What are We Learning from Business Training and Entrepreneurship Evaluations Around the Developing World?

By David J. McKenzie, Christopher Woodruff. Social Science Research Network, 2012

744 citations recorded by the source corpus.

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. This paper undertakes 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. It finds 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. The paper concludes by summarizing some directions and key questions for future studies.

Subfields: Applied Psychology, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/1b48cc7ec6e566c61d394e67b206002a7d936886

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Citations in the corpus

The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana (2016, background): “The issue of building financial management capability for small business owners in developing country settings has received increased attention in recent times (Bruhn and Zia 2013; Field, Jayachandran, and Pande 2010; McKenzie and Woodruff 2014).”
Generating Employment in Poor and Fragile States: Evidence from Labor Market and Entrepreneurship Programs (2015, background): “%) on wages.29 24van Lieshout et al. (2012) 25See McKenzie and Woodruff (2012); Cho and Honorati (2014).”
The New Empirical Economics of Management (2014, background): “23 See also the McKenzie and Woodruff (2012) survey of managerial RCT interventions which has similar qualitative conclusions.”
The Effects of Business Failure Experience on Successive Entrepreneurial Engagements: An Evolutionary Phase Model (2018, background): “…is argued that knowledge and narratives derived from past experiences in entrepreneurial contexts serve as learning schemas or guide to influence entrepreneurs’ strategic choices in subsequent entrepreneurial engagements (e.g., Jenkins et al., 2014; Mantere et al., 2013; McKenzie & Woodruff, 2013).”
Does Management Matter? Evidence from India (2011, neutral): “3 McKenzie and Woodruff (2012) provide a critical overview of these studies and other recent business training evaluations.”
Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland (2014, neutral): “Results of the entrepreneurship programmes also vary widely, with similar programmes yielding different outcomes in different places and for different groups (McKenzie and Woodruff 2014).”
Money or ideas ? a field experiment on constraints to entrepreneurship in rural Pakistan (2014, background): “…and enhancing business skills (De Mel, McKenzie and Woodruff, 2009; Karlan and Valdivia, 2010; Drexler, Fischer and Schoar, 2014; Calderon, Cunha and de Giorgi, 2013; Berge, Bjorvatn and Tungodden, Forthcoming; De Mel, McKenzie and Woodruff, 2012 and McKenzie and Woodruff, 2014 for a review).”
Learning and Earning: Evidence from a Randomized Evaluation in India (2017, background): “As McKenzie and Woodruff (2012) argue, the impacts of training may differ between the short and medium term, so measuring outcomes at multiple points in time will enable a better study of whether impacts continue to persist or not in the long-run.”
How does microfinance enhance entrepreneurial outcomes in emerging economies? The mediating mechanisms of psychological and social capital (2014, background): “in terms of increasing loan repayment rates and improving entrepreneurial outcomes (Bruhn et al., 2010; McKenzie and Woodruff, 2012).”