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

Abstract

Despite the popularity of business training among policy-makers, its use has faced increasing scepticism. Most of the first randomized experiments could not detect statistically significant impacts of training on firm profits or sales. I reassess the evidence for whether small business training works, incorporating more recent results. A meta-analysis of these estimates shows that training increases profits and sales on average by 5–10 per cent. This is in line with what is optimistic to expect, but impacts of this magnitude are too small for most experiments to detect. I then discuss five approaches for improving the effectiveness of traditional training by incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. The challenge is then how to deliver a quality programme on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funnelling firms.

Building Sustainable Supply Chains: A Model of Youth Input Resellers in Kenya

“…Using the yearly baseline revenue mean of 13,400 KSH from the pilot, we assumed an increase of 5 percent of baseline revenue as a result of the training. 10 This would be in line with the average increase in sales from business training interventions as discussed in McKenzie (2021). We based our standard deviation assumptions based off the standard deviation of 0.05 for sales in McKezie and 9 Five of the treatment groups received capital equivalent to $12.50 and put up $2.50 in collateral.…”

“…Our intervention counteracts this point by providing treatment youth with start-up capital along with training in business concepts and post-harvest grain management. McKenzie (2021) finds that business training programs in developing countries have had mixed levels of success. On average they increased firm profits and sales by 5 to 10 percent.…”

Assessment of Management Competencies According to Coherence with Managers’ Personalities

“…In training activities, the emphasis involves experience and awareness of the importance of teamwork and collective decisions. In implementing these activities, it is necessary to provide feedback concerning the assessment of managerial competencies and managers' personality characteristics [34][35][36][37].…”

The impacts of the COVID-19 pandemic on micro, small, and medium enterprises in Asia and their digitalization responses

“…Second, the sample firms have an entrepreneur for whom the NPO in the country knew his or her contact address. According to the recent studies, firms in developing countries, especially microenterprises, are poorly managed, and the vast majority of entrepreneurs in developing counties do not know that training and coaching can improve the business practices that matter for the performance of their firms ( Bloom and van Reenen (2010) ; Higuchi et al (2015) ; McKenzie and Woodruff (2017) ; Bruhn et al (2018) ; Higuchi et al (2019) ; McKenzie (2021) ]. Since the MSMEs in our sample have a connection with the NPO in their country, our sample is unlikely to represent ordinary MSMEs in developing countries.…”