Curating Local Knowledge: Experimental Evidence from Small Retailers in Indonesia

CentER Discussion Paper Series Nr. 2020-033

96 Pages Posted: 23 May 2019 Last revised: 15 Dec 2020

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: December 15, 2020

Abstract

Business practices and performance vary widely across businesses within the same sector. A key outstanding question is why profitable practices do not readily diffuse. We conduct a field experiment among urban retailers in Indonesia to study whether alleviating informational and behavioral frictions can facilitate such diffusion in a cost-effective manner. Through quantitative and qualitative field work, we curate a handbook that associates locally relevant practices with performance, and provides idiosyncratic implementation guidance informed by exemplary local retailers. We complement this handbook with two light-touch interventions to facilitate behavior change. A subset of retailers is invited to a documentary movie screening featuring the paths to success of exemplary peers. Another subset is offered two 30 minute personal visits by a local facilitator. A third group is offered both. Eighteen months later, we find significant impacts on practice adoption when the handbook is coupled with the two behavioral nudges, and up to a 35% increase in profits and 16.7% increase in sales. These findings suggest both informational and behavioral constraints are at play. The types of practices adopted map the performance improvements to efficiency gains rather than other channels. A simple cost-benefit analysis shows such locally relevant knowledge can be codified and scaled successfully at relatively low cost.

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, Curating Local Knowledge: Experimental Evidence from Small Retailers in Indonesia (December 15, 2020). CentER Discussion Paper Series Nr. 2020-033, 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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