Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development

Karlan, Dean; Knight, Ryan; Udry, Christopher

doi:10.2139/ssrn.2226588

Cited by 26 publications

(15 citation statements)

References 24 publications

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“…This increases power, but if the training has large effects for a few firms and small effects for most, truncating or trimming may eliminate the very effect the study is trying to detect. Karlan et al (2012) argue that the prospect of a "tail" event may induce firms to experiment with new methods and techniques, such as those taught in training or by consultants. Truncation should be preferred to trimming for this reason.…”

Section: Powermentioning

confidence: 99%

“…The closest to the business training experiments is the work of Karlan et al (2012), who study a mix of 160 male and female tailors in Ghana with 5 or fewer workers. They used local consultants from Ernst and Young in Ghana, who met with the tailors in visits of 30 minutes to 1 hour several times a month over one year, with the average firm receiving 10 hours of consultant time over a year, at zero cost to the firm.…”

Section: Individual Consultingmentioning

confidence: 99%

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What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?

McKenzie¹,

Woodruff²

2013

The World Bank Research Observer

393

141

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Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. We undertake a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. We find that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. We conclude by summarizing some directions and key questions for future studies.

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Section: Powermentioning

confidence: 99%

Section: Individual Consultingmentioning

confidence: 99%

What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?

McKenzie¹,

Woodruff²

2013

The World Bank Research Observer

393

141

View full text Add to dashboard Cite

show abstract

“…Third, recently a number of other field experiments in developing countries (e.g., Drexler, Fischer, and Schoar 2010;Karlan and Valdivia 2011;Bruhn and Zia 2011;Bruhn, Karlan, and Schoar 2012;Karlan, Knight, and Udry 2012) have begun to estimate the impact of basic business training and advice on micro-and small enterprises.…”

Section: Introductionmentioning

confidence: 99%

Does Management Matter? Evidence from India *

Bloom¹,

Eifert²,

Mahajan³

et al. 2012

The Quarterly Journal of Economics

934

201

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A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investigate this, we ran a management field experiment on large Indian textile firms. We provided free consulting on management practices to randomly chosen treatment plants and compared their performance to a set of control plants. We find that adopting these management practices raised productivity by 17% in the first year through improved quality and efficiency and reduced inventory, and within three years led to the opening of more production plants. Why had the firms not adopted these profitable practices previously? Our results suggest that informational barriers were the primary factor explaining this lack of adoption. Also, because reallocation across firms appeared to be constrained by limits on managerial time, competition had not forced badly managed firms to exit. JEL Codes: L2, M2, O14, O32, O33.

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“…Karlan et al (2012) find that a capital grant even lowered profits, while Banerjee et al (2013) detect a positive impact, but only for existing, relatively larger and the most profitable microbusinesses. Only Marcours et al (2012) find that cash grants for investment resulted in higher profits from non-agricultural self-employment activities more generally.…”

Section: Access To Finance Interventionsmentioning

confidence: 83%

Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Worldwide 600 million jobs are needed over the next 15 years to keep employment rates at their current level. Governments, non-governmental organizations and donors spend on targeted programs and broader policies to enhance employment creation and the creation of new firms. Because most employment in low and middle income countries is in micro, small and medium-sized enterprises, these firms are especially targeted by such interventions. Despite these efforts, not much is known about which of these interventions are really effective and under which conditions particular interventions work. This systematic review synthesizes the existing evidence on the impact of these programs. Overall the review shows that creating employment is a very complex challenge. Many conditions have to be met before interventions in favor of individual enterprises do not only improve business practices and performance but also lead to additional jobs. A striking finding is that the study design matters for the impacts found; randomized controlled trials find systematically smaller effects than quasi-experimental studies. A significant shortcoming of the literature is that almost nothing is known about long term effects and cost effectiveness. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: D22, G21, J21, O10

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Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development

Cited by 26 publications

References 24 publications

What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?

What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?

Does Management Matter? Evidence from India *

Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries

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