Government Tools and Assistive Tools

Government Tools and Assistive Tools

DOI: 10.4018/978-1-7998-5685-6.ch007
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The understanding of the difficulties in overcoming the gap, with the importance of maturing TSUs into complete firms, makes the involvement of the government in assisting the transition important. General aspects of the conditions and restraints on government support are presented followed by the reasons for government involvement. The main need for government support, to overcome market failure, is presented and explained as is the importance of the TSU economically and socially. The requirements in terms of learning and developing capabilities as well as the difference between the needs of internal actions and out-sourcing is clarified. The difference between financial and non-financial support is explained, as are the differences between general support (e.g., standardization) and firm specific support. Some of the specific tools (e.g., beta-site support, marketing entry support tools) are presented. Their types and purposes are described in general, with a reference to other sources for those interested in reading more.
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The importance of the TSU for the economy as an engine for growth or at least stability in the economic system is fairly clear. It is therefore important for those in charge of developing the economy that the TSUs have a smooth transition to the next stage or risk the collapse of the entire sector of TSU due to lack of continuance. The special conditions of the TSU have found expression in the development of special tools to assist the TSU. There are private tools in which the market is filling the gaps in order to enjoy the economic benefits resulting from the TSU1. However, there are also cases where the free or private market fails to get involved. Due to high risks, or other reasons. In these cases, there is ground for government or public intervention to compensate for the market failure and assist the TSUs in the transition. That is the rationale behind the non-private tools. In this chapter, after discussing the reasons for public support tools and their characteristics as well as risks, some examples are given of such tools, not all of them are financial aid. It is also important to distinguish between the specific aid (financial or not) given to a specific firm, and general aid to support TSUs as a sector, or type of enterprise.

Key Terms in this Chapter

Non-Financial Aid: A similarly aimed support which is not financial but can take other forms (e.g., mentoring support, general lenient for TSU regulation).

Market Entry: The introduction into the market of a new product or technology. This is the first time the specific product or technology (of the specific enterprise) is presented to the market (market segment) and this would determine in most cases how the product will be incorporated by the market, and the market share it will acquire finally. This is a strategic action and requires both planning and market understanding as well as risk management.

Beta-Site Testing: This is an advanced prototype testing that is carried out at a potential client site, or otherwise mimicking real market conditions for testing the product and its value to the clients.

Market Failure: A lack of positive action from the private market, or private entities to support a commercial activity. This is often due to perceived high risk, or lack of clear benefits resulting to the private entities involved. It means that certain activities are not supported by private entities even if these activities would benefit the economy in general. In that case it is often up-to public (government) entities to get involved and make supporting the activities more attractive to the private sector or support the activities directly. This is done in order to benefit the economy in general.

Financial Aid: Support either by grant, loan or loan guarantee of funds aimed at assisting (in our case) the TSU in overcoming barriers that are not well supported by private market support.

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