This chapter presents the case for more widespread and reliable evaluation in the field of SME and entrepreneurship policy. It begins by providing the definition of evaluation developed by (Papaconstantinou and Polt, 1997[1]) and adopted in the 2007 edition of the OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes. The various components of this definition are discussed, including the need to: consider evaluation as a process rather than a one-off activity; determine impacts as systematically and objectively as possible; consider the cost-effectiveness with which programme objectives are met; and analyse the implementation and administrative management of the policy or programme. The chapter then underlines the key purposes of evaluation in terms of justifying expenditure of public resources and obtaining information for policy improvement.

This chapter reviews the state of play in SME and entrepreneurship policy evaluation. It begins by referring to the dearth of reliable evaluation evidence in SME and entrepreneurship policy. It then highlights how the evidence from reliable evaluations is offering mixed messages on the effectiveness of SME and entrepreneurship policies. The chapter goes on to discuss common broad problems in the generation of useful evaluation evidence for policy development. These are: failure to appropriately specify target groups when starting a programme; lack of reflection on the potential of alternative policies for achieving the same goals; lack of consideration of the impact of the timing of evaluations; and insufficient account taken of changes to the political context. Finally, the chapter draws out lessons and issues for evaluation practice.