ABSTRACT. This paper investigates the need for providing
follow up business development instruments to small rural
businesses that have benefited from grant aid assistance
schemes. A sample of 76 small rural businesses in lagging
areas of insular Greece is included in the present survey, and
ranks thirteen possible business growth instruments. It is found
that business development instruments are ranked according
to each firm’s economic and human capital characteristics.
Furthermore, most firms need the concurrent provision of
more than one instrument. Likewise, a mixture of business
specific schemes, regulatory interventions and infrastructure
projects, better serves their business development needs.
Results from the present survey indicate that an integrated
business development strategy in lagging areas of Greece
should be supported by modern, flexibly tailored combinations
of assistance, using complex, multi-instrument sets of support
to development efforts.
1. Introduction and background
Business development approaches have been asso-
ciated with the use of the traditional instruments
of grant aid and financial assistance aiming to
increase invested capital and stimulate employ-
ment creation by assisted firms. Financial assis-
tance has, by far, been the end point of regional
and rural development policies and not just one
stage within an integrated support framework.
Small businesses in Greece are suffering from a
wide range of problems associated to their specific
characteristics (Liargovas, 1998). These charac-
teristics are related to the firm’s capital structure
and access to private and public financial sources.
They also relate to their human capital character-
istics, production methods and the use of appro-
priate modern technology, the lack of public
infrastructure in most lagging areas and the
unfavorable external economic environment that
is prolonged by the lack of planning controls and
Business needs extend far beyond mere finan-
cial assistance, to the provision of schemes
designed for use by individual firms, to the stip-
ulation of regulatory (or de-regulatory) actions and
the provision of infrastructure.
refer to instruments intended to assist firms, with
marketing the produced goods and services, to
provide quality business advice, technical support,
access to modern technology, etc. Regulatory
actions refer to the provision and dissemination
of standards and to the de-regulation of certain
regulated markets, such as the labour market.
Infrastructure schemes refer to instruments pro-
viding the appropriate transportation and com-
munication networks or to the provision of
suitable business premises such as incubators and
An issue of the utmost importance is to devise
a set of instruments that will accompany finan-
cial assistance schemes, will allow firms to
develop and will prepare them to adjust to the
changing economic circumstances. Providing the
correct set of business development instruments
ensures that an initial local rural development plan
(bottom-up) for marginal areas will meet the
The Day After Grant-Aid: Business
Development Schemes for Small Rural
Firms in Lagging Areas of Greece
Small Business Economics 14: 125–136, 2000.
2000 Kluwer Academic Publishers. Printed in the Netherlands.
Final version accepted on December 1, 1999
Dimitris Skuras and Efthalia Dimara
Department of Economics
University of Patras
University Campus – Rio
P.O. Box 1391
National Agricultural Research Foundation –
Agricultural Economics and Social Research Institute