IDEAS home Printed from https://ideas.repec.org/p/dia/wpaper/dt201612.html
   My bibliography  Save this paper

Does Managerial Capital also Matter Among Micro and Small Firms in Developing Countries?

Author

Listed:
  • Axel Demenet

    (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)

Abstract

The lack of managerial capital was recently put forward as a constraint for developing countries firms (Bruhn et al., 2010). While established for large and medium firms, its importance for micro enterprises has yet to be proven: evidence found in Development Economics and Entrepreneurial Studies is, at best, mixed. This paper uses a panel of Vietnamese micro, small and medium enterprises to investigate this question in a comparative manner. The data let building a multidimensional measure of Managerial Capital, and allows consistent estimates of firm-level productivity. Even though bias might still affect the estimation of the average influence of managerial capital on productivity, I am able to show that this influence is as important for micro firms as it is for medium ones.

Suggested Citation

  • Axel Demenet, 2016. "Does Managerial Capital also Matter Among Micro and Small Firms in Developing Countries?," Working Papers DT/2016/12, DIAL (Développement, Institutions et Mondialisation).
    • Handle: RePEc:dia:wpaper:dt201612
    as

    Download full text from publisher

    File URL: https://dial.ird.fr/wp-content/uploads/2021/10/2016-12Managerialcapital.pdf
    File Function: First version, 2016
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mahmut Yasar & Rafal Raciborski & Brian Poi, 2008. "Production function estimation in Stata using the Olley and Pakes method," Stata Journal, StataCorp LP, vol. 8(2), pages 221-231, June.
    2. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    3. Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-161, May.
    4. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2009. "Products and Productivity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 681-709, December.
    5. 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.
    6. Nicholas Bloom & Mark Schankerman & John Van Reenen, 2013. "Identifying Technology Spillovers and Product Market Rivalry," Econometrica, Econometric Society, vol. 81(4), pages 1347-1393, July.
    7. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2013. "Does Management Matter? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 1-51.
    8. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    9. Dean Karlan, Ryan Knight, and Christopher Udry, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development," Working Papers 312, Center for Global Development.
    10. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1351-1408.
    11. Pascaline Dupas & Jonathan Robinson, 2013. "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 163-192, January.
    12. 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.
    13. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2010. "What Capital Is Missing in Developing Countries?," American Economic Review, American Economic Association, vol. 100(2), pages 629-633, May.
    14. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    15. Alejandro Drexler & Greg Fischer & Antoinette Schoar, 2014. "Keeping It Simple: Financial Literacy and Rules of Thumb," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 1-31, April.
    16. David McKenzie & Christopher Woodruff, 2017. "Business Practices in Small Firms in Developing Countries," Management Science, INFORMS, vol. 63(9), pages 2967-2981, September.
    17. John Rand & Finn Tarp, 2012. "Firm-Level Corruption in Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 60(3), pages 571-595.
    18. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    19. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    20. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 423-423.
    21. Grimm, Michael & Paffhausen, Anna Luisa, 2015. "Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries," Labour Economics, Elsevier, vol. 32(C), pages 67-85.
    22. Daniel A. Ackerberg & Kevin Caves & Garth Frazer, 2015. "Identification Properties of Recent Production Function Estimators," Econometrica, Econometric Society, vol. 83, pages 2411-2451, November.
    23. Newman, Carol & Rand, John & Talbot, Theodore & Tarp, Finn, 2015. "Technology transfers, foreign investment and productivity spillovers," European Economic Review, Elsevier, vol. 76(C), pages 168-187.
    24. David McKenzie, 2011. "How Can We Learn Whether Firm Policies Are Working in Africa? Challenges (and Solutions?) For Experiments and Structural Models -super-†," Journal of African Economies, Centre for the Study of African Economies, vol. 20(4), pages 600-625, August.
    25. Nicholas Bloom & Aprajit Mahajan & David McKenzie & John Roberts, 2010. "Why Do Firms in Developing Countries Have Low Productivity?," American Economic Review, American Economic Association, vol. 100(2), pages 619-623, May.
    26. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank Group, vol. 29(1), pages 48-82.
    27. Jeffrey G. Covin & Dennis P. Slevin, 1989. "Strategic management of small firms in hostile and benign environments," Strategic Management Journal, Wiley Blackwell, vol. 10(1), pages 75-87, January.
