Impact of the Chilean Supplier Development Program on the performance of SME and their large firm customers

This paper evaluates the impact of the Chilean Supplier Development Program, aimed at improving and stabilizing the commercial linkages between small and medium-sized suppliers and their large firm customers, during the period 2003-2008. Applying propensity score matching and difference-in-differences, we find that both groups of firms benefited from the coordination efforts. The program increased sales, employment, and the sustainability of small and medium-sized suppliers. It also increased the sales of large firms and raised their ability of becoming exporters. We also find that the timing of the effect is different for suppliers and large firms. While the effect on suppliers appeared one year after the firms enrolled in the program, the effect on large firms took two years to appear.