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Measuring the unmeasured: Aggregating, anchoring, and adjusting to estimate small business performance

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  • Anderson, Stephen J.
  • Lazicky, Christy
  • Zia, Bilal

Abstract

Business sales and profits for small firms are notoriously difficult to measure, with multiple sources of measurement and recall error. This paper introduces a new survey methodology that combines data triangulation with dynamic adjustment to arrive at plausible estimates of these performance outcomes. Business data across three emerging markets show this aggregating, anchoring, and adjusting (AAA) method consistently outperforms the traditional self-reported measure of sales, while the improvement in profits is more nuanced. Consequently, the paper offers a “light” version that harnesses the gains of AAA in estimating sales to prime and elicit an aided recall of profits, which correlates highly with AAA profits and reduces survey time and cost. The gains in reliability and accuracy result in much higher statistical power of detecting impacts and estimating required sample sizes in field studies.

Suggested Citation

  • Anderson, Stephen J. & Lazicky, Christy & Zia, Bilal, 2021. "Measuring the unmeasured: Aggregating, anchoring, and adjusting to estimate small business performance," Journal of Development Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:deveco:v:151:y:2021:i:c:s0304387821000341
    DOI: 10.1016/j.jdeveco.2021.102655
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    2. Anderson, Stephen J. & Chintagunta, Pradeep & Vilcassim, Naufel J., 2023. "Virtual collaboration technology and international business coaching: examining the impact on marketing strategies and sales," LSE Research Online Documents on Economics 120474, London School of Economics and Political Science, LSE Library.
    3. Otis, Nicholas G. & Clarke, Rowan Philip & Delecourt, Solene & Holtz, David & Koning, Rembrand, 2023. "The Uneven Impact of Generative AI on Entrepreneurial Performance," OSF Preprints hdjpk, Center for Open Science.
    4. Julia Seither, 2021. "Keeping up with the Joneses: economic impacts of overconfidence in micro-entrepreneurs," NOVAFRICA Working Paper Series wp2108, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.

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    More about this item

    Keywords

    Microenterprises; Small firms; SMEs; Measurement; Sales; Profits; Underreporting; Evaluation; Survey methods;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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