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close this bookInternational Best Practice in Micro and Small Enterprise Development - Working Paper 2 - Micro and Small Enterprise Development and Poverty Alleviation in Thailand - Project ILO/UNDP: THA/99/003 (ILO-ISEP - ILO - UNDP, 2000, 80 p.)
close this folder2. Assessing business development services
View the document(introduction...)
View the document2.1 Indicators of good practice
View the document2.2 Assessment of MSE needs
View the document2.3 Assessing performance of BDS providers

2.1 Indicators of good practice

This section discusses the meaning of good practice and the use of benchmarks for assessing the performance of service providers. Good practice in BDS interventions is defined here with respect to four essential levels of impact and four broad performance criteria. The impact should be measured at the enterprise level (i.e. changes in the behaviour and capacity of the owner of the enterprise); the meso or service provider's level (i.e. changes in performance); the household level (improvements in living conditions resulting from the better performance of the MSE); and at the macro level (changes to the policy and regulatory environment resulting from the provision of sustainable and better quality BDS). However, this working paper will focus on impact at the enterprise and meso levels only.

The main performance criteria used to measure good practice are:

· Outreach - i.e. number of enterprises and organizations reached by the interventions;

· Efficiency - i.e. how resources are used by the service provider for implementing its interventions;

· Effectiveness - i.e. whether or not the interventions achieved their stated objectives; and

· Sustainability - as previously defined in Chapter 1.

It may be difficult to measure the performance of business development service providers based on the above criteria, especially because there may be conflicts between some of the criteria (e.g. strong outreach may be achieved to the detriment of impact at the enterprise level).

Given the above criteria, it is necessary to develop qualitative and quantitative indicators of good practice. One may choose one or more indicators when taking into consideration the specific objective. While it is possible to find long lists of indicators in the literature, it will be necessary to develop practical indicators that reflect local circumstances.

There are two main types of indicators. Firstly, there are those pertaining to the service provider (internal indicators), such as efficiency and outreach, which measure the performance of the provider but may not give useful information on the impact of its services on the actual enterprises. Secondly, there are those pertaining to the ultimate objective of the provider's intervention, such as the creation of large numbers of growth-oriented enterprises.

While quantitative indicators (e.g. the number of enterprises serviced each year) may be easier to apply and to use in evaluations of the service provider, they can be misleading. For example, while the logbooks of a provider may show that contacts were established with thousands of entrepreneurs, it is plausible that only a few actually benefited from the services. The contrary could also be true - the number of entrepreneurs may be low, but most of them may have benefited significantly from the services.

Qualitative indicators are more difficult to apply, but can yield extremely important findings on both the business development service providers and their clients. These may include changes in behaviour, which could have important long-term effects on the enterprise than, for example, a short-term assistance in marketing. While one can find a large number of examples of indicators in the literature, it is best to develop one's own indicators to reflect local circumstances, intervention objectives, and the characteristics of the clients.

Responsibility should be assigned to the business development service providers to develop indicators of business development, although they could also benefit from technical assistance from specialised organizations. In assessing the service providers themselves, it may be necessary to involve relevant government departments or donors to decide which indicators to use. These "outsiders" may also use their own staff or consultants to assess the performance of the BDS service providers. In addition, the business development service providers may also wish to assess their own performance, whether they benefit from subsidies and external support or not.