    28. Danny Miller, 1983. "The Correlates of Entrepreneurship in Three Types of Firms," Management Science, INFORMS, vol. 29(7), pages 770-791, July.
    29. Rand, John & Torm, Nina, 2012. "The Benefits of Formalization: Evidence from Vietnamese Manufacturing SMEs," World Development, Elsevier, vol. 40(5), pages 983-998.
    30. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    31. Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, vol. 104(3), pages 112-114, September.
    32. Héctor Montiel Campos & Luis S. Alvarado Acuna & José Pablo Nuno de la Parra & Francisco A. Aguilar Valenzuela, 2013. "Entrepreneurial Orientation in Mexican Microenterprises," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 9(3), pages 5-20.
    33. John Rand & Finn Tarp, 2011. "Does Gender Influence the Provision of Fringe Benefits? Evidence From Vietnamese SMEs," Feminist Economics, Taylor & Francis Journals, vol. 17(1), pages 59-87, January.
    34. 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.
    35. Amil Petrin & Brian P. Poi & James Levinsohn, 2004. "Production function estimation in Stata using inputs to control for unobservables," Stata Journal, StataCorp LP, vol. 4(2), pages 113-123, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Axel Demenet & Quynh Hoang, 2018. "How important are management practices for the productivity of small and medium enterprises?," WIDER Working Paper Series 69, World Institute for Development Economic Research (UNU-WIDER).
    2. Axel Demenet & Quynh Hoang, 2018. "How important are management practices for the productivity of small and medium enterprises?," WIDER Working Paper Series wp-2018-69, World Institute for Development Economic Research (UNU-WIDER).
    3. Gabriela Calderon & Jesse M. Cunha & Giacomo De Giorgi, 2020. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 68(2), pages 507-540.
    4. Rodríguez-Lesmes, Paul & Gutierrez, Luis H. & Urueña-Mejia, Juan Carlos & Ortiz, Andres & Medina Rojas, Ivan & Romero, Mauricio, 2023. "The role of local promoters in helping microentrepreneurs engage in digital business training. The case of Expertienda," Documentos de Trabajo 20902, Universidad del Rosario.
    5. Stephen J. Anderson & Rajesh Chandy & Bilal Zia, 2018. "Pathways to Profits: The Impact of Marketing vs. Finance Skills on Business Performance," Management Science, INFORMS, vol. 64(12), pages 5559-5583, December.
    6. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Van Reenen, 2014. "The New Empirical Economics of Management," NBER Working Papers 20102, National Bureau of Economic Research, Inc.
    7. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    8. Beber, Bernd & Dworschak, Regina & Lakemann, Tabea & Lay, Jann & Priebe, Jan, 2021. "Skills Development and Training Interventions in Africa: Findings, Challenges, and Opportunities," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 247426.
    9. Higuchi, Yuki & Nam, Vu Hoang & Sonobe, Tetsushi, 2015. "Sustained impacts of Kaizen training," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 189-206.
    10. 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.
    11. Jing Cai & Adam Szeidl, 2018. "Interfirm Relationships and Business Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 133(3), pages 1229-1282.
    12. Claudia Custodio & Diogo Mendes & Daniel Metzger, 2021. "The impact of financial education of executives on financial practices of medium and large enterprises," NOVAFRICA Working Paper Series wp2105, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    13. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank, vol. 29(1), pages 48-82.
    14. Nakasone, Eduardo & Torero, Maximo, 2014. "Soap Operas for for Female Micro Entrepreneur Training," MPRA Paper 61302, University Library of Munich, Germany.
    15. Troy D. Smith, 2015. "Private Equity Investment in India: Efficiency vs Expansion," Discussion Papers 15-011, Stanford Institute for Economic Policy Research.
    16. Tetsushi Sonobe & Keijiro Otsuka, 2015. "Cluster-Based MSE Development: The Role of Kaizen Training," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(4), pages 609-626.
    17. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    18. Robert T. Jensen & Nolan H. Miller, 2018. "Market Integration, Demand and the Growth of Firms: Evidence from a Natural Experiment in India," Working Papers id:12824, eSocialSciences.
    19. Eduardo Nakasone & Maximo Torero, 2014. "Soap Operas for Female Micro Entrepreneur Training," IDB Publications (Working Papers) 87916, Inter-American Development Bank.
    20. Tetsushi Sonobe & Keijiro Otsuka, 2012. "The Role of Training in Fostering Cluster-Based MSE Development," GRIPS Discussion Papers 12-14, National Graduate Institute for Policy Studies.

    More about this item

    Keywords

    informal sector; microenterprises; household business; managerial capital; entrepreneurship;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dia:wpaper:dt201612. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Loic Le Pezennec (email available below). General contact details of provider: https://edirc.repec.org/data/diallfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.