The effectiveness of public support for high-potential businesses
Lead Research Organisation:
Nesta
Department Name: Policy and Research
Abstract
Under this project, the Innovation Growth Lab (IGL) at Nesta will provide policymakers with robust actionable evidence and insights on how they can support local growth and innovation through support for high-potential firms. We will do this by returning to three previous programmes, to examine how successfully they achieved their stated objectives and what can be learnt to improve the design, delivery and evaluation of future programmes. In particular, we will complete the first analysis of a UK-based randomised field experiment, extend the results from a second randomised experiment, and apply quasi-experimental methods to evaluate the outcomes of a third large-scale business support programme for high-potential firms.
Small and medium-sized enterprises (SMEs) make up a large share of economic activity in the UK, but research has identified that much of their contribution to growth, job creation and prosperity comes from a relatively small proportion of businesses. Supporting SMEs with high potential for growth or innovation has therefore become a focus for business support policy, both at a local and a national level. However, little is known to date either about how successfully policymakers are able to to identify high-potential firms, or about what the impacts are of the support they provide. We aim to provide insight on both these points by revisiting the outcomes of three programmes that were aimed at high-potential firms, delivering evidence that meets the highest standards set by organisations such as the National Audit Office and the What Works Centre for Local Economic Growth.
The programmes in question were implemented by the Department for Business, Innovation and Skills and by Innovate UK between 2012 and 2016. We will use the Longitudinal Business Database to examine the rates of business survival and growth experienced by businesses that participated in these programmes for several years afterwards, providing a long-term perspective on their subsequent performance. We will assess the impacts of each of the three programmes, making use of the experimental design of two of the three programmes and quasi-experimental methods. In the case of the GrowthAccelerator programme, which supported almost 20,000 firms, we will also examine whether specialists' assessments of businesses' growth potential on entering the programme did predict subsequent growth and whether additional data can be used to improve these assessments.
The findings will be directly relevant to policymakers and actors throughout the UK who are seeking to support high-potential firms and boost local economies. The insights generated will help to identify whether some of the approaches used in these three programmes can bolster business growth in the long term, and will suggest how their targeting and effectiveness can be optimised.
Small and medium-sized enterprises (SMEs) make up a large share of economic activity in the UK, but research has identified that much of their contribution to growth, job creation and prosperity comes from a relatively small proportion of businesses. Supporting SMEs with high potential for growth or innovation has therefore become a focus for business support policy, both at a local and a national level. However, little is known to date either about how successfully policymakers are able to to identify high-potential firms, or about what the impacts are of the support they provide. We aim to provide insight on both these points by revisiting the outcomes of three programmes that were aimed at high-potential firms, delivering evidence that meets the highest standards set by organisations such as the National Audit Office and the What Works Centre for Local Economic Growth.
The programmes in question were implemented by the Department for Business, Innovation and Skills and by Innovate UK between 2012 and 2016. We will use the Longitudinal Business Database to examine the rates of business survival and growth experienced by businesses that participated in these programmes for several years afterwards, providing a long-term perspective on their subsequent performance. We will assess the impacts of each of the three programmes, making use of the experimental design of two of the three programmes and quasi-experimental methods. In the case of the GrowthAccelerator programme, which supported almost 20,000 firms, we will also examine whether specialists' assessments of businesses' growth potential on entering the programme did predict subsequent growth and whether additional data can be used to improve these assessments.
The findings will be directly relevant to policymakers and actors throughout the UK who are seeking to support high-potential firms and boost local economies. The insights generated will help to identify whether some of the approaches used in these three programmes can bolster business growth in the long term, and will suggest how their targeting and effectiveness can be optimised.