish Data’, Presented at the EARIEAnnual Congress, Porto.





Table 4.10: National Impact Estimates for Business LinksUnrestricted Model Restricted Model

Notes Lower Mid Upper Lower Mid Upper

Average level of employment 1 22.7 22.7 22.7 22.7 22.7 22.7

Average growth increment 2 0.7 2.2 3.7 1.0 2.4 3.8

Implied additionalemployment per firm 3 0.15 0.50 0.84 0.23 0.54 0.86

Number of assisted firms 4 49830 15 49830 49830 49830 49830 49830

Total Employment Effect 5 7475 24915 41857 11461 26908 42854

GVA per employee (£000pa) 6 27990 27990 27990 27990 27990 27990

Total value added (£m) 7 209 697 1172 321 753 1199

Total Cost of BL p.a. 300 300 300 300 300 300

Net value added -91 397 872 21 473 899

Notes and Sources:

1. Mean employment in intensively-assisted firms (2003-04 business year. Source: Table 3.6).2. Average employment growth increment implied by employment growth models and upper

and lower confidence interval limits (pp). Sources: Tables 4.5 and 4.6.3. Average increment to employment per enterprise. Product of (1) and (2).4. Number of intensively assisted firms per year. Source: BLOs.5. Total employment effect. Product of (3) and (4).6. GVA per employee in 2003 (£000pa), UK mean. Source: ABI.7. GVA effect (£m pa). Product of (5) and (6).

This suggests that over the 2004-05 business year intensive BL assistance nationallyincreased employment by between 24,915 and 26,908. This additional employmentgenerated value added of between £697 and £753m. Two factors have to be borne inmind in considering these estimates, however. First, they are subject to relatively wideconfidence intervals, reflecting the coefficient standard errors in the equations. These aredetailed in Table 4.10. Second, these figures probably under-estimate the overall impactof BL due to:


15

This figure is based on the broad definition of intensive assistance which would have been in operation atthe time of the BL interventions between April and September 2003 (it was defined as "significant"interventions and therefore easier to achieve than the current definition of intensive). The SBS monitoringstatistics estimate the number of intensively-assisted firms to be 49,830 in the period April 2003 to March2004. The number of intensively-assisted firms obtained from the 43 BLOs as part of this evaluation studytotaled 22,154 for the 6 month period April to September extraction exercise for the research team. TheSBS Management Information figure for the year 2004-2005 is around 39,000 when the new definition is incommon usage across the BLO network.






• The exclusion of any positive multiplier effects which may stem from the

additional demand generated by more rapidly growing employment. On the other hand the figures are not subject to displacement, either in part because the absenceof own price elasticity suggests that the firms were operating in less competitivemarkets where displacement was likely to be low.

To provide an indication of the robustness of these estimates it is possible to derive a‘break-even’ scenario given the value added per employee figures in Table 4.10. Giventhese figures, and the costs of the BL service, suggests that the level of job creation for break-even (i.e. the gains from BL assistance equalling the cost) would be job creation of around 10,700 or 39-43 per cent of the central point estimates for job creation. Theimplication is that even if the models over-estimated the average level of job creation by

a significant margin BL assistance would still generate positive value added. In fact, assuggested earlier, our approach is actually likely to underestimate the job creation benefits of BL assistance due to gains occurring after the sample period.

4.5 Costs of Business Link

Using the quarterly financial returns for the Business Link Organisations (BLO) the totalcost of Business link can be calculated. The quarterly returns report the income fromseven different sources which are listed down the left-hand side of table 4.11. Table 4.11shows the actual income for the BLOs for the 6 month period of the study April –

September 2003.

Table 4.11: Income of 43 Business Link Organisations: 2003

Source Income for 43 BLOs

£s

SBS 68,409,792.20

British Trade International 4,886,623.20

European Union and Single Regeneration

Budget

26,816,479.15

Learning and Skills Councils 19,809,924.99

Regional Development Agencies 18,607,939.97

Others 9,033,691.98

Total 147,564,451.49





Using the quarterly financial returns for the BLOs (all except Humberside) the totalincome for the 43 BLOs (from SBS, British trade international, EU & SRB, LSC, RDAand others) for the six months April - September 2003 can be derived see Table 4.11. Inaddition, since Humberside is not included estimates for Humberside may be derived on

two different assumptions: either

1. Humberside is estimated as an average of BLOs (but remember London skews theaverage)

2. Humberside is estimated by the proportion of the average contact rate that theyhave (74.79%)

• under 1 the total figure comes to £150,996,182.90

• under 2 the total figure comes to £150,131,043.40

(Note: 1 is probably an overestimate because of the London effect)

Consequently the cost of the BLO network for six months is approximately £150m. Thevalue added was calculated on an annual basis so the six month value added would behalved. If we then compare the cost to the value added at a midway point between thetwo estimates (which may in turn be underestimates) – that is, £725m, then the value-added for the 6 month period is £362.5m and so for every £1 spent by the publicauthorities through the BLO network (including EU, SRB etc) would generate £2.26 of value. In terms of cost per job, if we take the average of the mid-estimates of jobs createdfrom the restricted and unrestricted models as 25,911 then the total cost excludingcustomer fees is £11,578.

4.6 Displacement Issues

Our micro-econometric approach to estimating the effects of Business Links assistanceconcentrates on the direct impact on recipients; however, given that we find a significantimpact on the recipients of Business Link assistance, to what extent does this impact onthose firms that do not or cannot avail themselves of Business Link services? This isreflected in the notion of Displacement which is the potentially negative impact on non-recipients of Business Link services as the competitiveness of Business Link recipientsincreases16.

Displacement is not reflected directly in our econometric analysis which focuses insteadon the impact on individual recipients, but there are good grounds for thinking that thedisplacement effects of BL assistance are likely to be relatively minor. The criticalelement of any discussion concerning displacement of Business Link assistance relates toour understanding the competitive environment of those small firms helped by thisscheme. Three factors are important here: the general dynamics of the small business

16 The positive impact on non-recipients, through increased demand in the supply chain, for example, iscalled the multiplier and we do not estimate multipliers in the econometrics either.





sector (‘churn’) which suggests that any displacement effect from Business Links islikely to be relatively small compared to the overall level of market dynamics and mayindeed be positive; the location of firms’ competitors; and the nature of price competitionin the SME markets.

First, within the small firm sector there is a great deal of churn. Typically one-in-tenfirms enters or exits a market in any one year, although the smallest, newest companiesare most at risk (Disney et al., 2003a). Moreover, the same research shows that much of the growth in productivity comes from the opening and closing of plants (Disney et al.,2003b) Accordingly policymakers have recognised ‘productive churn’ where more productive firms displace the less productive leading to an increase in industry productivity. Insofar as Business Link helps predominantly new firms then it maycontribute to productive churn (see Table 2.2). Where Business Link helps predominantlyhigh productivity firms to grow then it contributes to productivity; however, our evidencesuggest that Business Link was not helping the most productive firms, (Table 3.7). Two points are important here. First, any displacement resulting from the positive effects of

Business Link support is likely to be relatively minor compared to that in the small business sector as a whole. And, secondly, any such effects may be positive for productivity as more productive Business Link assists displace less efficient competitors.

Second, we would expect that any displacement effects from BL assistance would begreater where a firm’s competitors were local. Data from our survey, however, inresponse to a question asking ‘if your business were to cease trading tomorrow, who doyou think would take up sales? Would it mainly be competitors based locally?’, suggeststhat just under half of those surveyed thought that local competitors would take up their customers if they were to cease trading. This is likely to mean that any displacementeffects from BL assistance are likely to be geographically dispersed minimising any local

impact. More generally, almost 90 per cent of assisted firms highlighted UK basedcompetitors who would take up their market in a situation of closure. At this leveltherefore there is more evidence that displacement may be an issue. The positive aspectsof this type of potential churn have already been highlighted however.

Notwithstanding this descriptive data, the most important piece of evidence ondisplacement comes from the impact of price changes. In this respect we would expectsmall firms to create relatively little displacement. First, small firms are unlikely to makeany impact on the local labour market in the form of increases in wages within the region.Further, in the firm growth models the ‘own price elasticity’ co-efficient was notsignificant suggesting that the influence of small firms’ price changes in the markets was

muted. Combining the conceptual argument and the empirical data it is unlikely that thesubsidised support from Business Link can aid a firm to reduce prices and ‘hurt’ their competitors, unfairly.

Overall, therefore, our view is that the extent of any displacement from BL assistance isunlikely to be significant either at local or national level. The small firm context is onewhere there is a great deal of churn. Business Link advisory services are inevitablyinvolved in that churn. Nonetheless, Business Link firms are younger than average and





more likely to be limited companies; the firms that Business link help are less likely to becompeting solely with other local firms; the nature of competition is non-price, and thefirms are too small to make any impact on local labour markets.

4.7 Summary

In this chapter we estimate the value for money of BL using data on interventions duringthe 6 month period from April to September 2003 and its impact over the subsequent business year. We differentiate in the analysis between the impact on intensively-assistedfirms and other-assisted firms, something which proves important in our econometricmodelling of the impact of BL assistance on individual firms. In particular, our modelling – based on a two-stage Heckman approach which allows for selectivity – suggests thatwhile BL assistance has a range of positive impacts on sales growth and productivity(sales per employee) these effects are generally statistically insignificant. More robust isthe effect of intensive BL assistance on employment growth, which is statisticallysignificant and positive. This effect provides the basis for our subsequent value for

money calculations. Our central estimates are that this BL assistance generated £697-£753m of additional value added on an annualised basis although these estimates aresubject to fairly wide confidence intervals (see Table 4.10).

Value for money reflects both the value added generated net of the cost of operating theBL network. We estimate the overall cost of operating the network for six months ataround £150m based on the income of BLOs from different sources. Comparing this costto the mid-point of our two value added estimates suggests that over a six-month periodadditional value-added is £362.5m, and so every £1 spent by the public authorities(including EU, SRB etc) would generate £2.26 of value17 discounted over two years.

17 The benefits have been discounted using the Treasury discount rate of (1.035)2 over two years





5. The Effectiveness of Alternative BLO Delivery Models

5.1 Introduction

The organisation of BLOs is a critical factor in understanding the way they operate.Rather than having a hierarchical approach where a central authority has local branches(like Scottish Enterprise) SBS created a franchise structure to enable local partnerships touse their local knowledge. The model was always an unusual franchise because rather than adopt a tried and tested business model the franchisees were individual local partnerships that created best practice (Mole, 2002). This was a deliberate and consideredchoice to enable ‘local solutions for local needs’. Thus, rather than being able to becontrolled, the franchise structure means that the BLOs are facilitated. Whereas branchesof Scottish Enterprise are headed by a manager, the BLOs are headed by a CEO. TheCEO has more ‘room for manoeuvre’ to find new sources of income and strands of business. To this end BLO CEOs are relatively free in comparison with a local branch of an executive agency (c.f. Scottish Enterprise). This enables them to pursue partnershipsand build relationships within their local areas including in sub-regional partnerships.

5.2 Previous Categorisations of BLOs

There have been a number of different categorizations of BLOs. These categorizationstend to focus on one particular aspect: geography, income and governance . These threefoci are not independent of each other. Thus governance and geography have an effect onincome and vice versa.

Geography

The environment is the structure within which each BLO find themselves so that clustershave been undertaken on the basis of geography including: income per head;manufacturing/services, urban/rural, size of firm (Dale, SBS). Bennett et al ., (2001)suggest that rural services have most impact. There has been a long tradition of using thisclassification from the TEC clusters to Business Links. The Business Link Tracker study(Roper, et al., 2001) used the TEC clusters and the Business link clusters are used inmonitoring information.

Income sources

Many of these sub-regional relationships are motivated by the search for income.Accordingly, BLOs have also been classified on the basis of their income sources, particularly on the major sources of their income from SBS, EU, LSC, RDAs and clients(SBS). Since funds tend to come ‘with strings attached’ then the source of funds mayinteract with the behaviour of the Business Link to produce differences in the way the programmes are delivered. This classification was done for SBS.





The Role of Governance

In previous categorisations of Business Links the role of governance has been one aspect

that has been isolated and compared with performance. In the pre-SBS days: they wereclassified by their contractual relationship towards the TECs where those with arms-length contracts appeared to perform well (Hutchinson, Foley and Oztel, 1996). This wayof categorising Business Link Organisations (BLOs) continues. Recently, they have beenclassified by the relationship with Chambers of Commerce (Bennett and Robson, 2003)or other partnerships (Bennett and Robson, 2004) where broadly those that wereChamber of commerce associated improved average performance, although there weresome poor performing chamber-linked BLOs.

In this chapter we focus on an assessment of the differential impacts of different deliverymodels which have been adopted by BLOs. The analysis has two key stages. First, the

delivery models of individual BLOs are compared and individual BLOs are grouped intofour categories. Two different categorisations are explored; one – developed by Bennettand Robson (2003) is based on corporate status; another – developed by Mole - takes intoaccount governance, funding and delivery mode.

The second stage of the analysis compares the type of services received by intensively-assisted firms and other-assisted firms from each type of BLO and the perceived andactual impact on firm performance. The final impact assessment is based on variants of the econometric impact models presented in Chapter 4.

5.3 Bennett-Robson (B-R) Classification

Bennett and Robson (2003) develop a four-way classification of BL operators based onan analysis of corporate status and interlocking and overlapping directorships betweenBLOs and other related organisations. This suggested that:

• 26 BLOs were truly independent having no interlocking or overlappingdirectorships with other local service providers;

• 4 BLOs were subsidiaries or ‘arms length’ operations of some other body;

• 11 BLOs were de facto subsidiaries of local Chambers of Commerce, or operated

as ‘arms length’ operations of Chambers of commerce; and

• 2 BLOs were private, commercial, for profit companies.

Based on an analysis of data from the Cambridge Centre for Business Research theyconcluded that:





• Market penetration of subsidiaries is higher than that of independent BLOs and ishighest of all among subsidiaries of Chambers of Commerce;

• Subsidiaries of Chambers of Commerce also have the highest levels of use of individual services between different types of BLO, particularly for advice and

grants;

• Subsidiaries of Chambers of Commerce also have the largest impact of all typesof sources of business support;

• Subsidiary organisations in general achieve higher levels of satisfaction thanindependent franchises, while subsidiaries of Chambers also generate strongsatisfaction levels apart from their provision of sales and marketing services.

Data from our survey provides an opportunity to validate these observations as well as providing an opportunity to assess the impact of intensive and other assistance provided

by each type of BLO on firm performance. One issue, which arises with thisclassification, however, is the predominance of BLOs in the ‘independent’ category. Thislimits the size of other groups of BLOs and the likely statistical significance of differences between groups. Having said this, section 5.2.1 focuses on the profile of support offered by the different types of BLO in the Bennett-Robson classification andsection 5.2.2 summarises their differential impacts on performance.

5.3.1 Support Service Profile

By and large the profiles of intensive assistance offered by different types of BLOs in the

B-R typology seem broadly similar (Table 5.1) Two statistically significant differencesdo emerge, however, with Chamber subsidiaries more likely to be providing business planning services and action plan development to intensively-assisted firms, while privateBLOs were notably more likely to be providing intensively-assisted firms with ITassistance.





Table 5.1: Profiles of Intensive Assistance: by Bennett-Robson Typology (% of firms

receiving each service)

Bennett-Robson Typology of BLOs

Independent

s

Other

Subsid.

Chamber

Subsid. Private

All

Firms Χ2 ρ

General business information 57.4 66.8 55.7 45.0 57.4 2.830 0.419Business benchmarking or diagnosis 14.0 7.8 14.0 9.2 13.6 2.007 0.571Business planning, action plandevelopment 38.4 54.9 43.4 25.5 39.6 7.705 0.053Information on regulation andcompliance 33.9 43.7 39.5 19.3 34.9 5.400 0.145Help with finding externalconsultants 22.9 27.7 23.7 3.6 22.9 4.129 0.248

Help with raising finance 34.6 29.7 40.2 47.8 35.4 3.710 0.295Help with making cost/qualityimprovements 15.0 16.0 17.1 19.0 15.4 1.017 0.797

Help with marketing 34.9 39.0 39.6 14.5 35.4 4.701 0.195

Help with R&D or NPD 12.0 11.7 15.0 5.6 12.3 2.208 0.530Help with exporting 13.0 15.5 16.9 6.4 13.5 3.006 0.391

Help with training 40.4 50.8 40.1 52.0 41.0 3.229 0.358

Help with e-commerce 15.4 15.1 18.8 23.9 16.0 1.708 0.635

Help with IT issues 20.0 22.2 23.2 49.6 21.0 10.135 0.017

Anything else 6.8 9.7 8.5 0.0 7.0 2.464 0.482


Services provided to other-assisted firms are also broadly similar across BLO types withmore variation evident here than between the services being provided to intensively-assisted firms. Here (Table 5.2):

• Private BLOs were notably more likely to provide other-assisted firms withassistance with IT as well as with R&D and new product development;

• Private BLOs and other subsidiaries were significantly more likely to provideassistance to other-assisted firms with obtaining finance than either Chamber subsidiaries or independents.





Table 5.2: Profiles of Other Assistance: by Bennett-Robson Typology (% of firms



Independent

s

Other

Subsid.

Chamber

Subsid. Private

All

Firm

s Χ2 ρ

General business information 57.3 54.7 57.5 38.5 56.6 4.529 0.210Business benchmarking or diagnosis 6.5 5.6 10.5 11.5 7.0 3.740 0.291Business planning, action plandevelopment 23.4 26.6 27.0 17.4 23.9 1.930 0.587Information on regulation andcompliance 24.0 25.2 22.8 30.5 24.1 0.680 0.878Help with finding externalconsultants 11.9 10.7 11.8 3.2 11.5 2.183 0.535

Help with raising finance 21.0 19.3 35.9 40.2 22.9 19.220 0.000Help with making cost/qualityimprovements 8.2 3.5 9.1 8.2 7.8 2.778 0.427

Help with marketing 21.5 16.4 19.4 19.2 20.8 1.724 0.632Help with R&D or NPD 9.0 9.3 13.7 21.4 9.8 0.699 0.072

Help with exporting 7.5 4.8 11.0 3.2 7.5 3.848 0.278

Help with training 30.2 31.0 31.0 32.4 30.5 0.191 0.979

Help with e-commerce 9.3 6.0 10.7 19.2 9.4 5.872 0.118

Help with IT issues 13.3 11.1 17.5 28.5 14.0 6.343 0.096

Anything else 7.6 8.0 4.0 8.9 7.3 2.325 0.508


5.3.2 Impact of BLO Services

We consider two measures of impact here. First, firms own subjective assessment of theimpact of BLO services on their development. As in Chapter 4 we consider two levels of perceived impact; first, whether BL assistance was ‘important’ for changes in the business and, secondly, whether BL assistance was the ‘crucial’ factor. Secondly, weconsider econometric evidence of the impact of BLO services provided by each type of BLO in the Bennett-Robson typology. This analysis is based on the models developed inChapter 4 for employment, sales and productivity growth.

The broad similarity in services being provided by the different types of BLO in theBennett-Robson classification is also suggested by similarity between the perceivedimpacts of services. Table 5.3 profiles this for intensively-assisted firms and Table 5.4 for

other-assisted firms. In terms of the perceived impact of BL assistance by intensively-assisted firms, we find two significant differences. First, BL assistance is commonly saidto be have been important in improving business planning by other subsidiaries, andsecond, independents were less commonly cited by firms as having had a crucial effecton the technical capability of the business than other types of BLO (Table 5.3). Nostatistically significant differences were evident in terms of the perceived impact of BLassistance to other-assisted firms (Table 5.4).





Table 5.3: Perceived Impact of BL Services: Intensively-Assisted Firms


Independent

s

Other

Subsid.

Chamber

Subsid Private

All

Firms Χ2 ρ

Part A: BL Services Important for Change (% of all respondents)More inclined to use externalsupport services 27.9 40.4 30.6 21.9 28.7

4.630 0.201

More inclined to use specialistconsultants 28.8 33.9 33.7 22.1 29.6

2.654 0.448

Image of business has improved 39.6 42.7 39.5 33.2 39.60.58

4 0.900

Technical capability has improved 17.5 9.9 21.6 29.5 18.05.45

6 0.141Financial management hasimproved 27.5 34.6 32.2 30.5 28.5

2.271 0.518

Better at planning 40.6 50.9 32.3 39.4 39.86.38

0 0.095

Export capacity has improved 13.2 13.2 17.6 5.6 13.73.09

3 0.377

Financial sourcing has improved 31.6 26.3 37.4 29.6 32.22.89

4 0.408Regulation and compliancecapability has improved 32.8 32.6 36.6 20.6 33.1

1.875 0.599

Invested more in training 29.3 42.0 31.5 45.3 30.55.49

6 0.139

Increased innovation capability 21.1 11.2 22.9 25.7 21.03.54

6 0.315Improved product or servicequality 25.4 19.7 23.1 40.5 25.1

4.256 0.235

More inclined to use externalsupport services 66.5 53.8 67.4 37.1 65.5

2.952 0.399

Part B: BL Assistance Critical to Change (% of those experiencing change)


0.383 0.944


7 0.949



1.166 0.761


5 0.605

Export capacity has improved 75.3 100.0 65.5 100.0 74.3

2.59

5 0.460



2.297 0.513


5 0.230


8 0.132





Improved product or servicequality 66.9 72.1 74.6 35.9 67.2

4.037 0.258






Table 5.4: Perceived Impact of BL Services: Other-Assisted Firms


Independent

s

Other

Subsid.

Chamber

Subsid Private

All

Firms Χ2 ρ


More inclined to use externalsupport services 17.2 13.9 16.1 10.4 16.6

1.548 0.671


0.907 0.824


5 0.707



1.886 0.596


0 0.111


5 0.757



2.564 0.464


1 0.657



3.390 0.335


More inclined to use external

support services 49.2 58.4 58.4 100.0 51.6

3.59

5 0.309More inclined to use specialistconsultants 54.2 55.0 55.9 71.5 54.8

0.194 0.978


3 0.399



2.918 0.404


5 0.261


1 0.326



0.948 0.814


5 0.924



3.555 0.314






Turning then to the regression model results which are based on variants of the modelsincluded in Table 4.5 and 4.6. Table 5.5 reports the coefficients and t-statistics of theassistance terms for each type of BLO within the Bennett-Robson typology. In essence,the aggregate effects reported in Table 4.5 and 4.6 are a weighted sum of these moredisaggregated results.

As in the aggregate models covering all BLOs (Tables 4.5 and 4.6) we find no significantevidence of any impact on sales growth – in this respect the different models of BLOidentified in the Bennett-Robson typology behave similarly. In terms of employmentgrowth we also find confirmation of the aggregate results with none of the different typesof BLO having any impact on the employment growth of other-assisted firms. Effects onintensively-assisted firms are stronger, however, with significantly positive effectsconcentrated in independents, other subsidiaries, and chamber subsidiaries. Notably thereare significant differences between the size of these coefficients, with other subsidiarieshaving an employment effect which is nearly twice as large as that of independents andchamber subsidiaries.

Table 5.5: Impact Coefficients in Regression Models of Employment, Sales and

Productivity GrowthEmployment

Growth

Sales

Growth

Productivity

Growth


A. Intensively-assisted firms

Independents 0.028 3.107 0.026 1.384 -0.020 -0.910

Other Subsidiaries 0.054 2.419 -0.014 -0.256 -0.056 -0.915

Chamber Subsidiaries 0.028 1.927 -0.030 -0.960 -0.071 -1.924

Private BLOs -0.004 -0.118 0.050 0.422 -0.049 -0.368

B. Other-assisted firms

Independents 0.003 0.305 0.047 1.677 0.064 2.222

Other Subsidiaries 0.014 0.865 -0.022 -0.379 -0.032 -0.544

Chamber Subsidiaries 0.001 0.094 0.009 0.170 0.050 0.979

Private BLOs 0.044 1.486 -0.078 -1.015 -0.222 -2.363 Source: BL Telephone Survey (2005)

In terms of productivity growth the results also tend to confirm the aggregate picture withgenerally weak BLO assistance impacts on productivity growth among intensively-assisted firms. For other-assisted firms a slightly different picture emerges, however, withindependent BLOs having a small positive effect and private BLOs a larger negativeeffect. The absolute importance of this last (negative) result, however, is reduced by therelatively small number of firms covered by private BLOs.

5.4 Mole Classification





The Business Link network contains 43 separate organisations (BLOs), which, whilst allare working their way toward brokerage models, are doing so from different positions.Their economic context also differs with some BLOs covering prosperous areas whereasothers cover disadvantaged areas.

Our purpose is to categorise BLOs on the basis of their business models. This shows thatthere are different ways of approaching the Information, Diagnostics and Brokerage(IDB) model. It may also provide initial insights into the types of business models withthe greatest impact.

This report re-states the previous categorization of BLOs. It then reports soundings froma series of interviews conducted with Business Link’s senior management. It thenintroduces four models of BLOs and discusses how these might be identified and used inthe economic impact modelling. The remainder of this chapter reflects outcomes from aseries of interviews conducted by the author(s) with BLOs at the Chief Executive or Director of Operations levels – sometimes both. These interviews were conducted

between June 2005 and September 2005 with representatives of 15 BLOs and two RDAoperatives.

5.4.1 The Information, Diagnostics and Brokerage (IDB) model

BLOs differ in: – their institutional environment – how intensive their assistance is – the way in which intensive clients are found – the proportionate number of intensive clients – where they get their money from

– the sort of relationships they aim to foster

a. Their institutional environment

BLOs find themselves having to deal with a number of different partnerships, particularlywith local authorities, with other support agencies and with the private sector. For someBLOs these relationships are relatively stable and easy to manage; for others they arecomplicated. BLOs argue that they can be either helped or hindered by their relationshipswith other partners in business support. Other organisations can help by working withBusiness Link, for example Business Link CEOs talk about the brand as ‘a route tomarket’ for other public sector provision, such as Learning and Skills Councils. However,

the more organisations that are involved in business support, both private and public, themore this confuses the consumer. CEOs are, therefore, keen to play a co-ordinating rolein their area. Of course, the numbers of private sector suppliers of advice, most notablyaccountants, differ markedly and systematically across the country, which means that insome areas private sector advice is plentiful and in other it is limited. It does appear thatfewer private sector advisers are located in rural areas which, in part, may explain thesuccess of BLOs in rural areas (Bennett et al., 2001).





b. How intensive BLOs assistance is

Some BLOs are keen to be more intensive in their assistance than others. Some aim towork very intensively with clients variously described as a ‘high cost per intervention’(Birmingham) ‘very, very intensive assistance (Sheffield). Both cases depended on

obtaining funding to supplement ‘SBS core funding’, most frequently from the EU.

c. How BLOs find their intensively assisted clients

There are essentially two options. The first is to use the ‘gateway’ to screen clients. Thesecond is to use special events and direct marketing. Again the options are contingentupon the type of clients that are seen as important. When clients are selected by someclear criteria such as sector or disadvantage it is easier to use the ‘gateway’ to screen potential clients. When the criteria requires a judgement of the potential to grow, and theability of the business adviser to help, the gateway becomes less useful, at least as a directconduit for more intensive assistance.

d. The proportionate number of intensive clients to less intensive clients

Some BLOs regard intensive assistance as that part of the business that had the mostimpact on the local economy. Delivering high rates of intensive assistance is contingenton funding, in this case normally from the LSC.

e. Where they get their money from

BLO models reflect both the total funds available and their sources. In turn, this dependsupon the geography of the BLO. Given the CEOs are ‘on the lookout’ for funds then the

obvious sources are EU funds and the Learning and Skills Councils. European money ismore likely to come to a BLO in a deprived area.

f. The sort of relationships they aim to foster

If the BLO aims to foster long-term relationships then it is more likely to attempt to havea more managed brokerage model..





