Pathways to Profits: Identifying Separate Channels of Small Firm Growth Through Business Training

69 Pages Posted: 21 Sep 2016

See all articles by Stephen Anderson

Stephen Anderson

Stanford Graduate School of Business

Rajesh Chandy

London Business School

Bilal Zia

World Bank - Development Research Group (DECRG)

Date Written: July 28, 2016

Abstract

This paper identifies separate and unique pathways to profits among small businesses in South Africa that are exposed to marketing or finance training in a randomized control study. The marketing group achieves greater profits by adopting a growth focus on higher sales, greater investments in stock and materials, and hiring more employees. The finance group achieves similar profit gains but through an efficiency focus on lower costs. Both groups show significantly higher adoption of business practices related to their respective training program. Consistent with a growth focus, marketing/sales skills are significantly more beneficial to firm owners who ex ante have less exposure to different business contexts. In contrast and in line with an efficiency focus, entrepreneurs who have been running more established businesses prior to training benefit significantly more from finance/accounting skills.

Keywords: Technology Innovation, Technology Industry

Suggested Citation

Anderson, Stephen and Chandy, Rajesh and Zia, Bilal, Pathways to Profits: Identifying Separate Channels of Small Firm Growth Through Business Training (July 28, 2016). World Bank Policy Research Working Paper No. 7774, Available at SSRN: https://ssrn.com/abstract=2841812

Stephen Anderson

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Rajesh Chandy

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Bilal Zia (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

MC3-445
1818 H Street, N.W.
Washington, DC 20433

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