Publication: Pathways to Profits: Identifying Separate Channels of Small Firm Growth through Business Training
Loading...
Files in English
630 downloads
Date
2016-07
ISSN
Published
2016-07
Author(s)
Editor(s)
Abstract
This paper identifies separate and unique pathways to profits among small businesses in South Africa that are exposed to marketing or finance training in a randomized control study. The marketing group achieves greater profits by adopting a growth focus on higher sales, greater investments in stock and materials, and hiring more employees. The finance group achieves similar profit gains but through an efficiency focus on lower costs. Both groups show significantly higher adoption of business practices related to their respective training program. Consistent with a growth focus, marketing/sales skills are significantly more beneficial to firm owners who ex ante have less exposure to different business contexts. In contrast and in line with an efficiency focus, entrepreneurs who have been running more established businesses prior to training benefit significantly more from finance/accounting skills.
Link to Data Set
Citation
“Anderson, Stephen J.; Chandy, Rajesh; Zia, Bilal. 2016. Pathways to Profits: Identifying Separate Channels of Small Firm Growth through Business Training. Policy Research Working Paper;No. 7774. © World Bank. http://hdl.handle.net/10986/24855 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication From Patriarchy to Policy(Washington, DC: World Bank, 2025-05-29)Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.Publication Global Socio-economic Resilience to Natural Disasters(Washington, DC: World Bank, 2025-05-22)Most disaster risk assessments use damages to physical assets as their central metric, often neglecting distributional impacts and the coping and recovery capacity of affected people. To address this shortcoming, the concepts of well-being losses and socio-economic resilience—the ability to experience asset losses without a decline in well-being—have been proposed. This paper uses microsimulations to produce a global estimate of well-being losses from, and socio-economic resilience to, natural disasters, covering 132 countries. On average, each $1 in disaster-related asset losses results in well-being losses equivalent to a $2 uniform national drop in consumption, with significant variation within and across countries. The poorest income quintile within each country incurs only 9% of national asset losses but accounts for 33% of well-being losses. Compared to high-income countries, low-income countries experience 67% greater well-being losses per dollar of asset losses and require 56% more time to recover. Socio-economic resilience is uncorrelated with exposure or vulnerability to natural hazards. However, a 10 percent increase in GDP per capita is associated with a 0.9 percentage point gain in resilience, but this benefit arises indirectly—such as through higher rate of formal employment, better financial inclusion, and broader social protection coverage—rather than from higher income itself. This paper assess ten policy options and finds that socio-economic and financial interventions (such as insurance and social protection) can effectively complement asset-focused measures (e.g., construction standards) and that interventions targeting low-income populations usually have higher returns in terms of avoided well-being losses per dollar invested.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Profits of Wisdom(Published by Oxford University Press on behalf of the World Bank, 2019-12-24)Business training programs in low-income settings have shown only limited impacts on firm revenues and profits, particularly for female entrepreneurs. A randomized design was used to compare the impacts of two types of business training programs targeting women with established small businesses in urban Tanzania. The basic version relied on in-class sessions to strengthen the participants’ managerial and technical skills. In the enhanced version, training was supplemented by visits from business coaches to the sites of participants’ activities, as well as other services tailored to their individual needs. The basic training had no impact on business practices or outcomes. The enhanced training positively impacted the adoption of new practices but had no effects on revenue or profits. However, the average masks large heterogeneous effects: only more experienced entrepreneurs benefited from the program. This finding suggests that more careful targeting can improve the impact of business training programs.Publication The Profits of Wisdom(World Bank, Washington, DC, 2017-12)Business training programs in low-income settings have shown limited, if any, impacts on firm revenues and profits, particularly for