This study addresses the research question: “What are the causal effects of proactive restructuring programs on SME employment and financial performance?” We empirically analyze the effects of Korea Credit Guarantee Fund’s Value-up Program on employment and financial performance of small and medium-sized enterprises (SMEs). The Value-up Program represents a proactive approach to corporate restructuring, intervening before firms face severe financial distress, in contrast to traditional ex-post restructuring that occurs after insolvency has materialized.
This study employed PSM-DID methodology combining Propensity Score Matching (PSM) and Difference-in-Differences (DID) for 2,085 SMEs with consecutive financial statements from 2019 to 2024. Through this approach, we controlled for selection bias due to both observable characteristics and unobservable time-invariant characteristics to estimate the pure treatment effect of the Value-up Program. The analysis sample consisted of 97 companies that participated in the 2021 Value-up Program (treatment group) and 1,988 companies selected as preliminary candidates but did not participate (control group). The analysis results showed that the Value-up Program had a strong effect on SME job creation, with significant employment increases of 20.66% (p < 0.05) in PSM analysis and 13.4% (p < 0.05) in PSM-DID analysis. In terms of sales growth, PSM-DID analysis showed a significant improvement of 17.2% (p < 0.01). Among profitability indicators, ROA increased by 1.30%p (p < 0.05), showing significant improvement, while operating margin and ROE did not achieve statistical significance. Additionally, insolvency risk analysis confirmed a significant prevention effect of 4.8%p (p < 0.01) based on ATE. Robustness tests including parallel trend assumption tests and placebo tests yielded consistent results, ensuring the reliability of the analysis.
This study contributes to the literature by providing the first empirical evidence on the effectiveness of proactive restructuring policies in the Korean context. Our findings suggest that early intervention through the Value-up Program generates positive employment and growth effects, though the comparison is limited to firms within the pre-selected candidate pool. The results highlight the importance of considering employment effects in SME support policy design and evaluation. However, as the analysis was conducted during the program support period, long-term effects after program completion remain to be examined in future research.