Local Best Practices for Business Growth

CentER Discussion Paper Series Nr. 2019-015

69 Pages Posted: 23 May 2019

See all articles by Patricio S. Dalton

Patricio S. Dalton

Tilburg University - Center for Economic Research (CentER)

Julius Rüschenpöhler

University of California at Berkeley; Center for Effective Global Action (CEGA)

Burak Uras

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Bilal Zia

World Bank - Development Research Group (DECRG)

Date Written: May 6, 2019

Abstract

Can best practices of successful business peers influence the efficiency and growth of small-scale enterprises? Does it matter how this information is disseminated? This paper conducts a field experiment among urban retail shop owners in Indonesia to address these research questions. Through extensive baseline quantitative and qualitative assessments, we develop a handbook of local best practices that associates specific business practices with performance and provides detailed implementation guidance informed by exemplary local shop owners. The handbook is distributed to a randomly selected sample of shop owners and is complemented with three experiential learning modules: one group is invited to watch a documentary video on experiences of highly successful peers, another is offered light in-shop assistance on the implementation of the handbook, and a third group is offered both. Eighteen months after the intervention, we find no effect of offering the handbook alone, but significant impact on practice adoption when the handbook is coupled with experiential learning. On business performance we find sizable and significant improvements as well, up to a 35% increase in profits and 16.7% in revenues. The types of practices adopted map these performance improvements to efficiency gains rather than other channels. The analysis suggests these interventions are simple, scalable, and highly cost-effective.

Keywords: Business Practices; Small-scale Enterprises; Peer Knowledge; Efficiency Gains; Social Learning

JEL Classification: O12; L26; M20; O31; O33; O35; O17; M50

Suggested Citation

Dalton, Patricio S. and Rüschenpöhler, Julius and Uras, Burak R. and Zia, Bilal, Local Best Practices for Business Growth (May 6, 2019). CentER Discussion Paper Series Nr. 2019-015. Available at SSRN: https://ssrn.com/abstract=3383456 or http://dx.doi.org/10.2139/ssrn.3383456

Patricio S. Dalton (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Julius Rüschenpöhler

University of California at Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Center for Effective Global Action (CEGA) ( email )

207 Giannini Hall
Berkeley, CA 94720-3310
United States

Burak R. Uras

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Bilal Zia

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

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

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