x

Please fill out this short user survey of only 3 questions in order to help us improve the site. We appreciate your feedback!
Building High-Growth Firms Through Training the Owner vs Through Linking the Firm to Business Service Markets
Last registered on March 23, 2021

Pre-Trial

Trial Information
General Information
Title
Building High-Growth Firms Through Training the Owner vs Through Linking the Firm to Business Service Markets
RCT ID
AEARCTR-0002769
Initial registration date
March 14, 2018
Last updated
March 23, 2021 5:17 PM EDT
Location(s)
Primary Investigator
Affiliation
World Bank
Other Primary Investigator(s)
PI Affiliation
Stanford University
Additional Trial Information
Status
Completed
Start date
2016-02-09
End date
2020-10-31
Secondary IDs
Abstract
Many small firms lack the finance and marketing skills needed for firm growth. The standard approach in many government programs has been to attempt to train the owner to develop these skills, through business training sessions or personalized consulting services. However, an alternative is to link firms to these skills in the market through insourcing workers with these skills, or outsourcing these tasks to professionals specializing in these services. We test which approach works best to grow small firms through a randomized experiment. Firms with 2-15 workers each will be randomized into five groups: a control group, a group given business training for the owner, a group given consulting services, a group linked to HR specialists who will find a worker to insource these skills, and a group linked to companies with professionals specializing in business services to outsource these skills. Impacts on business practices, firm sales and employment growth will then be measured to determine the most effective way of building skills in SMEs.
External Link(s)
Registration Citation
Citation
Anderson, Stephen and David McKenzie. 2021. "Building High-Growth Firms Through Training the Owner vs Through Linking the Firm to Business Service Markets ." AEA RCT Registry. March 23. https://doi.org/10.1257/rct.2769-4.3.
Former Citation
Anderson, Stephen, David McKenzie and David McKenzie. 2021. "Building High-Growth Firms Through Training the Owner vs Through Linking the Firm to Business Service Markets ." AEA RCT Registry. March 23. http://www.socialscienceregistry.org/trials/2769/history/88097.
Sponsors & Partners

There are documents in this trial unavailable to the public. Use the button below to request access to this information.

Request Information
Experimental Details
Interventions
Intervention(s)
Firms will be randomly assigned to one of four interventions: business training; business consulting; insourcing of an accounting or marketing worker; or outsourcing to an accounting or marketing firm.
Intervention Start Date
2016-12-15
Intervention End Date
2018-12-31
Primary Outcomes
Primary Outcomes (end points)
In the short-term, we are interested in which program has the most impact on business practices
In the longer-term, key outcomes are business survival, profitability, sales, and employment
Primary Outcomes (explanation)
The pre-analysis plan will describe how these outcomes are defined and constructed
Secondary Outcomes
Secondary Outcomes (end points)
Short-term: time-use of the business owner
Longer-term: use of market for business services, access to and use of finance, innovation
Secondary Outcomes (explanation)
The pre-analysis plan will describe how these outcomes are defined and constructed
Experimental Design
Experimental Design
Firms will be randomly allocated in enrolment batches. Within each batch, firms are randomly allocated to one of the four treatments, or to a control group, in equal proportions.
Experimental Design Details
To be included in the study, firms undertake the following steps:
Step One: apply online through the BIG platform in response to advertising campaign. McKenzie (2017) notes that requiring online application already screens on firms which are more sophisticated and likely to be plausible candidates for high-growth. Moreover, by applying for the program firms indicate their interest in developing their skills.
Step Two: pass an initial screening based on having complete data on the application, operating in one of the 5 GEM sectors, being 18 and older, and having more than one and fewer than 100 workers.
Step Three: attend an induction workshop in Lagos or Abuja, and answer baseline survey at this workshop. This screens further on motivation and effort.
Step Four: have a score of between 5 and 8 out of 10 for business practices based on this screen, have between 2 and 15 workers, and not be already outsourcing or insourcing both marketing and finance functions. This generates a group of potential high-growth firms who are determined to grow, and have made it past the barrier of hiring other paid workers apart from the owner.

Firms are then randomized by induction group (enrolment batch) - for example, the batch of firms that attended the Lagos induction workshop on a particular date. Firms are randomly assigned in equal proportions to the four treatment groups and to a control group.

A second sample outside of Lagos and Abuja are randomly assigned to consulting, training, and control only.
Randomization Method
Randomization done in office by computer, stratified by enrolment batch
Randomization Unit
Firm
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
The number of clusters is the same as the number of units. It is 753 firms.
Sample size: planned number of observations
753 firms
Sample size (or number of clusters) by treatment arms
The sample size is equally allocated across the five groups (subject to rounding).
Control - 149 firms
Training - 153 firms
Consulting - 149 firms
Insourcing - 152 firms
Outsourcing- 150 firms
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
See pre-analysis plan.
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan
Analysis Plan Documents
Pre-analysis plan

MD5: e6e117af7c48bb0c2afeb491a63f1aa7

SHA1: c6c00bedeade895aaf6dde15ce99eae9d0c9e404

Uploaded At: March 25, 2018

Pre-analysis plan

MD5: e6e117af7c48bb0c2afeb491a63f1aa7

SHA1: c6c00bedeade895aaf6dde15ce99eae9d0c9e404

Uploaded At: March 25, 2018

Updated Pre-analysis Plan before Round 2 Follow-up

MD5: bf119b038d4f452df7f19aecb1a8fbc8

SHA1: 24117c8e5bd590c4813ddf5aedf9a9dee3ca7df8

Uploaded At: February 27, 2019

Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
May 15, 2018, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
October 31, 2019, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
753 firms
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
753 firms in the experiment
667 firms in round 1 follow-up
648 firms in round 2 follow-up
Final Sample Size (or Number of Clusters) by Treatment Arms
152 insourcing, 150 outsourcing, 152 training, 149 consulting, and 149 control firms
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
No
Reports, Papers & Other Materials
Relevant Paper(s)
Abstract
Many small firms lack the finance and marketing skills needed for firm growth. The standard approach in many business support programs is to attempt to train the entrepreneur to develop these skills, through classroom-based training or personalized consulting. However, rather than requiring the entrepreneur to be a jack-of-all-trades, an alternative is to move beyond the boundary of the entrepreneur and link firms to these skills in a marketplace through insourcing workers with functional expertise or outsourcing tasks to professional specialists. We conducted a randomized experiment in Nigeria to test the relative effectiveness of these four different approaches to improving business practices. We find that insourcing and outsourcing both dominate business training; and do at least as well as business consulting at one-half of the cost. Moving beyond the entrepreneurial boundary enables firms to use higher quality digital marketing practices, innovate more, and achieve greater sales and profits growth over a two-year horizon.
Citation
Anderson, Stephen and David McKenzie (2020) "Improving business practices and the boundary of the entrepreneur: A randomized experiment comparing training, consulting, insourcing and outsourcing", World Bank Policy Research Working Paper no. 9502. December 2020
REPORTS & OTHER MATERIALS