Why are there (almost) no randomised controlled trial-based evaluations of business support programmes?

Based on the achievements of randomised controlled trials (RCTs) in medicine, and the need for effective government interventions in support of business, some have advocated for the use of RCTs in the evaluation of business support programmes (BSPs). Notwithstanding these recommendations, the use of RCTs in the evaluation of BSPs has been resisted by (almost) all. Policy makers and managers are correct in their reluctance to undertake RCT-based evaluations for four reasons. First, while RCTs require the random allocation of support, judicious programmes select firms on the basis of potential and amenability to support. Second, while RCTs require treatments that exhibit low variability, the most effective BSPs draw upon substantive knowledge to provide support that is customised. Third, BSPs aim to produce outliers—firms whose performance is exceptional. When outliers are present, very large samples will be required to produce reliable results. Finally, an RCT may not yield a meaningful contribution to knowledge. The strength of an RCT is its ability to estimate the magnitude of the treatment effect under controlled conditions. But where much depends on the nature of participants and circumstances, we seek evidence of what works, for whom, in which circumstances, and why.

Read More