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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

    ()
    (World Bank)

  • Woodruff, Christopher

    ()
    (University of Warwick)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6895.

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Length: 37 pages
Date of creation: Oct 2012
Date of revision:
Publication status: published in: World Bank Research Observer, 2013, [Online First]
Handle: RePEc:iza:izadps:dp6895

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

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References

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  1. repec:cge:warwcg:97 is not listed on IDEAS
  2. Bloom, Nicholas & Eifert, Benn & Mahajan, Aprajit & McKenzie, David & Roberts, John, 2010. "Does Management Matter?: Evidence from India," Research Papers 2074, Stanford University, Graduate School of Business.
  3. Dean Karlan & Ryan Knight & Christopher Udry, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," NBER Working Papers 18325, National Bureau of Economic Research, Inc.
  4. Nick Bloom & John Van Reenen, 2010. "Why do Management Practices Differ Across Firms and Countries?," CEP Occasional Papers 26, Centre for Economic Performance, LSE.
  5. 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.
  6. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
  7. 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.
  8. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2014. "Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka," Journal of Development Economics, Elsevier, vol. 106(C), pages 199-210.
  9. 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.
  10. 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.
  11. Mano, Yukichi & Iddrisu, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2012. "How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive? The Impacts of Experimental Basic Managerial Training," World Development, Elsevier, vol. 40(3), pages 458-468.
  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. McKenzie, David, 2011. "Beyond baseline and follow-up : the case for more t in experiments," Policy Research Working Paper Series 5639, The World Bank.
  14. Bruhn, Miriam & Karlan, Dean S. & Schoar, Antoinette S, 2012. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," CEPR Discussion Papers 8887, C.E.P.R. Discussion Papers.
  15. 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.
  16. 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.
  17. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are women more credit constrained ? experimental evidence on gender and microenterprise returns," Policy Research Working Paper Series 4746, The World Bank.
  18. 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.
  19. 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.
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Citations

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Cited by:
  1. 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.
  2. World Bank, 2013. "Europe 2020 Romania : Evidence-based Policies for Productivity, Employment, and Skills Enhancement," World Bank Other Operational Studies 16255, The World Bank.
  3. 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.
  4. Umidjon Abdullaev & Marcello Estevao, 2013. "Growth and Employment in the Dominican Republic," IMF Working Papers 13/40, International Monetary Fund.
  5. 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).
  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. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2012. "Business training and female enterprise start-up, growth, and dynamics : experimental evidence from Sri Lanka," Policy Research Working Paper Series 6145, The World Bank.
  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. 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).

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