The relationships between business support, managerial practices and firm performance over time

Abstract

Governments have long favoured business advisory services and grants as key tools for supporting firms. While existing research generally underscores their positive impact on firm performance, there is less clarity on how this support influences specific managerial practices. These practices, which encompass a firm's strategies and activities, are thought to be first shaped by business support, which then in turn more directly impact firm performance. In this research paper, we analyse data from the Longitudinal Small Business Survey (LSBS) between 2018 and 2022 to examine the links between receiving business support in 2018, the managerial practices implemented in 2019, and firm performance (turnover growth and employee growth). Our study reveals that although business advice and government grants enhance the likelihood of adopting managerial practices, their individual and combined direct and indirect effects on firm performance are marginal. Additionally, the impact of business support on performance seems lagged, as SMEs require time to implement the support before observing any noticeable improvements. We discuss the implications of these findings and highlight the need for further research to explore these results in greater detail.