The What Works Centre for Local Economic Growth published its second evidence review this week looking at the effectiveness of business advice and mentoring. The review considered almost 700 policy evaluations and evidence reviews from the UK and other OECD countries.
It found 23 impact evaluations that met the Centre's minimum standards. This is a smaller evidence base than for our first review (on employment training) and is a very small base compared to some other policy areas (e.g. medicine, aspects of international development, and education).
Overall, of the 23 evaluations reviewed, 17 found positive impacts on at least one business outcome (such as productivity, employment or sales). Four evaluations found that business advice didn't work (had no statistically significant effects on any outcome) and two evaluations found that business advice might be harmful on one or more outcomes.
Some of the key messages that emerge from the review for local and national policy-makers include:
First, business advice programmes show consistently better results for productivity and output (GVA) than they do for employment. This may be because it's easier to help firms raise their productivity, or because productivity increases come first with employment gains seen in the longer run.
Second, programmes that use a hands-on, ‘managed brokerage' approach may perform better than those using a ‘light touch' approach (although this conclusion is based on only one direct comparison study).
Taken at face value, this suggests that a strong relationship between advisor and client may be important to achieving positive programme outcomes. It is not clear, however, which of these two approaches is more cost-effective.
Third, many issues discussed in current debates are based on inconclusive evidence. For example, we found no evidence that would suggest one level of delivery – national or local – is more effective than another. It is also difficult to reach any conclusions about the effectiveness of public-led vs. private-led delivery.
As should be clear from this review, there are also many scenarios where we still do not know much at all about the effectiveness of policy. Given the current emphasis on value for money, there is clearly a clear need for more, consistent analysis of cost-effectiveness in business advice impact evaluations.
Further evaluations of this kind should be a priority for improving our understanding of what works in business advice. Local flexibility that allows for greater experimentation provides an ideal opportunity to undertake such evaluations.
We are starting conversations with a number of Local Enterprise Partnerships and local authorities about this. If you are interested in helping us experiment in this area and improve our understanding of what works, please don't hesitate to get in touch with the Centre
Henry Overman is Professor of economic geography at the London School of Economics
