Learning to Grow from Peers: Experimental Evidence from Small Retailers in Indonesia

72 Pages Posted: 6 Aug 2019

See all articles by Patricio S. Dalton

Patricio S. Dalton

Tilburg University - Center for Economic Research (CentER)

Julius Ruschenpohler

University of California, Berkeley

Burak Uras

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

Bilal Zia

World Bank - Development Research Group (DECRG)

Date Written: July 8, 2019

Abstract

Business practices and performance vary widely among local peers. This paper identifies key determinants of such heterogeneity among a sample of small urban retail shops in Indonesia, and experimentally tests whether learning about the best practices of local peers is valuable for business growth. Through extensive baseline quantitative and qualitative fieldwork, the study develops a handbook that associates specific business practices with performance and provides detailed implementation guidance informed by exemplary local shop owners. Instead of offering formal training or in-depth counseling, this handbook is simply distributed to a randomly selected sample of shop owners and 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, the study finds no effect of offering the handbook alone, but significant impact on practice adoption when the handbook is coupled with experiential learning. On business performance, the study finds sizable and significant improvements as well, up to an increase of 35 percent in profits and an increase of 16.7 percent in revenues. The types of practices adopted map these performance improvements to efficiency gains rather than other channels. The analysis suggests that these interventions are simple, scalable, and highly cost-effective.

Keywords: Gender and Development, Educational Sciences, Transport Services, Hydrology, Private Sector Economics, Private Sector Development Law, Marketing

Suggested Citation

Dalton, Patricio S. and Ruschenpohler, Julius and Uras, Burak R. and Zia, Bilal, Learning to Grow from Peers: Experimental Evidence from Small Retailers in Indonesia (July 8, 2019). World Bank Policy Research Working Paper No. 8933, Available at SSRN: https://ssrn.com/abstract=3430547

Patricio S. Dalton

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

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Julius Ruschenpohler

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
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 (Contact Author)

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

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

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