female entrepreneurs. This paper uses a randomized design to compare the impacts of two types of business training programs targeting women with established small businesses in urban Tanzania. The basic version of the training relied on in-class sessions to strengthen the managerial and technical skills of the participants. In the enhanced version, training was supplemented by individual visits from business coaches to the sites of participants’ activities, as well as other services tailored to their individual needs. The study finds no impact of the basic training on business practices and business outcomes. Participants in the enhanced training are more likely to adopt new practices, but show no effects for revenue or profits, on average. However, the average masks large heterogeneous effects: entrepreneurs with low levels of experience show reduced revenues; those with more experience benefit from the program. This finding suggests that business training programs may have greater impacts if they are more carefully targeted.Publication Impact Evaluation of Small and Medium Enterprise Programs in Latin America and the Caribbean(World Bank, 2011)This report was co-funded by research grant from the World Bank's research committee for a regional study evaluating Small and Medium Enterprise (SME) Support Programs in Latin America and support from the poverty reduction and economic management division of the Latin America and Caribbean Region of the World Bank. The objective of the study was to rigorously evaluate SME programs in four Latin American countries Mexico, Chile, Colombia and Peru to gain insights into whether SME programs work, which programs perform better than others, and why. This report should be of interest to country governments, policymakers with responsibilities for SMEs, local researchers and the private sector in the region, as well as World Bank staff and bilateral donors. However, the findings and conclusions expressed in this report are entirely those of the authors, and do not necessarily represent the opinions of the World Bank, its Board of Directors or the countries it represents.Publication The Medium-Term Impact of Entrepreneurship Education on Labor Market Outcomes(World Bank, Washington, DC, 2019-01)Despite the widespread popularity of entrepreneurship education, there is thin evidence on its effectiveness in improving employment outcomes over the medium to long term. A potential time lag between entrepreneurial intentions and actions is sometimes presented as a reason why employment impacts are rarely observed. Based on a randomized control trial among university students in Tunisia, this paper studies the medium-term impacts of entrepreneurship education four years after students' graduation. The paper complements earlier evidence that documented small, short-term impacts on entry into self-employment and aspirations toward the future one year after graduation. The medium-term results show that the impacts of entrepreneurship education were short-lived. There are no sustained impacts on self-employment or employment outcomes four years after graduation. There are no lasting effects on latent entrepreneurship either, and the short-term increase in optimism also receded.Publication Using Experimental Evidence to Inform Firm Support Programs in Developing Countries(World Bank, Washington, DC, 2020-10)Countries design programs for supporting firms, with varying levels of success. Firm growth is constrained by several factors, such as low firm capabilities (e.g. management), availability of finance, and access to markets. Based on the available experimental evidence on firm support programs in developing countries, this paper makes three broad observations. First, there are huge knowledge gaps in understanding the success of instruments that alleviate firm constraints. Various instruments, such as early-stage equity finance, incubators, and accelerators, remain untested due to the lack of good design, results framework, or monitoring and evaluation systems and so on. Second, since these interventions are expensive, policy makers expect such programs to be designed more effectively to pursue their objectives. However, evidence provides little guidance on the criterion for firm selection because the existing evaluations of instruments reveal little information on the heterogeneous impact by firm characteristics, such as the age, size, sector, and location of firms. Third, most interventions seek to address only one of the broad constraints faced by firms. To this end, the paper concludes with a novel proposal for a firm support program that attempts to sequentially address multiple constraints to firm growth. This program will be implemented in Malawi through the "Financial Inclusion and Entrepreneurship Scaling" project.
