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

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 that 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. Point estimates of the spillovers on the competing businesses are small and not statistically significant, and the markets as a whole have grown in terms of sales volume. (JEL J16, L25, L26, L53, O14)

Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work’

“…One use of mentors has been to have local mentors (or, in some cases, instructors) follow-up after classroom training with several in-person visits intended to reinforce the content taught in training and help firms with any implementation issues. This approach was tested by Drexler et al (2014) in the Dominican Republic, Valdivia (2015) in Peru, McKenzie and Puerto (2020) in Kenya, and Gine and Mansuri (2020) in Pakistan. None of these studies finds any sustained impact of these follow-up visits.…”

Microentrepreneurship in Developing Countries

“…The main channel for improved profits seems to be reductions in supply costs due to changing suppliers. In contrast, personalized mentoring had no additional benefits over standard business training in the experiment analyzed in McKenzie and Puerto (2017).…”

“…Many of them find no significant positive effects of training on business performance (Karlan and Valdivia, 2011;Drexler et al, 2014;Fiala, 2018). But others find that business training increases profits, survival, or growth in the long- (Blattman et al, 2016;McKenzie and Puerto, 2017) or short-term (Mano et al, 2012;de Mel et al, 2014;Field et al, 2016).…”

Early-Stage Venture Incubation and Mentoring Promote Learning, Scaling, and Profitability Among Disadvantaged Entrepreneurs

“…Some aspects of human capital, particularly knowledge and skills, lend themselves to being developed through various interventions. For instance, in-class training (Field et al 2010, McKenzie and Puerto 2017, Anderson et al 2018) and external management consulting (e.g., Bloom et al 2010;Bloom et al 2013aBloom et al , 2013b) can hone entrepreneurs' knowledge and skills.…”