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What are we learning from business training and entrepreneurship evaluations around the developing world?

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Author Info

  • McKenzie, David J.
  • Woodruff, Christopher

Abstract

Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. We undertake a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. We find that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. We conclude by summarizing some directions and key questions for future studies.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9564.

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Date of creation: Jul 2013
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Handle: RePEc:cpr:ceprdp:9564

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Keywords: business training; consulting; firm productivity; randomized experiments;

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References

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  1. Erica Field & Seema Jayachandran & Rohini Pande, 2010. "Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India," American Economic Review, American Economic Association, vol. 100(2), pages 125-29, May.
  2. Nick Bloom & Ben Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2010. "Does management matter?: evidence from India," LSE Research Online Documents on Economics 36366, London School of Economics and Political Science, LSE Library.
  3. Karlan, Dean S. & Knight, Ryan & Udry, Christopher, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," CEPR Discussion Papers 9100, C.E.P.R. Discussion Papers.
  4. Kjetil Bjorvatn & Bertil Tungodden, 2010. "Teaching Business in Tanzania: Evaluating Participation and Performance," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 561-570, 04-05.
  5. Martin Valdivia & Dean Karlan, 2006. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 941, Economic Growth Center, Yale University.
  6. Mano, Yukichi & Iddrisu,, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2011. "How can micro and small enterprises in Sub-Saharan Africa become more productive? the impacts of experimental basic managerial training," Policy Research Working Paper Series 5755, The World Bank.
  7. John Gibson & David McKenzie, 2007. "Using Global Positioning Systems in Household Surveys for Better Economics and Better Policy," World Bank Research Observer, World Bank Group, vol. 22(2), pages 217-241, September.
  8. repec:cge:warwcg:97 is not listed on IDEAS
  9. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 1-32, July.
  10. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2010. "What Capital Is Missing in Developing Countries?," American Economic Review, American Economic Association, vol. 100(2), pages 629-33, May.
  11. McKenzie, David, 2011. "How can we learn whether firm policies are working in africa ? challenges (and solutions?) for experiments and structural models," Policy Research Working Paper Series 5632, The World Bank.
  12. McKenzie, David, 2009. "Impact assessments in finance and private sector development : what have we learned and what should we learn ?," Policy Research Working Paper Series 4944, The World Bank.
  13. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "Business Training and Female Enterprise Start-up, Growth, and Dynamics: Experimental evidence from Sri Lanka," CAGE Online Working Paper Series 98, Competitive Advantage in the Global Economy (CAGE).
  14. Marcel Fafchamps & David McKenzie & Simon Quinn & Christopher Woodruff, 2010. "Using PDA consistency checks to increase the precision of profits and sales measurement in panels," CSAE Working Paper Series 2010-19, Centre for the Study of African Economies, University of Oxford.
  15. John Gibson & David McKenzie, 2007. "Using the Global Positioning System (GPS) in Household Surveys For Better Economics and Better Policy," Working Papers in Economics 07/04, University of Waikato, Department of Economics.
  16. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
  17. Nicholas Bloom & John Van Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 203-24, Winter.
  18. Pablo Fajnzylber & William Maloney & Gabriel Montes Rojas, 2006. "Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico," World Bank Economic Review, World Bank Group, vol. 20(3), pages 389-419.
  19. McKenzie, David, 2011. "Beyond baseline and follow-up : the case for more t in experiments," Policy Research Working Paper Series 5639, The World Bank.
  20. Mariam Bruhn & Dean Karlan & Antoinette Schoar, 2012. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," Working Papers 1010, Economic Growth Center, Yale University.
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Citations

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Cited by:
  1. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "Business Training and Female Enterprise Start-up, Growth, and Dynamics: Experimental evidence from Sri Lanka," CAGE Online Working Paper Series 98, Competitive Advantage in the Global Economy (CAGE).
  2. Jonathan Argent & Britta Augsburg & Imran Rasul, 2013. "Livestock asset transfers with and without training: evidence from Rwanda," IFS Working Papers W13/23, Institute for Fiscal Studies.
  3. Sonobe, Tetsushi & Otsuka, Keijiro, 2012. "The Role of Training in Fostering Cluster-Based Micro and Small Enterprises Development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. World Bank, 2013. "Europe 2020 Romania : Evidence-based Policies for Productivity, Employment, and Skills Enhancement," World Bank Other Operational Studies 16255, The World Bank.
  5. Umidjon Abdullaev & Marcello Estevao, 2013. "Growth and Employment in the Dominican Republic," IMF Working Papers 13/40, International Monetary Fund.
  6. Sara Johansson de Silva & Pierella Paci & Josefina Posadas, 2014. "Lessons Learned and Not Yet Learned from a Multicountry Initiative on Women's Economic Empowerment," World Bank Publications, The World Bank, number 16377, October.
  7. Beaman, Lori & Magruder, Jeremy & Robinson, Jonathan, 2014. "Minding small change among small firms in Kenya," Journal of Development Economics, Elsevier, vol. 108(C), pages 69-86.
  8. Nguimkeu, Pierre, 2014. "A structural econometric analysis of the informal sector heterogeneity," Journal of Development Economics, Elsevier, vol. 107(C), pages 175-191.
  9. Cho, Yoon Y. & Honorati, Maddalena, 2013. "Entrepreneurship Programs in Developing Countries: A Meta Regression Analysis," IZA Discussion Papers 7333, Institute for the Study of Labor (IZA).

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