Firm-level productivity growth in Northern Ireland:the impact of exporting, innovation and public financial assistance

Motivated by the historically poor productivity performance of Northern Ireland firms and the longstanding productivity gap with the UK, the aim of this thesis is to examine, through the use of firm-level data, how exporting, innovation and public financial assistance impact on firm productivity growth. These particular activities are investigated due to the continued policy focus on their link to productivity growth and the theoretical claims of a direct positive relationship. In order to undertake these analyses a newly constructed dataset is used which links together cross-sectional and longitudinal data over the 1998-2008 period from the Annual Business Survey, the Manufacturing Sales and Export Survey; the Community Innovation Survey and Invest NI Selective Financial Assistance (SFA) payment data. Econometric methodologies are employed to estimate each of the relationships with regards to productivity growth, making use in particular of Heckman selection techniques and propensity score matching to take account of critical issues of endogeneity and selection bias. The results show that more productive firms self-select into exporting but there is no resulting productivity effect from starting to export; contesting the argument for learning-by-exporting. Product innovation is also found to have no impact on productivity growth over a four year period but there is evidence of a negative process innovation impact, likely to reflect temporary learning effects. Finally SFA assistance, including the amount of the payment, is found to have no short term impact on productivity growth suggesting substantial deadweight effects and/or targeting of inefficient firms. The results provide partial evidence as to why Northern Ireland has failed to narrow the productivity gap with the rest of the UK. The analyses further highlight the need for access to comprehensive firm-level data for research purposes, not least to underpin robust evidence-based policymaking.

Mixing the grant cocktail:towards an understanding of the outcomes of financial support to small firms

One of the key policy objectives of government at national and regional level, is to overcome the constraints preventing local industry achieving greater competitiveness in the international market-place. This paper examines the impact of grant assistance to Northern Ireland small firms delivered over the period 1994 ^ 97 by the former Local Enterprise Development Unit through its Growth Business Support Programme (GBSP). Previous work by the authors showed that there was some tentative evidence to suggest a link between employment growth and grant aid provided to very small firms (fewer than 10 employees) assisted under the GBSP. The central objective of the empirical work reported in this paper is to extend the previous analysis by understanding the extent to which the value of financial assistance influences growth (employment, turnover, and productivity measures) and if differential impacts arise depending on the nature and timing (lag structures) of the grant assistance.

Evaluating the additionality of public sector assistance to Irish firms: a question of ownership?

This article presents an innovative approach to estimating the additionality of financial assistance awarded to firms by an Irish regional development agency. The 'self assessment approach' is used to derive estimates of deadweight and displacement for firms in the Shannon region of Ireland. Irish studies have derived high estimates of deadweight by international standards. In light of this, and the fact that successive Irish governments have placed emphasis on Foreign Direct Investment as an engine for growth, the primary objective here is to address the question of whether the type of firm ownership matters with respect to resulting deadweight and/or displacement estimates. The latter question is addressed using logistic regression analysis to test whether, ceteris paribus, firm ownership is a key-determining factor for estimates of deadweight and/or displacement. The results show that ownership does not matter in the case of deadweight, but regarding displacement there are differences between indigenous and foreign-owned firms albeit at very low levels. More precisely, as expected, indigenously owned firms are more likely to lead to higher estimates of displacement.

The use of counterfactual scenarios as a means to assess policy deadweight:an Irish case study

The evaluation of industrial policy interventions has attracted increasing policy and academic attention in recent years. Despite the widespread consensus regarding the need for evaluation, the issue of how to evaluate, and the associated methodological considerations, continue to be issues of considerable debate. The authors develop an approach to estimate the net additionality of financial assistance from Enterprise Ireland to indigenously owned firms in Ireland for the period 2000 to 2002. With a sample of Enterprise Ireland assisted firms, an innovative, self-assessment, in-depth, face-to-face, interview methodology was adopted. The authors also explore a way of incorporating the indirect benefits of assistance into derived deadweight estimate issue which is seldom discussed in the context of deadweight estimates. They conclude by reflecting on the key methodological lessons learned from the evaluation process, and highlight some pertinent evaluation issues which should form the focus of much future discussion in this field of research.

Estimating additionality and leverage:between public and private sector equity finance in Ireland (2000 – 2002)

This paper aims to contribute to the debate about the role of the public sector in stimulating greater use of private sector equity for business start-up and growth in two ways. First, to examine the extent to which the provision of public sector equity finance enables individual firms to raise additional funds in the private sector market place. Second, to consider the methodological implications for an economic impact assessment of industrial policy interventions (especially those which include an equity component) at the level of the individual firm. We assess the extent to which there may be indirect positive effects (externalities) associated with public sector financial assistance to individual firms and if so how they distort standard evaluation methodologies designed to estimate the level of additionality of that support. The paper draws upon the results of a recent study of the impact of Enterprise Ireland (EI) financial assistance to indigenous Irish industry in the period 2000 to 2002. The paper demonstrates that a process of re-calibration is necessary in estimates of economic impact in order to account for these positive externalities and the result in this study was a ‘boost’ to additionality. In operational and conceptual terms, the study underlines the importance of the relationship between private and public sector sources of equity finance as an important dynamic in the attempt by industrial and regional policy to stimulate the number of firms with viable investment proposals accessing external equity finance.

Air traffic controller reactions to computer assistance

The research was instigated by the Civil Aviation Authority (CAA) to examine the implications for air traffic controllers' (ATCO) job satisfaction of the possible introduction of systems incorporating computer-assisted decision making. Additional research objectives were to assess the possible costs of reductions in ATCO job satisfaction, and to recommend appropriate task allocation between ATCOs and computer for future systems design (Chapter 1). Following a review of the literature (Chapter 2) it is argued that existing approaches to systems and job design do not allow for a sufficiently early consideration of employee needs and satisfactions in the design of complex systems. The present research develops a methodology for assessing affective reactions to an existing system as a basis for making reommendations for future systems design (Chapter 3). The method required analysis of job content using two techniques: (a) task analysis (Chapter 4.1) and (b) the Job Diagnostic Survey (JDS). ATCOs' affective reactions to the several operational positions on which they work were investigated at three levels of detail: (a) Reactions to positions, obtained by ranking techniques (Chapter 4.2); (b) Reactions to job characteristics, obtained by use of JDS (Chapter 4.3); and (c) Reactions to tasks, obtained by use of Repertory Grid technique (Chapter 4.4). The conclusion is drawn that ATCOs' motivation and satisfaction is greatly dependent on the presence of challenge, often through tasks requiring the use of decision making and other cognitive skills. Results suggest that the introduction of systems incorporating computer-assisted decision making might result in financial penalties for the CAA and significant reductions in job satisfaction for ATCOs. General recommendations are made for allocation of tasks in future systems design (Chapter 5).