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Business training and female enterprise start-up, growth, and dynamics : experimental evidence from Sri Lanka

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  • de Mel, Suresh
  • McKenzie, David
  • Woodruff, Christopher

Abstract

The authors conduct a randomized experiment among women in urban Sri Lanka to measure the impact of the most commonly used business training course in developing countries, the Start-and-Improve Your Business program. They work with two representative groups of women: a random sample of women operating subsistence enterprises and a random sample of women who are out of the labor force but interested in starting a business. They track the impacts of two treatments -- training only and training plus a cash grant -- over two years with four follow-up surveys and find that the short and medium-term impacts differ. For women already in business, training alone leads to some changes in business practices but has no impact on business profits, sales or capital stock. In contrast, the combination of training and a grant leads to large and significant improvements in business profitability in the first eight months, but this impact dissipates in the second year. For women interested in starting enterprises, business training speeds up entry but leads to no increase in net business ownership by the final survey round. Both profitability and business practices of the new entrants are increased by training, suggesting training may be more effective for new owners than for existing businesses. The study also finds that the two treatments have selection effects, leading to entrants being less analytically skilled and poorer.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6145.

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Date of creation: 01 Jul 2012
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Handle: RePEc:wbk:wbrwps:6145

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Keywords: Primary Education; Competitiveness and Competition Policy; Business in Development; Business Environment; Access&Equity in Basic Education;

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References

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  1. repec:cge:warwcg:115 is not listed on IDEAS
  2. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2014. "Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana," Journal of Development Economics, Elsevier, vol. 106(C), pages 211-226.
  3. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2011. "Does Management Matter? Evidence from India," CEP Discussion Papers dp1042, Centre for Economic Performance, LSE.
  4. 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.
  5. Emran, M. Shahe & Morshed, A.K.M Mahbub & Stiglitz, Joseph E., 2011. "Microfinance and Missing Markets," MPRA Paper 41451, University Library of Munich, Germany.
  6. McKenzie, David, 2011. "Beyond baseline and follow-up : the case for more t in experiments," Policy Research Working Paper Series 5639, The World Bank.
  7. Bruhn, Miriam & Karlan, Dean & Schoar, Antoinette, 2012. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," Working Papers 100, Yale University, Department of Economics.
  8. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," Working Papers 136, European Bank for Reconstruction and Development, Office of the Chief Economist.
  9. Banerjee, Abhijit & Duflo, Esther, 2007. "What is Middle Class about the Middle Classes Around the World?," CEPR Discussion Papers 6613, C.E.P.R. Discussion Papers.
  10. Miriam Bruhn & David McKenzie, 2009. "In Pursuit of Balance: Randomization in Practice in Development Field Experiments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 200-232, October.
  11. 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.
  12. McKenzie, David J. & Woodruff, Christopher, 2013. "What are we learning from business training and entrepreneurship evaluations around the developing world?," CEPR Discussion Papers 9564, C.E.P.R. Discussion Papers.
  13. Kevane, Michael & Wydick, Bruce, 2001. "Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?," World Development, Elsevier, vol. 29(7), pages 1225-1236, July.
  14. 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.
  15. Claudia Martínez A. & Esteban Puentes & Jaime Ruiz-Tagle, 2013. "Micro-Entrepreneurship Training and Asset Transfers: Short Term Impacts on the Poor," Working Papers wp380, University of Chile, Department of Economics.
  16. Miriam Bruhn & Bilal Zia, 2013. "Stimulating managerial capital in emerging markets: the impact of business training for young entrepreneurs," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 5(2), pages 232-266, June.
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Cited by:
  1. Gabriela Calderón & Jesse M. Cunha & Giacomo De Giorgi, 2013. "Business Literacy and Development: Evidence From a Randomized Controlled Trial in Rural Mexico," Working Papers 742, Barcelona Graduate School of Economics.
  2. Cho, Yoonyoung & Honorati, Maddalena, 2013. "Entrepreneurship programs in developing countries : a meta regression analysis," Social Protection Discussion Papers 77168, The World Bank.
  3. McKenzie, David & Woodruff, Christopher, 2013. "What are we learning from business training and entrepreneurship evaluations around the developing world?," CAGE Online Working Paper Series 116, Competitive Advantage in the Global Economy (CAGE).
  4. repec:cge:warwcg:115 is not listed on IDEAS

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