Why owls fly while ostriches flounder: an empirical study of advice takers and non-advice takers

On account of its continued focus in public policy, external advice for small firms - so-called “guided preparation”- has become a topic of perennial research interest for small business scholars for over 25 years. Despite this, evidence surrounding the efficacy of this form of entrepreneurial support is far from certain. Drawing on a major longitudinal dataset this paper examines the differences between SMEs who take advice and those who do not. Our findings are quite emphatic: small firms who take external advice (i.e. Owls), are in general better quality and more informed firms. By contrast SMEs who don’t seek advice (i.e. Ostriches) tend to be less innovative, less profitable, and more financially constrained than their advice seeking counterparts. The work has important implications for policy makers which suggest the need to encourage more pro-active SME advice takers, especially for innovative SME seeking recourse to strategic forms of advice.