Minding Small Change among Small Firms in Kenya

Last registered on December 06, 2016
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Pre-Trial

Trial Information

General Information

Title
Minding Small Change among Small Firms in Kenya
RCT ID
AEARCTR-0001706
Initial registration date
December 06, 2016

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
December 06, 2016, 4:23 PM EST

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

Locations

Country
Kenya
Region
Africa

Primary Investigator

Name
Lori Beaman
Affiliation
Northwestern University
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Other Primary Investigator(s)

PI Name
Jonathan Robinson
PI Affiliation
University of California, Santa Cruz
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PI Name
Jeremy Magruder
PI Affiliation
University of California, Berkeley
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Additional Trial Information

Status
Completed
Start date
2009-10-01
End date
2014-01-15
Keywords
Finance & Microfinance
Additional Keywords
attention and decision making, small firms, Kenya
JEL code(s)
Secondary IDs
Abstract
Many micro-enterprises in Kenya have low productivity. We focus on one particular business decision which may indicate low productivity: keeping enough change on hand to break larger bills. Our estimates suggest that the average firm loses approximately 5-8% of total profits because they do not have enough change. We conducted two experiments to shed light on why this happens: surveying firms weekly about lost sales, thereby increasing the salience of change, and explicitly informing firms about lost sales. We find that both interventions significantly altered change management and reduced lost sales. This largely rules out many potential explanations such as the risk of theft or the costs of holding change being too high. One explanation consistent with firms' response to the survey and information on their lost sales is that firms were not perfectly attentive to change management prior to the interventions.
External Link(s)
J-PAL summary page

Registration Citation

Citation
Beaman, Lori, Jeremy Magruder and Jonathan Robinson. 2016. "Minding Small Change among Small Firms in Kenya." AEA RCT Registry. December 06. https://doi.org/10.1257/rct.1706-1.0
Former Citation
Beaman, Lori, Jeremy Magruder and Jonathan Robinson. 2016. "Minding Small Change among Small Firms in Kenya." AEA RCT Registry. December 06. https://www.socialscienceregistry.org/trials/1706/history/12266
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Our interventions are designed to alter the salience of lost sales from insufficient changeholding. There are two main interventions: 1) a salience treatment and 2) an information treatment. The salience treatment is just the survey itself. Firms were phased into the study with cohorts every 3 weeks, so that some firms received treatment before others, but all firms did receive the salience treatment by the end of the trial. In the salience treatment, business owners were surveyed weekly on change-keeping behavior and how it effected sales. This intervention lasts for 8-18 weeks depending on the cohort.

In the information treatment, firms were presented with the information on total lost sales and profits due to changeouts compiled from the previous surveys, as well as the average losses for firms in the area. After firms were in the salience treatment for 6 weeks, a random subsample of those firms received the one-time Information Treatment.



Intervention Start Date
2009-10-01
Intervention End Date
2011-04-30

Primary Outcomes

Primary Outcomes (end points)
Change shortages ("changeouts") in past week; Lost sales in the past week; Weekly Revenue; Weekly Profit; Amount of Cash/Coin brought in the morning; Number of times the firm borrowed/lent change to other nearby firms
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The researchers evaluated a randomized field experiment to examine the effect of surveys and an information intervention on the change management behavior of small firms in Kenya. Over two periods, 508 small firms (309 in 2009-2010, 199 in 2011) were enrolled in the study. Each firm was assigned a randomly chosen number, stratified by market center and business type. This determined their start date for the first intervention, a weekly survey of change-keeping behavior and how it effected sales.

Firms were randomly assigned to twelve cohorts (nine in the first period, three in the second period) stratified by location and business type. All firms in a cohort began the survey intervention at the same time, and a new cohort began the intervention roughly every three weeks. After six weeks of the first treatment, half of a cohort's firms were randomly selected to receive the second intervention, the information treatment.
Experimental Design Details
Randomization Method
Randomization performed by computer
Randomization Unit
Randomization was at the firm level.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
508 firms
Sample size: planned number of observations
508 firms
Sample size (or number of clusters) by treatment arms
All 508 recruited firms received the survey treatment in cohorts every three weeks; half of each cohort received the information treatment after six weeks
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
University of California, Santa Cruz IRB
IRB Approval Date
2009-01-17
IRB Approval Number
HS0801282
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
April 30, 2011, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
April 30, 2011, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
508 firms
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
508 firms
Final Sample Size (or Number of Clusters) by Treatment Arms
All 508 recruited firms received the survey treatment in cohorts every three weeks; half of each cohort received the information treatment after six weeks
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
Many micro-enterprises in Kenya have low productivity. We focus on one particular business decision which may indicate low productivity: keeping enough change on hand to break larger bills. This is a surprisingly large problem. Our estimates suggest that the average firm loses approximately 5–8% of total profits because they do not have enough change. We conducted two experiments to shed light on why this happens: surveying firms weekly about lost sales, thereby increasing the salience of change, and explicitly informing firms about lost sales. We find that both interventions significantly altered change management and reduced lost sales. This largely rules out many potential explanations such as the risk of theft or the costs of holding change being too high. One explanation consistent with firms' response to the survey and information on their lost sales is that firms were not perfectly attentive to change management prior to the interventions.
Citation
Beaman, Lori, Magruder, Jeremy and Robinson, Jonathan, (2014), Minding small change among small firms in Kenya, Journal of Development Economics, 108, issue C, p. 69-86.
URL
http://www.sciencedirect.com/science/article/pii/S030438781300182X

Reports & Other Materials