Work

Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico

Year: 2013

Type: report

Study designs: Randomized Controlled Trial, Clinical Trial

Abstract: A large share of the poor in developing countries run small enterprises, often earning low incomes.This paper explores whether the poor performance of businesses can be explained by a lack of basic business skills.We randomized the offer of a free, 48-hour business skills course to female entrepreneurs in rural Mexico.We find that those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government.Indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages, are economically meaningful, yet imprecisely measured.We present a simple model of experience and learning that helps interpret our results, and consistent with the theoretical predictions, we find that "low-quality" entrepreneurs are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.

Source: National Bureau of Economic Research

DOI: 10.3386/w19740

Authors: Gabriela Calderon, Jesse Cunha, Giacomo De Giorgi

Institutions: Universitat Autònoma de Barcelona, National Bureau of Economic Research, California Polytechnic State University, Naval Postgraduate School

Language: English

Topic: Entrepreneurship Studies and Influences

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Quality education, Reduced inequalities

Open Access status: green

Funders: Ministerio de Economía y Competitividad, School of Humanities and Sciences, Stanford University