5 .4.2 Four models of BLOs

Using the above six questions we now can formulate four models which may broadlyreflect the range of ways in which BLOs operate. The four models are referred to as:

– ‘Light touch’ brokerage – ‘Managed’ brokerage – ‘Pipeline forcing’ – ‘Managed Pipeline Forcing’ brokerage


• The dominant model. Some BLOs suggest that they were ‘lean and mean’ withlow levels of ‘touch with their clients and not too much follow-up.

• Philosophy is ‘Lets solve the business problem there and then’• The payoff is in the high penetration rate• ‘Light touch’ BLOs are likely to be in areas that receive little non-core funding

such as EU supported funds.


• Many BLOs believe that to retain customers they needed to manage therelationships between client, BL and consultant.

• The account manager oversees the process with a project management rolethroughout the assistance and follow-up

• Almost all have contracts between the consultant and client - an exception is Northumberland’s three way contract between consultant, client and BLO.


• ‘Trigger points’ to identify firms that may be ‘amenable’ to intensive assistance.They are very keen to get a high proportion of firms through to the end of thefunnel

• Not too many in; not many fall out• Generally have a close relationship with the LSC



.





Figure 5.1 Models of Business Link Operators: Intensity of intensive assistance and

the proportion of firms intensively assisted.

Proportion of Firms Intensively Assisted

High LowIntensity of Intensive assistance

Highly intensive Model 4 ManagedPipeline ForcingBrokerage


Low intensity Model 3 PipelineForcing


In order that we may map the models to the differences in their operating environmentthe following matrix was constructed (Table 5.6).

Table 5.6: BLO Delivery Models and their Operating Environment

Models

BLOs differ in…. 1 Light-touch

brokerage

2 Managed

brokerage

3 Pipeline

Forcing

4 Managed

Pipeline Forcing

Brokerage

their institutionalenvironment

Clear/Complex Complex Complex Complex

how intensive their assistance is

Not very Very Very Very

the way in which

intensive clients arefound

Gateway Gateway

Sector

Gateway

Triggers

Gateway Sector,

Triggers

the proportionatenumber of intensiveclients

Low Mid High High

where they get their money from

SBS EU LSC/EU EU

the sort of relationships theyaim to foster

One-off Ongoing Ongoing Ongoing

5.4.3 Operationalising the Models

To model the BLOs we use data as shown in Table 5.7. In this way most of theclassification is covered. There are differences that remain: the relationships that theBLOs aim to foster and the way in which intensive clients are found. On the relationshipswe have some evidence that BLOs are training their advisers to foster ‘processconsulting’ but the variation in this relationship may be at the individual business adviser





level. On the way in which intensive clients are found we have the data at the firm levelalready collected in the main questionnaire.

Table 5.7: Operationalising the BLO Models

Factor Measure Source

1. Complexity of institutionalenvironment

Number of intermediariessuch as accountants

ICAEW direct

2. Intensively of assistance

BLO turnover BLO accounts

3. Where they gettheir money from

SBS vs LSC vs EUincomes

BLO accounts

4. The proportionatenumber of intensive clients

Intensive clients as a proportion of businesses‘touched’

SBS data

One of the issues is whether the appropriate modelling is to cluster the BLOs into threegroups or to use dummy variables to account for the complexity of the environment or rural area. In practice, we might expect to do both since the cluster is intended to capturethe business models of the BLOs.

Complexity of institutional environment - the Private Competition

In order to ascertain the private competition we used the business location of members of the Institute of Chartered Accountants of England and Wales (ICAEW) as a proxy for thenumber of private sector advisers (Table 5.8). Accountants are the most mentioned

business advisers by SMEs (Mole, 2002). What we find is not particularly surprising.There are fewer firms (on the VAT stock of firms) per chartered accountant in prosperousareas such as Surrey and Cheshire and in big city locations like Birmingham and Near Manchester (East Lancs. and North Manchester are now part of Manchester). Weexpected fewer accountants to be registered in Cumbria, Durham and Northumberland.One surprise is the high number of firms per accountant in Somerset and West (Bristol).





Table 5.8: Number of Firms per Accountant in each Business Link AreaBusiness Link No. of Firms per AccountantWest 226.52

Somerset 226.52

Humberside 201.25

Manchester 193.63

North Manchester 193.63

Stafford 166.53

Northumberland 156.23

Derbyshire 151.59

Tees Valley 145.86

Cumbria 143.25

Northampton 142.13

Norfolk

Suffolk 139.39

County Durham 137.53

Lincolns 134.59

Shropshire 134.13

N.Yorkshire 133.63Black Country 129.65

S.Yorkshire 127.28

Leicester 126.03

Gloucestershire 125.84

Coventry 125.50

Cambridge 119.46

Bedfordshire 117.21

Hereford 115.70

Hampshire 113.58

Nottingham 112.97

Devon & Cornwall 109.96

London 109.10

Tyne & Wear 106.05Sussex 105.02

W.Yorkshire 102.84

Berks & 102.12

Dorset (Wessex) 101.68

M.Keynes 100.50

Merseyside 95.93

N&W Lancs. 90.04

East Lancs. 90.04

Essex 89.02

Kent 75.73

Hertford 66.72

Birmingham 62.49

Cheshire 58.94

Surrey 47.36

Source: ICAEW

Performance Monitoring Data

Using the SBS performance monitoring data for April 2003-September 2003 we can use proxies for, at least some of, the models. The major starting point for this analysis is to





use the reported results from the monitoring statistics and the financial results from theBLOs. As has been said before the way in which income is gathered can have animportant impact on the sort of business models that the BLOs operates.18

To measure the extent to which a BLO attempts to have a light or heavy touch we use a

number of proxies: the cost per customer, the proportion of funds provided by SBS, the proportion of funds provided by the EU, and the amount of EU funds per customer (Table5.9). The reason that we choose this grouping is because they all appear to measuresomething similar which is the underlying intensity of the help that the BLO provides.

Table 5.9: Performance Monitoring Descriptive Statistics

N Minimum Maximum MeanStd.

Deviation

Cost per customer 42 £209.68 £1364.24 £527.63 £227.13EU and SRB proportion

43 0.0 63.0 14.5 15.2

SBS as a proportionof total

43 18.0 78.0 45.4 15.2

Source: SBS

A Hierarchical Cluster analysis on this basis produces five clusters, on the basis of their intensity. As can be seen in Table 5.10 the cluster analysis groups together BLOs that aresimilar. The Tyne and Wear and South Yorkshire are both very intensive with their assistance; where they differ is on the amount of EU and SRB funding that they produce.Cluster 4 manage to generate high levels of costs per customer although they do not fundtheir activity from the EU, both of these BLOs received more funds from the RDA thanfrom the SBS in this period. All of these four clusters use significantly more intense

assistance than the average BLOs. The group of BLOs that are characterised as havingmore intense assistance includes all four of the delineated clusters.

18 Of course the actual direction of causality is debateable. Obviously in South Yorkshire there are largeamounts of EU money available that would tend to suggest a very intensive assistance model but other areas might deliberately garner funds to support an avowed very intensive assistance aim.





Table 5.10: Intensity of Help - BLO clusters

Cluster BLOs Cost per

customer

£

SBS

funded

%

EU and

SRB

funded

%

1 Tyne and Wear 1198.20 24 29

2 South Yorkshire 1364.24 18 63

3 Durham 920.77 26 21

North Manchester 19 792.52 30 33

Merseyside 738.29 45 35

Northumberland 640.27 30 38

East Lancs.20 637.17 29 39

Hertfordshire 634.38 35 29

4 Birmingham 750.19 19 9

Shropshire 735.76 34 0

5 All bar the above 429.65 52 10

Consequently, there is a group of BLOs offering more intensive assistance comprisingTyne and Wear, South Yorkshire, Durham, North Manchester, Merseyside, Northumberland, East Lancashire, Hertfordshire, Birmingham and Shropshire. Theaverage cost per customer of those who were spending more per customer was £841which was 1.95 times that of the light-touch group.

Next, we can compare the intensive assistance rate to the penetration rate. This mayenable us to evaluate the membership of Cluster 3 – that is, those that attempt tointensively-assist a high proportion (Table 5.11). At this time the intensively-assisted ratewas not a monitoring target (which means it didn’t suffer from Goodhart’s law) but the

definition was probably not as tight as it was subsequently. The ratio of intensiveassistance to the penetration rate varies from between 3 per cent to over 37 per cent(Northumberland).

19 North Manchester has been subsumed into Greater Manchester Chamberlink 20 East Lancs. has been subsumed into Greater Manchester Chamberlink





Table 5.11: Proportionate Intensive Rate - Descriptive Statistics

N Minimum Maximum Mean Std.Deviation

Intensive per penetrationrate (%)

43 3.0 37.0 9.6 6.8

A Hierarchical Cluster analysis suggests that there were essentially three clusters of BLOs using this criterion (Table 5.12). The first cluster is Northumberland all on its own.The second comprises a number of rural and North Eastern BLOs. This is a smaller group. Finally a further group is the rest of the Business Link Organisations. In thisgroup, therefore, are all the BLOs that have a high level of assistance. However, thisgroup also comprises two BLOs that are in group 2 the heavy intervention group.

Table 5.12: Proportionate Intensive Rate – Cluster Analysis

Cluster BLOs

Intensive rate per penetration

rate

(%)

1 Northumberland 37

2 Tees Valley 24

Cumbria 23

Durham 22

Humberside 20

Suffolk, 18

3 All bar the above 7

Reviewing the range of criteria available to assist the definition of a typology of BLOs,and mindful of the constraints surrounding the data gathering, it is possible to allocateindividual BLOs to the four different models of Business Link service delivery (Table

5.13). Those BLOs who do not make it into any other category are in the light touch brokerage catch all category (Model 1). Managed brokerage includes those moreintensive BLOs (Model 2). Model 3 includes those BLOs that have a high level of intensive assistance compared to non-intensive and finally Model 4 captures the twoBLOs who have both a high level of intensity and a high level of intensive assistance.





Table 5.13: Four Models of Business Link Assistance and BLOs Organisations

Model 1 Model 2 Model 3 Model 4

Light Touch

Brokerage

Managed

Brokerage

Pipeline Forcing Managed Pipeline

Forcing Brokerage

Bedfordshire Tyne and Wear Cumbria Durham

Berks & Wiltshire South Yorkshire Humberside NorthumberlandBlack County North Manchester 21 Suffolk

Cambridge Merseyside Tees Valley

Cheshire East Lancashire22

Coventry Hertfordshire

Derbyshire Birmingham

Devon & Cornwall Shropshire

Dorset (Wessex)

Essex

Gloucester

Hampshire(Wessex)

Hereford

Kent

Leicester

Lincolnshire

London

M.Keynes Oxford

Manchester

N&W Lancs.

N.Yorkshire

Norfolk Northampton

Nottingham

Somerset

Stafford

Suffolk

Surrey

Sussex

W.Yorkshire

West

21 North Manchester has been subsumed into Greater Manchester Chamberlink 22East Lancs. has been subsumed into Greater Manchester Chamberlink





Table 5.14: Significant Correlations between Income and Intensity

Total income

SBS as a

proportion

of total

Cost per

customer

EU and SRB

proportion

EU funds per

Customer

Total incomeSBS as a proportion of totalCost per customer EU and SRB proportionEU funds per customer

1 -.177 .312

*

.220 .289-.177 1 -.684** -.604** -.575**

.312* -.684** 1 .637** .825**

.220 -.604** .637** 1 .886**

.289 -.575** .825** .886** 1

* Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).

Table 5.14 shows that focussing on the intensity aspects of the Business Link organisation is inevitably associated with the sources of funds. What the table doesnot show is that the funds from Learning and Skills Council are not significant.Therefore, the simple use of sources of funds does not capture the significantvariations in Business Link Organisations.

Data for these four models of Business Link assistance/BLOs is compared below.Section 5.4.4 focuses on the services provided by each group of BLOs in Mole’sclassification, while Section 5.4.5 focuses on the impact of BLO services on businessgrowth and development. As with the Bennett-Robson categorisation examinedearlier, however, the Mole categorisation produces groups of BLOs of very differentsizes, limiting the power of any statistical test to discriminate between groups.

5.4.4 Support Service Profile

For intensively-assisted firms, significant differences were evident between the profiles of BLO assistance relating to business planning and action plan development,raising finance, help with e-commerce and help with IT issues. The key differences

between the four models of BL assistance/BLOs were (see Table 5.15):

• 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

brokerage BLOs;

• Managed brokerage BLOs and BLOs operating both managed brokerage andPipeline Forcing managed pipeline forcing brokerage were most likely to be

providing assistance with e-commerce and IT.




Table 5.15: Profiles of Intensive Assistance: By Mole Typology (% of firms


Mole Typology

Light-touch

ManagedBrokerage

PipelineForcing

Managed

Pipeline

ForcingBrokerage

AllFirms Χ2 ρ

General business information 58.7 58.4 51.1 55.4 57.4 3.2010.

Business benchmarking or diagnosis 14.3 12.6 11.8 11.6 13.6 1.077

0.

Business planning, action plandevelopment 37.7 51.9 39.6 41.5 39.6 8.671

0.

Information on regulation andcompliance 34.9 42.5 29.6 35.8 34.9 4.700

0.

Help with finding externalconsultants 24.5 21.7 15.9 23.4 22.9 6.059

0.

Help with raising finance 32.9 51.8 33.5 42.6 35.4

16.86

3

0.

Help with making cost/qualityimprovements 15.5 12.6 15.1 19.1 15.4 1.667

0.

Help with marketing 36.4 39.8 28.9 32.9 35.4 4.3990.

Help with R&D or NPD 12.1 16.5 10.3 13.6 12.3 2.5490.

Help with exporting 13.2 17.1 13.3 11.9 13.5 1.5540.

Help with training 42.3 42.8 33.6 40.6 41.0 4.3050.

Help with e-commerce 14.0 21.4 16.1 30.9 16.016.03

70.

Help with IT issues 19.1 30.4 15.9 40.1 21.024.88

30.

Anything else 7.2 9.4 6.8 1.8 7.0 3.9170.


More significant difference were evident in the service profiles being provided toother-assisted firms (Table 5.16), with managed brokerage BLOs generally providinga higher proportion of client firms with each service than other types of BLO. Key

points were:

• Managed brokerage BLOs were providing 42.3 per cent of their clients withhelp for raising finance compared to only 19.7 per cent of the clients of lighttouch brokerages;

• Managed brokerage BLOs were also providing more of their clients help withexporting, e-commerce and IY than other types of BLOs (Table 5.16);

• BLOs operating as managed pipeline forcing brokerage were most likely to beoffering their clients help with training (Table 5.16).




Table 5.16: Profiles of Other Assistance: by Mole Typology (% of firms receiving

each service)

Mole Typology

Light-touch

ManagedBrokerage

PipelineForcing

Managed

Pipeline

ForcingBrokerage

AllFirms Χ2 ρ

General business information 56.8 62.6 54.6 45.4 56.6 4.2690.

Business benchmarking or diagnosis 7.2 4.6 6.5 8.0 7.0 0.968

0.

Business planning, action plandevelopment 24.0 22.0 27.8 19.7 23.9 1.513

0.

Information on regulation andcompliance 23.0 30.2 27.8 28.0 24.1 3.177

0.

Help with finding externalconsultants 11.3 16.1 8.7 12.5 11.5 2.084

0.

Help with raising finance 19.7 42.3 26.7 40.5 22.9

34.75

8

0.

Help with making cost/qualityimprovements 7.5 7.9 11.8 7.7 7.8 1.668

0.

Help with marketing 20.0 23.2 26.5 19.9 20.8 2.2230.

Help with R&D or NPD 9.5 12.3 7.7 15.3 9.8 3.0540.

Help with exporting 7.1 15.2 5.4 4.8 7.510.08

40.

Help with training 31.3 31.6 17.4 34.9 30.5 8.4240.

Help with e-commerce 8.9 16.7 4.2 14.1 9.4 9.3870.

Help with IT issues 13.1 23.2 10.5 19.5 14.0 9.2170.

Anything else 7.3 6.8 7.5 7.8 7.3 0.1610.


5.4.5 Impact of BLO Services

As in the case of the Bennett-Robson typology we consider two indicators of impact –

the impact perceived by firms and the econometrically modelled impact of BLOassistance on business growth. Reflecting the pattern of service provision for intensively-assisted firms, two significant differences were evident between the

proportions of BL clients in each category in the Mole typology reporting that BLservices has been an important catalyst for change within their business.

Firms that received support from Business Links that used the Managed Brokeragemodel were significantly more likely to report them as having been an importantsource of change in financial sourcing than other types of BLO. Firms that receivedsupport from Business Links that used the Managed Pipeline Forcing Brokeragemodel were significantly more likely to report them as having had an important

impact on training than other types of BLO (Table 5.17). Only in terms of innovationcapability were there significant differences in the proportion of intensively-assisted




firms citing BLOs as the crucial factor in change in the firm (Table 5.17). Here, lighttouch brokerages were said to have most commonly been the crucial factor.

Table 5.17: Perceived Impact of BL Services: Intensively Assisted Firms

Mole Typology

Light-

touch

Managed

Brokerage

Pipeline

Forcing

Managed

Pipeline

Forcing

Brokerage

All

Firms Χ2 ρ


More inclined to use externalsupport services 29.0 32.9 24.4 28.4 28.7 2.395 0More inclined to use specialistconsultants 28.8 37.4 25.2 36.4 29.6 5.991 0

Image of business has improved 38.5 48.5 40.3 35.6 39.6 4.493 0

Technical capability has improved 17.4 23.9 16.0 19.8 18.0 3.797 0Financial management hasimproved 28.0 35.4 25.0 31.4 28.5 3.558 0

Better at planning 40.9 34.9 38.4 39.4 39.8 1.495 0

Export capacity has improved 13.6 19.9 9.7 14.2 13.7 5.136 0


1 0Regulation and compliancecapability has improved 33.0 37.9 27.8 40.1 33.1 4.375 0

Invested more in training 31.3 34.1 22.4 35.2 30.5 6.882 0Increased innovation capability 20.5 24.1 21.9 20.0 21.0 0.596 0Improved product or servicequality 24.7 25.0 25.0 30.6 25.1 0.939 0


More inclined to use externalsupport services 65.9 67.8 64.9 56.7 65.5 0.952 0More inclined to use specialistconsultants 66.8 71.2 60.0 75.9 67.2 1.844 0

Image of business has improved 77.0 72.1 73.3 79.2 75.9 1.046 0

Technical capability has improved 73.2 57.9 78.6 66.2 71.4 3.670 0

Financial management hasimproved 71.5 74.4 63.6 79.2 71.3 1.649 0

Better at planning 71.8 80.4 68.0 64.6 71.6 2.674 0

Export capacity has improved 76.8 57.9 72.4 87.1 74.3 4.481 0

Financial sourcing has improved 70.0 58.1 63.9 73.6 68.0 3.500 0Regulation and compliancecapability has improved 69.8 78.3 60.8 70.4 69.7 2.795 0

Invested more in training 77.0 81.5 78.6 56.1 76.2 4.880 0

Increased innovation capability 69.9 55.8 52.2 36.3 63.7 8.667 0Improved product or servicequality 69.4 53.4 71.5 56.3 67.2 3.632 0





For other-assisted firms, significant differences between the proportions of firmsreporting BLO assistance as important were evident only for financial sourcing andinnovation capability (Table 5.18). In both cases other-assisted firms were most likelyto cite Managed Brokerage BLOs as being an important factor in stimulating change.

Table 5.18: Perceived Impact of BL Services: Other-Assisted Firms

Mole Typology

Light-

touch

Managed

Brokerage

Pipeline

Forcing

Managed

Pipeline

Forcing

Brokerage

All

Firms Χ2 ρ


More inclined to use externalsupport services 15.9 24.2 17.2 15.2 16.6 4.111

0.2

More inclined to use specialistconsultants 14.9 18.7 17.3 22.6 15.7 2.990

0.

Image of business has improved 24.6 32.9 26.3 26.3 25.5 3.0640.

Technical capability has improved 12.4 19.1 14.4 10.5 13.0 3.7850.2

Financial management hasimproved 18.8 22.2 23.2 13.8 19.2 2.489

0.4

Better at planning 27.5 26.5 28.9 19.1 27.2 1.697

0.

Export capacity has improved 7.4 10.0 6.9 8.4 7.6 0.8180.


60.0

Regulation and compliancecapability has improved 19.0 21.2 21.8 26.2 19.7 1.704

0.

Invested more in training 19.3 19.2 17.8 16.9 19.1 0.3120.

Increased innovation capability 10.9 21.8 12.5 11.6 12.0 9.8020.0

Improved product or servicequality 14.8 20.4 15.4 4.1 14.8 6.964

0.0


More inclined to use externalsupport services 47.2 66.4 68.1 59.0 51.6 5.276

0.

More inclined to use specialistconsultants 51.9 52.9 67.9 73.5 54.8 2.741

0.4

Image of business has improved 57.3 77.3 64.1 63.5 60.4 4.2940.2

Technical capability has improved 47.7 56.9 57.7 47.0 49.6 0.4900.

Financial management hasimproved 56.2 86.2 54.6 61.7 59.1 6.255

0.

Better at planning 55.5 74.0 57.0 65.3 57.4 3.290 0.

Export capacity has improved 65.4 64.3 74.5 100.0 67.7 2.075 0.




Financial sourcing has improved 58.1 56.9 74.7 61.7 60.1 2.2010.

Regulation and compliancecapability has improved 60.8 53.7 74.5 78.2 62.2 3.002

0.

Invested more in training 62.4 49.8 55.9 36.8 59.7 3.328

0.

Increased innovation capability 48.0 50.3 64.8 51.3 49.9 0.9810.

Improved product or servicequality 52.2 66.9 76.9 72.6 56.2 3.862

0.2


Econometric estimates of the growth impact of the different types of BLO in the Moletypology are given in Table 5.19, based on models such as those in Table 4.5 and 4.6.As in the aggregate results we find no significant effect of BLO assistance on other-assisted firms for sales or employment growth. Significant positive productivitygrowth effects are evident with the (positive) effect of light-touch brokerage of moreabsolute importance.




Table 5.19: Impact Coefficients in Regression Models of Employment, Sales and

Productivity Growth: Mole Typology

Employment

Growth

Sales

Growth

Productivity

Growth


A. Intensively-assisted firmsLight-touch 0.025 2.757 0.016 0.833 -0.020 -0.888

Managed Brokerage 0.069 4.117 0.046 1.303 -0.038 -0.917

Pipeline Forcing 0.018 1.275 -0.014 -0.475 -0.035 -1.035

Managed pipelineforcing brokerage 0.035 1.754 0.094 2.030 -0.086 -1.492

B. Other-assisted firms

Light-touch 0.005 0.585 0.055 1.999 0.072 2.509

Managed Brokerage 0.005 0.295 -0.030 -0.590 -0.025 -0.492

Pipeline Forcing -0.011 -0.621 -0.086 -1.270 -0.031 -0.431

Managed pipelineforcing brokerage 0.027 1.175 -0.092 -1.455 -0.136 -1.927


No significant productivity effects were evident on intensively-assisted firms fromany type of BLO (Table 5.18), although the small group of managed pipeline forcing

brokerage BLOs were having a positive sales growth effect. More notable perhaps arethe employment growth effects where the managed brokerage and light-touch groupsof BLOs both had strongly positive and significant effects. Notably BLOs in themanaged brokerage group had an employment impact (6.9 percentage points) almostthree times that of those in the light-touch brokerage group. For the managed

brokerage group the cost per customer was almost double that of the light-touchgroup, if the employment impact was the be all and end all of the programme then themanaged brokerage group would appear to be greater value for money; however, thelight-touch group showed impacts on sales and productivity from other assistance.

5.5 Summary

The chapter concentrated on discovering any significant differences between types of Business Link Organisations with respect to the impacts on employment growth, salesgrowth and productivity growth. Two classifications of Business Links were tested:

the Bennett and Robson classification on the basis of governance and the Moletypology on the basis of delivery methods. In the Bennett and Robson classificationindependents, other subsidiaries, and chamber subsidiaries were found to havesignificantly positive employment growth effects on intensively-assisted firms. Thechapter found significant differences between the type of BLOs and their

performance.

We found that our broad aggregate models were confirmed with much of thedifferences being between the effects on employment growth for intensively assistedfirms. In terms of productivity growth the results also tend to confirm the aggregate

picture with generally weak BLO assistance impacts on productivity growth among

intensively-assisted firms. For other-assisted firms a slightly different pictureemerges, however, with independent BLOs having a small positive effect and private




BLOs a larger negative effect. The absolute importance of this last (negative) result,however, is reduced by the relatively small number of firms covered by independentBLOs.

The Mole typology also shows the impact of employment growth. In this case it is the

light-touch and managed brokerage firms that have greater impact on intensivelyassisted firms. Going back to Table 5.16 suggested that both types improve thesourcing of finance for firms. In terms of productivity growth on the other assistedfirms light-touch brokerage BLOs have a positive effect which is rather difficult totrace in the differences in the type of services shown in Table 5.17. Light touch other assisted clients tend to have an increase in sales growth too. One interpretation is thatthere are poor returns from pipeline forcing. This may indicate that the targets for intensive assistance may be unhelpful as regards impact. Thus, if the onus is on theclient to opt-in to more intensive assistance then this suggests that both advisers andclients are making a dispassionate assessment of the benefits of advice rather than

being forced into a ‘relationship’.

Given the economic rationale of Business Link is to encourage productivity within thesmall firm sector, how do our results shed light on the ways in which it might do this?Recall from section 1.3 that the SBS aim to build the capacity for small businessgrowth through improvements to the management skills within the target group of small and medium sized enterprises.

The evidence suggests that intensive assistance in all of the models make some perceived impact on the management from the BL services. A significant differencewas that the pipeline forcing model resulted in a lower perceived impact of the

sourcing of finance (table 5.17), and their clients invested less in training, althoughthey received less assistance in this aspect. A similar impact is also evident in theBennett-Robson model which suggests that those firms that have financial problemsmay not show the impact within the two years that we expect impacts to develop,even on employment. This would tend to suggest that the firms that are usingBusiness Link for this purpose are not growing strongly. Nonetheless, nearly 40%

believe that they are better at planning and the image of the business has improved;around a third of businesses have improved their ability to raise finance and deal withregulation, and one-quarter have improved their product quality.

The implications of the Mole typology is that the models that perform well are the

light touch particularly in the other assistance aspect, and the managed brokerage particularly in generating employment. For the Business Link faced with a choice of spending priorities between gaining more intensive customers or spending more oneach one the implication is that they should choose spending more on each. Themodel that appeared to work well was the light touch model which produced impactson all three of the measured impacts under certain circumstances.

The light-touch model was found to have employment growth impact from intensiveassistance, sales growth impact from non-intensive assistance (weakly) and

productivity growth impact from non-intensive assistance. If the employment growthwas the only consideration then the managed brokerage model was expensive but

produced greater benefits than the light-touch model.




Another implication of the modelling is in the original equations that demonstrate thatthe key to increasing the productivity and sales growth of the firms is to encouragethem to seek to exploit new markets. Those firms that are seeking new markets areconsistently more likely to grow in sales and productivity (see tables 4.5 to 4.6).




The intention was to select a small number of issues that require further elaborationthrough this qualitative approach. Reviewing the results from the telephone surveyrevealed a number of issues that could usefully be pursued:

• the profile of assistance and how delivered/brokered;• perceived impact of that assistance• additionality – ‘hard’ and ‘soft’.

