Motivation, self-selection and effects of the business advice program in Slovakia

This research analyses the effects of the Slovak business advisory scheme upon firm performance. We examined the effects of the scheme upon the business performance of some 900 firms in four different samples. Our research has some novel elements. Data on economic effects rely on the annual accounts of companies, rather than on surveys. We paid attention to self-selection of applicants and constructed counterfactual samples for both supported and unsupported applicants. Firms supported by the business advice performed significantly better than did those in the control samples. The effect, however, disappeared once self-selection of the scheme was taken into account. Evidence from the participant survey indicated significant non-monetary benefits of the scheme, e.g., the acquisition of analytical and managerial skills. Self-selection may help to identify a pool of highly motivated firms. The next phase of the scheme may target these firms with more tailored and higher-intensity support.