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

  • McKenzie, David

    (World Bank)

  • Woodruff, Christopher

    (University of Warwick)

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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Paper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 116.

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Date of creation: 2013
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Handle: RePEc:cge:wacage:116
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  1. 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.
  2. Nick Bloom & John Van Reenen, 2010. "Why do Management Practices Differ Across Firms and Countries?," CEP Occasional Papers 26, Centre for Economic Performance, LSE.
  3. 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.
  4. 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.
  5. 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.
  6. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2011. "Does Management Matter? Evidence from India," NBER Working Papers 16658, National Bureau of Economic Research, Inc.
  7. 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.
  8. Dean Karlan & Ryan Knight & Christopher Udry, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Working Papers 1014, Economic Growth Center, Yale University.
  9. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," IZA Discussion Papers 3743, Institute for the Study of Labor (IZA).
  10. Dean Karlan & Martin Valdivia, 2006. "Teaching entrepreneurship: Impact of business training on microfinance clients and institutions," Natural Field Experiments 00282, The Field Experiments Website.
  11. McKenzie, David, 2011. "Beyond baseline and follow-up : the case for more t in experiments," Policy Research Working Paper Series 5639, The World Bank.
  12. Kjetil Bjorvatn & Bertil Tungodden, 2009. "Teaching business in Tanzania: Evaluating participation and performance," CMI Working Papers 9, CMI (Chr. Michelsen Institute), Bergen, Norway.
  13. 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.
  14. 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.
  15. 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.
  16. 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.
  17. Fafchamps, Marcel & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2012. "Using PDA consistency checks to increase the precision of profits and sales measurement in panels," Journal of Development Economics, Elsevier, vol. 98(1), pages 51-57.
  18. 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.
  19. Tetsushi Sonobe & Aya Suzuki & Keijiro Otsuka & Vu Hoang Nam, 2012. "KAIZEN for Managerial Skills Improvement in Small and Medium Enterprises: An Impact Evaluation Study in a knitwear cluster in Vietnam," Working Papers 29, Development and Policies Research Center (DEPOCEN), Vietnam.
  20. 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.
  21. 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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