The broad structure to the topic guides for the face-to-face interviews with each of thetwo groups of assisted businesses was as follows (see Appendix C):

• identifying the performance ‘story’ and seeking to capture the major events associated with that at the outset of the face-to-face interview. Thiswas an important initial area of discussion with the assisted business as wesought to ‘lock down’ a performance trend and some key explanatory factors

at the outset of the interview before embarking upon a discussion of the natureof the relationship with Business Link and its perceived impact.

• Confirmation of the ‘package’ of assistance received from BLOnetwork and an assessment of its relative importance – probing onadditionality - self-assessment’ of the counterfactual position – in the absenceof assistance how would the business have performed.

• The impact of the assistance on the subsequent performance and

behaviour of the firm. The importance here was to engage in a discussion of the ‘hard’ and soft’ aspects of the impact of assistance.

• Expectations of the business prior to the engagement with the BLOnetwork – what were they looking for and why approach Business Link?

• Experiences of the nature and delivery of the support provided throughthe BLO network – internal/external brokerage issues were explored here tounderstand more clearly from the point of view of the business the role of thevariety of models of delivering business support.

• Alternative sources of business support. This was included to ascertainthe nature of the Business Link ‘fit’ in the wider market place of businesssupport services.

The agenda for the non-assisted businesses was a rather narrower and focused againon explaining recent performance trends as well as seeking to understand the extent towhich they used external business support services and their awareness of theBusiness Link ‘brand’.

6.3 Case Study Selection

The 34 face-to-face interviews were drawn from those firms who had agreed (via a

question on the telephone survey) to be involved in further research associated withthe project. Face-to-face interviews were carried out with owner/managers and senior




management who had confirmed at the time of securing the interview that they wereinvolved in the ‘package’ of assistance received in the April to September 2003

period.

There were a number of principles used to select the case studies. These can be

summarised as follows:

• range of BLO models

• range of locations (region and urban/rural)

• variety of sectors (e.g., manufacturing, financial and business services)

• range of business size

• focus on intensively-assisted businesses but other-assisted and non-assistedincluded

In addition, the individual businesses who had been assisted by Business Link were

further pre-selected in terms of their responses questions on additionality and theimpact of assistance particular aspects of their business in the telephone questionnaire(i.e., questions 11 and 26 – see Appendix A). In brief, an attempt was made toinclude businesses from across the spectrum of responses to the self-assessmentadditionality question: that is, from ‘zero’ to ‘100%’ additionality. Similarly, wewished to interview only those business owners that had expressed strong opinions,either positively or negatively, in answering questions that asked respondents to rateon a scale of 1 to 5 the extent to which Business Link assistance had helped improvecertain aspects of their business and selecting only those that had answered a ‘1’ or ‘5’ to one of the questions.

In all, 25 intensively-assisted, 6 other-assisted and 3 non-assisted businesses wereinterviewed24. In doing so, a broad geographical spread was obtained (Table 6.2). Theaim was also to achieve an even spread between the different Business Link operational ‘models’ and to ensure that targeted businesses were not just in urbanareas, but also in rural areas – particularly deprived rural areas (Table 6.3). In total,there were 7 rural businesses included in the sample, of which 5 were in deprivedrural wards.

With respect to size and sector of the interviewed businesses Table 6.4 provides asummary of their characteristics. Over half (56%) could be classified as micro-

enterprises (currently less than 10 employees) while a small number employed morethan 50 employees. This reflects the characteristics of the respondents of thetelephone survey (see Section 3.2). Service sector businesses predominate although13 of the 34 interviews were with businesses in the production sector. However,representativeness was not the prime concern here as the objective was to include avariety of ‘cases’ of assistance.

24 The purpose of the 3 non-assisted interviews was to understand the key factors related to the performance of the business and to ascertain the role of external assistance, including Business Link.




Table 6.2: Type of Assistance by BLO

Government

Office Region BLO

Intensively

-assisted

Other-

assisted

Non-

assisted

South East Berks & Wilts 1

West Midlands Birmingham 1East of England Cambridge 1

West Midlands Coventry 2

East Midlands Derbyshire 3

East of England Essex 2

South East Kent 3

Greater London London 3 1 2

East of England Milton Keynes 2

East Midlands Northants 1

North East Northumberland 2

East Midlands Nottingham 2East of England Suffolk 2

South East Surrey 2

South East Sussex 1 1

North East Tyne & Wear 2Total 25 6 3

Table 6.3: Business Link Model by Urban/Rural Area

BLO Delivery Model

(Mole Classification)Area 1 2 3 4

Rural

(of which deprived)

1(1) -

2(2)

4(2)

Urban 8 3 9 4Total 9 3 11 8

Table 6.4: Industrial Sector by Employment Size

Current Employment Size

Sector 1-9 10-49 50+ Total

Construction 2 3 1 6Primary 0 1 0 1

Manufacturing 4 1 2 7

Services 13 6 1 20Total 19 11 4 34




6.4 Intensively-Assisted Businesses

The majority of the face-to-face interviews were conducted with intensively-assisted businesses (n=25) and the aim of this section is to add to the analysis set out in the previous chapters. In particular, a number of issues have already been identified that

might be further explored through the qualitative data. For example,

• There is some evidence that the type of delivery model matters in terms of theimpact upon business performance for intensively-assisted businesses (seeChapter 5, Table 5.19) – but, from the perspective of the business, it isimportant to investigate the particular ways in which this may or may not beimportant.

• External brokerage was more common in the provision of services tointensively-assisted firms. A considerable external brokering by BL staff was

to non-fee paying services rather than market based services. Further, itwould appear that internal brokerage – to a fee-paying service within BL – was operating for around a quarter of intensively-assisted firms. Can theinterviews provide further insights into the nature of this ‘internal’ BLassistance and the way it compares with or indeed connects to other ‘external’forms of brokered support?

• Nearly a third of intensively-assisted firms reported that they were moreinclined to use external support services as a result of their support from BL.The most commonly reported impacts of BL assistance were on companyimage, planning capability and firms’ ability to deal with regulation and

compliance. Least common were effects on export capability and technicalcapability.

• In each area of influence on the business BL was identified as the crucialinfluence levering change within the firm by a significantly higher proportionof firms in the intensively-assisted group. What exactly were the types of changes being implemented and what impact did they have on business

performance?

• Additionality was self-reported by intensively-assisted businesses as follows:

o A quarter (23%) of intensively-assisted firms reported that the same

business achievements would have been made without BL assistance – i.e. total deadweight.

o A further quarter (25%) of intensively-assisted firms said outcomes

would have been the same without assistance but BL assistance helpedto accelerate business development.

o Two-fifths (40 per cent) of intensively-assisted firms reported business

outcomes which, without BL assistance, they would not have achieved.




• Finally, the econometric models showed that for the intensively-assistedgroup of firms there were some ‘assistance’ effects (see Chapter 4) which can

be explored through the qualitative data:

o Intensive assistance is found to have a positive and significant impact

on employment growth increasing firms’ employment growth rate by2.8 percentage points.

o Intensive assistance has a positive but insignificant effect on firms’

sales growth, increasing sales growth by 1.9 percentage points.o Intensive assistance has a negative but statistically insignificant effect

on firms’ labour productivity, decreasing productivity growth by 2.8 percentage points.

The remainder of this section is organised as follows. The discussion commenceswith perspectives on the nature and delivery of ‘intensive’ assistance and concludes

with a qualitative assessment of the impact of that assistance upon business performance.

6.4.1 Contact with Business Link

For the majority of this group of intensively-assisted businesses it is clear that, ingeneral, the relationship with Business Link pre-dated April 2003. There was a rangeof previous assistance dating mostly from 2000-01, although in a small minority of cases the business had been a client of Business Link for over 10 years. The type of support previously received from Business Link included:

• help with start-up support (e.g., financial planning, marketing, premises);

• participation in seminars and/or networking events related to specific businessissues (e.g., staff training, funding, exporting, ICT issues) organised byBusiness Link alone or in partnership with the local Chamber of Commerce;

• specific support on exporting and/or technical matters.

Therefore, the assistance received by these businesses from Business Link in theApril-September 2003 period was, with one or two exceptions, within the context of an existing relationship (though not necessarily an ‘intensive’ one) with the localBLO.

One obvious implication of this prior relationship is the ability of the business toaccurately separate out the impact on the business of previous support from BusinessLink from that received in the period under consideration in this study. Nevertheless,having established the existence and nature of a previous relationship at the outset of the interview it was possible to ensure that the subsequent discussion of the impact of the ‘2003’ tranche of support was handled more carefully to reduce this‘contamination’ effect.

Further reassurance about the influence of prior assistance was obtained when all but

of the interviewees were able to recall (some after a little prompting) the specific




reason for their involvement with Business Link in the target period and the details of the assistance received.

Across the 25 intensively-assisted businesses there was a mixture in the ‘direction of initiation’ of the contact with Business Link. The majority of interviewees reported

that they had been the ones to initiate the contact for assistance in the April-September 2003 period, although some of the respondents acknowledged that it wasin response to a specific mailing from the Business Link (e.g. concerning the Passportto Export scheme) or as a result of discussions with their Business Advisor.

It became clear that those businesses assisted following discussions with the BusinessAdvisor were among the first group classified as ‘intensively-assisted’, whereas theremainder of businesses interviewed were categorised as such subsequent to their approach to Business Link in the target period. It should be noted that there were asmall number of firms who were unaware that they were classified by Business Link as ‘intensively-assisted’ and these were mostly micro-enterprises in the servicesector.

Those that had made the initial contact were generally motivated by the desire toobtain funding for specific actions in areas that they themselves had identified withinthe business – primarily marketing, ICT and technical support. From their previousexperience of Business Link support they were seeking support and assistance on the

basis of a combination of the ‘unique service and a subsidised price’ provided byBusiness Link - a phrase that was volunteered by respondents on a number of occasions. A number of businesses were able to discuss in detail the price they had

paid for assistance previously received and the reduction in outlay/costs they had

achieved as a result of using Business Link.

What alternative services were available in the market place? A number of respondents reported that they were aware of, and indeed had used, alternative

providers of support and advice. A common observation was that it was verydifficult to ‘find the right person’ and in general they ‘were expensive for the return

obtained’.

6.4.2 Nature and Delivery of Assistance

The nature of the assistance received by this group of intensively-assisted businesseswas wide-ranging and included the following:

• Strategic Action Plan – leading in all cases to further actions in generic areas(see below)

• Human Resources – Investors in People (IiP); STEP Programme; Go for Growth Programme (managerial competencies); staff development/employeetraining

• Technical Capability – SMART Award; ICT development; website design &development; ISO 9000 Quality Assurance Award




• Marketing - Passport to Export Scheme; advertising; market intelligence onnew market areas (geographic and sectoral); marketing plan

• General Business Advice and Support – liabilities insurance, business planning; financial management & payroll; Health & Safety; employment law

Seeking accreditation with IiP was the most common form of support service provided by Business Link to this group of businesses in the period under review andthe experience was a very positive one in that it had wider benefits than simply staff training and appraisal. Many of the respondents were able to integrate the systemsand procedures introduced as a result of the IiP award into the wider process of

business planning and financial management of the business. A frequent comment of the IiP accreditation process was that it represented excellent value for money ‘for an

outlay of £1,500 to Business Link it allowed the business to grow by around £50,000’ .

The role of the Business Adviser in the delivery of support services has been anintegral part of any assessment of the overall impact of the Business Link network (see for example, Bennett and Robson, 1999; 2003b; Roper et al., 2001). In thisqualitative assessment of the impact of Business Link support services we sought toassess the value of the PBA within the context of a group of intensively-assisted

businesses.

Interestingly, not all the intensively-assisted businesses reported (unprompted) thatthey had been assisted by Business Link in developing a Strategic Action Plan (SAP)following a process of ‘diagnosis’. Instead, they tended to focus on the specific formsof assistance (e.g., grants or accreditation) that they received without acknowledging

that it was set it in the context of a wider review of the business25

. This was especiallythe case for some of those businesses who were pursuing the IiP award. However,when prompted, all the respondents recalled some process of ‘diagnosis’ taking placewith the business advisor from Business Link which led to some form of ‘action’.

The views on the value of the SAP, and the role of the Business Adviser, were mixed.Some respondents felt that it was too general (‘just a collection of ideas really without

much direction’ – ‘not enough expert knowledge of the business to be helpful’ ) which perhaps explains why it was not mentioned when questioned about the nature of assistance received. However, there were others (the majority of this group) whovalued not only the final outcome but the actual process of sitting down with an

external business advisor and reviewing the strategic direction of the business. Thefollowing comments illustrate the value placed on the development of the SAP by thisgroup of intensively-assisted businesses:

25 Interestingly, the results from Wave 5 of the DTI Business Support Product Survey (2005) providesome corollary evidence on this point. Business Performance Diagnostic (BPD) recorded a lower scoreacross a number of output measures than in the previous surveys. This would appear to be a result of the decline in overall satisfaction with the ‘product’. One possible interpretation is that the respondentis more inclined to value the ‘end result’ (e.g., a grant application) of the diagnostic process rather thanthe process itself. The qualitative evidence presented here from the face-to-face interviews with

intensively-assisted Business Link clients, albeit regarding assistance received in the April toSeptember 2003 period and therefore a slightly different ‘product’, lends some supportive evidence for this interpretation.




“The advisor was like a ‘critical friend’ at the initial meeting. They

talked through different ways in which to develop the business and the

advisor gave some advice on things the advisor thought might not be a good idea to do based on the advisor’s experience and some things that

the advisor thought it might be a good idea to do……, and then when the

advisor had finished the advisor wrote a letter summarising the advicethat he’d given. It was then up to me to turn this into a strategic

document for the business – I feel it was unrealistic to expect the businessadvisor to write a SAP for the business. The most important aspects of the

services have been helping to evaluate options for taking business forward” (Business Service Firm - to technology-based businesses).

“The advisor visited the company. In the beginning they just went through what the company was doing at the moment and where did the

company think it wanted to expand, which we didn’t really know. After couple of months, the advisor focused the company on what the best plan

was for the company to expand. The most important aspect of the services

and support is that it opened our eyes to the opportunities and highlighted markets which we thought were impossible”.

“In addition, the Business Link advisor carried out a financial audit,

which highlighted areas for improvement that we have tried to implement,

such as tightening up credit controls”.

As the SAP was being taken forward in these businesses there was a range of internal/external brokering taking place depending on the nature of the assistance and

support being sought. Again there were a range of views expressed whichdemonstrated the importance of the signposting process to sources of advice andsupport external to the Business Link. For example;

“Business Link is more useful for ‘general’ businesses matters, or for

signposting. For specialised services, such as finance or marketing, other providers are more useful – e.g. EnTrust, who we have used on various

occasions without going through Business Link. As a result, Business Link can’t be said to be better or worse than other business advice services –

more a case of ‘horses for courses” (Publishing Company; 7 employees).

“Business Link signposted the business to a number of subcontractors

who could help design a website, from which I was able to choose one.This subcontractor also helped out with marketing – creating brochures

and a corporate profile – as well as some in-house training which has

given the business the impetus to take on a full-time in-house IT technician.” (Mail Order Battery Specialist; 10 employees).

“…and just talking to somebody objective who understood businesses …

It wasn’t that he told me the actions to take as part of the plan for the

business….. He just asked me the right questions and gave me the

questions I should ask myself and then pointed in the right direction to find the people that gave me the answers. He put me in touch with




someone for premises, put me in touch with someone for training in

business management. He showed me how to get some funding discount

on the training.”( Business Services – Construction Site management: 7employees).

A number of the intensively-assisted businesses included in the face-to-faceinterviews were located in rural areas (5 of the 7 were in deprived rural wards).Unprompted the value of regular visits by the Business Link Business Advisor andrurality were connected by one or two of the respondents:

“Businesses, particularly us in rural areas that are isolated, need that

critical friend to be there even if it’s just for a chat and say ‘Well,

everything seems fine - carry on what you’re doing’.. and that’s lost recently …. due to the introduction of targets….they may have, you

know, a target that each Business Link advisor has to see 10 people aday. Well, they can’t see 10 people a day in a rural area. It’s simply

impossible. So what happens is, you know, Business Link will

concentrate on the town and cities because they can get round 10 people a day in that area. I see my advisor less and less now”.(Publishing Business: 1 employee).

We have already reported from the telephone survey that there is a general degree of satisfaction with the support and advice provide by Business Link (Table 3.5).Almost 8 out of 10 intensively-assisted businesses in the telephone survey were either satisfied or very satisfied with the support provided. The evidence gathered from

these face-to-face interviews clearly supports that aggregate assessment and providesa greater sense of why the Business Link ‘brand’ received that high level of endorsement. In brief, it reflects the way in which the majority of businesses feel thattheir needs are being served by a Business Link network which has access to a wider

pool of expertise (i.e. the ‘unique’ product) at a subsidised price.

The previous Chapter has highlighted the complexity of the Business Link ‘brand’throughout the network and how, in fact it does seem to matter in terms of themodelling of business performance (see Table 5.18). However, for the perspective of the individual assisted businesses it is clear that the distinction between ‘light-touch’and ‘managed’ brokerage is impossible to discern in the narrative of the nature and

style of delivery of the assistance received.




6.4.3 Impact on the Business

The primary focus in this study is to identify the scale of the economic impact of business support services provided by Business Link. Having discussed thenature of the support received by this group of intensively-assisted businesses and

ascertained their views on their experience of working with the Business Advisor we now turn our attention to the qualitative assessment of the impact of BusinessLink assistance.

We have seen in Chapter 4 that for the intensively-assisted group of businesses:

There were positive and significant employment growth effects attributable toBusiness Link assistance in the econometric models of business performance – and sales growth effects for one of the four BLO Delivery Models (Model 4);

In response to the self-assessment additionality questions (see Table 4.9) 40 per cent

of intensively-assisted firms reported business outcomes which, without BLassistance, they would not have achieved. A further 25 per cent of intensively-assisted firms said outcomes would have been the same without assistance butthat Business Link assistance helped to accelerate business development.

The following points from the group of intensively-assisted businesses help explain both the positive ‘hard’ and ‘soft’ outcomes reported in the aggregate analysis. Interms of enhanced performance as measured by sale, employment, productivityand profitability we report the following illustrations:

“The business was not growing as I expected in the niche market

where competition was not an issue. The business would not haveachieved the improvements without the help from Business Link.

Business Link helped to define the focus of its services for technology

companies. Business Link has helped me to really understand that I

needed to focus on one particular market, whereas originally I was going out to business everywhere, which was a waste of time. Another

improvement of the business is increased turnover, as a direct consequence of focusing on technology companies.” (BusinessServices; 2 employees).

“The help provided by Business Link had changed the way of thecompany’s thinking totally. I changed from being ‘don’t want to

know’ to ‘being very game to get the businesses’. Business Link has

changed my attitude more than anything else. The company’soverseas business and direct sales has increased primarily from the

Web….the company would not have achieved this without the help from Business Link. The company would have just plodded on as we

were without any thought in terms of overseas business”. (BusinessServices; 17 employees).




“Very satisfied with the IiP course … definite value for money –

allowed the business to grow by around £50k for a cost of £1.5k.

However, extraneous problems have meant that the business has alower turnover now than it did 3 years ago”. (Publishing; 1employee).

“Because the Partners have now seen the strategic impact of IiP on

the fee income generated across the legal team…., and if you analyseout our training, the training that we’ve been doing in departments

that have been growing, the two match…..and if that’s what you cando by actually organising all this sort of stuff, then perhaps we can do

the same with the strategy”. (Financial Services, 100 employees)

“Since 2002 Business Link have worked with the company to improve

marketing, including increasing PR work, creating a logo for the firmand improvements to the product catalogue, all of which have helped

the business to grow and diversify its markets and generate additional

sales as a result”. (Business Services; 13 employees – rural deprivedlocation)

We have already stressed the importance of the subsidised prices of Business Link assistance. The following example illustrates the value in cost reduction of theassistance and connects that outcome to the fact that without the ‘free’ participation inthe STEP Programme then these benefits would not have been achieved:

“The company saved thousands on IT by having it set up by this 19 year old on the STEP scheme rather than paying for it commercially,which Mr Mackenzie said would have cost £25,000 minimum. Another

benefit has been the saving of £3,000 per year in stationary too. The project completely changed the structure of the information flow

within the business… and the company now has …a complete grip of

the information within the four walls. We’re a very tight companyorganisation and systems wise, and all that has been achieved directly

through the involvement of Business Link. We would never have beenable to achieve anything like this if we had had to pay for it

themselves, and …..would never had the time himself to learn and set

up a new computer system and so they would have struggled on withthe far more inefficient old one”. (Manufacturing; 11 employees)

With respect to the ‘softer’ forms of impact the following example illustrate thediversity of effects that the Business Link package of support has had on the business.The implication of many of these comments is that it may take some time to see the

benefits in terms of quantitative business performance measures:

“There were some soft benefits resulting from the help of Business

Link. These include increased company image and publicity that may

lead to more future business. There was no ‘hard’ benefit like




increased revenue so far”. (Manufacturing; 3 employees – rurallocation)

“The impact has been quite large coming in the form of changes of mybehaviour and in the form of a better relationship between myself and

the workforce. ...we are developing now more team orientated salesthan individual orientated sales. I have changed my role…

significantly in the business… I have taken a much more hands on role

in getting involved than I was previously…I was delegating a lot of theresponsibilities to the running of the business to a managing director

and sales manager, and to help me spend more time on thedevelopment of the business. But what I realised was that the external

development of the business, it really needed to be developed from the

inside out of the business, this is where my thinking has changed”.(Services; 10 employees – rural deprived location)

“….. the impact on the business of the Business Link assistance had

been quite big. The changes made to achieve the ISO9000 had brought substantial improvements in quality control with a few simple changes

such as re-arranging the production line and making more careful checks on ‘finished’ products which had resulted in improved

customer satisfaction with their products. The Investors in People had

also made a difference by helping the business set up a proper structured training programme for employees. The changes brought in

to apply for the Investors in People award have helped make a more

contented and capable workforce. The company definitely wouldn’t have gone down the Investors in People route had it not been for

Business Link who suggested IiP – nor the ISO9000 route either…thetwo were so intertwined”. (Services; 6 employees)

“Difficult to quantify the contribution Business Link have had to the

success of the business but: I would not say they were critical, I would say they were a big part of the overall… scheme of things. I mean

without some of their advice and help we may not be as far as weare.” It seems to be in ‘professionalising’ the business and its

processes that Business Link has been most useful in improving our performance”. (Manufacturing; 8 employees)

We noted above that there was a high degree of partial additionality present in theoverall sample of intensively-assisted businesses. The interviews provide anopportunity to explore the telephone survey ‘self-assessment’ in more detail. Thefollowing four examples help us understand the nature of this partial addionality:

“The assistance given by Business Link was important in two ways.

Firstly the new computers and the networking of the office computershas brought greater efficiency in the office and secondly, through




giving the company an improved profile and extra sales. For example

having a good website draws in potential customers because the firm

looks professional and reliable. …if they see a decent website…it’s not a little tiny company on the edge of nowhere that doesn’t do

anything…the website does get your profile…better known…I think it

give a professional image. We now get almost daily correspondencethrough the website whereas prior to the new website there was very

little. In addition the company is now selling over the internet too, to places in Kent, Surrey and Doncaster, where we had not sold to

before. We probably would have gotten the website done eventuallybut not as quickly and maybe not as professionally. Business Links

role was helping us find good, competent people to carry out the

setting up for the website”. (Construction; 15 employees)

“The impact of the assistance given by Business Link was to enable

the business to get things started and done earlier than perhaps would

have been the case. We would have gone ahead both with starting upthe business in the first place and expanding it into cleaning with or

without the help of the Business Link advisor. …with their help it wasa case of achieving it, in two years as opposed to achieving it in

three”. (Business Services; 9 employees)

“The website would possibly still not be in existence, as we had not recognised a need for it prior to Business Link’s involvement. We are

now getting around 1600 visits per month on the site. Generally, the IiP has improved the efficiency of the business in terms of the way theoffice and staff are managed; the overall feeling is that ‘we would

have achieved the same results, but not as quickly”. (BusinessServices; 13 employees)

Not all intensively-assisted business that we talked to were as positive about theimpact of Business Link assistance as the following comment illustrates:

“The Business Link facilitated support and grants haven’t massively

impacted upon the business, but AC feels that this is because theywere dealing with fairly mundane things. …….It’s hard to pinpoint

whether Business Link have affected the growth or not, although the

grants etc. may have sped up the process a little”. (Construction; 15employees)




6.5 Other-Assisted Businesses

From the 6 interviews with firms in this group it is clear that a variety of assistancewas being offered from the Business Link local service ranging from what isconsidered the minimum of ‘assistance’ such as the provision of information on

the ‘How to…’ aspects of business, as well as networking events on general andspecialist topics through to the sign-posting to significant inputs of adviceeventually provided by specialist third parties. Some examples will serve toillustrate the range of assistance. First, there would appear to be what might betermed ‘administration’ support which the following comment illustrates.

“the contact with Business Link came about because we were told that

before we were able to go on a Trade Mission to China we needed aletter from the local Business Link – to confirm that we existed more

than anything else. I think that then enabled us to access the small

amount of support provided - but that was unimportant – we needed the letter before we could get on the place – I had never been in

contact with Business Link before then – I had assumed they were for very small start-up businesses.” (Chemical manufacturer; 10employees).

Second, attendance at networking events brought many businesses into the ‘other-assisted’ category and the range of experience was mixed:

“the networking event was designed to allow businesses to ‘pitch’ toeach other in terms of fostering business but on this occasion the mix of

businesses was not right for me and I left with no leads to pursue – I got the impression that the event had to be held irrespective of whether theattendees met the objectives for the event.” (Business Consultant; lessthan 10 employees).

“We got some advertising and marketing support following a Business

Link event around 2003 - it was their own staff who provided it if I remember - but it was quite basic advice really but it has enabled us to

re-think our whole marketing strategy in the last two years which was

necessary as we attempted to enter the American market.” (CentralHeating System manufacturer; 55 employees).

Finally, there were more significant forms of support provided by third parties after aninitial contact with the local Business Link:

“The company must have been on a mailing list as we received

literature through the post which I initially dismissed along with other ‘junk’ mail. But I then noticed a feature article in one of them about

staff training and it happened to correspond with a need I had

identified in the business, in the context of the changes that I wasimplementing - changing the focus of the business to concentrate on

the property development side of the business rather than contracting.

All that happened was that Business Link passed on the name of thecompany who was providing the staff training and we took it from




there – the development of the Personal Development Plans for senior

and middle management has really changed the culture in the business

and has laid the foundations for the future – but this has not reallyimpacted upon the business in terms of increased sales or

profitability.” (Property Development; 20 employees).

“We use Business Link as often as possible as they are a constant

source of specialist advice (IT; certification for ISO; IiP and grant applications) and much of this ends up in referrals to third party

consultants – we have used them about 6-7 times since 2003 – for usthey represent very good value and are very responsive.” (ServiceFirm – landscape architecture - drainage specialists for recreationareas; less than 50 employees).

The following business in the service sector which provided information for other small firms was a regular attendee at Business Link networking events and was fullyaware of the range of support that could be accessed:

“We approached Business Link for help to develop our website…… we

were put in touch with a specialist company who undertook the work – at rates considerably higher than others – and this was funded by

Business Link.”

From this review of the ‘other-assisted’ group of firms it would be misleading toassume that they were only receiving low-level types of assistance. There is a widevariety of assistance provided to this group of businesses some of which resembles

that received by intensively-assisted firms – especially the nature of third part support brokered by the local Business Link. We have no way of knowing how widespreadthis potential ‘problem’26 might be. Therefore, when we set out differences in the

performance of these two groups of assisted firms (see for example, Table 3.7) it isimportant to remember that the distinction in the nature and scale of assistancereceived is not as clear as might have been originally envisaged. Of course, it isalways possible that this lack of distinction may simply reflect the mis-classificationof firms into the two groups by individual Business Links.

