Government support and small- and medium-sized enterprise (SME) performance: the moderating effects of diagnostic and support services

Abstract

Using a sample of 42,261 Korean SMEs from Small Business Corporation (SBC) survey over a period of 2006-2011, this study investigates the pivotal role of government-sponsored nonmonetary diagnostic and support services in helping Korean SMEs improve their survival and growth in conjunction with government loan financing. We find that financial resources from the Korean government indeed help Korean SMEs survive, but do not necessarily help them achieve higher annual assets and sales growth. However, when government-based diagnostic and support services are combined with public loan financing, they prove to be effective in enhancing the Korean SMEs' annual assets and sales growth.