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Optimizing Small Business: Technical Assistance with Nudges

The Milken Institute conducted a pilot project exploring ways to improve the efficacy of small business technical assistance programs through the application of behavioral science intervention known as a “nudge” (Thaler and Sunstein 2008). Four nudges were applied to improve the learning, engagement, and productivity of small-business owners and therein their business operations and financing. A nine-month pilot study was executed across seven regional Small Business Development Center (SBDC) networks in California and Texas.

The pilot study demonstrated that nudges are a light-touch, low-cost intervention easily integrated into existing SBDC processes without imposing a significant burden on SBDC advisors. The evidence from California supported that nudging is a powerful intervention toward accessing capital, but the evidence from Texas did not. Given the importance of SBDCs’ scale and reach, the divergent findings for the two states merit a more in-depth nationwide study on ways of identifying ways to optimize this small business technical assistance.