There is also evidence of these businesses initiating the contact which serves tounderline the market presence of the Business Link brand in certain areas. Very few

of the interviewed firms could point to a tangible impact of the assistance received but, as with the intensively-assisted group, they were able to identify development sintheir business which would not have taken place without the contact with BusinessLink.

6.6 Summary

The analysis and discussion in this Chapter has revealed the following points:

26 The use of the word ‘problem’ refers solely to the obvious methodological difficulties for thiseconomic impact study when we assume that the nature of support is markedly difference.




• There is a general positive endorsement of the Business Link ‘brand’ whichconfirms the aggregate assessment. The majority of businesses feel that their needs are being served by a Business Link network which has access to awider pool of expertise (i.e. the ‘unique’ product) at a subsidised price. Thiswould appear to be true for both intensively-assisted and other-assisted firms.

• The time-scale is too short over which to measure the economic impact of Business Link assistance received in the April to September 2003 period.Many of the benefits have still to be realised as much of the assistance relatesto ‘changed behaviour’ in terms of, for example, strategic focus and staff training – the expectation is for enhanced business performance in the yearsahead.

• The distinction between ‘intensive’ and ‘other’ assist is somewhat blurred in anumber of cases which has implications for the impact assessment.




7. Developing a Spatial Perspective on the Business Link Local

Service

7.1 Introduction

The evaluation study has to date provided a ‘national’ overview of the impact of theBusiness Link Local Service. The purpose of this chapter is two-fold. First, to

provide an overview of the similarities and differences between intensively-assisted,other-assisted and non-assisted firms in the different Government Office Regions(GORs) across England. Our objective here is to provide a baseline against whichfuture developments in the profile of assisted firms can be measured. In essence, thisextends the analysis of Chapter 2, and highlights some substantial differences across

GORs regions in the attributes and characteristics of assisted firms.

Second, to provide headline data on the operation of Business Link in rural areas inEngland. For the purposes of this analysis we adopt a typology of rurality whichreflects both morphology and context. As a result we use the following three-foldclassification: urban, rural (less sparse) and rural (sparse).

7.2 Regional Baselines

We start by considering the age characteristics of both firms and their owners, and

then report on regional differences in the legal organisation of firms. Regional data onthe sectoral composition of respondent firms, is presented. The next section reviewsthe strategic direction of respondents and suggests that there is limited regionalvariation in the strategic priorities of respondent firms. Finally, we present regionaldata on the number of directors in each firm, gender diversity, ethnic diversity, andthe size of firms as measured by the number of employees and total turnover.

7.2.1 The Age Characteristics of Respondent Firms

In Section 2.3 we reported that significant differences in the age distribution of intensively, other, and non-assisted firms were evident, and that BL assisted firmswere in general younger than non-assisted firms. Table 7.1 sheds further light on thisresult. First, it suggests that within seven of the nine regions there are significantdifferences in the age distribution of intensively-assisted firms, other-assisted firmsand non-assisted firms. Second, the test statistics for individual regions demonstratesignificant differences in the age profile of intensively and other-assisted firms withinthe North West, Yorkshire and Humberside, and Eastern regions, which are notevident in other regions. This suggests that in these three regions, the age of firmsmay play a role in determining the type of assistance received by firms. Finally,separate tests for intensively (65.4) and other assisted firms (56.2) both provide

statistically significant evidence for regional variation in the age characteristics of assisted firms. Moreover, it is unlikely that this reflects regional differences in the




age profile of companies in general, because the control group of non-assisted firmsdo not exhibit such statistically significant variation (43.1). In sum, these findingssuggest substantial differences across regions in the age of firms that are selected for BL assistance, differences which cannot be attributed to the underlying regional age

profile of firms.

Interestingly, a similar result is also evident in Table 7.2 which provides details onregional variations in the age of firm owners. As with firm age, the test statisticssuggest statistical significant regional variation in the owner’s age for intensivelyassisted firms (53.3) and other assisted firms (66.6), while in contrast we find nosignificant variation for non-assisted firms (47.4). This suggests that there may beregional variation in the probability of receiving BL assistance that is not attributableto a more general regional variation in owner age. However, we also note that thewithin region tests suggest that only the West Midlands and East regions arecharacterised by any statistically significant differences in the owner age profileacross the three types of firms. In particular, assisted firms in the West Midlandsappear to have substantially younger owners than non-assisted firms.




Table 7.1: Age of Firms by Region and Type

2-3 years

ago

3-4 years

ago

4-5 years

ago

5-10 years

ago

10-20 years

ago

More than

20 years

ago

Intensively-assisted firms

North East 24.32 8.11 8.11 16.22 23.42 19.82

North West 15.6 6.8 6.1 13.6 30.6 27.2South East 14.6 9.3 7.8 18.5 26.8 22.9

South West 10.8 4.2 8.3 23.3 21.7 31.7

West Midlands 13.8 5.4 2.3 20.8 30.0 27.7

Yorkshire and Humberside 11.9 3.7 11.9 21.1 16.5 34.9

East Midlands 7.8 5.8 9.7 21.4 28.2 27.2

East 6.9 9.9 8.9 26.7 15.8 31.7

London 8.1 8.1 14.1 21.2 22.2 26.3

All Regions 13.1 6.9 8.3 19.9 24.5 27.3


North East 14.5 12.0 5.1 21.4 25.6 21.4

North West 6.7 5.0 3.4 18.5 28.6 37.8

South East 9.5 7.2 8.7 18.9 28.4 27.3

South West 8.6 3.8 5.7 18.1 26.7 37.1West Midlands 12.5 6.7 7.7 12.5 32.7 27.9

Yorkshire and Humberside 9.3 7.9 6.6 20.5 29.1 26.5

East Midlands 14.0 8.0 5.0 21.0 28.0 24.0

East 17.2 10.8 1.1 15.1 23.7 32.3

London 13.9 4.6 13.9 22.2 26.9 18.5

All Regions 11.3 7.3 6.7 18.9 27.9 27.9

Non-assisted firms

North East 11.8 3.0 7.7 13.0 23.7 40.8

North West 9.4 5.1 5.8 15.9 28.3 35.5

South East 8.7 1.9 4.3 17.9 25.6 41.5

South West 9.1 3.0 7.1 19.2 29.3 32.3

West Midlands 7.0 7.0 3.0 12.0 27.0 44.0

Yorkshire and Humberside 5.3 4.4 6.2 15.9 27.4 40.7East Midlands 11.1 6.5 3.7 13.0 12.0 53.7

East 10.8 3.6 3.6 15.3 28.8 37.8

London 3.1 5.2 7.3 13.5 29.2 41.7

All Regions 8.8 4.1 5.4 15.2 25.6 40.8

Chi-Squared Tests for Within Region Variation Between Firm Types

Intensively,

Other, and

Non-

assisted

Firms

Intensively

and Other-

Assisted

Firms

North East 32.54 5.42

North West 10.56 9.26

South East 30.51 4.32

South West 3.79 2.66

West Midlands 17.17 6.26

Yorkshire and Humberside 17.65 10.05

East Midlands 32.12 3.89

East 24.81 14.75

London 23.66 4.42

All Regions 78.42 6.30

degrees of freedom 10 5

Chi-Squared Tests for Between Region Variation By Firm Type

Intensively assisted firms 65.44

Other assisted firms 56.16

Non-assisted Firms 43.06

degrees of freedom 40

Note: Statistics in bold (bold italics) are significant at the 5% (10%) level.




Table 7.2: Owner Age by Region and Type

Under 25 25 and 34 35 and 44 45 and 54

55

and

64

65

and

over


North East 7.84 29.41 36.27 25.49 0.98

North West 6.5 29.8 30.6 31.5 1.6South East 7.0 30.8 30.3 27.0 4.9

South West 0.9 9.3 26.9 35.2 25.0 2.8

West Midlands 0.9 14.2 31.9 35.4 13.3 4.4Yorkshire andHumberside 8.9 26.7 42.6 20.8 1.0

East Midlands 9.4 28.2 40.0 17.6 4.7

East 9.1 25.0 53.4 12.5

London 7.1 32.9 38.8 18.8 2.4

All Regions 0.2 8.7 29.3 36.9 22.2 2.7


North East 14.3 33.7 30.6 18.4 3.1

North West 10.6 24.0 31.7 31.7 1.9

South East 5.8 27.1 34.3 24.2 8.7

South West 8.1 23.3 37.2 26.7 4.7

West Midlands 11.8 21.2 49.4 11.8 5.9Yorkshire andHumberside 0.9 8.1 30.6 36.9 18.9 4.5

East Midlands 12.3 28.4 29.6 23.5 6.2

East 1.3 9.2 36.8 32.9 17.1 2.6

London 3.8 12.5 31.3 36.3 11.3 5.0

All Regions 0.5 9.7 28.2 35.2 21.1 5.2

Non-assisted firms

North East 0.7 10.3 22.1 33.8 26.2 6.9

North West 4.8 37.1 26.6 25.0 6.5

South East 1.6 3.7 33.0 29.8 22.9 9.0

South West 11.4 23.9 38.6 20.5 5.7

West Midlands 3.4 5.7 35.2 29.5 20.5 5.7Yorkshire andHumberside 9.3 23.7 38.1 22.7 6.2

East Midlands 1.0 9.0 24.0 29.0 33.0 4.0

East 1.0 4.1 25.5 40.8 20.4 8.2

London 1.3 6.4 34.6 28.2 21.8 7.7

All Regions 1.0 7.0 28.9 32.4 23.9 6.9


Intensively,

Other, and Non-

assisted Firms Degrees of Freedom

Intensively and

Other-Assisted

Firms

Degrees of

Freedom North East 14.06 10 4.89 4

North West 12.91 8 1.91 4

South East 13.46 10 3.60 4

South West 4.34 10 1.69 5

West Midlands 18.08 10 5.59 5Yorkshire andHumberside 7.22 10 4.05 5

East Midlands 9.57 10 2.45 4

East 20.13 10 9.85 5

London 12.32 10 6.91 5

All Regions 31.65 10 10.75 5


Test Statistic Degrees of Freedom

Intensively-assisted firms 53.32 40




7.2.2 The Legal Status of Respondent Firms

Table 7.3 analyses regional differences in the legal status of firms. Here, we findsignificant differences between the legal status of intensively, other, and non-assistedfirms. Moreover, the test statistic for differences in the distribution of legal status

between intensively and other assisted firms (51.55) confirms that a statisticallysignificant difference is present between the regional profile of intensively and other-assisted firms. However, it is also worth noting that while 7 of the 9 regionsdemonstrate statistically significant variation when all three types of firms areincluded, only five demonstrate a statistically significant difference betweenintensively and other assisted firms. This therefore, suggests that the aggregate levelfinding that non-assisted firms are less likely to be limited companies, than other assisted firms, and that other-assisted firms are in turn less likely to be limitedcompanies than intensively-assisted firms, does not hold in all regions.

Separate tests for intensively-assisted (58.67), other-assisted firms (60.58, and non-assisted firms (29.88) provide interesting evidence with regard to the regionalvariation in the legal status of assisted firms. The control group of non-assisted firmssuggest that there is not a statistically significant relationship between regionallocation of a firm and its legal status. In contrast, in the case of both intensivelyassisted and other assisted firms, the distribution of firms by legal status is found to besignificantly different between regions. Our results, therefore, suggest significantregional variation in the legal status of assisted firms, which is not present amongstnon-assisted firms. This further suggests that BL assistance selection criterion varyfrom region to region.




Table 7.3: Legal Status of Firms by Region and Type

Sole trader Partnership

Private

Limited

Company Other


North East 22.9 18.3 55.0 3.7

North West 21.6 18.9 56.1 3.4South East 10.3 10.8 73.9 4.9

South West 22.1 12.3 62.3 3.3

West Midlands 9.9 10.7 72.5 6.9

Yorkshire and Humberside 9.0 7.2 76.6 7.2

East Midlands 13.7 10.8 70.6 4.9

East 8.0 10.0 76.0 6.0

London 9.0 7.0 76.0 8.0

All Regions 14.1 12.0 68.7 5.2


North East 27.7 16.0 48.7 7.6

North West 24.4 25.2 47.9 2.5

South East 26.9 11.7 52.3 9.1

South West 30.5 16.2 46.7 6.7West Midlands 17.3 16.3 55.8 10.6

Yorkshire and Humberside 30.0 14.7 49.3 6.0

East Midlands 19.4 13.6 62.1 4.9

East 13.8 8.5 71.3 6.4

London 21.3 4.6 71.3 2.8

All Regions 24.4 14.0 55.1 6.6

Non-assisted firms

North East 33.7 23.7 36.7 5.9

North West 28.1 15.8 50.4 5.8

South East 29.8 15.9 48.6 5.8

South West 25.0 19.0 50.0 6.0

West Midlands 21.0 16.0 59.0 4.0

Yorkshire and Humberside 25.4 23.7 43.9 7.0East Midlands 32.4 19.8 42.3 5.4

East 31.2 13.8 47.7 7.3

London 22.9 10.4 58.3 8.3

All Regions 28.4 17.8 47.7 6.1


Intensively,

Other, and

Non-

assisted

Firms

Intensively

and Other-

Assisted

Firms

North East 11.87 2.65

North West 6.97 2.42

South East 39.60 27.47

South West 7.51 5.96

West Midlands 12.60 7.24

Yorkshire and Humberside 36.12 24.34

East Midlands 19.83 1.88

East 25.90 1.80

London 14.50 8.44

All Regions 114.90 51.55

degrees of freedom 6 3


Intensively assisted firms 58.67

Other assisted firms 60.58

Non-assisted Firms 29.88

degrees of freedom 24





7.2.3 Regional Differences in the Sectoral Composition of Respondent Firms

Tables 7.4 and 7.5 provide an analysis of regional variation in the sectoral distributionof firms in the sample. In Table 7.4, the Chi-squared tests for between regionvariation for each firm type confirm that intensively assisted (273.35) Other-assisted(150.11) and non-assisted firms (126.38) all exhibit statistically significant regionalvariation in sectoral composition. This is as we should expect, given an underlying

pattern of relative concentration of various industries in different regions of thecountry.

However, the test statistics for within region variation between firm types, alsosuggest substantial variation in the sectoral distribution of firms. Thus, in 7 of the 9regions, statistically significant differences are found when we test for differences

between the sectoral distribution of intensively, other, and non-assisted firms.

However, when narrowing the test to find differences between intensively and other assisted firms, only in the North West, South West, Yorkshire and Humbersideregions exhibit statistically significant differences. These results suggest that whilein most regions there are substantial differences between non-assisted and assistedfirms, in most regions, the sectoral composition of intensively and other assisted firmsdo not significantly differ.

Table 7.4: Test Statistics: Sectoral Composition by Region and Type Chi-Squared Tests for Within Region Variation Between Firm Types

Intensively

, Other,

and Non-

assisted

Firms

Degrees

of

Freedo

m

Intensivel

y and

Other-

Assisted

Firms

Degrees

of

Freedo

m

North East 31.26 22 10.68 10 North West 38.94 22 16.95 10South East 50.93 22 16.32 11South West 47.07 22 20.94 10West Midlands 30.50 22 10.64 11Yorkshire andHumberside 44.33 20 29.46 10East Midlands 44.44 22 11.44 10

East 27.67 20 13.32 9London 41.38 20 12.17 10All Regions 155.41 26 23.60 12


Intensively assistedfirms 273.35 88Other assisted firms 150.11 80

Non-assisted Firms 126.38 96





Table7.5: Sectoral Composition by Region and Type

Agriculture,

hunting &

forestry

Fishin

g

Manufact-

uring

Electricity,

gas and

water

supply

Constructio

n

Retail,

wholesale

& repair

of motor

vehicles

Hotels

and

catering

Transport,

storage

and

comm-

unicat ion Finance

Real

estate,

renting

and

business

activities Education

Health

and social

work

Other

community

social and

persona

service

activities


North East 4.55 21.82 3.64 16.36 6.36 5.45 1.82 22.73 7.27 2.73 7.27

North West 11.5 24.3 0.7 6.8 12.2 12.84 2.70 14.19 2.03 6.76 6.08

South East 3.4 16.5 0.5 4.4 14.1 1.94 3.40 1.46 38.83 0.49 10.68 4.37

South West 18.0 18.9 3.3 14.8 6.56 3.28 22.95 1.64 6.56 4.10

West Midlands 3.0 37.9 0.8 3.0 15.9 2.27 3.03 0.76 18.94 1.52 6.06 6.82

Yorkshire and Humberside 1.8 42.7 6.4 15.5 0.91 1.82 20.00 1.82 6.36 2.73

East Midlands 3.9 26.2 3.9 18.4 0.97 2.91 28.16 1.94 7.77 5.83

East 5.0 19.0 12.0 17.0 4.00 4.00 27.00 1.00 6.00 5.00

London 4.0 7.1 10.1 2.02 3.03 2.02 56.57 1.01 3.03 11.11

All Regions 5.8 23.4 0.3 5.4 14.8 4.34 3.10 0.88 27.70 1.95 6.64 5.75


North East 5.8 20.0 6.7 16.7 10.83 1.67 0.83 20.00 3.33 8.33 5.83

North West 9.3 19.5 2.5 16.9 10.17 6.78 27.12 1.69 2.54 3.39

South East 3.0 16.7 9.9 16.7 4.94 1.90 0.38 34.98 0.76 5.70 4.94

South West 4.8 11.5 3.8 13.5 6.73 0.96 1.92 42.31 1.92 6.73 5.77

West Midlands 2.9 24.0 4.8 18.3 4.81 1.92 3.85 25.00 1.92 7.69 4.81


East Midlands 3.9 17.6 10.8 19.6 4.90 2.94 0.98 30.39 0.98 5.88 1.96

East 4.2 31.6 5.3 22.1 1.05 25.26 7.37 3.16

London 0.9 12.1 7.5 15.9 0.93 0.93 47.66 2.80 1.87 9.35

All Regions 4.2 19.0 6.6 18.0 5.67 2.41 0.77 30.95 1.46 5.50 5.42

Non-assisted firms

North East 7.6 15.9 1.2 5.9 25.9 12.35 4.71 2.35 12.35 1.76 3.53 6.47

North West 5.1 21.0 5.8 26.1 10.87 2.90 2.17 13.04 0.72 5.80 6.52South East 2.4 21.1 5.3 30.6 5.26 1.44 1.44 21.53 6.70 4.31

South West 3.0 14.1 2.0 2.0 21.2 13.13 1.01 3.03 21.21 2.02 9.09 8.08

West Midlands 9.0 24.0 8.0 28.0 3.00 2.00 1.00 12.00 1.00 5.00 7.00


East Midlands 3.6 0.9 18.2 5.5 36.4 7.27 5.45 0.91 10.00 10.91 0.91

East 6.2 0.9 23.0 4.4 26.5 7.96 3.54 16.81 1.77 4.42 4.42

London 1.0 11.5 7.3 27.1 6.25 2.08 4.17 23.96 2.08 6.25 8.33

All Regions 4.8 0.2 18.9 0.3 5.7 28.2 8.3 3.0 1.7 16.5 1.0 5.9 5.6





7.2.4 Regional Differences in the Strategic Priorities of Respondent Firms

The first panel of Table 7.7 extends the analysis of differences in the strategic prioritiesof firms that was first presented in Table 2.5 (Table 7.6 presents the basic descriptive

data). In this earlier analysis, we reported statistically significant variation acrossintensively, other, and non-assisted firms for all five strategic priorities identified in thesurvey. Nevertheless, the region specific tests suggest that these statistically significantdifferences are not present in all regions. Thus for example, in 6 regions there arestatistically significant differences in the likelihood of intensively, other, and non-assistedfirms to use a strategy increasing sales in new markets. In contrast, statisticallysignificant differences in the likelihood of intensively, other, and non-assisted firms toengage in the strategy of developing new products for new markets are only evident inthree regions. These results suggest the need for caution in generalizing differences instrategies between assisted and non-assisted firms to all regions.

The second panel of Table 7.7 focuses solely on differences between intensively andother assisted firms. As a result, we first note that if we look at differences across allregions, there are only statistically significant differences between intensively and other assisted firms for three strategies, while there is no statistically significant difference for the strategies of increasing sales in current markets and developing new products for newmarkets. Moreover, at the regional level, there is much less evidence of statisticallysignificant differences between intensively and other assisted firms. Thus, while in theSouth East Region, statistically significant differences in the strategic priorities of intensively and other-assisted firms are evident for four of the five strategies, threeregions exhibit no statistically significant difference, two regions exhibit differences inthe likelihood of two key strategies, and three regions exhibit differences in only one

priority. As a result, we would suggest that much of the variation in key strategies that isevident at the aggregate level between intensively and other-assisted firms is actuallyattributable to variation in a limited number of regions. In particular, there is evidence of considerable variation in the strategies of intensively- and other-assisted firms in theSouth East region.

Finally, the third panel of Table 7.7 tests for between region variations in strategic priorities for intensively, other, and non-assisted firms. These results largely suggest thatthere is little variation in strategic priorities that can be attributed to regional location.The primary exception to this appears to be with regard to the strategy of developing new products for existing markets, where statistically significant regional differences are

found for all three types of firms. Similarly, we also find evidence of statisticallysignificant regional differences in the likelihood of engaging in the strategy of maintaining sales in present markets, but only for other assisted firms.





Table 7.7: Test Statistics for Regional Differences in Strategic PrioritiesChi-Squared Tests for Within Region Variation Between Intensive, Other, and Non-Assisted Firms

Maintain

Sales in

Present

Markets

Increase

sales in

current

markets

Increase

sales in

new

markets

New

products

for

existing

markets

New

products

for new

markets

North East 11.71 3.55 6.14 5.97 6.44

North West 1.62 0.11 12.57 0.57 0.73

South East 26.14 2.15 10.52 5.34 10.80

South West 3.44 0.98 0.65 1.17 2.38

West Midlands 1.32 0.93 9.32 2.15 6.86

Yorkshire and Humberside 10.32 0.03 0.89 6.99 1.69

East Midlands 10.29 1.53 6.76 5.60 4.12

East 1.83 3.32 0.36 0.07 0.30

London 3.74 1.57 5.68 1.38 0.01

All Regions 50.56 7.11 36.95 8.59 17.17

(All tests have 2 degrees of freedom)

Chi-Squared Tests for Within Region Variation Between Intensive and Other Assisted Firms

Maintain

Sales in

Present

Markets

Increase

sales in

current

markets

Increase

sales in

new

markets

New

products

for

existing

markets

New

products

for new

markets

North East 0.04 0.88 1.34 4.15 0.92

North West 0.05 0.07 0.38 0.21 0.73

South East 20.14 1.08 7.48 3.43 4.25

South West 3.13 0.78 0.40 0.04 1.84

West Midlands 0.73 0.67 3.14 2.16 5.73


East Midlands 5.06 0.97 1.70 0.52 0.15

East 0.01 0.33 0.04 0.01 0.10

London 0.42 0.54 0.64 1.16 0.00All Regions 19.75 1.85 10.53 2.08 7.16

(All tests have 1 degree of freedom)


Maintain

Sales in

Present

Markets

Increase

sales in

current

markets

Increase

sales in

new

markets

New

products

for

existing

markets

New

products

for new

markets

Intensively assisted firms 12.85 9.16 9.02 23.86 12.90

Other assisted firms 13.88 6.32 8.85 24.24 9.56

Non-Assisted Firms 8.59 6.67 9.15 13.56 7.07

(All tests have 8 degrees of freedom)

Note: Statistics in bold ( bold italics ) are significant at the 5% (10%) level.





7.2.5 Regional Differences in Diversity, Director Numbers and Firm Size

Tables 7.8 and 7.9 provide an analysis of regional variation in the average of severalcharacteristics of firms that were considered earlier in Chapter 2. These include data on

the number of company directors, gender and ethnic diversity, and firm size as measured by the number of employees and sales turnover.

The first panel of Table 7.9 suggests that except for the case of ethnic diversity, there islittle evidence of between region variation in these characteristics. However, with regardto ethnic diversity, we find statistically significant regional differences for intensively,other, and non-assisted firms. This finding should be expected, given substantial regionalvariation in the distribution of ethnic minorities in the UK. The one surprising result isthe finding of statistically significant regional variation in gender diversity for other-assisted Firms. This appears to be driven by above average female representation in theSouth West and, North East and North West regions, and below average female

representation in the West Midlands, East, and London regions.

The second and third panels of Table 7.9 also suggest that there is relatively limitedwithin region variation between intensive, other, and non-assisted firms. In fact, in only13 of 90 tests for within region variation attributable to firm type do we find evidence of statistically significant differences in the regional averages.

Of these significant differences, however, the most notable is the finding of statisticallysignificant differences in size of firms, as measured by sales, between intensively andother assisted firms in the South West, West Midlands, and London regions. However,while in London and the West Midlands intensively assisted firms are, on average, larger

than other-assisted firms, the opposite relationship is evident in the South West.

There is also notable within region variation in gender diversity in both the South and theWest Midlands regions, where both the tests including and excluding non-assisted firmsfind evidence of significant variation attributable to the type of firm. These resultssuggest that relative to the control group of non-assisted firms, firms in the South Westregion with female directors are more likely to receive other-assistance. In contrast in theWest Midlands, firms with female directors are more like to receive intensive assistance,and less likely to receive other assistance. These results suggest that the gender of directors plays a role in assistance selection in these regions that is not evident in other regions.

We also note that there is evidence that intensively-assisted firms are on averagesubstantially larger than other assisted firm in Yorkshire and Humberside, and that theaverage ethnic diversity of intensively-assisted firm in London is significantly lower thanthat of other-assisted firms.





Table7.8: Average Firm Characteristics: By Region and Type

Directors

and

Partners

(No)

Gender

diversity

–

%

female

Ethnic

diversity

–

%

ethnic

Employees

2005

Sales

2005


North East 2.2 29.0 1.9 19.21,773.

3

North West 2.1 32.6 0.8 17.91,242.

9

South East 2.1 30.3 2.2 21.93,064.

0

South West 2.1 26.7 0.4 19.01,099.

3

West Midlands 2.3 31.4 6.9 21.52,043.

4

Yorkshire and Humberside 2.4 23.6 2.3 25.62,546.

3

East Midlands 2.4 24.3 8.5 27.03,358.

8

East 2.7 28.5 1.7 33.04,080.

0

London 3.0 29.1 9.6 41.52,666.

5

All Regions 2.3 28.8 3.5 24.32,432.

5


North East 2.3 33.0 3.3 20.63,686.

5

North West 2.2 32.8 2.6 18.51,399.

2

South East 2.2 27.8 2.7 23.14,434.

8

South West 2.4 36.1 0.8 15.54,062.

2

West Midlands 2.7 21.3 4.7 35.98,239.

9


9

East Midlands 2.5 30.0 3.3 24.92,966.

6

East 2.2 23.9 0.5 111.52,849.

7

London 2.0 24.7 20.5 15.31,375.

4

All Regions 2.3 28.8 4.8 28.63,604.

4

Non-assisted firms

North East 2.1 28.9 1.0 15.2 876.3

North West 1.8 28.4 3.0 15.41,977.

5

South East 2.0 30.9 1.5 15.23,003.

7

South West 2.2 26.5 0.0 21.25,824.

2

West Midlands 2.2 25.6 4.2 16.44,244.

2


4

East Midlands 2.2 28.1 4.4 13.34,720.

8

East 2.1 23.6 2.8 21.23,984.

6

London 2.3 26.3 15.2 38.41,648.

0

All Regions 2.1 27.2 3.3 18.73,000.

