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Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya

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  • McKenzie, David

    (World Bank)

  • Puerto, Olga Susana

    (Youth Employment Network (UN, ILO, World Bank))

Abstract

A common concern with efforts to directly help some small businesses to grow is that their growth comes at the expense of their unassisted competitors. We test this possibility using a two-stage randomized experiment in Kenya which randomizes business training at the market level, and then within markets to selected businesses. Three years after training, the treated businesses are selling more, earn higher profits, and their owners have higher well-being. There is no evidence of negative spillovers on the competing businesses, and the markets as a whole appear to have grown in terms of number of customers and sales volumes. This market growth appears to come from enhanced customer service and new product introduction, generating more customers and more sales from existing customers. As a result, business growth in underdeveloped markets is possible without taking sales away from non-treated businesses.

Suggested Citation

  • McKenzie, David & Puerto, Olga Susana, 2017. "Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya," IZA Discussion Papers 10615, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10615
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    References listed on IDEAS

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    1. 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.
    2. Abhijit V. Banerjee & Esther Duflo, 2008. "What Is Middle Class about the Middle Classes around the World?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 3-28, Spring.
    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. David McKenzie & Christopher Woodruff, 2017. "Business Practices in Small Firms in Developing Countries," Management Science, INFORMS, vol. 63(9), pages 2967-2981, September.
    5. 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.
    6. 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.
    7. Carpena, Fenella & Cole, Shawn & Shapiro, Jeremy & Zia, Bilal, 2011. "Unpacking the causal chain of financial literacy," Policy Research Working Paper Series 5798, The World Bank.
    8. McKenzie, David, 2012. "Beyond baseline and follow-up: The case for more T in experiments," Journal of Development Economics, Elsevier, vol. 99(2), pages 210-221.
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    Citations

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    Cited by:

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    2. Pracht, Wyatt & Ricker-Gilbert, Jacob, 2022. "Building Sustainable Supply Chains: A Model of Youth Input Resellers in Kenya," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322141, Agricultural and Applied Economics Association.
    3. Batista, Catia & Sequeira, Sandra & Vicente, Pedro C., 2021. "Closing the Gender Profit Gap?," IZA Discussion Papers 14781, Institute of Labor Economics (IZA).
    4. Valentina A. Assenova, 2020. "Early-Stage Venture Incubation and Mentoring Promote Learning, Scaling, and Profitability Among Disadvantaged Entrepreneurs," Organization Science, INFORMS, vol. 31(6), pages 1560-1578, November.
    5. Evan Borkum & Paolo Abarcar & Laura Meyer & Matthew Spitzer, "undated". "Jordan Refugee Livelihoods Development Impact Bond Evaluation Framework," Mathematica Policy Research Reports 602dafe521fe4467854dcd45e, Mathematica Policy Research.
    6. Bensch, Gunther & Kluve, Jochen & Stöterau, Jonathan, 2021. "The market-based dissemination of energy-access technologies as a business model for rural entrepreneurs: Evidence from Kenya," Resource and Energy Economics, Elsevier, vol. 66(C).
    7. Jizhou Liu, 2023. "Inference for Two-stage Experiments under Covariate-Adaptive Randomization," Papers 2301.09016, arXiv.org.
    8. McKenzie, David, 2020. "If it needs a power calculation, does it matter for poverty reduction?," World Development, Elsevier, vol. 127(C).
    9. Buvinic, Mayra & Knowles, James C. & Witoelar, Firman, 2022. "The unfolding of women’s economic empowerment outcomes: Time path of impacts in an Indonesia trial," World Development, Elsevier, vol. 158(C).
    10. Higuchi, Yuki & Mhede, Edwin P. & Sonobe, Tetsushi, 2019. "Short- and medium-run impacts of management training: An experiment in Tanzania," World Development, Elsevier, vol. 114(C), pages 220-236.
    11. Lang, M & Seither, J, 2022. "The Economics of Women s Entrepreneurship: Evidence from Building Skills in Uganda," Documentos de Trabajo 020563, Universidad del Rosario.
    12. Dammert, Ana C. & Nansamba, Aisha, 2023. "Skills training and business outcomes: Experimental evidence from Liberia," World Development, Elsevier, vol. 162(C).
    13. Bulte, Erwin H. & Lensink, Robert & Winkel, Anne B., 2018. "The impact of a gender and business training on income hiding: An experimental study in Vietnam," Journal of Economic Behavior & Organization, Elsevier, vol. 148(C), pages 241-259.
    14. Hee-Seung Yang & Booyuel Kim & Rony Rodriguez-Ramirez, 2022. "Does the Small Business Programme Benefit Self-Employed Workers? Evidence from Nicaragua," Working papers 2022rwp-207, Yonsei University, Yonsei Economics Research Institute.
    15. Fox,Louise & Kaul,Upaasna, 2018. "The evidence is in : how should youth employment programs in low-income countries be designed ?," Policy Research Working Paper Series 8500, The World Bank.
    16. Gonzalez-Uribe, Juanita & Hmaddi, Ouafaa, 2022. "The multi-dimensional impacts of business accelerators: what does the research tell us?," LSE Research Online Documents on Economics 115461, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    business training; spillovers; microenterprise; market development;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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