Technology Extension Services, Intangible Capital, and SME Productivity Before and During the COVID-19 Pandemic

This study examines the impact of Technology Extension Services (TES) on SME productivity in Japan using an endogenous switching regression model and panel data from 2016 to 2023. Focusing on Kohsetsushi , Japan’s public support centers, the analysis finds that TES adoption improves productivity in both pre-pandemic and pandemic periods. Firms with greater intangible capital gained more, especially during the pandemic, highlighting the importance of absorptive capacity under crisis. Selection patterns indicate that more productive firms tended to adopt TES, though some capable firms abstained, consistent with comparative advantage. Geographic proximity constrained access before the pandemic but mattered less as digital delivery expanded. The results show how internal capabilities, external shocks, and spatial access interact to shape the effectiveness of public technology support.