4





Table 7.9 Test Statistics for Regional Variation in Firm CharacteristicsANOVA F-Tests for Between Region Variation By Firm Type

directors

and

partners

(No)

gender

diversity

- %

female

ethnic

diversity

- %

ethnic

Employees

2005

Sales

2005

Intensively assisted firms 1.50 0.95 4.96 1.35 0.95Other assisted firms 0.77 2.01 8.33 0.85 0.33

Non-Assisted Firms 0.85 0.86 7.23 1.16 0.60

ANOVA F-Tests for Within Region Variation Between Intensive, Other, and Non-Assisted Firms

directors

and

partners

(No)

gender

diversity

- %

female

ethnic

diversity

- %

ethnic

Employees

2005

Sales

2005

North East 0.48 0.55 0.94 0.51 1.76

North West 2.95 0.64 1.04 0.36 0.46

South East 0.25 0.47 0.47 0.46 0.13

South West 0.98 2.70 0.77 0.68 1.01

West Midlands 1.74 2.48 0.52 1.92 1.97


East Midlands 0.52 0.66 1.61 3.23 0.08

East 2.06 0.74 0.97 0.59 0.11

London 1.69 0.43 1.94 0.88 1.93

All Regions 3.77 0.78 1.98 0.67 0.77

ANOVA F-Tests for Within Region Variation Between Intensive and Other Assisted Firms

directors

and

partners

(No)

gender

diversity

- %

female

ethnic

diversity

- %

ethnic

Employees

2005

Sales

2005

North East 0.12 0.71 0.44 0.08 1.01

North West 0.49 0.00 1.62 0.03 0.06South East 0.07 0.58 0.15 0.02 0.15

South West 1.98 4.06 0.32 0.73 2.77

West Midlands 1.50 5.01 0.58 1.59 4.48


East Midlands 0.03 1.27 2.64 0.09 0.02

East 1.50 1.00 0.96 0.49 0.15

London 2.46 0.88 3.62 2.32 2.88

All Regions 0.09 0.00 2.15 0.18 1.59


7.3 A Rural Perspective





In order to help develop an understanding of the operation of the Business Link network in rural areas DEFRA boosted the size of the national survey to facilitate a moremeaningful analysis. Although it has not been possible to develop a rural dimension tothe overall aggregate assessment of the value-added of Business Link we are able in this

section to set out some of the headline indicators of differential performance of theassisted groups by type of rural area and to provide some assessment of the satisfactionwith and additionality of Business Link assistance.

As indicated in the introduction we develop a rural perspective to the analysis byadopting the following DEFRA classification: urban, rural (less sparse) and rural(sparse)27. Table 7.10 shows how the sample breaks down by assisted status and degreeof rurality. Overall, just over a third of the sample is located in rural areas in Englandand these 1,233 businesses are split almost equally between sparse and less sparse ruralareas: 541 and 692 business respectively.

Table 7.10: Assisted Status by Urban/Rural ClassificationIntensively

-assisted firms

No. (%)


No. (%)

Non-assisted firms

No. (%)

All

Firms

No. (%)

Urban 709 (63.2) 714 (63.1) 734 (64.6) 2157 (63.6)

Rural (less sparse) 252 (22.5) 223 (19.7) 217 (19.1) 692 (20.4)

Rural (sparse) 161 (14.3) 194 (17.2) 186 (16.4) 541 (16.0)

Total 1122 (100.0) 1131 (100.0) 1137 (100.0) 33901 (100.0)

Source: BL Telephone Survey (2005)1 It has not been possible to allocate 58 respondents to this classification due to problems with postcodes.

7.3.1 Firm Size and Performance

There area clear size differences in the sample between urban and rural areas and also between less and more sparse rural areas – and indeed across the three assisted groups of firms (Table 7.11). Average employment for all respondents in urban areas was 28 persons which was higher than in the two rural categories (less sparse and sparse) weremean employment was 18 and 10 respectively.28 Median employment is also higher inurban areas compared to rural areas and the differences between the less sparse and moresparse rural areas are confirmed. Median employment in intensively-assisted firms islarger than in the other two groups of firms but the differences are less marked in the tworural areas.

Sales data suggests a similar picture with average sales among sample firms in urbanareas in the financial year 2004-5 being £3.49m compared to £2.57m and £674.5k in thetwo rural areas respectively. Median sales figures for these three groups of firms confirmthis pattern. Intensively-assisted firms in urban areas have a median sales figure in 2004-

27 The recent evaluation report on “Improving Access to Business Advice in Rural Areas” (SBRC, 2005)focused on ‘lagging rural areas’ in terms of economic performance and it may be possible to undertakefurther analysis of this survey dataset for DEFRA using that typology.28 The comparable data for the sample as a whole is presented in Chapter 3 (Table 3.6).





05 of £700,000 compared to between £500,000 and £260,000 for the two rural areasrespectively. Although there is very little difference between intensively-assisted firms inurban and less sparse rural areas those in more sparse rural areas are markedly smaller.

Table 7.11: Urban-Rural Firm Size Contrasts

Intensively

-assisted firms

Other-

assisted

firms

Non-assisted

firms

All

Firms

A. Urban

Employmen

t 2005

Mean 27.7 37.9 19.7 28.4

Median 12.0 8.0 6.0 8.0

Valid N 697 694 700 2091

Turnover

2005 (£000s)

Mean 2,728.8 4,412.9 3,839.7 3,491.5

Median 699.5 540.0 500.0 600.0

Valid N 408 222 305 935

Sales peremployee

Mean 108,251.5 112,755.6 138,915.3 119,270.5

Median 57,142.9 52,283.3 63,189.2 59,894.0Valid N 406 216 299 921

B. Rural

(less sparse)

Employmen

t 2005

Mean 22.6 17.2 15.4 18.6

Median 7.0 6.0 5.0 6.0

Valid N 245 213 205 664

Turnover

2005 (£000s)

Mean 2,327.5 4,050.6 1,965.4 2,566.7

Median 500.0 395.0 300.0 418.2

Valid N 126 59 94 279

Sales peremployee

Mean 126,378.7 92,672.9 96,264.3 109,240.5

Median 53,495.0 57,937.2 56,916.5 56,250.0Valid N 122 56 90 268

C. Rural

(sparse)

Employmen

t 2005

Mean 12.4 10.2 7.6 10.0

Median 4.1 5.0 3.0 4.0

Valid N 158 186 178 522

Turnover

2005 (£000s)

Mean 816.4 719.6 509.9 674.5

Median 260.0 118.0 150.0 150.7

Valid N 61 62 70 192

Sales peremployee

Mean 62,574.6 61,565.9 85,418.4 70,474.2

Median 40,000.0 33,474.7 43,750.0 39,489.4

Valid N 60 59 66 185


Note: These figures differ slightly from those presented in Table 3.6 due to the 58 respondents that were

not allocated to one of the urban/rural categories.

Some interesting contrasts emerge, however, between the performance of firms in urbanand the two rural locations (Table 7.12). Patterns of mean employment change are very





distinct for urban and rural firms among the intensively-assisted firms, other-assistedfirms and non-assisted firms. For example:

• Overall, all firms in less sparse rural areas have grown marginally faster than for the sample as a whole (see Table 3.7) and for firms located in urban areas more

sparse rural areas.

• Intensively-assisted firms in less sparse rural areas grew more rapidly than inurban areas and more sparse rural areas, although in the more sparse rural areasintensively-assisted firms grew marginally faster than their counterparts in urbanareas.

• Both groups of other-assisted firms and non-assisted firms in urban areas grewmarginally faster than in the two rural areas but the differences were small.

Turnover growth rates portray a great deal of variation between urban and rural areas and

across the assisted groups:

• Mean turnover growth rates of firms in less sparse rural areas was significantlylower than in urban areas and, although the performance of firms in the moresparse rural areas was almost identical to that in urban areas, it is clear that this isa function of one or two high growth outliers in the other-assisted category of firms.

• Using median turnover growth rates the pattern is one of slightly higher growth inless sparse rural areas compared to urban areas with the more sparse rural areasexhibiting the lowest growth rates.

• With respect to assisted status, and focusing on median turnover growth in order to remove the effect of some extreme outliers in the dataset, the intensively-assisted firms in the less sparse rural areas grew at slightly slower rates than their counterparts in urban areas (8.2% compared to 9.9%) but at almost twice the rateas those intensively-assisted firms in the more sparse rural areas.

• The performance of the other-assisted group of firms was broadly similar acrossthe three geographical areas, while the non-assisted group performed considerably better in the less sparse rural areas compared to urban areas and the more sparserural areas.

Table 7.12: Urban-Rural Performance ContrastsIntensively Other- Non-assisted All





-assisted firms

assisted

firms firms Firms

A. Urban

Employmen

t Growth

Mean 14.5 11.0 5.2 10.2

Median 0.0 0.0 0.0 0.0

Valid N 688 690 694 2072

Turnover

Growth

Mean 27.7 52.6 12.0 28.5

Median 9.9 11.1 0.01 7.0

Valid N 333 177 241 751

Sales per

employee

Mean 108,251.5 112,755.6 138,915.3 119,270.5

Median 57,142.8 52,283.2 63,189.2 59,894.0

Valid N 406 216 299 921

B. Rural

(less sparse)

Employmen

t Growth

Mean 23.6 7.9 3.4 12.3

Median 0.0 0.0 0.0 0.0

Valid N 243 212 203 658

Turnover

Growth

Mean 16.5 25.2 11.6 16.5

Median 8.2 12.7 7.1 8.4

Valid N 104 45 82 231

Sales per

employee

Mean 126,378.6 92,672.9 96,264.3 109,240.5

Median 53,495.0 57,937.2 56,916.5 56,250.0

Valid N 122 56 90 268

C. Rural

(sparse)

Employmen

t Growth

Mean 16.0 8.1 4.5 9.2

Median 0.0 0.0 0.0 0.0

Valid N 155 186 177 518

Turnover

Growth

Mean 10.2 70.8 7.6 29.6Median 4.2 11.1 0.0 5.2

Valid N 54 54 53 161

Sales per

employee

Mean 62,574.6 61,565.9 85,418.4 70,474.2

Median 40,000.0 33,474.7 43,750.0 39,489.4

Valid N 60 59 66 185


Finally, with respect to sales per employee there were again marked differences betweenthe three assisted groups and across urban and rural areas:

• Sales per employee was higher in urban areas and in the less sparse rural areascompared to the more remote rural areas. This was particularly the case for other-assisted and non-assisted firms.

• Intensively-assisted firms in less sparse rural areas had a sales per employee of twice that observed in the more sparse rural areas and higher than in urban areas,although the median value was lower in the case of the latter comparison.





All these performance differences would suggest further examination in terms a moreformal assessment of the impact of the nature and scale of Business Link assistance. Inorder to shed some light upon these differences we present data in the next section on thedegree of satisfaction and perceived impact of Business Link assistance disaggregated by

this urban rural classification.

7.3.2 Perceived Impact of Business Link by Rural Area

We focus in this section on overall levels of satisfaction with the Business Link assistance received by firms in rural areas compared to urban areas and also present dataon the perceived impact of that assistance using the self-assessment additionalityquestion. The main motivation for getting in touch with Business Link follows broadlysimilar patterns for both assisted groups of firms across the three urban and rural areasexcept in one important respect. Around one-quarter of both intensively-assisted and

other-assisted firms in more sparse rural areas reported that they approached BusinessLink to obtain funding which compares to an average of 15 per cent in urban and lesssparse rural areas.

In terms of the frequency of contact with Business Link in the last two years (i.e., 2003-2005) there is very little difference in the pattern for either intensively-assisted or other-assisted firms in urban or the less sparse rural areas: between a fifth and a quarter of firmsreport contact every month or better. However, for assisted firms in the more sparse ruralareas this proportion falls to just over 10 per cent, with a significant increase in thosereporting ‘less often than once a year’.

Location made no difference to the types of advice provided to assisted firms. Factualadvice and basic advice were received by similar proportions of intensively-assisted firmsand other-assisted firms (see Chapter 3, Table 3.2), while in-depth assistance and ‘long-term or intensive-assistance’ was received by significantly more firms in the intensively-assisted group (25-28 per cent) than by other-assisted firms (14-21 per cent).

We have already established in Chapter 3 that intensively-assisted firms consistentlyreceived more different types of support than other-assisted firms in the group of respondents (see Table 3.3). Table 7.13 concentrates on the intensively-assisted firmsonly it is clear that overall, there is a slightly different and significant pattern of BLassistance received by these firms in sparse rural locations compared to similar firms in

urban and less sparse rural locations. In particular, we can see that intensively-assistedfirms were slightly more likely to have received assistance on regulation and complianceissues (χ 2 (2)=5.74, ρ<0.057) with obtaining funding (χ 2(2)=7.87, ρ<0.020) and e-commerce (n.s.) and less likely to have received benchmarking and diagnosis (n.s.), helpwith finding external consultants (χ 2(2)=7.48, ρ<0.024), advice on cost reductions or quality improvements (χ 2(2)=4.83, ρ<0.089), help with marketing (χ 2(2)=5.17, ρ<0.075)and advice on training (χ 2(2)=12.87, ρ<0.002).





Table 7.13: Proportions of Intensively-Assisted Firms receiving Different Types of

BL Services by Rural Area

All Urban

Rural

(less

sparse)

Rural

(sparse)% % % %

General business information 57.3 58.3 55.0 55.6

Business benchmarking or diagnosis 13.6 14.2 14.3 9.6

Business planning, action plan development 39.7 38.4 40.6 40.9

Information on regulation and compliance 34.9 36.9 34.5 26.9

Help with finding external consultants 22.9 24.9 22.7 14.7

Help with raising finance 35.5 36.9 28.1 39.9

Help with making cost/quality improvements 15.4 15.5 18.1 10.1

Help with marketing 35.4 37.4 34.8 27.8

Help with R&D or New Product Development 12.3 12.6 11.3 10.1

Help with exporting 13.5 13.5 14.5 11.9

Help with training 41.0 44.7 37.6 30.2Help with e-commerce 16.2 14.7 17.7 20.3

Help with IT issues 21.0 19.8 22.5 22.0

Anything else 7.0 6.0 9.2 8.9


With regards to overall satisfaction with the BL service, which as we have already seenare high from this cohort of firms, there was very little difference between the urban andrural areas (Figure 7.1). There were marginally higher levels of satisfaction in less sparserural areas, especially among the intensively-assisted group of firms who also record the

highest mean score in these rural locations (4.1 – maximum 5).

Figure 7.1: Satisfaction with BL Service by Assisted Group and Rural Area (%

Very satisfied and Satisfied)





70

80

90

% V

e r y

S a t i s f i e d o r S a

t i s f i e d

Firms were asked about the time horizon over which they expected their performance toreflect the benefits from BL assistance received during the previous two years (Table7.14). We have already seen in Chapter 4 that these profiles differed significantly between intensively-assisted firms and other-assisted firms (see Table 4.8). Around half of firms, a slightly larger proportion of other-assisted firms, reported already havingexperienced all of the benefits; the remainder expected the benefits to accrue over future

years. There are no significant differences in this pattern once we disaggregate theresponses from the two assisted groups by the urban/rural status. The only smalldifference to note is that both groups of assisted firms in more sparse rural areas are morelikely to have realised the benefits of BL assistance within the next 5 years than beyondthis time horizon.

Table 7.14: Time Horizons for Experiencing the Benefits of BL Assistance by Rural Area

Intensively-

assisted firms

Other-

assisted firms

All

Firms





U r b a n

R u r a l ( l e s s

s p a r s e )

R u r a l ( s p a r s e )

U r b a n

R u r a l ( l e s s

s p a r s e )


U r b a n

R u r a l ( l e s s

s p a r s e )


% % % % % % % % %

You have already realised all the benefits47.5 49.6 47.1 52.4 50.7 50.0 49.9 50.1 48.7

You expect to realise all the benefits in the nextyear 13.5 12.7 14.0 12.6 17.8 15.8 13.1 15.1 15.0

You expect to realise them in the next 2 years 14.1 11.5 11.5 7.6 4.7 9.5 10.9 8.3 10.4

In the next 3 years 2.8 3.3 3.8 2.1 2.8 1.1 2.4 3.1 2.3

In the next 4 years 0.7 0.8 2.5 0.6 0.5 0.5 0.7 0.7 1.4

In the next 5 years 1.2 2.1 1.9 1.6 0.5 0.0 1.4 1.3 0.9

Or it will take more than 5 years to fully realise allthe benefits of BL support

7.5 7.4 5.7 3.1 3.3 0.5 5.3 5.5 2.9

(No benefits experienced from Business Link

support) 12.8 12.7 13.4 20.0 19.7 22.6 16.4 16.0 18.4 Source: BL Telephone Survey (2005)

An additional approach to assessing the perceived impact of BL assistance is the standardadditionality approach, designed to investigate whether additionality was ‘full’, or ‘partial’ (Table 7.15). Overall, responses were significantly different between intensively-assisted firms and other-assisted firms although the pattern of responses did not varysignificantly across the urban and rural areas. The following points summarise the mainurban-rural dimension of the responses:

• Firms in urban and rural areas were just as likely to report that the same businessachievements would have been made without BL assistance – i.e. totaldeadweight was between 22 per cent and 34 per cent in rural areas.29

• Intensively-assisted firms were less likely than other-assisted firms to report ‘totaldeadweight’ – although there is some evidence that assisted firms (i.e. bothgroups) in sparse rural areas were less likely to do so. For these firms the impactof BL assistance was to bring forward the business outcomes.

Table 7.15: Additionality of BL Assistance by Rural Area

Additionality Question Response Intensively-

assisted firms

Other-

assisted firms

All

Firms

29 This is consistent with the recent evaluation of the DEFREA/BLO pilot initiatives in lagging rural areas(SBRC, 2005).





U r b a n

R u r a l ( l e s s

s p a r s e )


U r b a n

R u r a l ( l e s s

s p a r s e )


U r b a n

R u r a l ( l e s s

s p a r s e )


% % % % % % % % %

Deadweight We would have achieved similar business outcomes anyway 23.2 25.0 21.7 36.6 34.1 34.4 29.9 29.3 28.7

Partial

Additionality

We would have achieved similar business outcomes, but not as quickly 24.7 24.2 28.6 19.4 18.4 23.6 22.1 21.5 25.8

We would have achieved some butnot all of the business outcomes 28.0 24.2 28.0 16.1 18.8 20.0 22.0 21.7 23.6

Full

Additionality

We probably would not haveachieved similar business outcome 9.5 9.5 8.7 5.0 5.4 6.7 7.2 7.6 7.6

We definitely would not haveachieved similar business outcomes 2.4 3.6 1.9 2.9 1.3 1.5 2.7 2.5 1.7

No Response (None of these)12.3 13.5 11.2 19.9 22.0 13.8 16.1 17.5 12.6


7.4 Summary

Regional Baselines

In this chapter we have examined differences between the structural characteristics of intensively-assisted firms and other-assisted firms in each GOR. Detailed baseline resultsfor each region are provided in the tables but it is useful to consider some generalsummary points. First, in terms of firm age we find significant regional variation which isnot attributable to the underlying regional age profile of firms. The implication is thatBLOs in different GORs are targeting assistance at significantly different age cohorts of firms. Second, an essentially similar result arises in terms of the legal status of assistedfirms. Again, the suggestion is that BLOs in different GORs are targeting assistance atgroups of firms with different ownership profiles. Third, there is a marked difference between the sectoral composition of assisted firms and the general population of firms in

most regions. This suggests that in general terms there is effectively some sectoraltargeting of assistance by BLOs.

Fourth, ethnic diversity within the leadership teams of assisted firms also differs betweenregions. However, this is likely to reflect underlying differences in the distribution of ethnic minority populations within the UK. More surprising perhaps is that there is alsosignificant variation in levels of gender diversity between the leadership teams of assistedfirms, although the pattern varies between regions. While this does suggest that BLOs in





some regions are more likely to be assisted female-led businesses it is not clear whether this is due to either targeting or differences in the underlying business population. InSouthern regions, for example, where the opportunities for service sector activity aregreater, female-led businesses may account for a larger proportion of all potential clientfirms. Finally, it is worth noting that there are also robust differences between regions in

the size distribution of assisted firms. In London and the West Midlands intensivelyassisted firms are, on average, larger than other-assisted firms, the opposite relationship isevident in the South West.

The differences identified between regions in the characteristics of assisted firms providesome support for the importance of the analysis in this chapter, and the development of differentiated baseline statistics for each region. They also emphasise, however, thatsignificant regional differences did exist during the reference period in the supportstrategies being adopted by BLOs. As Chapter 5 suggests some of these alternativemodels of delivery are were being more effective than others in terms of their impact on business performance, something that may be important in determining future regional

support strategies.

Rural Perspective

With respect to an urban – rural perspective on the operation of the business link localservice we can conclude that there are differences in the headline performance data for intensively-assisted areas and that those located in less sparse rural areas perform better than in the more remote rural areas and urban areas.

We have also seen that the ‘package’ of assistance received by intensively-assisted firmsin the more remote rural areas differs significantly in a number of ways to similar firms in

other locations. Satisfaction levels with the assistance received similar across the threelocations with marginally higher levels reported in rural areas.

The assessment of the perceived impact of Business Link assistance revealed that therewas very little difference in the time horizon over which benefits were anticipated to berealised and that the proportion of firms reporting that they would have achieved similar business outcomes without BL assistance was similar in urban and the two rurallocations. In general, this provides some evidence that the BL ‘brand’ is having broadlysimilar effects in both urban and rural areas across England.





8. Conclusions and Discussion

8.1 Introduction

We set out below the main findings and conclusions from this economic impact study of the Business Link Local Service interventions in the period April to September 2003.The results are based on a large-scale telephone survey of intensively-assisted, other-assisted and non-assisted businesses which was undertaken in the May to July 2005. Animportant aspect is to compare the findings of the current evaluation with earlier evaluations of the Business Link network which include Value for Money and economicimpact indicators.

8.2 Value for Money

We estimated in Chapter 4 the Value for Money of Business Link assistance using dataon interventions during the 6 month period April to September 2003 period and its impactover the subsequent business year. We differentiate in the analysis between the impact onintensively-assisted firms and other-assisted firms, something which proves important inour econometric modelling of the impact of Business Link assistance on individual firms.

In particular, our modelling – based on a two-stage Heckman approach which allows for selectivity – suggests that while Business Link assistance has a range of positive impactson sales growth and productivity (sales per employee) these effects are generallystatistically insignificant. More robust is the effect of intensive Business Link assistanceon employment growth, which is statistically significant and positive. This effect provides the basis for our subsequent value for money calculations.

Our central (i.e., mid-point) estimates are that this Business Link assistance nationallyincreased employment by between 25,912 and 31,891 which generated £699-£753m of

additional value added on an annualised basis (see Table 4.10). Two factors have to be borne in mind in considering these estimates, however. First, they are subject to relativelywide confidence intervals, reflecting the coefficient standard errors in the equations.Second, these figures probably under-estimate the overall impact of BL due to:







• The exclusion of any positive multiplier effects which may stem from theadditional demand generated by more rapidly growing employment.

Value for money reflects both value added generated net the cost of operating theBusiness Link network. We estimate the overall cost of operating the network for six

months at around £150m based on the income of BLOs from different sources.Comparing this cost to the mid-point of our two value added estimates suggests that over a six-month period additional value-added is £362.5m, and so every £1 spent by the public authorities through the BLO network (including EU, SRB etc) would generate£2.26 of value. In our opinion this represents good value for money.

Overall, the extent of any displacement from BL assistance is unlikely to be significanteither at local or national level. The small firm context is one where there is a great dealof churn. Business Link advisory services are inevitably involved in that churn. Nonetheless, Business Link firms are younger than average and more likely to be limitedcompanies; the firms that Business link help are less likely to be competing solely with

other local firms; the nature of competition is non-price; and the firms are too small tomake any impact on local labour markets.

8.3 Comparison with Previous Studies

We highlight two previous evaluations for comparative purposes. First, a national“Value for Money” evaluation of Business Links carried out by PACEC (1998)represented a significant contribution to our understanding of the effects of BLs on small businesses. This study sought to provide both a qualitative and quantitative assessment of the effects of Business Link assistance on the performance of users and non-users of BLservices for the period 1994-97. Second, the Business Link Tracker Study (Roper et al.,

2001; Roper and Hart, 2005) which used a treatment model correcting for potentialselection bias to evaluate the performance effect of Business Links assistance on smallfirms in England. More specifically, the study considered the growth and productivityeffects over the 1996 to 2000 period of assistance provided in 1996 to 1998.

8.3.1 PACEC (1998)

PACEC concluded that using Business Links had a positive performance effect, withregression analysis showing that use of Business Links was a significant variable inexplaining growth in assisted firms' turnover and employment. It is important to notethat, unlike this study and the Business Link Tracker Study (section 8.3.2) the PACEC

study alluded to, but did not apply, the econometric approach controlling for sampleselection identified as best practice by Storey (2000)30. Instead, PACEC highlighted thespecific data requirements of this approach, most notably the requirement to identifyvariables influencing the probability of assistance but not business performance.

30 This has obvious implications for the comparison of any of the economic impact indicators and VfMestimates.





The PACEC analysis implied that Business Link use per se had added nearly £55,000 tothe turnover, and 1.63 workers to the employment, of the average firm. From thequalitative analysis the results indicated that business growth can be attributed directly toBusiness Links. During the three year period covered by the research, the average firmincreased its employment by 0.4 jobs, its turnover by £76,000, its profits by £9,000, its

net assets by £13,000 and its exports by £6,000 because it had received Business Link support.

The key Value for Money indicators for Business Links in the three year period 1994-97were as follows:

• 8,000 jobs;

• nearly £1 billion extra business turnover;

• more than £300 million extra profits;

• £145 million worth of extra net assets

• nearly £400 million of extra exports

8.3.2 Business Link Tracker Study (2001)

Econometric Results

The econometric analysis of the effect of Business Links assistance to firms over the period 1996-98 suggests two main substantive results (Roper et al., 2001; Roper andHart, 2005). First, there was little evidence that Business Link assistance was beingtargeted effectively at firms with a track record of rapid prior growth. Secondly, therewas little evidence that after allowing for selection bias Business Link assistance over the

period 1996-98 had any significant effect on firms’ sales, employment or productivitygrowth performance over the period 1996-2000. Making no allowance for selection bias,does however, suggest a positive employment growth effect from Business Link assistance over the period 1996-2000. This effect is biased upwards, however, by theselection process, emphasising the importance of allowing for possible selection bias inthis type of policy evaluation (Storey, 2000).

Additionality

A further approach to assessing the perceived impact of Business Link assistance is thestandard additionality approach, designed to investigate whether additionality was ‘full’,

or ‘partial’. Responses from the current study were significantly different betweenintensively-assisted firms and other-assisted firms.

• 23 per cent of intensively-assisted firms and 36 per cent of other-assisted firmsreported that the same business achievements would have been made withoutBusiness Link assistance – i.e. total deadweight.





• 25 per cent of intensively-assisted firms and 20 per cent of other-assisted firmssaid outcomes would have been the same without assistance but Business Link assistance helped to accelerate business development.

• Remaining firms (40 per cent of intensively-assisted firms and 25 per cent of

other-assisted firms) reported business outcomes which, without Business Link assistance, they would not have achieved.

The Business Link Tracker Study did not ask the same question in 2001 but rather focused specifically on how the business would have performed in the absence of assistance from Business Links:

“Now, thinking specifically about the performance of your business over the

period 1996-2000 can you indicate how the support from Business Linksimpacted upon that performance? In the absence of assistance would your

business have?”

Overall, one-quarter of the assisted firms reported additionality with respect to BusinessLink support while two-thirds reported deadweight in that they would have grown at thesame rate over the period 1996-2000. The rest (one in twelve) did not know. This crudedeadweight ratio compares to the average of 64 per cent obtained over five performancemeasures in the PACEC study for the 1994-97 period.





