Evaluating the effect of soft business support upon small firm performance

The paper applies robust econometric techniques to assess theimpact of publicly-provided subsidised ‘soft’ businesssupport on the performance of small and medium-sized enterprises(SMEs). It considers the assistance for consultancy advice providedtowards marketing under the UK Enterprise Initiative, lookingat its effect on sales turnover, employment and survival, andmaking explicit allowance for selection effects. It is foundthat the policy has no impact on the survival of smaller SMEs,and that it is most effective in the mid-range SMEs, where itraises survival rates by about 4% over the longer run and growthrates in surviving firms by up to 10% per annum. Overall, thescheme has a substantial impact, but the paper draws attentionto the possible displacement effects.     

Industrial restructuring and regional policy

The paper examines the changing regional specialisation of UKemployment over the period 1971-94, analysing the extent towhich UK regional policy has altered the industrial structureof the Assisted Area regions, making them less vulnerable toeconomic change. All regional economies are found to have becomemore specialised, but industry has become less geographicallyconcentrated leading to a convergence of regional industrialstructures towards the national pattern of employment. Thesetrends are stronger in the Assisted Areas, and have been promotedby the operation of regional policy, but the major policy effectoccurs through the large-scale capital grants which have acceleratedthe employment decline of the traditional manufacturing industriesin which the Assisted Areas were relatively over-represented.     

Regional Grants: Are They Worth It?*

Regional grants have recently come under scrutiny and are controversial. Some estimates put the employment effect of these grants at no more than 6,000 jobs in the first half of the 1990s, against expenditure of £500 million. Other aspects of the grants are questioned, such as their ability to attract foreign direct investment and their effect on productivity. This paper reviews these issues, focusing on the recent evidence for the Regional Selective Assistance scheme. It describes the nature and difficulties involved in policy evaluation, and finds that differences over the employment effect of the grants result from possible biases induced by the evaluation methodology and from differences in the job measure used. Overall, the paper argues that the regional grants are cost‐effective in employment terms, but that expenditure is small relative to the scale of the problem, so that an expansion of the grants may be desirable.     

FUND SUBSTITUTION AND THE INCENTIVE EFFECT OF PUBLIC INVESTMENT SUBSIDIES

This paper analyses the observed phenomenon of public for private fund substitution in industrial assistance, by examining the public and private sector funding of investment under different assumptions about the nature of the private capital market. This bears on the effectiveness of industrial subsidies, and has implications for welfare and the design of optimal assistance contracts. It is shown that fund substitution depends crucially on the elasticity of investment with respect to the user cost of capital in the without-subsidy position, and on the nature of any amount and rate constraints on the assistance contract.     

Informative Brand Advertising and Pricing Strategies in Internet Markets with Heterogeneous Consumer Search

The use of information intermediaries has been shown to undermine the effect of brand in online markets. In this paper, the effect of consumer search on the relationship between brand advertising and pricing strategies is analysed. Price data are taken from the leading UK motor insurance comparison website, with the advantage that prices can be related to the search characteristics of consumers and to the advertising expenditure of firms. The paper finds that more-advertised firms have lower price rankings at the comparison site, indicating that advertising is informative in this market. The main result is that consumer search weakens the relationship between advertising and pricing. An implication is that increased usage of price comparison sites will make informative brand advertising less important.     

Medieval or Modern? A Scholastic's View of Business Ethics, circa 1430

There are varying opinions about whether or not the field of business ethics has a history or is a development of more modern times. It is suggested that a book by a Dominican Friar, Johannes Nider, De Contractibus Mercatorum, written ca. 1430 and published ca. 1468 provides a basis for a history of over 500 years. Business ethics grew out of attempts to reconcile Biblical precepts, canon law, civil law, the teachings of the Church Fathers, and the writings of early philosophers with the realities of expanding economic activity. Nider's background is discussed as well as his book as an example of incunabula.Nider was one of the Scholastics who provided a link between Aristotle and later Reformation thinkers. In Nider we find caveat venditor as his moral guide to merchants as well as other surprisingly modern ideas such as justice in exchange; restitution for defective goods; the market as the final arbiter of value; and the importance of creating utility in products.     

Subsidies for Job Creation: Is Small Best?

Wisdom has it that direct financial assistance to small firms for employment creation may be poor use of resources since these firms have high failure rates. In this paper we identify another feature which works in the other direction, which suggests that small firms will be more responsive to assistance. This is related to these firms relatively poor access to private funds. Recent evidence is reported suggesting that proportionate grant assistance is more effective in small firms, but only in those firms which are new or relatively young. Explanations of this are considered related both to the cost of funds and to other factors.     

Tweetjacked: The Impact of Social Media on Corporate Greenwash

We theorize that social media will reduce the incidence of corporate greenwash. Drawing on the management literature on decoupling and the economic literature on information disclosure, we characterize specifically where this effect is likely to be most pronounced. We identify important differences between social media and traditional media, and present a theoretical framework for understanding greenwash in which corporate environmental communications may backfire if citizens and activists feel a company is engaging in excessive self-promotion. The framework allows us to draw out a series of propositions regarding the impact of social media on corporate decisions whether to greenwash, and what channels to use for environmental communication. We conclude with a number of suggestions for future research.     

POLITICAL PARTIES AND GOVERNMENT BEHAVIOUR

The paper attempts to explain and identify differences in party political behaviour in office, in terms of the weight they attach to unemployment and inflation. Reasons are advanced to suggest that incumbents do not take-up the median voter position, but instead pursue differentiated policies (i.e. make choices) which are both consistent with their known ideology (preferences) and with maximizing their share of the vote at the next election. The model is fitted with UK data, and the results are encouraging, providing some support for the notion that parties pursue politically-motivated policies throughout their term of office and not just in the run-up to elections.     

Accounting for Changes in Income Inequality: Decomposition Analyses for the UK, 1978–2008

We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types – notably the elderly and those with young children – which had relatively low incomes in the period to 1991 have seen their incomes converge with others.