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Managerial Capital and Business Transformation in an Emerging Market: The Impact of Marketing versus Finance Skills Training for Entrepreneurs
Last registered on February 12, 2014


Trial Information
General Information
Managerial Capital and Business Transformation in an Emerging Market: The Impact of Marketing versus Finance Skills Training for Entrepreneurs
Initial registration date
Not yet registered
Last updated
February 12, 2014 11:58 AM EST
Primary Investigator
London Business School
Other Primary Investigator(s)
PI Affiliation
London Business School
PI Affiliation
World Bank
Additional Trial Information
On going
Start date
End date
Secondary IDs
This research seeks to address a significant constraint to growth among businesses in developing countries: managerial capital. Managerial capital refers to the skills associated with the management of customers, money, operations and people within businesses (Bruhn, Karlan and Schoar 2010). Improvements in managerial capital offer the possibility of improved growth and prosperity. However, there exists substantial evidence that it is not abundant among micro and small businesses – and those in developing countries in particular. The limited empirical work that has used experimental interventions to improve managerial capital has been inconclusive as to whether such interventions have an impact on firm growth, job creation or poverty alleviation. One potential issue is that existing studies typically involve offering business skills training to a broad mix of entrepreneurs, the majority of whom are self-employed out of necessity and would prefer jobs in the formal sector (i.e., subsistence entrepreneurs). Greater selectivity in the recruitment of candidates for management skills training might offer greater potential for impact. Prior training interventions have also tended to focus on building finance and accounting skills, which can lead to improvements in bottom-line profits. Little emphasis has been placed on the development of marketing and sales skills, which have the potential to increase top-line revenues and, in turn, stimulate firm growth and job creation.

We seek to address these limitations by focusing on a more homogeneous group of firms, using a more intense intervention, and providing training programs that focus on only one dimension of managerial capital per course. In part 1, a screening tool will be implemented to identify a homogenous sample of 900 ‘high growth potential’ micro and small enterprises in five locations across the greater Cape Town area of South Africa. Next, in part 2, participants will be exposed to a high quality training intervention. The mini-MBA training programs are provided by Business Bridge and combine online e-learning content with face-to-face classroom teaching sessions in an innovative approach that reduces dropouts, enhances learning, and improves real-world implementation. The course structure also allows us to study the impact of providing ‘specific’ business skills training programs (e.g. marketing skills versus finance skills) as opposed to more general business training. Participants will be randomly assigned into one of three groups. 300 participants will receive the “Marketing and Sales training” intervention through an 8-week intensive course that covers topics such as value creation, customer segmentation, pricing, competitive differentiation, and selling strategies. 300 participants will receive the “Finance and Accounting training” intervention that includes classes on separation of personal and business finances, cash-flow management, business investments, and record keeping (e.g. income statements, balance sheets, etc). 300 participants will be assigned to a control group that does not receive any training but can continue to use the services of our local partner. Prior to the training program launch, a baseline survey will be conducted on all entrepreneurs in the sample (n=900). Following the training, all participants will have their business practices and performance outcomes measured using post-intervention surveys over the next year.

Through this research, we hope to offer insights on how transformational entrepreneurs can be identified and nurtured. We also hope to learn more about the extent to which the effects of managerial capital development depend on the specific training received (marketing vs. finance) and firm size (micro vs. small). In addition, examining the interaction of marketing or finance skills with various individual background characteristics can provide further insights on who benefits more from different types of managerial capital programs.
External Link(s)
Registration Citation
Anderson-Macdonald, Stephen, Rajesh Chandy and Bilal Zia. 2014. "Managerial Capital and Business Transformation in an Emerging Market: The Impact of Marketing versus Finance Skills Training for Entrepreneurs." AEA RCT Registry. February 12. https://doi.org/10.1257/rct.250-1.0.
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Experimental Details
Intervention Start Date
Intervention End Date
Primary Outcomes
Primary Outcomes (end points)
Economic Outcomes:
1) Business Knowledge (of entrepreneur).
2) Business Practices (e.g. 30 different marketing or finance related practices).
3) Business Performance (e.g. sales, profits, employment, survivorship).

Social Outcomes:
1) Happiness (of entrepreneur).
2) Household Consumption (e.g. food, clothing, large purchases, etc).
3) Household Education (e.g. fees, related consumption, etc).
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
Sample of 900 entrepreneurs (recruited in the field and chosen via a screening tool). After final sample selected, but before treatment started, all Ps were randomized into one of three groups:
1/3 randomly assigned to marketing/sales intervention.
1/3 randomly assigned to finance/accounting intervention.
1/3 randomly assigned to control group.
Experimental Design Details
Randomization Method
Randomization done in office via a computer (stata do file).
Randomization Unit
Individual entrepreneur (firm owner).
Was the treatment clustered?
Experiment Characteristics
Sample size: planned number of clusters
Sample size: planned number of observations
900 entrepreneurs (firm owners)
Sample size (or number of clusters) by treatment arms
300 entrepreneurs get marketing/sales intervention.
300 entrepreneurs get finance/accounting intervention.
300 entrepreneurs assigned to control group (do not get any training until after the RCT study ends).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Target Effect Size: 15% increase in sales or employment. Required Sample Size: 291 entrepreneurs per group (T1, T2, C). Assumptions for Power Calculations: 80% power α = .05 ρ = 0.50 (auto-correlation in firm outcomes) 1 pre-treatment survey round and 3 post-treatment survey rounds. Coefficient of Variation (CV) of 1.0 Equal Group Sizes, e.g. T1 (n=291) versus T2 (n=291) versus Control (n=291). [Used "sampsi" command in Stata for calculations.]
IRB Name
London Business School Research Ethics Committee
IRB Approval Date
IRB Approval Number
Post Trial Information
Study Withdrawal
Is the intervention completed?
Is data collection complete?
Data Publication
Data Publication
Is public data available?
Program Files
Program Files
Reports, Papers & Other Materials
Relevant Paper(s)