An evaluation of public support measures for private external consultancies to SMEs in the Walloon Region of Belgium

This paper is a contribution to the somewhat scarce literature on the scientific evaluation of small business policies, and evaluates public support measures for private external consultants to SMEs in the Walloon Region of Belgium. A critical analysis of the supply and the demand, an evaluation of the efficiency and the effectiveness of policy measures, and real policy recommendations are presented. The rationale for offering subsidized private external consultancies as a mixed product was confirmed by the SMEs in the Walloon Region. In general, the consultants received favourable evaluations from the SMEs. However, our empirical findings corroborate the shortcomings reported in the literature on the supply of publicly financed advisory services. We found a profusion of support services, which led to confusion, a lack of conceptual integration of services, the exclusion of certain categories of SMEs, and adverse selection where the consultants push forward their own solutions. Subsidized private external consultancies to SMEs are effective in the Walloon Region, in that SMEs refer to their positive qualitative impact. However, they have no significant influence on net job creation, turnover, or financial indicators. These findings reflect the qualitative targets of the SMEs in using private external consultancy and their singularity. To enhance the efficiency and effectiveness of the support measures for the use of private external consultancies by SMEs in the Walloon Region and to avoid adverse selection, we recommend that the neo-Austrian approach is adopted. This means that the real needs of the entrepreneur and of the SME, and symmetric power relations between SMEs on the one side and public authorities and consultants on the other side, determine the publicly financed advisory process.