Local Best Practices for Business Growth
CentER Discussion Paper Series Nr. 2019-015
69 Pages Posted: 23 May 2019
Date Written: May 6, 2019
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: Suggested Citation