8.4 Business Link Delivery Models

Four models which may broadly reflect the range of ways in which BLOs operate weredeveloped as part of this economic evaluation study. The four models are referred to as:


• Some BLOs suggest that they were ‘lean and mean’ with lowlevels of ‘touch with their clients and not too much follow-up.• Philosophy is ‘Lets solve the business problem there and then’• The payoff is in the high penetration rate• ‘Light touch’ BLOs are likely to be in areas that receive little non-core funding such as EU supported funds.


• The dominant model. Many BLOs believe that to retain customersthey needed to manage the relationships between client, BL andconsultant.• The account manager who oversees the process with a projectmanagement role throughout the assistance and follow-up• - almost all now have contracts between the consultant and client -an exception is Northumberland’s three way contract betweenconsultant, client and BLO.


• ‘Trigger points’ to identify firms that may be ‘amenable’ tointensive assistance. They are very keen to get a high proportion of firms through to the end of the funnel• Not too many in; not many fall out• Generally have a close relationship with the LSC







Using these four models, and allocating each of the 43 BLOs to one of the four models,we are able to make the following conclusions about service delivery and impact.

Service Profile

For intensively-assisted firms, significant differences were evident between the profilesof BLO assistance relating to business planning and action plan development, raisingfinance, help with e-commerce and help with IT issues. The key differences between thefour models of BL assistance/BLOs were:

• Managed brokerage BLOs were most likely to be providing intensively-assistedfirms 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 PipelineForcing managed pipeline forcing brokerage were most likely to be providingassistance with e-commerce and IT.

More significant difference were evident in the service profiles being provided to other-

assisted firms, with managed brokerages generally providing a higher proportion of clientfirms with each service than other types of BLO. Key points were:

• Managed brokerages were providing 42.3 per cent of their clients with help for raising finance compared to only 19.7 per cent of the clients of light touch

brokerages;

• Managed brokerages were also providing more of their clients help withexporting, e-commerce and IT than other types of BLOs;

• BLOs operating as managed pipeline forcing brokerage were most likely to beoffering their clients help with training.

Impact of the Delivery Model

We consider two indicators of impact – the impact perceived by firms and theeconometrically modelled impact of BLO assistance on business growth.

Reflecting the pattern of service provision for intensively-assisted firms, two significantdifferences were evident between the proportions of Business Link clients in eachcategory in the Mole typology reporting that Business Link services has been animportant catalyst for change within their business.





Intensively-assisted firms were significantly more likely to cite Managed BrokerageBLOs as having been an important source of change in financial sourcing than other types of BLO, and were more likely to cite managed pipeline forcing brokerage BLOs ashaving had an important impact on training than other types of BLO. Only in terms of innovation capability were there significant differences in the proportion of intensively-

assisted firms citing BLOs as the crucial factor in change in the firm. Here, light touch brokerages were said to have most commonly been the crucial factor.

For other-assisted firms, significant differences between the proportions of firmsreporting BLO assistance as important were evident only for financial sourcing andinnovation capability. In both cases other-assisted firms were most likely to cite ManagedBrokerage BLOs as being an important factor in stimulating change.

The econometric estimates of the growth impact of the different types of BLO in theMole typology reveal that:

• as in the aggregate results, we find no significant effect of Business Link assistance on other-assisted firms for sales or employment growth. Significant positive and negative productivity growth effects are evident with the (positive)effect of light-touch brokerage of more absolute importance given the relativelysmall number of BLOs (and firms) in the managed pipeline forcing brokeragecategory.

• no significant productivity effects were evident on intensively-assisted firms fromany type of BLO, although the small group of managed pipeline forcing brokerage BLOs were having a positive sales growth effect. More notable perhapsare the

• employment growth effects where the managed brokerage and light-touch groupsof BLOs both had strongly positive and significant effects. Notably BLOs in themanaged brokerage group had an employment impact (6.9 percentage points)almost three times that of those in the light-touch brokerage group.

8.5 Sub-National Issues

Regional Baselines

We have examined differences between the structural characteristics of intensively-assisted firms and other-assisted firms in each Government Office Region (GOR)(Chapter 7). In light of the new administrative arrangements for the Business Link network since April 2005 the following points are of particular interest:

• First, in terms of firm vintage we find significant regional variation which is notattributable to the underlying regional age profile of firms. The implication is that





BLOs in different GORs are targeting assistance at significantly different agecohorts of firms.

• Second, an essentially similar result arises in terms of the legal status of assistedfirms. Again, the suggestion is that BLOs in different GORs are targeting

assistance at groups of firms with different ownership profiles.

• Third, there is a marked difference between the sectoral composition of assistedfirms and the general population of firms in most regions. This suggests that ingeneral terms there is effectively some sectoral targeting of assistance by BLOs.

• Fourth, ethnic diversity within the leadership teams of assisted firms also differs between regions. However, this is likely to reflect underlying differences in thedistribution of ethnic minority populations within the UK. More surprising perhaps is that there is also significant variation in levels of gender diversity between the leadership teams of assisted firms, although the pattern varies

between regions. While this does suggest that BLOs in some regions are morelikely to be assisted female-led businesses it is not clear whether this is due toeither targeting or differences in the underlying business population. In Southernregions, for example, where the opportunities for service sector activity aregreater, female-led businesses may account for a larger proportion of all potentialclient firms.

• Finally, it is worth noting that there are also robust differences between regions inthe size distribution of assisted firms. In London and the West Midlandsintensively assisted firms are, on average, larger than other-assisted firms, theopposite relationship is evident in the South West.

The differences identified between regions in the characteristics of assisted firms providesome support for the development of differentiated baseline statistics for each region.They also emphasise, however, that significant regional differences did exist during thereference period in the support strategies being adopted by BLOs. As Chapter 5 suggestssome of these alternative models of delivery are were being more effective than others interms of their impact on business performance, something that may be important indetermining future regional support strategies.

Rural Perspective

With respect to an urban – rural perspective on the operation of the business link localservice we can conclude that there are differences in the headline performance data for intensively-assisted areas and that those located in less sparse rural areas perform better than in the more remote rural areas and urban areas.

We have also seen that the ‘package’ of assistance received by intensively-assisted firmsin the more remote rural areas differs significantly in a number of ways to similar firms in





other locations. Satisfaction levels with the assistance received similar across the threelocations with marginally higher levels reported in rural areas.

The assessment of the perceived impact of Business Link assistance revealed that therewas very little difference in the time horizon over which benefits were anticipated to be

realised and that the proportion of firms reporting that they would have achieved similar business outcomes without BL assistance was similar in urban and the two rurallocations. In general, this provides some evidence that the BL ‘brand’ is having broadlysimilar effects in both urban and rural areas across England.

8.6 Methodological Critique

The methodological approach adopted in this study comprised three main elementsreflecting both the demand and supply sides of the market for business support as well asthe outcomes of BL support for the assisted businesses. Fieldwork included:

(d) An extensive survey of c3,500 companies covering BL intensively- and other-assisted businesses and a similarly sized control group with the survey beingspecifically designed to support an econometric approach designed to overcomeany systematic bias in the type of assisted firms.

(e) A detailed interview survey with 34 companies with a focus on those whoreceived intensive assistance. This provided more detailed information on themore organisational and strategic impact of BL support, particularly on thosefirms receiving intensive assistance.

(f) Interviews with 18 Business Link Organisations (BLOs) and the development of adetailed typology of alternative brokerage models.

This multi-dimensional approach was designed to accord with current best practicemethodology in terms of ex post evaluation combining rigorous econometric analysiswith more in-depth qualitative approaches related both to the pattern of supply and itsoutputs. The large sample size in the survey, in particular, was important in enabling us todevelop sub-sample comparisons by region and also to examine the effectiveness of alternative brokerage models. A key input to the development of the sampling frame for the survey was data on other-assisted firms and intensively-assisted firms provided atstart of project by all individual BLOs.

It is perhaps worth highlighting some of the key advantages of the approach adopted hereinvolving sample selection models:

(a) The use of an explicit two stage approach to modelling the impact of BL supportexplicitly allows us to examine the factors which affect whether individual firmsreceived support. From a policy point of view this is interesting in providinginformation about the ability of firms with different characteristics (e.g. gender,





ethnicity) to access BL services. It also provides information about theeffectiveness of any targeting.

(b) The sample selection approach allows us to identify separately the ‘selection’ and‘assistance’ effects. This avoids potential bias in the estimation of the ‘assistance’

effects and provides a direct way of assessing the ‘additional’ impact of BLassistance on firms’ growth. If there is no additionality clearly there is noadditional performance effect. Note that the survey was designed explicitly tosupport this modelling approach collecting information on factors which werelikely to determine the probability of receiving BL assistance but not firm performance. It turned out that the selection effects were not significant and themodels presented in the main report are OLS.

(c) The performance models enable us to explore the impact of many different factorson firm performance and identify their relative importance. This may guide future policy intervention.

(d) Large sample sizes allow us to split the assistance effect into its impact on sub-groups of firms, enabling us, for example, to examine the effects of alternative brokerage models etc.

Two main issues limit the ability of our study to provide a comprehensive view of thevalue for money of Business Links, however. First, as the responses from assisted firmssuggest, the impact of BL assistance on performance in around half of firms occurs morethan two years after the assistance is provided. In our study, however, in order to provideinformation at this point in time we were restricted to an 18-24 month period over whichimpact could be assessed. The implication is that our modelling work will underestimate

the true impact of BL assistance. Moreover, as any multiplier effects are likely to occur over a longer time horizon than that considered here this may also contribute to a degreeof under-estimation of the true impact of BL assistance. Addressing these issues clearlyrequire a longer-term view with the possibility that respondent firms could simply be re-surveyed at some point in the future although a better approach is probably to collectmore longitudinal information on firms’ future performance.

Second, our attempts at collecting value added data from BL clients as part of thetelephone survey proved ineffective yielding low response rates. It did prove possible,however, to obtain high response rates for turnover and employment growth in the surveyand we have therefore used these figures in the modelling work. This is clearly not ideal,

however, and in future it would be useful to consider the potential for linking one-off value for money studies such as ours to statutory survey resources such as the AnnualBusiness Inquiry which do provide value added information.





References

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http://www.dti.gov.uk/about/psa/




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Meeting Expectations?’ Durham University Business School, Durham

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http://www.sbs.gov.uk/SBS_Gov_files/researchandstats/ASBS-Report.pdf




Appendices

Appendix A: Telephone Survey Questionnaire

Appendix B: Survey Weighting Protocols

Appendix C: Face-to-Face Topic Guide

Appendix D: Additional Estimation Results Including Selection Effects

Appendix E: Excerpt from Conference Paper on the Impact on

Employment growth





Appendix A: Telephone Survey Questionnaire





BLO ECONOMIC IMPACT QUESTIONNAIRE

April 2005

OMB Research; Warwick Business School; Kingston University and AstonBusiness School for the Small Business Service

SAMPLE GROUPS:X1 = INTENSIVELY ASSISTED FIRMSX2 = OTHER ASSISTED FIRMSY = NON-ASSISTED FIRMS

IF SAMPLE GROUP X:

Ask for named respondent

Good morning/afternoon, my name is … and I’m calling on behalf of OMB

Research, an independent market research agency. We have been commissionedby the Department of Trade & Industry to conduct an evaluation of the variousservices and support provided through Business Link.

You should recently have received a letter explaining that we were conducting thisresearch

IF SAMPLE GROUP Y:

Could I speak to the owner/managing director or the person responsible for business development within your organisation?

Good morning/afternoon, my name is … and I’m calling on behalf of OMBResearch, an independent market research agency. We have been commissionedby the Department of Trade & Industry to conduct an evaluation of the

effectiveness to businesses of various activities and support they provide.ALL SAMPLE GROUPS:

This research will cover areas such as your usage of business advice and supportservices, the impact they have had on your firm and your general businessperformance, and will take around <IF X 20 minutes / IF Y 15 minutes> dependingon your answers. Is it convenient to speak to you now or would you prefer tomake an appointment for another time?

FOR ALL SAMPLE GROUPS ADD IF NECESSARY

The research is being conducted under the Code of Practiceof the Market Research Society, which means that all of the answers you

give are strictly confidential and anonymous. Participation in this survey isvoluntary.

The responses of all organisations taking part will be combined into a statistical repor

Your organisation was selected at random <IF X: from a list supplied by your localBusiness Link / IF Y: from a list of all UK businesses>





If you wish to check that OMB Research is a bona fide market researchagency, you can contact the Market Research Society on 0500 396999, or call James Murray at OMB Research on 01622 790900

IF Y: If you would like to find out more about Business Link and their services you can visit www.businesslink.gov.uk

OFFER FAX REASSURANCE IF NECESSARY


http://www.businesslink.gov.uk/






No................................................................................................2(Don’t know)................................................................................3





IF SAMPLE GROUP Y

S3a. Has your business ever used Business Link as a source of advice or assistance?

Yes..............................................................................................1No................................................................................................2

(Don’t know)................................................................................3

IF YES AT S3a (CODE 1)

S3b. When was the last time you used Business Link? Was it…? READ OUT

In the last 2 years, that is since April 2003..................................1 - CLOSEOr more than 2 years ago............................................................2(Don’t know)................................................................................3

IF NO OR DON’T KNOW AT S3a (CODES 2 OR 3)

S3c. Can I just check, had you heard of Business Link before this interview today?

Yes..............................................................................................1

No................................................................................................2(Don’t know)................................................................................3





SECTION A: BUSINESS BACKGROUND

ASK ALLNow we would just like to get some information on the background to your

business and the markets in which you operate:

A1. So firstly, how long ago was your business established? READ OUT ASNECESSARY. IF NEEDED CLARIFY THAT THIS MEANS WHEN THE BUSINESSSTARTED TRADING

Less than 2 years ago.................................................................1 - CLOSE2-3 years ago..............................................................................23-4 years ago..............................................................................34-5 years ago..............................................................................45-10 years ago............................................................................510-20 years ago..........................................................................6More than 20 years ago...............................................................7(Don’t know)................................................................................8(Refused).....................................................................................9

A2a. Record gender of respondent. DO NOT ASK – INTERVIEWER TO CODE

Male............................................................................................1Female........................................................................................2

A2b. And what is your position within the business? READ OUT AS NECESSARY.SINGLE CODE

Owner/proprietor.........................................................................1Managing Director.......................................................................2Partner........................................................................................3Director........................................................................................4Senior Manager...........................................................................5Company Secretary.....................................................................6General Manager........................................................................7Chief Executive (CEO)................................................................8Chairman.....................................................................................9Office Manager............................................................................10Other (SPECIFY).........................................................................11(Don’t know)................................................................................12(Refused).....................................................................................13

A3. Which of the following best describes the current status of your business?READ OUT. SINGLE CODE

Sole trader...................................................................................1Partnership..................................................................................2Private Limited Company (Ltd)....................................................3Public Limited Company (plc)......................................................4Limited Liability Partnership.........................................................5





Social Enterprise (AS NECESSARY: whose main purpose is to pursue social or environmental goals and any profit or surplus generated is primarily reinvested for thispurpose)......................................................................................6Other (SPECIFY).........................................................................7(Don’t know)................................................................................8(Refused).....................................................................................9





A4. And is the business…? READ OUT. SINGLE CODE

An independent single site organisation......................................1The headquarters of a multi-site organisation..............................2Or a subsidiary or associated company.......................................3(Other – SPECIFY)......................................................................4

(Don’t know)................................................................................5(Refused).....................................................................................6

TEXT IF HEADQUARTERS OR SUBSIDIARY (CODES 2-3 AT A4)From now on when I ask about your business I’d like you to answer just for thesite at which you work.

ASK ALL

A5. What is the main activity of your business…? RECORD VERBATIM. PROBEFOR INDUSTRY TYPE – IF MANUFACTURING, WHAT TYPE OF MANUFACTURING?IF FINANCIAL SERVICES, WHAT KIND? ETC. (WILL BE CODED TO 1 LEVEL SICCODE)

…………………………………………………………………………………………………………

A6a. Does your business export overseas? IF NECESSARY: By that I mean sellgoods or services to businesses or individuals based overseas.

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3(Refused).....................................................................................4

IF EXPORT AT A6a (CODE 1)

A6b. Approximately what proportion of your current sales are accounted for byexports? Would you say that it is…? READ OUT.

Up to 5%......................................................................................1Between 6 - 15%.........................................................................2Between 15 - 25%.......................................................................3Between 26 - 50%.......................................................................4Between 51 - 75%.......................................................................5Or between 76 - 100%.................................................................6(Don’t know)................................................................................7(Refused).....................................................................................8

ASK ALL

A7a. In the last 2 years, has your business introduced any new or significantlyimproved products or services? IF YES, PROBE FOR WHETHER NEW, IMPROVEDOR BOTH. SINGLE CODE.

Yes, new products or services.....................................................1Yes, improved products or services.............................................2Yes, both.....................................................................................3No................................................................................................4(Don’t know)................................................................................5





IF NEW OR BOTH AT A7a (CODES 1 OR 3)

A7b. Are these just new to your business or are they completely new, and by that Imean that to the best of your knowledge they have not been introduced by anyonebefore you? SINGLE CODE.

Just new to the business.............................................................1

Completely new...........................................................................2(Don’t know)................................................................................3

ASK ALL

A8a. And still thinking about the last 2 years, has your business introduced anynew or significantly improved processes in this time? IF YES, PROBE FORWHETHER NEW, IMPROVED OR BOTH. SINGLE CODE.

Yes, new processes....................................................................1Yes, improved processes............................................................2Yes, both.....................................................................................3No................................................................................................4(Don’t know)................................................................................5

ASK ALL

A10a. I’d now like you to think about your businesses’ competitors. First of all,how would you describe the nature of the competition in your main markets.Would you say that there is…? READ OUT. SINGLE CODE.

Very intense competition.............................................................1Intense competition.....................................................................2Moderate competition..................................................................3Weak competition........................................................................4Or no competition at all................................................................5(Don’t know)................................................................................6

ASK ALL EXCEPT THOSE WITH NO COMPETITION AT A10a (CODE 5)

A10b. If your business were to cease trading tomorrow, who do you think wouldtake up your current sales? Would it mainly be competitors based…? READ OUT.AIM FOR SINGLE CODE BUT MULTI CODE ALLOWED.

Locally, and by that I mean within 20 miles of your business.......1Elsewhere in the UK....................................................................2In other countries in the EU.........................................................3Or, in countries outside of the EU................................................4(No one would take up our sales)................................................5(Don’t know)................................................................................6





ASK ALL EXCEPT THOSE WITH NO COMPETITION AT A10a (CODE 5)

A10c. Thinking specifically about your main competitor, if they reduced their prices by 10%, to what extent do you think this would impact on your sales?Would your sales be…? READ OUT. AS NECESSARY: Please just give me your best estimate. INTERVIEWER NOTE: ASK IN TERMS OF VOLUME OF SALES

RATHER THAN PRICEThe same....................................................................................1Up to 10% lower..........................................................................210 - 20% lower............................................................................320 - 30% lower............................................................................4Or, more than 30% lower.............................................................5(Higher).......................................................................................6(Don’t know)................................................................................7(Refused).....................................................................................8

ASK ALL

A10d. Now thinking specifically about your own prices, if you were forced by cost

increases to raise your prices by 10%, to what extent do you think this wouldimpact on your sales? Would your sales be…? READ OUT. AS NECESSARY:Please just give me your best estimate.

The same....................................................................................1Up to 10% lower..........................................................................210 - 20% lower............................................................................320 - 30% lower............................................................................4Or, more than 30% lower.............................................................5(Higher).......................................................................................6(Don’t know)................................................................................7(Refused).....................................................................................8





SECTION B: STRATEGIC DIRECTION OF THE BUSINESS

ASK ALL

B1a. Thinking now about your main business objectives, which ONE of thefollowing would you say is the key focus for your business at this time? READ

OUT. SINGLE CODEMaintaining sales of your current products or services................1Increasing sales of your current products or services..................2Or, developing new products or services.....................................3(None of these)............................................................................4(Don’t know)................................................................................5

IF INCREASING SALES OF CURRENT PRODUCTS OR SERVICES (CODE 2 AT B1a)

B1b. Are you mainly looking to…? READ OUT. SINGLE CODE

Increase sales in markets in which you are already operating.....................1Or, introduce your current products or services into new markets...............2

(Both)..........................................................................................................3(None of these)............................................................................................4(Don’t know)................................................................................................5

IF DEVELOPING NEW PRODUCTS OR SERVICES (CODE 3 AT B1a)

B1c. Would these new products or services be aimed at customers based in…?READ OUT. SINGLE CODE

Markets in which you are already operating................................................1Or, new markets..........................................................................................2(Both)..........................................................................................................3(None of these)............................................................................................4(Don’t know)................................................................................................5

ASK ALL

B2. Thinking now about the way in which the business is managed, which ONE of the following best describes your key strategy for managing your staff? READOUT. SINGLE CODE. RANDOMISE.

Teamworking across staff and management....................................................................1Close supervision.............................................................................................................2The establishment of standard working procedures.........................................................3Or, careful initial staff selection, and investment in training and development .................4(None of these)................................................................................................................5(No staff)..........................................................................................................................6(Don’t know).....................................................................................................................7

B3. Does your business have a formal written business plan?

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3





IF HAVE BUSINESS PLAN (CODE 1 AT B3)

B4. How long ago was this business plan written or last revised? Was it…? READOUT. INTERVIEWER NOTE: IF PLAN HAS BEEN REVISED RECORD TIME OFMOST RECENT UPDATE

Within the last 2 years.................................................................1

2 - 5 years ago............................................................................2Or over 5 years ago.....................................................................3(Don’t know)................................................................................4

IF HAVE BUSINESS PLAN (CODE 1 AT B3)

B6. And was this business plan created primarily for external use, such as toobtain funding from a bank or for approval by an accountant?

Yes, primarily for external use.....................................................1No................................................................................................2(Don’t know)................................................................................3





SECTION C: SOURCES OF EXTERNALADVICE/ASSISTANCE INCLUDING BUSINESS LINKS

ASK ALLC1a. Over the last 2 years <IF X:, and other than the support you have receivedthrough Business Link,> have you used any external sources of information,advice or support to help you develop the business.

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3

IF USED OTHER SOURCES OF SUPPORT AT C1a (CODE 1)

C1b. Who did you get this from? PROBE AS PER PRECODES. CODE ALL THATAPPLY

Friends or relatives.............................................................................................1A customer or supplier.......................................................................................2Another business owner.....................................................................................3An accountant....................................................................................................4A bank................................................................................................................5A solicitor............................................................................................................6A management consultant..................................................................................7Another consultant.............................................................................................8A Trade Association...........................................................................................9An Employers Federation (e.g. Confederation of British Industry)......................10The Inland Revenue...........................................................................................11A regulatory body (e.g. Health & Safety Executive, Environment Agency).........12

Department of Trade & Industry.........................................................................13An Enterprise Agency.........................................................................................14The Chamber of Commerce...............................................................................15Other (SPECIFY)................................................................................................16(Don’t know/can’t remember).............................................................................17

IF USED OTHER SOURCES OF SUPPORT AT C1a (CODE 1)

C1c. Did you have to pay for any of this information, advice or support?

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3





ASK ALL Y MENTIONING AT LEAST 2 SOURCES AT C1b

C2. Thinking about these sources of advice or support, which one has been themost important for your business? CATI TO DISPLAY ALL USED AT C1b. READOUT AS NECESSARY. SINGLE CODE.

Friends or relatives.............................................................................................1

A customer or supplier.......................................................................................2Another business owner.....................................................................................3An accountant....................................................................................................4A bank................................................................................................................5A solicitor............................................................................................................6A management consultant..................................................................................7Another consultant.............................................................................................8A Trade Association...........................................................................................9An Employers Federation (e.g. Confederation of British Industry.......................10The Inland Revenue...........................................................................................11A regulatory body (e.g. Health & Safety Executive, Environment Agency).........12Department of Trade & Industry.........................................................................13

An Enterprise Agency.........................................................................................14The Chamber of Commerce...............................................................................15Other advice or support......................................................................................16(Don’t know/can’t remember).............................................................................17

ASK ALL MENTIONING AT LEAST 1 SOURCE AT C1b

C3. Still thinking about these sources of external information, advice or support,<IF X: and not including Business Link,> can you tell me which of the followingforms this assistance took? Was it…? READ OUT. RANDOMISE. CODE ALL THATAPPLY.

Factual information........................................................................................................1Basic advice..................................................................................................................2

An in-depth discussion...................................................................................................3Long-term or intensive assistance.................................................................................4Or, something else (SPECIFY)......................................................................................5(Don’t know)..................................................................................................................6

ASK C4a – g IF SAMPLE GROUP X, OR SAMPLE GROUP Y AND AWARE OFBUSINESS LINK (CODE 1 AT S3c). OTHERS SKIP TO C14a

RANDOMISE QUESTIONS C4a – f

I’d now like you to think specifically about your awareness of Business Link andany contact they have had with you. First of all…

C4a. Have you ever received any mailings or mail shots from Business Link?Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3

C4c. Have you ever visited the Business Link website?

Yes..............................................................................................1No................................................................................................2





(Don’t know)................................................................................3





C4d. Has a member of Business Link staff ever contacted you directly to tell youabout their services?

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3

C4e. Are you familiar with any other businesses that have received help or support from Business Link?

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3

C4f. Have you ever been directed or referred to Business Link by any externalorganisations or advisors?

Yes..............................................................................................1No................................................................................................2

(Don’t know)................................................................................3

IF DIRECTED TO BUSINESS LINK AT C4f (CODE 1). ASK DIRECTLY AFTER C4f

C4g. Who has directed you to Business Link? PROBE AS PER PRECODES.CODE ALL THAT APPLY

Accountant..................................................................................1Bank............................................................................................2Consultant...................................................................................3Solicitor.......................................................................................4Customer.....................................................................................5Supplier.......................................................................................6

Chamber of Commerce...............................................................7Department of Trade and Industry (DTI)......................................8Department for Educations and Skills (DfES)..............................9Enterprise Agency.......................................................................10Farm Business Advisory Service.................................................11Higher Education Institution (e.g. university)...............................12Investors in People......................................................................13Learning and Skills Council (LSC)...............................................14Regional Development Agency (RDA).........................................15Trade Association........................................................................16Training provider.........................................................................17Other (SPECIFY).........................................................................18

(Don’t know/can’t remember).......................................................19





IF SAMPLE GROUP X

C5a. Over the last 2 years, on average how often has your business been incontact with Business Link? Would you say that your business has been incontact with them…? READ OUT. SINGLE CODE. INTERVIEWER NOTE: If in doubtplease calculate the average based on number of days – e.g. if respondent saw them on

24 days over the course of a couple of months but did not see them at any other time inthe 2 years, then record as ‘every month’ (24 times in 2 years = once a month)

Every week..................................................................................1Every fortnight.............................................................................2Every month................................................................................3Every 3 months...........................................................................4Every 6 months...........................................................................5Once a year.................................................................................6Or, less often...............................................................................7(Don’t know)................................................................................8

IF SAMPLE GROUP X

C5b. And which of the following forms did the assistance you received fromBusiness Link take? Was it…? READ OUT. RANDOMISE. CODE ALL THATAPPLY.

