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Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment

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  • Marcel Fafchamps
  • Simon R. Quinn

Abstract

We run a novel field experiment to link managers of African manufacturing firms. The experiment features exogenous link formation, exogenous seeding of information, and exogenous assignment to treatment and placebo. We study the impact of the experiment on firm business practices outside of the lab. We find that the experiment successfully created new variation in social networks. We find significant diffusion of business practices only in terms of VAT registration and having a bank current account. This diffusion is a combination of diffusion of innovation and simple imitation. At the time of our experiment, all three studied countries were undergoing large changes in their VAT legislation.

Suggested Citation

  • Marcel Fafchamps & Simon R. Quinn, 2015. "Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment," NBER Working Papers 21132, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21132
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    Cited by:

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    2. Tadao Hoshino & Daichi Shimamoto & Yasuyuki Todo, 2020. "Accounting for Heterogeneity in Network Formation Behaviour: An Application to Vietnamese SMEs," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(5), pages 1042-1067, October.
    3. SHIMAMOTO Daichi & Yu Ri KIM & TODO Yasuyuki, 2019. "The Effect of Social Interactions on Exporting Activities: Evidence from Micro, Small, and Medium-Sized Enterprises in rural Vietnam," Discussion papers 19020, Research Institute of Economy, Trade and Industry (RIETI).
    4. Jing Cai & Adam Szeidl, 2018. "Interfirm Relationships and Business Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 133(3), pages 1229-1282.
    5. Dalton, Patricio & Rüschenpöhler, Julius & Uras, Burak & Zia, Bilal, 2019. "Local Best Practices for Business Growth," Other publications TiSEM fc650e2f-88cf-4d75-8257-f, Tilburg University, School of Economics and Management.
    6. Fafchamps, Marcel & Islam, Asad & Malek, Mohammad Abdul & Pakrashi, Debayan, 2020. "Can referral improve targeting? Evidence from an agricultural training experiment," Journal of Development Economics, Elsevier, vol. 144(C).
    7. Marcel Fafchamps & Simon Quinn, 2017. "Aspire," Journal of Development Studies, Taylor & Francis Journals, vol. 53(10), pages 1615-1633, October.
    8. Bisztray, Márta & Koren, Miklós & Szeidl, Adam, 2018. "Learning to import from your peers," Journal of International Economics, Elsevier, vol. 115(C), pages 242-258.
    9. Javier Mejia, 2018. "Social Networks and Entrepreneurship. Evidence from a Historical Episode of Industrialization," Documentos CEDE 016380, Universidad de los Andes - CEDE.
    10. Mattea Stein, 2021. "Know-how and Know-who: Effects of a Randomized Training on Network Changes Among Small Urban Entrepreneurs," CSEF Working Papers 622, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. Daichi Shimamoto & Yasuyuki Todo & Yu Ri Kim & Petr Matous, 2017. "Identifying and Decomposing Peer Effects on Decision-Making Using a Randomized Controlled Trial," Working Papers 1704, Waseda University, Faculty of Political Science and Economics.
    12. Comola, Margherita & Prina, Silvia, 2014. "Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes," IZA Discussion Papers 8641, Institute of Labor Economics (IZA).
    13. Lucas Figal Garone & Paula A. López Villalba & Alessandro Maffioli & Christian A. Ruzzier, 2020. "Productivity differences among firms in Latin American and the Caribbean," Working Papers 136, Universidad de San Andres, Departamento de Economia, revised Jan 2020.
    14. Hinh T. Dinh & Thomas G. Rawski & Ali Zafar & Lihong Wang & Eleonora Mavroeidi, 2013. "Tales from the Development Frontier : How China and Other Countries Harness Light Manufacturing to Create Jobs and Prosperity," World Bank Publications - Books, The World Bank Group, number 15763.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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