The power of the right advice in business growth. An experience from Venezuela

Last registered on August 10, 2018
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Pre-Trial

Trial Information

General Information

Title
The power of the right advice in business growth. An experience from Venezuela
RCT ID
AEARCTR-0002585
Initial registration date
November 23, 2017

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 24, 2017, 12:49 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
August 10, 2018, 9:57 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Venezuela (Bolivarian Republic of)
Region

Primary Investigator

Name
Pilar CAF
Affiliation
CAF - Development Bank of Latin America
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Other Primary Investigator(s)

PI Name
Gonzalo Aguilera
PI Affiliation
CAF - Development Bank of Latin America
Contact Investigator
PI Name
Adriana Camacho
PI Affiliation
CAF - Development Bank of Latin America
Contact Investigator

Additional Trial Information

Status
On going
Start date
2017-08-01
End date
2020-02-01
Keywords
Finance & Microfinance
Additional Keywords
tailor-made business advisory consulting entreprenourship SME
JEL code(s)
Secondary IDs
Abstract
This study develops a Randomized Control Trial (RTC) design and uses a Dif-Dif methodology to evaluate the causal effect of Avanza program on business performance. Avanza is a tailor-made advice and training program for SME in Venezuela; it will be implemented by Ideas Foundation, an NGO advising entrepreneurs for the last 13 years.

Specifically, the intervention will consist of: 1) Tailored diagnosis based on baseline data and individual interviews to identify main barriers for growth and prepare a one-year work plan; 2) Group seminars on common issues for business owners and managers, according to the goals of their work plan; 3) Six-month advisory services from a senior and a junior consultant based on the diagnosis results .

The selection process consisted in a 3-month-window opened by Ideas Foundation for firms to register. Registration information and eligibility criteria were verified through official records for 338 firms. A comprehensive questionnaire was developed with 176 questions; which was piloted, optimized, and applied in July 2017 to 192 firms that passed the registration filters. This same questionnaire will be improved with results from semi-structured interviews, and applied twice again 2 and 3 years later as a follow-up and final survey, respectively.

A factor analysis (FA) was performed on the baseline survey data to construct treatment groups around common functional dimensions that explained the greater portion of best practices listed in the questionnaire. The FA produced three treatment groups: (a) Monitoring and Planning; (b) Innovation, marketing and training; and (c) Financial practices. Firms were paired according to their lower score in either factor. Once the 96 pairs were established, one firm of each pair was randomly selected to treatment and the other one to control.

This paper aims to complement the evidence by Bruhn et al. (2013) regarding the effect that consulting services have on business performance. In addition, it will use cuantitative and cualitative tools to identify potential mechanisms that can help explain the results. Regarding this, the study will put a special focus in measuring changes in managerial skills, adoption of best practices, and attitudes, since they are all considered importante drivers that can ultimately lead to improvement.
External Link(s)

Registration Citation

Citation
Aguilera, Gonzalo, Pilar CAF and Adriana Camacho. 2018. "The power of the right advice in business growth. An experience from Venezuela ." AEA RCT Registry. August 10. https://doi.org/10.1257/rct.2585-3.0
Former Citation
Aguilera, Gonzalo, Pilar CAF and Adriana Camacho. 2018. "The power of the right advice in business growth. An experience from Venezuela ." AEA RCT Registry. August 10. https://www.socialscienceregistry.org/trials/2585/history/32950
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
The intervention consists of:
1. Tailored diagnosis based on baseline data and individual interviews to identify main barriers for growth and prepare a one-year work plan.
2. Group seminars on common issues for business owners, according to the goals of their work plan.
3. Six-month advisory services from a senior and a junior consultant based on the previous diagnosis
Intervention Start Date
2017-11-01
Intervention End Date
2018-07-01

Primary Outcomes

Primary Outcomes (end points)
1) Business performance, measured as:
a) Survival rate
b) Productivity: brute and net margin; operating costs; operating
earnings; return on assets (ROA); and productivity residual
c) Growth: sales; average number of clients and employees; entry into new markets (local and foreign); development of new products; investment level
Primary Outcomes (explanation)
Productivity variables will be constructed using information of the financial statements of each firm, except for "productivity residual" which will be constructed based on Bruhn et al., (2012)

Secondary Outcomes

Secondary Outcomes (end points)
2) Managerial skills: adoption of better practices in the following areas:
a) Finance
b) Marketing
c) Human Resources
d) Planning and monitoring
e) Innovation
Secondary Outcomes (explanation)
Managerial skills are going to be measured using the baseline questions, which includes a different section for each of the mentioned areas. A different index will be constructed for each section

Experimental Design

Experimental Design
This study develops a Randomized Control Trial (RTC) design and uses a Dif-Dif methodology. A factor analysis (FA) was performed on the baseline survey data to construct treatment groups around common functional dimensions that explained the greater portion of best practices listed in the questionnaire. The FA produced three treatment groups: (a) Monitoring and Planning; (b) Innovation, marketing and training; and (c) Financial practices. Firms were paired according to their lower score in either factor. Once the 96 pairs were established, one firm of each pair was randomly selected to treatment and the other one to control.
Experimental Design Details
Randomization Method
Pairwise randomization done in office by a computer
Randomization Unit
Firm
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
0
Sample size: planned number of observations
192 firms
Sample size (or number of clusters) by treatment arms
96 firms to control and 96 firms to treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
Comité de Ética de la Investigación de la Universidad Católica Andrés Bello
IRB Approval Date
2017-12-19
IRB Approval Number
01-2017
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials