Can business counselling help SMEs grow? Evidence from the Swedish business development grant programme

Purpose – The purpose of this paper is to evaluate the state funded business counselling on firm growth. Design/methodology/approach – A quasi-experimental difference-in-difference estimation of treatment effects, using a matched sample of comparable untreated firms. Findings – Firms that have been granted counselling vouchers have a higher growth in value added than comparable untreated firms. This effect is mainly due to increased use of labour and capital, rather than increased efficiency. Results are upwardly biased due to sample selection among treated firms. Research limitations/implications – An improved strategy for identifying potential comparison firms from the pool of all firms may be necessary for further impact evaluations on business development programmes. Social implications – Policy makers may have to reconsider the programme design, since the programme currently suffer from a large potential for crowding-out, and low additional value of business counselling. Originality/value – The paper uses a matching procedure in order to infer causal effects of business counselling and compares the effect of, respectively, contamination and selection on estimated impact on firm growth and survival. The data used are an original, rich micro-level data set on state investment support to businesses.