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

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

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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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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  1. 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.
  2. 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.
  3. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are women more credit constrained ? experimental evidence on gender and microenterprise returns," Policy Research Working Paper Series 4746, The World Bank.
  4. Bloom, Nicholas & Eifert, Benn & Mahajan, Aprajit & McKenzie, David & Roberts, John, 2010. "Does Management Matter?: Evidence from India," Research Papers 2074, Stanford University, Graduate School of Business.
  5. Gabriela Calderón & Jesse M.Cunha ; & Giacomo De Giorgi , 2013. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Working Papers 2013-24, Banco de México.
  6. 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.
  7. 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.
  8. Bruhn, Miriam & Karlan, Dean S. & Schoar, Antoinette S, 2012. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," CEPR Discussion Papers 8887, C.E.P.R. Discussion Papers.
  9. 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.
  10. Esther Duflo & Abhijit Banerjee, 2008. "What is Middle Class About the Middle Classes Around the World?," Working Papers id:1363, eSocialSciences.
  11. Attanasio, Orazio & Augsburg, Britta & de Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2014. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," Discussion Papers, Research Unit: Economics of Change SP II 2014-303, Social Science Research Center Berlin (WZB).
  12. 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.
  13. Emran, M. Shahe & Morshed, A.K.M Mahbub & Stiglitz, Joseph E., 2011. "Microfinance and Missing Markets," MPRA Paper 41451, University Library of Munich, Germany.
  14. 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.
  15. 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.
  16. 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.
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