Changing use of external business advice and government supports by SMEs in the 1990s.

This paper uses cross-sectional surveys of 1991 and 1997, a panel survey of firms surviving between 1991 and 1997 and comparison with a further cross-sectional survey in 1999, to compare the levels of use by SMEs of external business advice. The resource-based theory of the firm indicates that SMEs seek advice in order to increase their competitive capacity. Over time, increasing competition between SMEs is expected to lead to increasing use of advice. However, the paper demonstrates that only modest changes over time have occurred in aggregate use of external advice by SMEs, and these are not statistically significant. This suggests that earlier growth in external business advice services may now have plateaued. There are some significant changes of use by source (increasing for advertising, personnel and recruitment, new technology and computer services; and decreasing for taxation and financial management advice). The paper is one of the first to assess sector patterns. Publishing, manufacturing and other business activities are the largest users of advice. Sector differences are shown to be considerable and need to be taken account in future analyses. For government advice services, the shift from a centralized and fragmented structure (Small Firms Service and Enterprise Initiative) to a decentralized and coordinated structure (Training and Enterprise Councils and Business Link) had no impact on greater market penetration except for the greater participation by the larger SMEs in use of Investors in People. Increased use of government sources has occurred, however, through enterprise agencies and regional development bodies. Further comparison of developments up to 1999 suggests a possible decline in use of advice as a whole, and a significant decline in use of Business Link. This indicates that the new bodies of the Small Business Service and the Learning and Skills Council may struggle to meet their market penetration targets