Factual information........................................................................................................1Basic advice..................................................................................................................2An in-depth discussion...................................................................................................3Long-term or intensive assistance.................................................................................4Or, something else (SPECIFY)......................................................................................5(Don’t know)..................................................................................................................6

IF SAMPLE GROUP X

C6. Which ONE of the following would you say best describes your mainmotivation for getting in touch with Business Link? READ OUT. RANDOMISE.SINGLE CODE

Our business was in difficulty......................................................................................1Our business was not growing fast enough.................................................................2We were looking for funding........................................................................................3We just wanted to find out what Business Link could offer..........................................4We wanted some specific information.........................................................................5Someone recommended that we get in touch with them.............................................6Or, was there another reason? (SPECIFY).................................................................7(Don’t know)................................................................................................................8





IF SAMPLE GROUP X

C7. As you probably know, Business Link provides a wide range of advice andsupport. I’m going to read out a list of possible types of advice and support, andfor each one I’d like you to tell me whether or not this is something that your business has received from Business Link over the last 2 years?

READ OUT. RANDOMISE. BUT KEEP l and m TOGETHER.

Yes No(Don’tknow)

a. General business information 1 2 3

b. Business benchmarking or diagnosis, where you compare your business performance with others

1 2 3

c. Business planning, such as developing an action plan 1 2 3

d. Access to information and advice on regulation and compliance 1 2 3

e. Help with finding external consultancy services 1 2 3

f. Help with raising finance 1 2 3

g. Help with making cost reductions or quality improvements 1 2 3

h. Help with marketing 1 2 3

i. Help with research and development or new productdevelopment

1 2 3

j. Help with exporting 1 2 3

k. Help with training 1 2 3

l. Help with e-commerce, and by that I mean on-line trading 1 2 3

m. Help with IT issues 1 2 3

n. Anything else? (SPECIFY) 1 2 3

IF SAMPLE GROUP X

C8a. Was all of this advice and support provided to you by Business Link directly,or was any of it provided by external parties referred to you by Business Link?

All provided by Business Link......................................................1At least some was referred to an external party ..........................2(Don’t know)................................................................................3

IF SAMPLE GROUP X

C8b. Can I just check, did your business have to pay Business Link for any of thisadvice and support?

Yes..............................................................................................1No................................................................................................2

(Don’t know)................................................................................3

IF SAMPLE GROUP X AND REFERRED TO EXTERNAL PARTY (CODE 2 AT C8a)

C8c. And did your business have to pay any external parties that Business Linkreferred you to for any of this advice and support?

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3





IF SAMPLE GROUP X

C9a. Overall, how satisfied are you the services you have received from BusinessLink over the last 2 years? Please give me a score of 1 to 5, where 5 would meanthat you are very satisfied and 1 would mean that you are very dissatisfied?

1 – Very dissatisfied....................................................................1

2..................................................................................................23..................................................................................................34..................................................................................................45 – Very satisfied.........................................................................5(Don’t know)................................................................................6

IF RATING OF ‘1’, ‘2’ OR ‘3’ AT C9a

C9b. Why do you say that? What could they improve? PROBE FULLY. RECORDVERBATIM

................................................................................................................................................

................................................................................................................................................

IF SAMPLE GROUP X

C10. Now thinking about the overall package of support your firm has receivedfrom Business Link over the last 2 years, do you agree or disagree with thefollowing statements? READ OUT. RANDOMISE.

Agree Disagree (Neither agree nor disagree)

(Don’tknow)

a. DELETED 1 2 3 4

b. We received all the support and help thatwe needed

1 2 3 4

c. We have a trusting relationship with our

Business Link advisor 1 2 3 4d. We have a trusting relationship withBusiness Link as an organisation

1 2 3 4

e. DELETED 1 2 3 4

f. DELETED 1 2 3 4

g. We would recommend Business Link toother businesses needing help

1 2 3 4

h. DELETED 1 2 3 4

i. DELETED 1 2 3 4

j. We could have got the same quality of advice from other external sources of

business support

1 2 3 4

k. DELETED 1 2 3 4





IF SAMPLE GROUP X

C11a. I’m going to read out a list of possible ways in which the support you havereceived from Business Link over the last 2 years may have impacted on your business. For each one, I’d like you to tell me whether or not this is somethingyou have experienced AS A DIRECT RESULT of receiving Business Link’s

assistance. READ OUT. RANDOMISEDISPLAY ON EACH SCREEN a-m – AS NECESSARY: Is this something you haveexperienced AS A DIRECT RESULT of receiving Business Link’s assistance

a. The business is now more inclined to use external business support for general information and advice

b. The business is now more inclined to use specialist consultancy servicesc. The image of the business has improvedd. The business has improved its technical capacitye. The business has improved its financial management skillsf. The business is better at planningg. The business has developed a greater capacity to engage in export activityh. The business is better equipped to seek external financei. The business is better able to deal with regulation and compliance issues

j. The business has invested more resources in training staff, in terms of time and money

k. DELETEDl. The business has more capability to develop new products or servicesm. The business has improved the quality of its products or services

Yes..............................................................................................1No................................................................................................2(Don’t know)................................................................................3

ASK FOR EACH OF A-M THAT RESPONDENT AGREES THEY HAVE EXPERIENCED(CODE 1 AT C11a). ASK C11b DIRECTLY AFTER EACH STATEMENT AT C11aWHERE RESPONDENT SAYS YES

C11b. And to what extent? Please give me a score of 1 to 5, where 5 means to acritical extent and 1 means to no extent. AS NECESSARY: By this I mean to whatextent has this happened as a direct result of the support you’ve received fromBusiness Link.

1 – To no extent..........................................................................12..................................................................................................23..................................................................................................34..................................................................................................45 – To a critical extent.................................................................5

(Don’t know)................................................................................6





IF SAMPLE GROUP X

C12. Thinking about all of the benefits that your business might experience as aresult of the help and support you have received from Business Link over the last2 years, when do you expect to fully realise these benefits? Would you say that…?READ OUT. SINGLE CODE

You have already realised all the benefits...................................1You expect to realise all the benefits in the next year .................2You expect to realise them in the next 2 years............................3In the next 3 years ......................................................................4In the next 4 years ......................................................................5In the next 5 years ......................................................................6Or it will take more than 5 years to fully realise all the benefits....7(No benefits experienced from Business Link support)................8(Don’t know)................................................................................9

ASK ALLC14a. I’d now like to focus on how your business has developed over the last 2years. First of all, how many people are currently employed by your business atthe site where you work? Please give me the full time equivalent, so count parttime employees according to the proportion of time that they work.Write in number (0+):(Refused)(Don’t know) – PROMPT WITH RANGES

IF DON’T KNOW AT C14aC14b. If you had to estimate, approximately how many people are employed byyour business at this site? PROMPT WITH RANGESZero.............................................................................................11-4...............................................................................................2

5-9...............................................................................................310-19...........................................................................................420-49...........................................................................................550-99...........................................................................................6100-199.......................................................................................7200-249.......................................................................................8250-499.......................................................................................9500 or more.................................................................................10(Don’t know)................................................................................11(Refused).....................................................................................12

ASK ALL

C15a. And approximately how many people were employed at this time last year?Again, please give me the full time equivalent.Write in number (0+):(Refused)(Don’t know) – PROMPT WITH RANGES





IF DON’T KNOW AT C15aC15b. If you had to estimate, approximately how many people were employed atthis time last year? PROMPT WITH RANGESZero.............................................................................................11-4...............................................................................................25-9...............................................................................................310-19...........................................................................................420-49...........................................................................................550-99...........................................................................................6100-199.......................................................................................7200-249.......................................................................................8250-499.......................................................................................9500 or more.................................................................................10(Don’t know)................................................................................11(Refused).....................................................................................12

ASK ALLC16a. What is the current annual turnover of your business? IF NECESSARYCLARIFY THAT WE WANT THE TURNOVER IN THEIR LAST COMPLETEDFINANCIAL YEARWrite in amount (£ - ALLOW ZERO)(Refused)(Don’t know) – PROMPT WITH RANGES

IF DON’T KNOW AT C16aC16b. If you had to estimate your total turnover, into which of the following bandswould you put yourself? PROMPT WITH RANGESZero/nothing................................................................................1Up to £100,000............................................................................2£100,001 - £500,000...................................................................3£500,001 - £2million....................................................................4£2,000,001 - £10 million..............................................................5£10,000,001 - £50 million............................................................6More than £50million ..................................................................7(Don’t know)................................................................................8(Refused).....................................................................................9

IF SAMPLE GROUP XC20. Which ONE of the following statements best describes your view on thecontribution the support you have received from Business Link has made, or willmake, to your firm? READ OUT. SINGLE CODE. ENSURE ALL STATEMENTS AREREAD OUT BEFORE CODING A RESPONSE

We would have achieved similar business outcomes anyway......................... .1We would have achieved similar business outcomes, but not as quickly..........2We would have achieved some but not all of the business outcomes...............3We probably would not have achieved similar business outcomes...................4We definitely would not have achieved similar business outcomes..................5(None of these).................................................................................................6





ASK ALL X ALSO USING ALTERNATIVE SOURCES OF SUPPORT AT C1a (CODE 1)

C21. You mentioned earlier that over the last 2 years you have received supportfrom xxx <CATI TO INSERT ALL SOURCES USED AT C1b> as well as BusinessLink. Which one of these sources of advice or support, including Business Link,has been the most important for your business? CATI TO DISPLAY ALL USED AT

C1b PLUS BUSINESS LINK (BUSINESS LINK ALWAYS TO BE SHOWN AT TOP OFLIST). READ OUT AS NECESSARY. SINGLE CODE.

Business Link.....................................................................................................1Friends or relatives.............................................................................................2A customer or supplier.......................................................................................3Another business owner.....................................................................................4An accountant....................................................................................................5A bank................................................................................................................6A solicitor............................................................................................................7A management consultant..................................................................................8Another consultant.............................................................................................9A Trade Association...........................................................................................10

An Employers Federation (e.g. Confederation of British Industry.......................11The Inland Revenue...........................................................................................12A regulatory body (e.g. Health & Safety Executive, Environment Agency).........13Department of Trade & Industry.........................................................................14An Enterprise Agency.........................................................................................15The Chamber of Commerce...............................................................................16Other advice or support......................................................................................17(Don’t know/can’t remember).............................................................................18





SECTION D: PARTNERS/DIRECTORS

ASK ALL

D1. Now I’d like to ask you some questions about the owners, partners anddirectors in your business. Including yourself, how many owners, partners or

directors are there in day to day control of the business (at this site)? IFNECESSARY: Please do not include any non-executive directors. PROBE FORBEST ESTIMATE

Enter number (ALLOW FOR ZERO)(Don’t know)(Refused)

IF ANY NUMBER GIVEN AT D1 (1+)

D2. And how many of these owners, partners or directors are female? PROBE FORBEST ESTIMATE

Enter number (ALLOW FOR ZERO)

(Don’t know)(Refused)

IF ANY NUMBER GIVEN AT D1 (1+)

D3a. And how many are from ethnic minority groups? PROBE FOR BESTESTIMATE

Enter number (ALLOW FOR ZERO)(Don’t know)(Refused)

IF AT LEAST ONE ETHNIC MINORITY AT D3a

D3b. Which ethnic minority groups? PROBE AS PER PRECODES. CODE ALL THATAPPLY.

Mixed – White and Black Caribbean............................................1Mixed – White and Black African.................................................2Mixed – White and Asian.............................................................3Mixed – Other..............................................................................4Asian or Asian British - Indian......................................................5Asian or Asian British - Pakistani.................................................6Asian or Asian British - Bangladeshi............................................7Asian or Asian British - Other......................................................8Black or Black British - Caribbean...............................................9Black or Black British - African.....................................................10

Black or Black British - Other.......................................................11Chinese.......................................................................................12Any other ethnic group................................................................13(Don’t know)................................................................................14(Refused).....................................................................................15

ASK ALL

D4. In addition to the owners, partners or directors in day to day control of thebusiness, does your business have any non-executive directors?





SECTION E: MAIN PARTNER/MANAGING DIRECTOR

ASK ALL EXCEPT OWNER OR MANGING DIRECTOR AT A2b (CODES 1-2) – CODETHESE AUTOMATICALLY AS YES AT E1

E1. Are you the main partner or managing director in this business?

INTERVIEWER NOTE: IF RESPONDENT IS AN EQUAL PARTNER IN THE BUSINESSCODE ‘YES’.


TEXT IF NOT MAIN PARTNER/MD (CODE 2 AT E1)

For the following questions I’d like you to answer, to the best of your knowledge,about the main partner or managing director. If you’re not sure of the answer justlet me know and I’ll move on to the next question. INTERVIEWER NOTE: IF MORE

THAN ONE MAIN PARTNER OR MANAGING DIRECTOR ASK RESPONDENT TOANSWER ABOUT THE ONE THEY KNOW BEST

ASK ALL

E2. <IF CODE 1 AT E1: Do you / IF CODE 2-4 AT E1: Does the main partner or managing director> hold more than 20% of the equity in this firm?


E3. Is this the only business with which <IF CODE 1 AT E1: you are / IF CODE 2-4AT E1: they are> currently involved in any capacity?


E4. What is the highest level of qualification < IF CODE 1 AT E1: that you hold / IFCODE 2-4 AT E1: that they hold>? PROBE AS PER PRECODES. STOP AFTERFIRST ONE CODED. SINGLE CODE.

A degree, HND, masters degree or other higher degree......... ....1A-levels, AS-levels or OND..........................................................2

5 or more GCSEs grades A to C, 5 or more O-levels,NVQ level 2 or similar..................................................................3CSEs or less than 5 GCSEs grades A to C or NVQ level 1..... ....4Other (SPECIFY).........................................................................5None............................................................................................6(Don’t know)................................................................................7(Refused).....................................................................................8





E5. And which of the following age bands do <IF CODE 1 AT E1: you / IF CODE 2-4AT E1: they> fall into? READ OUT. SINGLE CODE.

Under 25......................................................................................125 - 34.........................................................................................235 - 44.........................................................................................3

45 - 54.........................................................................................455 - 64.........................................................................................565 and over.................................................................................6(Don’t know)................................................................................7(Refused).....................................................................................8

ASK ALL

E8. Have <IF CODE 1 AT E1: you / IF CODE 2-4 AT E1: they> been involved instarting any other businesses apart from this one?


IF STARTED OTHER BUSINESSES (CODE 1 AT E8)

E9. How many? READ OUT AS NECESSARY

Just one other company..............................................................1Two or three other companies.....................................................2More than three other companies................................................2(Don’t know)................................................................................3(Refused).....................................................................................4

E10b. <IF CODE 1 AT E1: Would you / IF CODE 2-4 AT E1: To the best of your

knowledge, would your main partner or managing director> be willing to issueequity and dilute <IF CODE 1 AT E1: your / IF CODE 2-4 AT E1: their> ownownership of the business to improve its long-term business performance?






SECTION F: GVA

ASK ALL

F1. For the final part of this research, we just need to collect from you a fewpieces of financial performance information, for which you will need to refer to

your most recent set of annual accounts.REASSURE AS NECESSARY: The information we need relates to your operatingprofit, employee costs, depreciation and assets. Once again, the research isbeing conducted on behalf of the Department of Trade and Industry and anyfinancial information you provide will only be used by the research team in their analysis, treated as strictly confidential and will not be passed on in attributableform.

Are you able to get a copy of your accounts in front of you now? ALLOWRESPONDENT TO PUT YOU ON HOLD AS NECESSARY

Yes..............................................................................................1 - GO TO F4No................................................................................................2 – GO TO F2

(Don’t have any accounts)...........................................................3 – GO TO F11

IF NO (CODE 2 AT F1)

F2. In that case, could I please send you a short questionnaire to fill out? I caneither send you an electronic copy by email, or a paper copy in the post. Either way, you will need to refer to your most recent set of accounts when completingthe questions, returning your answers to us either by email or in the post.

Alternatively you could simply fax or post us a copy of < IF LIMITED COMPANY,PLC OR LIMITED LIABILITY PARTNERSHIP just the relevant pages of > your mostrecent accounts and we will complete the questionnaire for you.

Which would you prefer – an email questionnaire, a paper questionnaire sent in

the post or to fax or post us < IF LIMITED COMPANY, PLC OR LIMITED LIABILITYPARTNERSHIP the relevant pages from > your accounts?

Email questionnaire............................................................................1Paper questionnaire sent in the post..................................................2Fax copy of accounts.........................................................................3Post copy of accounts........................................................................4(Refused to supply accounts information)..........................................5 – GO TO F11

IF PREFER EMAIL QUESTIONNAIRE (CODE 1 AT F2)

F3a. Could I please take a note of your email address? INTERVIEWER NOTE:

CLARIFY ALL SPELLING AND PUNCTUATION READ ADDRESS BACK TORESPONDENT TO CHECK IT IS CORRECT

...........................................................................................................





IF PREFER PAPER QUESTIONNAIRE (CODE 2 AT F2)

F3b. Can I confirm that your address is…? READ OUT – CATI TO DISPLAYADDRESS FROM SAMPLE (INCLUDING COMPANY NAME)

Yes - correct.......................................................................................1No (ENTER CORRECT ADDRESS)..................................................2

IF PREFER TO FAX ACCOUNTS (CODE 3 AT F2) & NOT A LIMITED COMPANY, PLCOR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6, 7 OR 8 AT A3)

F3c. Could you please fax a copy of your accounts to 01622 790902 quotingreference < xxx CATI TO INSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your company name. If you encounter any problems please do not hesitate to contactus on 01622 790900. INTERVIEWER NOTE: ASK RESPONDENT TO READ BACKFAX AND REFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO FAX ACCOUNTS (CODE 3 AT F2) & A LIMITED COMPANY, PLC ORLIMITED LIABILITY PARTNERSHIP (CODES 3, 4 OR 5 AT A3)

F3c. We only need you to fax us the following pages – your statutory profit andloss statement (this should be near the front of your accounts), your balancesheet (which should be the page after your statutory profit and loss statement)and your trading and profit and loss statement (which should form the last pagesof your accounts). Please fax copies of these to 01622 790902 quoting reference <xxx CATI TO INSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your companyname. If you encounter any problems please do not hesitate to contact us on01622 790900. INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK FAX ANDREFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO POST ACCOUNTS (CODE 4 AT F2) & NOT A LIMITED COMPANY,

PLC OR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6, 7 OR 8 AT A3)F3c. Could you please post a copy of your accounts to OMB Research Limited,259 Forstal Road, Aylesford, Kent, ME20 7AP quoting reference < xxx CATI TOINSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your company name. If youencounter any problems please do not hesitate to contact us on 01622 790900.INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK ADDRESS ANDREFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO POST ACCOUNTS (CODE 4 AT F2) & A LIMITED COMPANY, PLC ORLIMITED LIABILITY PARTNERSHIP (CODES 3, 4 OR 5 AT A3)

F3c. We only need you to post us the following pages – your statutory profit and

loss statement (this should be near the front of your accounts), your balancesheet (which should be the page after your statutory profit and loss statement)and your trading and profit and loss statement (which should form the last pagesof your accounts). Please post copies of these to OMB Research Limited, 259Forstal Road, Aylesford, Kent, ME20 7AP quoting reference < xxx CATI TO INSERT‘OMBREF NUMBER’ FROM SAMPLE > and your company name. If you encounter any problems please do not hesitate to contact us on 01622 790900.INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK ADDRESS ANDREFERENCE NUMBER TO CHECK CORRECT





IF HAVE ACCOUNTS TO HAND (CODE 1 AT F1) (OTHERS GO TO F11)

F4. Can I just check that you have your most recent annual accounts in front of you, and that they contain information for your last 2 financial years for which youhave accounts? IF NO, ASK RESPONDENT TO GET ACOUNTS

Yes.....................................................................................................1

(Decided to give financial info by other method e.g. email, post, fax).2 – GO TO F99a

F5a1. Firstly, can you tell me the year end date of the most recent year shown onthese accounts? IF NECESSARY: The most recent year is normally the left handcolumn on each page, and the year end date is shown at the top.

INTERVIEWER: CODE MONTH FIRST, THEN YEAR

January..............................................................................................1February.............................................................................................2March.................................................................................................3April....................................................................................................4

May....................................................................................................5June...................................................................................................6July.....................................................................................................7August................................................................................................8September..........................................................................................9October..............................................................................................10November...........................................................................................11December...........................................................................................12(Don’t know).......................................................................................13(Refused)...........................................................................................14(Decided to give financial info by other method e.g. email, post, fax).15 – GO TO F99a

F5a2. CODE YEAR

2002...................................................................................................12003...................................................................................................22004...................................................................................................32005...................................................................................................4(Pre 2002)..........................................................................................5(Don’t know).......................................................................................6(Refused)...........................................................................................7(Decided to give financial info by other method e.g. email, post, fax).8 – GO TO F99a

F5b. And how long did this accounting year cover? Was it 12 months or someother period?

12 months..........................................................................................1Other period (SPECIFY NUMBER MONTHS)....................................2(Don’t know).......................................................................................3(Refused)...........................................................................................4(Decided to give financial info by other method e.g. email, post, fax).5 – GO TO F99a





F5c1. And what is the year end date of the previous year? IF NECESSARY: This isnormally the right hand column on each page, and the year end date is shown atthe top.

INTERVIEWER: CODE MONTH FIRST, THEN YEAR

January..............................................................................................1

February.............................................................................................2March.................................................................................................3April....................................................................................................4May....................................................................................................5June...................................................................................................6July.....................................................................................................7August................................................................................................8September..........................................................................................9October..............................................................................................10November...........................................................................................11December...........................................................................................12(Don’t know).......................................................................................13

(Refused)...........................................................................................14(Company only has accounts covering one year)...............................15(Decided to give financial info by other method e.g. email, post, fax).16 – GO TO F99a

IF COMPANY HAS ACCOUNTS FOR PREVIOUS YEAR (I.E. NOT CODE 15 AT F5c1)

F5c2. CODE YEAR

2002...................................................................................................12003...................................................................................................22004...................................................................................................3

2005...................................................................................................4(Pre 2002)..........................................................................................5(Don’t know).......................................................................................6(Refused)...........................................................................................7(Decided to give financial info by other method e.g. email, post, fax).8 – GO TO F99a


F5d. And how long did this accounting year cover? AS NECESSARY Was it 12months or some other period?

12 months..........................................................................................1Other period (SPECIFY NUMBER MONTHS)....................................2(Don’t know).......................................................................................3(Refused)...........................................................................................4(Decided to give financial info by other method e.g. email, post, fax).5 – GO TO F99a





IF LIMITED COMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP: Looking now atyour statutory profit and loss statement, which should be near the front of your accounts.

IF GAVE EXACT TURNOVER FIGURE AT C16a (OTHERS GO TO E6b)

F6a. You mentioned previously that your current turnover is <CATI TO INSERTFROM C16a>. Can I just check that this is the exact figure shown in your accounts for your most recent year? IF NECESSARY There should be one figuregiven for turnover in your accounts, but it may be referred to as income, sales or receipts.

Yes.....................................................................................................................1No (RECORD ACTUAL TURNOVER TO NEAREST WHOLE POUND)..... .......2(Don’t know).......................................................................................................3(Refused)...........................................................................................................4(Decided to give financial info by other method e.g. email, post, fax).................5 – GO TOF99a

INTERVIEWER - CONFIRM TURNOVER FIGURE BY READING BACK TORESPONDENT AS INDIVIDUAL FIGURES (E.G. 1 – 2 – 1 – 4 – 6 – 7)

IF DID NOT GIVE EXACT TURNOVER FIGURE AT C16a (OTHERS GO TO F6c)

F6b. What is the turnover figure shown in your accounts for the most recent year?IF NECESSARY There should be one figure given for turnover in your accounts,but it may be referred to as income, sales or receipts.

RECORD TURNOVER TO NEAREST WHOLE POUND...................................(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a

INTERVIEWER - CONFIRM TURNOVER FIGURE BY READING BACK TORESPONDENT AS INDIVIDUAL FIGURES (E.G. 1 – 2 – 1 – 4 – 6 – 7)


F6c. And what is the turnover figure shown in your accounts for the previousyear?RECORD TURNOVER TO NEAREST WHOLE POUND...................................(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TO

F99a

INTERVIEWER - CONFIRM TURNOVER FIGURE BY READING BACK TORESPONDENT


F7a. < IF LIMITED COMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP Stilllooking at your statutory profit and loss statement > what is the operating profit





shown in your accounts for the most recent year? IF NECESSARY Operatingprofit may be shown as operating loss, net profit or profit to owners’ capitalaccount.

IF NECESSARY: Please include any income arising from disposal of assets, but donot deduct any interest payable.

RECORD OPERATING PROFIT TO NEAREST WHOLE POUND....................(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99aINTERVIEWER - CONFIRM PROFIT FIGURE BY READING BACK TO RESPONDENT





IF VALUE GIVEN AT F7a (I.E. NOT ‘DON’T KNOW’ OR ‘REFUSED’)

F7b. Can I just check, is that a profit or a loss?

Profit...................................................................................................................1Loss...................................................................................................................2(Don’t know).......................................................................................................3

(Refused)...........................................................................................................4(Decided to give financial info by other method e.g. email, post, fax).................5 – GO TOF99a


F7c. And what is the operating profit shown for the previous year?

RECORD OPERATING PROFIT TO NEAREST WHOLE POUND....................(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a

INTERVIEWER - CONFIRM PROFIT FIGURE BY READING BACK TO RESPONDENT

IF VALUE GIVEN AT F7c (I.E. NOT ‘DON’T KNOW’ OR ‘REFUSED’)

F7d. Again, can I just check, is that a profit or a loss?

Profit...................................................................................................................1Loss...................................................................................................................2(Don’t know).......................................................................................................3(Refused)...........................................................................................................4(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a


F8a. < IF LIMITED COMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP (CODES3, 4 OR 5 AT A3) Turning now to your trading and profit and loss statement, whichshould form the last pages of your accounts, IF NOT A LIMITED COMPANY, PLCOR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6, 7 OR 8 AT A3) Now > I’d liketo focus on your total employee costs for the most recent year. These willprobably be spread across several entries in your accounts, so please look for any entries referring to items such as salaries, wages, labour, pay, pensions andsocial security costs, but please ignore any payments made to subcontractors or dividends paid to the owners or directors. What is the total value of all thesetypes of employee costs? INTERVIEWER NOTE: IF EASIER FOR RESPONDENT,

RECORD EACH TYPE OF COST SEPARATELY ON A SHEET OF PAPER, ADDINGTOGETHER BEFORE ENTERING INTO CATI.

ALLOW RESPONDENT PLENTY OF TIME TO ENSURE THAT ALL RELEVANTENTRIES HAVE BEEN INCLUDED

RECORD EMPLOYEE COSTS TO NEAREST WHOLE POUND.............. ........(Don’t know).......................................................................................................(Refused)...........................................................................................................





(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a

Can I just check, that you’ve included all entries referring to salaries, wages,labour, pay, pensions and social security costs. INTERVIEWER: IF NOT, GO BACK

AND INCLUDE ADDITIONAL ITEMS






F8b. And what is the total value of your employee costs for the previous year?Again, please look for all entries referring to items such as salaries, wages,labour, pay, pensions and social security costs, but please ignore any paymentsmade to subcontractors or dividends paid to the owners or directors.

RECORD EMPLOYEE COSTS TO NEAREST WHOLE POUND.............. ........(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a


F9a. < IF LIMITED COMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP (CODES3, 4 OR 5 AT A3) Still looking at your trading and profit and loss statement IF NOTA LIMITED COMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6,

7 OR 8 AT A3) Next > could you give me a figure for depreciation for the mostrecent year. IF NECESSARY There could be more than one entry for this, but theyshould all contain the word ‘depreciation’. Please provide a total for all theseentries. INTERVIEWER NOTE: IF EASIER FOR RESPONDENT, RECORD EACHTYPE OF DEPRECIATION SEPARATELY ON A SHEET OF PAPER, ADDINGTOGETHER BEFORE ENTERING INTO CATI.

