What Kind of Business Advice Improves Small Business Productivity?

ERC Insight paper

Associated Themes
  • Productivity and performance

The UK has a longstanding productivity gap with major competitor economies. Knowledge-based explanations and policy instruments attract substantial attention, including the provision of formal advice for SMEs. This paper estimates the impact of formal business advice interventions on employee productivity. It also estimates the impacts of different advice topics to identify those more likely to enhance productivity. Quantitative analysis is conducted using recent UK data for the period 2015 to 2021. Statistical matching and treatment analysis control for the likelihood that firms which actively seek advice have different characteristics. Findings show that obtaining business advice, across all forms, raises productivity by 10 per cent. Topics associated with sizeable improvements suggest that advice focused on codified knowledge delivered by trusted professional practitioners could provide most traction on improving SME productivity. This has important implications for public policy support and the design of signposting activity.