Changing Business Practices of Micro and Small Enterprises: Evidence from an RCT with 12 Financial Service Providers

56 Pages Posted: 14 Jul 2021

See all articles by Alexandra Avdeenko

Alexandra Avdeenko

Center for Evaluation and Development (C4ED)

Markus Frölich

Center for Evaluation and Development; IZA Institute of Labor Economics; University of Mannheim

Simona Helmsmüller

Hochschule Bonn-Rhein-Sieg

Date Written: June 1, 2021

Abstract

Even with access to finance, few micro and small entrepreneurs grow their businesses pro- fessionally, possibly due to inefficient management. Using a randomized control trial, we measure the impact of a business training program frequently implemented worldwide. In Indonesia, the program worked with twelve large financial service providers who provided group training and/ or individual counseling to their clients. In line with the existing literature, we find no evidence of changes in business-related outcomes such as profits or sales. While most studies rely on evidence from few hundred entrepreneurs and hence may suffer from lack of precision, a large sample size from a panel of 3,975 entrepreneurs provides us with more confidence in our zero findings. However, we also find that effects vary across partner institutions with one bank achieving significant behavioural changes associated with greater marketing knowledge. Being able to compare the results across a dozen banks and cooperatives, our evaluation provides a new argument in the ongoing "training doesn't work" debate highlighting the role of partner selection in this and similar interventions.

JEL Classification: D22, L26, O12, O17

Suggested Citation

Avdeenko, Alexandra and Frölich, Markus and Helmsmüller, Simona, Changing Business Practices of Micro and Small Enterprises: Evidence from an RCT with 12 Financial Service Providers (June 1, 2021). CEPR Discussion Paper No. DP16265, Available at SSRN: https://ssrn.com/abstract=3886734

Alexandra Avdeenko (Contact Author)

Center for Evaluation and Development (C4ED) ( email )

O7, 3
Mannheim, 68161
Germany

Markus Frölich

Center for Evaluation and Development ( email )

O7, 3
Mannheim, 68161
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

University of Mannheim

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Simona Helmsmüller

Hochschule Bonn-Rhein-Sieg ( email )

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