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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

2.3 Assessing performance of BDS providers

A good assessment should be based upon solid monitoring of the BDS support. The cost of an assessment should not be excessive, and it should not exceed ten per cent of the total project budget. The assessment exercise should be both rigorous and practical, with clear recommendations for further actions.

While many manuals are available on how to assess the performance of organizations in general, assessing the performance of BDS service providers is a complex undertaking not normally catered for in such manuals. There are three major effects which are difficult to assess, and which could considerably reduce the reliability of the assessment. The first is that business development services are only one factor among many that affect the growth and competitiveness of enterprises. It is, therefore, necessary to isolate the effects of BDS, and this can usually be done by the use of a control group. However, many evaluators are reluctant to use this technique for ethical and cost reasons. Secondly, it is difficult to estimate the "snowballing" effect of the BDS, where other entrepreneurs who are not formally covered by the intervention obtain information and ideas from the same intervention. Finally, business services provided to an entrepreneur by a government agency or not-for-profit organization may actually have a negative effect on another entrepreneur who did not benefit from these services (e.g. cases of excess production of the same good in a limited geographical area), thereby creating a displacement effect. Thus, any negative effects should be set off against the positive ones.

The difficulties mentioned above clearly show that assessing the performance of a BDS service provider is very complex. It requires highly qualified staff and can be somewhat expensive. These kinds of assessments are very important in view of the large amount of money spent every year on promoting business development service providers. Countries cannot afford to ignore this issue and, therefore, government agencies and other organizations should carry out some extremely professional and in-depth assessments to determine whether the public investment in this area is justified. The assessments should not only focus on specific business development service providers, they should preferably cover the range of different BDS approaches used by a number of providers.