Users also downloaded
Showing related downloaded files
Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication South Asia Development Update, April 2024: Jobs for Resilience(Washington, DC: World Bank, 2024-04-02)South Asia is expected to continue to be the fastest-growing emerging market and developing economy (EMDE) region over the next two years. This is largely thanks to robust growth in India, but growth is also expected to pick up in most other South Asian economies. However, growth in the near-term is more reliant on the public sector than elsewhere, whereas private investment, in particular, continues to be weak. Efforts to rein in elevated debt, borrowing costs, and fiscal deficits may eventually weigh on growth and limit governments' ability to respond to increasingly frequent climate shocks. Yet, the provision of public goods is among the most effective strategies for climate adaptation. This is especially the case for households and farms, which tend to rely on shifting their efforts to non-agricultural jobs. These strategies are less effective forms of climate adaptation, in part because opportunities to move out of agriculture are limited by the region’s below-average employment ratios in the non-agricultural sector and for women. Because employment growth is falling short of working-age population growth, the region fails to fully capitalize on its demographic dividend. Vibrant, competitive firms are key to unlocking the demographic dividend, robust private investment, and workers’ ability to move out of agriculture. A range of policies could spur firm growth, including improved business climates and institutions, the removal of financial sector restrictions, and greater openness to trade and capital flows.Publication Remarks at the United Nations Biodiversity Conference(World Bank, Washington, DC, 2021-10-12)World Bank Group President David Malpass discussed biodiversity and climate change being closely interlinked, with terrestrial and marine ecosystems serving as critically important carbon sinks. At the same time climate change acts as a direct driver of biodiversity and ecosystem services loss. The World Bank has financed biodiversity conservation around the world, including over 116 million hectares of Marine and Coastal Protected Areas, 10 million hectares of Terrestrial Protected Areas, and over 300 protected habitats, biological buffer zones and reserves. The COVID pandemic, biodiversity loss, climate change are all reminders of how connected we are. The recovery from this pandemic is an opportunity to put in place more effective policies, institutions, and resources to address biodiversity loss.Publication Economic Recovery(World Bank, Washington, DC, 2021-04-06)World Bank Group President David Malpass spoke about the world facing major challenges, including COVID, climate change, rising poverty and inequality and growing fragility and violence in many countries. He highlighted vaccines, working closely with Gavi, WHO, and UNICEF, the World Bank has conducted over one hundred capacity assessments, many even more before vaccines were available. The World Bank Group worked to achieve a debt service suspension initiative and increased transparency in debt contracts at developing countries. The World Bank Group is finalizing a new climate change action plan, which includes a big step up in financing, building on their record climate financing over the past two years. He noted big challenges to bring all together to achieve GRID: green, resilient, and inclusive development. Janet Yellen, U.S. Secretary of the Treasury, mentioned focusing on vulnerable people during the pandemic. Kristalina Georgieva, Managing Director of the International Monetary Fund, focused on giving everyone a fair shot during a sustainable recovery. All three commented on the importance of tackling climate change.Publication Media and Messages for Nutrition and Health(World Bank, Washington, DC, 2020-06)The Lao People’s Democratic Republic (Lao PDR) has experienced rapid and significant economic growth over the past decade. However, poor nutritional outcomes remain a concern. Rates of childhood undernutrition are particularly high in remote, rural, and upland areas. Media have the potential to play an important role in shaping health and nutrition–related behaviors and practices as well as in promoting sociocultural and economic development that might contribute to improved nutritional outcomes. This report presents the results of a media audit (MA) that was conducted to inform the development and production of mass media advocacy and communication strategies and materials with a focus on maternal and child health and nutrition that would reach the most people from the poorest communities in northern Lao PDR. Making more people aware of useful information, essential services and products and influencing them to use these effectively is the ultimate goal of mass media campaigns, and the MA measures the potential effectiveness of media efforts to reach this goal. The effectiveness of communication channels to deliver health and nutrition messages to target beneficiaries to ensure maximum reach and uptake can be viewed in terms of preferences, satisfaction, and trust. Overall, the four most accessed media channels for receiving information among communities in the study areas were village announcements, mobile phones, television, and out-of-home (OOH) media. Of the accessed media channels, the top three most preferred channels were village announcements (40 percent), television (26 percent), and mobile phones (19 percent). In terms of trust, village announcements were the most trusted source of information (64 percent), followed by mobile phones (14 percent) and television (11 percent). Hence of all the media channels, village announcements are the most preferred, have the most satisfied users, and are the most trusted source of information in study communities from four provinces in Lao PDR with some of the highest burden of childhood undernutrition.