ALLOW RESPONDENT PLENTY OF TIME TO ENSURE THAT ALL RELEVANTENTRIES HAVE BEEN INCLUDED

RECORD DEPRECIATION TO NEAREST WHOLE POUND.............................(Don’t know).......................................................................................................(Refused)...........................................................................................................

(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a


F9b. And what is the total figure for depreciation shown for the previous year? IFNECESSARY Again, there could be more than one entry.

RECORD DEPRECIATION TO NEAREST WHOLE POUND.............................(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a


F10a. Finally, could you give me the figure for tangible fixed assets for the mostrecent year. This should be shown on your balance sheet < IF LIMITEDCOMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP (CODES 3, 4 OR 5 AT A3)which should be the page after your statutory profit and loss statement, near thefront of your accounts >. IF NECESSARY Your accounts may break down fixedassets into tangible assets, intangible assets and investments, but if so please





just give me the figure for tangible assets. If your accounts only refer to fixedassets, without any breakdown, then please give me this figure.RECORD TANGIBLE FIXED ASSETS TO NEAREST WHOLE POUND...........(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a






F10b. And what is the figure for tangible fixed assets shown for the previousyear? IF NECESSARY Again, if your accounts break down fixed assets intotangible assets, intangible assets and investments, just give me the figure for tangible assets. If your accounts only refer to fixed assets, without any

breakdown, then please give me this figure.RECORD TANGIBLE FIXED ASSETS TO NEAREST WHOLE POUND...........(Don’t know).......................................................................................................(Refused)...........................................................................................................(Decided to give financial info by other method e.g. email, post, fax)................. – GO TOF99a

N.B: F99a-d are the same as F2-F3c and just give respondents the option of opting out of the telephone GVA and completing by another method

IF PREFER OTHER METHOD AT F5a1, F5a2, F5b, F5c1, F5c2, F5d, F6a, F6b, F6c,

F7a, F7b, F7c, F7d, F8a, F8b, F9a, F9b, F10a or F10bF99a. In that case, could I please send you a short questionnaire to fill out? I caneither send you an electronic copy by email, or a paper copy in the post. Either way, you will need to refer to your most recent set of accounts when completingthe questions, returning your answers to us either by email or in the post.

Alternatively you could simply fax or post us a copy of < IF LIMITED COMPANY,PLC OR LIMITED LIABILITY PARTNERSHIP just the relevant pages of > your mostrecent accounts and we will complete the questionnaire for you.

Which would you prefer – an email questionnaire, a paper questionnaire sent inthe post or to fax or post us < IF LIMITED COMPANY, PLC OR LIMITED LIABILITYPARTNERSHIP the relevant pages from > your accounts?

Email questionnaire............................................................................1Paper questionnaire sent in the post..................................................2Fax copy of accounts.........................................................................3Post copy of accounts........................................................................4(Refused to supply accounts information)..........................................5 – GO TO F11

IF PREFER EMAIL QUESTIONNAIRE (CODE 1 AT F99a)

F99b. Could I please take a note of your email address? INTERVIEWER NOTE:CLARIFY ALL SPELLING AND PUNCTUATION READ ADDRESS BACK TORESPONDENT TO CHECK IT IS CORRECT

...........................................................................................................

IF PREFER PAPER QUESTIONNAIRE (CODE 2 AT F99a)

F99c. Can I confirm that your address is…? READ OUT – CATI TO DISPLAYADDRESS FROM SAMPLE (INCLUDING COMPANY NAME)

Yes - correct.......................................................................................1No (ENTER CORRECT ADDRESS)..................................................2





IF PREFER TO FAX ACCOUNTS (CODE 3 AT F99a) & NOT A LIMITEDCOMPANY, PLC OR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6, 7OR 8 AT A3)

F99d. Could you please fax a copy of your accounts to 01622 790902 quotingreference < xxx CATI TO INSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your

company name. If you encounter any problems please do not hesitate to contactus on 01622 790900. INTERVIEWER NOTE: ASK RESPONDENT TO READ BACKFAX AND REFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO FAX ACCOUNTS (CODE 3 AT F99a) & A LIMITED COMPANY, PLCOR LIMITED LIABILITY PARTNERSHIP (CODES 3, 4 OR 5 AT A3)

F99d. We only need you to fax us the following pages – your statutory profit andloss statement (this should be near the front of your accounts), your balancesheet (which should be the page after your statutory profit and loss statement)and your trading and profit and loss statement (which should form the last pagesof your accounts). Please fax copies of these to 01622 790902 quoting reference <xxx CATI TO INSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your companyname. If you encounter any problems please do not hesitate to contact us on01622 790900. INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK FAX ANDREFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO POST ACCOUNTS (CODE 4 AT F99a) & NOT A LIMITED COMPANY,PLC OR LIMITED LIABILITY PARTNERSHIP (CODES 1, 2, 6, 7 OR 8 AT A3)

F99d. Could you please post a copy of your accounts to OMB Research Limited,259 Forstal Road, Aylesford, Kent, ME20 7AP quoting reference < xxx CATI TOINSERT ‘OMBREF NUMBER’ FROM SAMPLE > and your company name. If youencounter any problems please do not hesitate to contact us on 01622 790900.INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK ADDRESS AND

REFERENCE NUMBER TO CHECK CORRECT

IF PREFER TO POST ACCOUNTS (CODE 4 AT F99a) & A LIMITED COMPANY, PLCOR LIMITED LIABILITY PARTNERSHIP (CODES 3, 4 OR 5 AT A3)

F99d. We only need you to post us the following pages – your statutory profit andloss statement (this should be near the front of your accounts), your balancesheet (which should be the page after your statutory profit and loss statement)and your trading and profit and loss statement (which should form the last pagesof your accounts). Please post copies of these to OMB Research Limited, 259Forstal Road, Aylesford, Kent, ME20 7AP quoting reference < xxx CATI TO INSERT‘OMBREF NUMBER’ FROM SAMPLE > and your company name. If you encounter

any problems please do not hesitate to contact us on 01622 790900.INTERVIEWER NOTE: ASK RESPONDENT TO READ BACK ADDRESS ANDREFERENCE NUMBER TO CHECK CORRECT





ASK ALL

F11. That’s the end of < IF NOT PROVIDED FINANCIAL INFORMATION NOW ANDAGREED TO SUPPLY LATER (I.E CODE 1, 2, 3 OR 4 AT F2 OR CODE 1,2,3, OR 4 ATF99a) this part of > the survey, thank you for taking the time to help us with thisimportant research < IF NOT PROVIDED FINANCIAL INFORMATION NOW AND

AGREED TO SUPPLY LATER (I.E CODE 1, 2, 3 OR 4 AT F2 OR CODE 1,2,3, OR 4 ATF99a) and we look forward to receiving your financial information in due course >.

Would you be willing to take part in any future research on this topic conductedon behalf of the DTI or Business Link?

Yes.....................................................................................................1No......................................................................................................2(Don’t know).......................................................................................3

ASK ALL

F12. We are working with academic researchers at the Business Schools atWarwick, Kingston and Aston Universities on this project, who would like to beable to analyse the answers you have provided us with alongside data you mayprovide to central Government, such as through Companies House. Would you bewilling for us to provide the academic research team with your company namealongside your answers? INTERVIEWER NOTE: READ OUT F12 EXACTLY ASSCRIPTED

AS NECESSARY: This will allow the researchers to ‘look up’ other data held onyour business by central Government, which will in turn allow them to conduct afuller and more meaningful analysis of this survey data.

Yes.....................................................................................................1No......................................................................................................2(Don’t know).......................................................................................3

ASK ALL EXCEPT THOSE CONFIRMING THEIR ADDRESS AT F3bF13. Could I just confirm that your business postcode is…?CATI TO DISPLAY POSTCODE FROM SAMPLE – AMEND IF MISSING ORINCORRECT

F14. And may I take a note of your name?WRITE IN……………………………………………

STANDARD THANK & CLOSE

AS NECESSARY: If you would like to find out more about Business Link and their services you can visit www.businesslink.gov.uk







Appendix B: Survey Weighting Protocols






ALL BLO USERS - VOLUMES 1 - 5 (NUMBERS) ALL BLO USERS - VOLUMES 1 - 5 (PROPORTIONS)

Less than10 "10-49" "50-249" Grand Total Less than10 "10-49" "50-249" GrandTotal

Primary 5436 517 134 6087 Primary 4% 0% 0% 4%

Production 13810 10507 4352 28669 Production 10% 7% 3% 20%

Construction 5110 2826 727 8663 Construction 4% 2% 1% 6%

Services 67410 26514 7579 101503 Services 47% 18% 5% 70%

Grand Total 91766 40364 12792 144922 Grand Total 63% 28% 9% 100%

INTENSIVE BLO USERS - VOLUMES 1 - 5 (NUMBERS) INTENSIVE BLO USERS - VOLUMES 1 - 5 (PROPORTIONS)

Less than10

"10-49"

"50-249" Grand Total

Less than10

"10-49"

"50-249"

GrandTotal

Primary 884 80 18 982 Primary 5% 0% 0% 6%

Production 1618 1808 840 4266 Production 10% 11% 5% 26%Construction 411 395 146 952 Construction 2% 2% 1% 6%

Services 6150 3256 974 10380 Services 37% 20% 6% 63%


OTHER BLO USERS - VOLUMES 1 - 5(NUMBERS) OTHER BLO USERS - VOLUMES 1 - 5 (PROPORTIONS)

Less than10

"10-49"

"50-249" Grand Total Sole trader

"10-49"

"50-249"

GrandTotal

Primary 4552 437 116 5105 Primary 4% 0% 0% 4%

Production 12192 8699 3512 24403 Production 9% 7% 3% 19%

Construction 4699 2431 581 7711 Construction 4% 2% 0% 6%Services 61260 23258 6605 91123 Services 48% 18% 5% 71%


210




Appendix C: Face-to-Face Topic Guide

(Note: This is the version used for the Intensively-Assisted Firms)





BLO ECONOMIC IMPACT STUDY: TOPIC GUIDE

Thank you for agreeing to meet me/us.

The SBRC has been commissioned by the Small Business Service to conduct a study

looking at the impact of Business Link services and support (delivered in the periodApril to September2003) on your business. You have already participated in thenational telephone survey undertaken between May and July of this year. The purpose of our visit now is to probe in more detail on the precise nature of theservices and support provided the way it has influenced the development of your business and to gauge your overall experience of the relationship with Business Link.Rather than simply looking for ‘yes/no’ answers, the questions allow you to giveyour answers at length if you wish. Your replies will, of course, be treatedin the strictest confidence.

At the end of the study we will send you a summary of the research

findings so you can compare your own experiences with those of other business owners.

Name of respondent (with position)

Name of business

Business address

Interviewer

Date of interview

Assistance Category: Intensively Assisted Other Assist Non-Assisted

Business Link Operator:

Appropriate warm up questions – e.g. about the nature of the business? When was it

established? Future aims for the business? About the interviewee – e.g. brief employment history? What were their reasons and objectives for setting up (or buying, joining)

business?

Introduction

• What have been the major events since 2003 which have altered thefirm's growth pattern?





Probe:- Were they unforeseen?- How did the business react to them?- What was the outcome?- Was the performance of the business better or worse than expected in that

period?- What are your reasons for saying that?

Contact with Business Link

I’d like to now ask you a few background questions about your relationship with your local Business Link.

• How did you first find out about your local Business Link? Probe: When was this?

• In what year did the business first contact BL? Probe:

- What was your reason? (expectations and motivations)- What was the outcome?

• Thinking back two years, what were your motives for seeking assistance (or accessing services and support) from your local Business Link in the period

April to October 2003 (this is the specific period we are interested in as part of this study): Probe:

- Did you initiate the contact?- Was the business growing or declining?- facing tough competition?- struggling to maintain sales/market share? (see QC6 responses to

elaborate).

• What did you expect to achieve from the relationship with Business Link? Probe:

- …and the reality?- How are they able to arrive at this opinion with respect to expectations –

benchmarked against what other experiences?

Nature of Assistance

• How would you describe your initial meetings with the Business Link? Probe:How did the business advisor present him/herself:

- as an expert (on the issues you were seeking advice and assistance





- critical friend who you bounce ideas off - as doctor who diagnosed what problems you business was facing

• How did you (and adviser?) decide that the particular assistance that you receivedwas the right one for you?

Probe:- Had you decided that the problem was the most pressing for you before

the meeting?- Did you prioritise with your advisor, which issues to tackle?- Or did it feel like you ended up focussing on a problem that Business

Link/consultant had a fix for?

• What services and support did you receive from Business Link in the period Aprilto October 2003? Probe: Nature of the IDB ‘model’ – and the range of services.

- What were the most important aspects of the services and support

provided? Why do you say that?- Was the solution tailored to your business needs?- Were you able to draw on existing product offers?

• What alternative sources of business support were available? Probe:

- Were you aware of these alternatives at time?- Did you try to use these alternatives? – if so what was the outcome?- How do you think BL rank compared to these other sources of services

and support?

- What did you get from BL that they couldn't get from elsewhere - was it asubsidised price or a unique service?

Delivery of Assistance

• How were those services provided by Business Link between April to October 2003 delivered? Probe:

- Directly from the BL or via third parties?- How was the external individual or organisation chosen?

- How much control did you have of this process?

• Thinking back, how satisfied were you with the way those services and supportwere delivered?

Probe:- Relationship with the Business Advisor?- Competence of third parties?





- Specific knowledge of your business – and was this necessary to deliver the services and support required?

- (where third party – did BL help you manage, get the most of thecontractor ?)

- If rural – did the business advisor have specific awareness of the issues

facing you as a business located in a rural area? If so, what are thoseissues?

• Did you pay for any of the services provided by or through Business Link? Probe:

- If yes did you feel they you getting value for money?

• What were your experiences of the development of the Strategic Action Plan? Probe:

- How closely involved were you with its development?- Did you agree with all of its contents and proposed actions?

- Relationship with the Business Advisor?- Did it identify issues that you were already aware/unaware of?- Did you implement all/some/any of the changes proposed in the Strategic

Action Plan?

Impact on the Business

• In what ways has the support provided by Business Link in 2003 impacted uponyour business over the last 2 years? Probe: See responses to QC11a for the range of possible areas we are seeking tocover here.

- How critical was the BL support to these changes?- Why do you say that?- Have all the benefits been realised? – why not?- Important to cover ‘hard’ and ‘soft’ outcomes – the latter picking up on

aspects of changing the way the business operates

… and then leading into the additionality question …..

• Which ONE of the following statements best describes your view on thecontribution the support you have received from Business Link has made, or willmake, to your firm?

i. We would have achieved similar business outcomes anywayii. We would have achieved similar business outcomes, but not as quickly

iii. We would have achieved some but not all of the business outcomesiv. We probably would not have achieved similar business outcomesv. We definitely would not have achieved similar business outcomes

vi. (None of these)





Probe: What is the reason for saying that? – need to explore the response in detailhere – seeking precise examples of timing and scale – if all outcomes notachieved which ones?. How has this affected the performance of the business? If ‘zero’ additionality need to probe on why they say that and relate to earlier responses on the BL relationship and their motivations for going to them in the

first place.





Finally….

• Have you used Business Link since October 2003? Probe: When and what for? Have you maintained contact with any providersinitially brokered by the contact with Business Link?

• What improvements would you suggest could be made to the nature and delivery

of the services and business support provided by Business Link? Probe: Refer to the 2003 assistance and/or the most recent assistance received.Internal/External brokerage? What are your general perceptions of BL? Werethere any unmet needs from the assistance?

• Have you used other business advice services since 2003? Probe: When and what for?

Any other comments?

Thank you and close interview.





Appendix D: Additional Estimation Results Excluding Selection Effects





Box 4.1: Econometric Approach – Allowing for Selectivity in BL Assistance

Our focus here is the causal effect of BL assistance provided during the April to September 2003

period on business performance between the 2004 and 2005 business years. If π is any potentialindicator of business growth, a basic model that encapsulates these effects can be defined as

follows:

ε δ β π ++= z x (1)

Where: x is a vector of firm, market and owner-manager characteristics, and z is a binary variabletaking value 1 if a firm received BL assistance, and 0 otherwise. In this model, the size, sign and

significance of the coefficient on the ‘treatment’ term (i.e. δ ) will give an indication of theimpact of BL assistance on business growth. Other studies have shown, however, that suchtreatment coefficients will give an unbiased indication of the real effect of assistance only if assistance is randomly distributed across the population of small firms. Where there is anyelement of systematic targeting or selection, the coefficient on the treatment term will reflect acombination of ‘assistance’ and ‘selection’ effects.

Rather than direct estimation of equation (1) a preferable approach is therefore to allow explicitlyfor this type of selection bias. Specifically, we assume that the likelihood or probability of receiving BL assistance (z*) is itself related to a set of business and owner-manager characteristics, v. This suggests a model of the form (Greene, 1995, p. 642):

ε δ β π ++′= z x '

z*= γ ’v + w (2)

What is observed, however, is not the probability of receiving BL assistance (zi*) but acategorical variable which indicates whether a firm was intensively assisted, other assisted or not-assisted. In this situation the standard estimation method for this type of model is the two-stage

procedure outlined in Heckman (1979). This involves the estimation of a Probit model toestimate the probability of a firm being either intensively assisted, other assisted or not assistedand the incorporation of a selection parameter in the treatment model for business performance(see Greene, 1995, p. 639 for details).

An important issue in operationalising the Heckman type model is the avoidance of too muchoverlap between the selection and performance models. This is a particular problem in secondaryanalysis where the variable set may be limited. Our choice of variables here was shaped byawareness of this problem as well as (a) our previous experience of the BL Tracker Study (e.g.Roper and Hart, 2005) (b) our understanding of the small business literature and the determinantsof business growth (e.g. Storey, 1994)31. In the probit models we therefore focus on informationalvariables and objective and observable characteristics of firms – factors which may have provided

the basis for administrative criteria for the targeting of assistance. In the growth models wecontrol for more organisational factors and the characteristics of the entrepreneur – both of whichhave been shown to be important in the small business literature.

31 Roper, S and Hart, M (2005) ‘Small Firm Growth And Public Policy In The UK: What Exactly Are The

Connections? Working Paper, Aston Business School (RP0504). Storey, D (1994) ‘Understanding theSmall Business Sector’, Routledge, London.





Table D.1: Impact of Intensive Assistance: Full ModelEmploy

Growth

Sales

Growth

Productivity

Growth


Constant 0.014 0.52 -0.037 -0.53 -0.046 -0.62


Firm Size -0.0002 -0.65

-0.000

1 -0.18 0.0004 0.70

Size squared 0.0004 0.40 0.002 0.83 0.0001 0.04

Firm age: 3-4 years -0.027 -1.49 0.041 0.90 0.031 0.59

Firm age: 4-5 years -0.020 -1.20 0.019 0.43 0.030 0.61

Firm age: 5-10 years -0.015 -1.07 -0.014 -0.39 -0.036 -0.89

Firm age: 10-20 years -0.019 -1.41 -0.049 -1.42 -0.050 -1.25


Legal Partnership 0.008 0.64 0.034 1.12 0.025 0.76

Ltd Liability Company 0.015 1.48 0.038 1.49 0.017 0.62

Other type of company -0.003 -0.11 0.008 0.09 0.003 0.03

Multi-plant firm 0.024 2.05 -0.019 -0.71 -0.023 -0.77

Exporter 0.001 0.06 0.005 0.26 0.019 0.87




Business Strategy


Focus: Sales in new markets 0.016 1.53 0.078 3.59 0.051 2.14

Focus: New products, newmarkets 0.009 0.62 -0.007 -0.22 -0.014 -0.40


Non-executive Directors -0.002 -0.13 0.038 1.35 0.019 0.61

Owner Manager

O-M has equity 0.003 0.23 0.034 1.26 0.020 0.67

O-M age 25-34 0.020 0.94 0.033 0.63 0.002 0.04

O-M age 35-44 0.001 0.07 0.021 0.52 0.021 0.49

O-M age 45-54 -0.007 -0.39 0.046 1.17 0.056 1.35

O-M age 55 plus -0.018 -1.03 0.022 0.56 0.047 1.13

Serial Founder -0.002 -0.21 0.015 0.84 0.013 0.69

Intensively-Assisted Firms 0.023 2.40 0.009 0.41 -0.022 -0.88Selection Parameter -0.005 -0.58 0.030 1.43 0.017 0.75

Note: Models also include a full set of Industry Dummies to control for industry specific differences inemployment, turnover, and productivity growth.





Table D.3: Impact of Intensive Assistance: Restricted ModelsEmploy

Growth

Sales

Growth

Productivity

Growth


Constant 0.014 0.985 0.040 0.923 0.019 0.423


Firm age: 5-10 years -0.051 -1.810

Firm age: 10-20 years -0.013 -1.606 -0.060 -3.241 -0.063 -2.382



No. of competitors -0.020 -1.307 0.029 1.563

Own Price Elasticity -0.039 -1.380

Business Strategy

Focus: Sales in currentmarkets 0.023 3.438



Non-executive Directors 0.046 1.900

Owner Manager

O-M has equity 0.035 1.580

O-M age 35-44

O-M age 45-54 -0.014 -1.907 0.036 1.823

O-M age 55 plus -0.020 -2.422 0.027 1.228


Selection Parameter -0.007 -0.929 0.018 1.005 0.016 0.727

Note: Models Also Include a Full Set of Industry Dummies to Control for Industry Specific Differences inemployment, turnover, and productivity growth.





Table D.4: Impact of Other Assistance: Restricted ModelsEmployment

Growth

Sales

Growth

Productivity

Growth


Constant 0.049 2.96 0.086 1.81 0.070 1.45


Firm age: 3-4 years 0.107 2.61 0.076 1.78

Firm age: 10-20 years -0.016 -1.99 -0.030 -1.16

Firm age: 20 plus years -0.021 -2.70 -0.043 -1.73

Ltd Liability Company 0.016 2.47

Multi-plant firm 0.021 2.08


No. of competitors -0.018 -2.68


Business Strategy

Focus: Sales in currentmarkets 0.022 3.26 -0.045 -2.15



Owner Manager

O-M has equity -0.018 -1.87

O-M age 55 plus -0.013 -1.75

Serial Founder 0.043 2.04 0.054 2.43


Selection Parameter 0.004 0.48 0.018 0.80 0.002 0.08

Note: Models Also Include a Full Set of Industry Dummies to Control for Industry Specific Differences inemployment, turnover, and productivity growth.





Appendix E: Excerpt from Conference Paper on the Impact on

Employment growth





So who benefits from Business Link assistance?In other words, younger, limited, firms with boards of directors exhibiting higher

gender diversity were more likely to take up intensive assistance. Other assistancewas also being targeted at younger firms with statistically weaker evidence of a

similar gender effect. Also, clear evidence exists that firms in different industries

have different probabilities of receiving assistance. However, a clear distinction alsoexists between which industries are likely to receive intensive or other assistance.Finally, in both cases direct action by BL to recruit contacts seems to have

substantially increased the probability of using BL services.

However, our second question concerns the type of firm and assistance that mostbenefits the recipient. To answer this we ‘reverse engineer’ an OLS model of the

impact of intensive assistance on the firm. The OLS model will estimate theindependent effects of firm age, limited liability and business strategy on the firm,

having controlled for these we add a co-efficient for intensive assistance and testedthat. The result is an estimate of effects on employment growth of a number of

factors. If we then take these estimates and strip out their effects on employment

growth we are left with the residual which OLS would on average set at nought andthe impact of the assistance. Using this variable we can then try to understand the

types of firms etc that can explain the impact. In this way the idea is to explain whysome firms gain more impact from assistance that others. Table 12 reports the

descriptive statistics for the variable.

Table 12 Partialed Impact on Employment Growth

N Min Max Mean Std. Deviationlnva-partintgr

1094 -1.64 2.46 .0674 .29356

The number that we are interested in is only those intensively assisted firms since

that was the impact that we are trying to explain, hence N=1094 in table 12. Wereport correlations between the partialled impact on growth and factors that may

help to explain the impact in table 13.

Table 13 Correlates with the Partialled Employment Impact

Factor Correlation P

value

The Firm

Employment category (1=sole trader, 2=1-9, 3=10-49,4=50-249)

-.074 .015

Age of business category (1=2-3years…) -.091 .003Age of owner (1=under 25…) -.073 .015

Would you be willing to dilute equity? (1=yes, 2=no) -.083 .006

New or significantly improved processes (1=new, 2=improved,

4=no)

-0.071 .018

Over the past two years have you used any external sources of

information (1=yes, 2=no)

-0.071 .019

Still thinking about these external sources of advice was it basic

advice? (1=Yes, 0= No)

0.071 .018





Still thinking about these external sources of advice was it anin-depth discussion? (1=Yes, 0= No)

0.101 .001

Still thinking about these external sources of advice was it

IT/website related? (1=Yes, 0= No)

0.060 .046

Still thinking about these external sources was this advice from

an accountant? (1=Yes, 0= No)

0.068 .025

Still thinking about these external sources was this advice from

a bank? (1=Yes, 0= No)

0.086 .004

What did you get from Business Link

On average how many times did you contact Business Linkp.a.? (number)

0.062 .044

was it an in-depth discussion? People (1=Yes, 0= No) 0.063 .038

was it Investors in People advice (1=Yes, 0= No) 0.085 .005

IT website related (1=Yes, 0= No) -0.074 .014

Help with finding external consultancy services (1=Yes, 2= No) -0.090 .003

Help with training (1=Yes, 2= No) -0.069 .022

Help with e-commerce, and by that I mean on-line trading (1=Yes,

2= No)

-0.109 .000

Help with IT issues (1=Yes, 2= No) -0.084 .005

Anything else? (SPECIFY) (1=Yes, 2= No) -0.085 .005

Help with advertising (1=Yes, 0= No) 0.299 .010

Was this provided directly by Business Link? (1=all by BusinessLink, 2= some referred to outside party)

0.085 .005

Did you have to pay Business Link? (1=Yes, 2= No) -0.061 .044

Behavioural Impact on the Business

The image of the business has improved (1=Yes, 2= No) -0.077 .011

The business has improved its technical capability (1=Yes, 2=

No)

-0.103 .001

The business has improved its financial management skills

(1=Yes, 2= No)

-0.078 .010

The business has improved its planning (1=Yes, 2= No) -0.078 .010The business has improved its ability to deal with regulation(1=Yes, 2= No)

-0.067 .026

The business has improved its investment in staff training(1=Yes, 2= No)

-0.099 .001

The business has improved its ability to introduce new productsor services (1=Yes, 2= No)

-0.116 .000

The business has improved the quality of its products/services(1=Yes, 2= No)

-0.140 .000

The business has improved (1=Yes, 2= No) -0.078 .010

As a result

How satisfied are you with the services provided by Business

Link? (1=very dissatisfied, 5= very satisfied)

0.018 .553

What could they do better – more knowledgeable advisers(1=Yes, 0= No)

0.148 .032

What could they do better – continuity of personnel (1=Yes, 0=No)

-0.152 .027

What could they do better – keep contact (1=Yes, 0= No) 0.281 .000

Are you still using Business Link or planning to in the future?

(1=Yes, 2= No)

-.061 .043

The business is now more inclined to use external business 0.095 .002





support for general information and advice (1=Yes, 2= No)

The business is now more inclined to use specialist consultancy(1=Yes, 2= No)

0.073 .016

Table 13 is rather like a trawl through the factors that make for the impact on

employment growth. Moreover, the table is simply showing correlations with thepartialled employment impact. Nevertheless the data is suggestive. One of the

biggest surprises was the impact of help with advertising yet marketing was notsomething that showed any impact.

Different characteristics of firms seemed to make a difference. The firms that were

more innovative had better impacts, those firms that planned also had higherimpacts. As did those managers or firms that took advice from other sources.

economic impact study of business link local service-uk-2007

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