Publication: Small Business Training to Improve Management Practices in Developing Countries: Reassessing the Evidence for 'Training Doesn’t Work'
Date
2020-09
ISSN
Published
2020-09
Author(s)
Abstract
Despite the popularity of business
training among policy makers, the use of business training
has faced increasing skepticism. This is, in part, fueled by
the fact that most of the first wave of randomized
experiments in developing countries could not detect
statistically significant impacts of training on firms'
profits or sales. This paper revisits and reassesses the
evidence for whether small business training works,
incorporating the results of more recent studies. A
meta-analysis of these estimates suggests that training
increases profits and sales on average by 5 to 10 percent.
The author argues that this is in line with what is
optimistic to expect given the relatively short length of
most training programs, and the expected return on
investment from the cost of such training. However, impacts
of this magnitude are too small for most experiments to
detect statistically. Emerging evidence is provided on five
approaches for improving the effectiveness of traditional
training by incorporating gender, kaizen methods,
localization and mentoring, heuristics, and psychology.
Training programs that incorporate these elements appear to
deliver improvements over traditional training programs on
average, although with considerable variation. Given that
training delivers some benefits for firms, the challenge is
then how to deliver a quality program on a cost-effective
basis at a much larger scale. Three possible approaches to
scaling up training are discussed: using the market, using
technology, or targeting and funneling firms.
Citation
“McKenzie, David. 2020. Small Business Training to Improve Management Practices in Developing Countries: Reassessing the Evidence for 'Training Doesn’t Work'. Policy Research Working Paper;No. 9408. © World Bank, Washington, DC. http://hdl.handle.net/10986/34506 License: CC BY 3.0 IGO.”
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