'The Impact of External Modernization and Internal Modernization for Small-Scale Retailers in Emerging Markets: Evidence from a Field Experiment'
Last registered on March 23, 2020

Pre-Trial

Trial Information
General Information
Title
'The Impact of External Modernization and Internal Modernization for Small-Scale Retailers in Emerging Markets: Evidence from a Field Experiment'
RCT ID
AEARCTR-0004087
Initial registration date
April 08, 2019
Last updated
March 23, 2020 9:52 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
Stanford University
Other Primary Investigator(s)
PI Affiliation
Stanford University
PI Affiliation
Stanford University
PI Affiliation
World Bank
Additional Trial Information
Status
On going
Start date
2017-08-01
End date
2020-07-04
Secondary IDs
Abstract
The retail sector in Mexico and other developing countries tends to be dominated by millions of traditional small-scale businesses that fail to adopt modern business structures. It is important to investigate approaches to modernizing the retail sector given the prevalence of traditional retail firms in urban centers, the large proportion of workers that are employed in traditional retail across developing countries, and the critical logistics role that retailers play in distributing goods from international suppliers to local consumers. We propose two novel approaches to effectively induce retailers to modernize their businesses: an “external or customer-facing” approach and an “internal or product-facing” approach.

We evaluate the impact of the two approaches on modernization levels and performance via a randomized control trial. In our RCT, 1154 small retailers in Mexico City are randomized into three groups of equal size: control (n=384), “external” treatment (n=385) and “internal” treatment (n=384). Over 6 weeks, junior fellows (i.e. top university students majoring in business, economics or related disciplines) partner with retailers in one of the two treatment groups and work with them to implement relevant modernization structures through 12 site visits. Each site visit is 2.5 hours long, so the program amounts to 30 hours of direct implementation of modernization structures. Retail firms in the “external” treatment group only implement external modernization structures, while retail firms in the “internal” treatment group only implement “internal” modernization structures, with help from their junior fellow.
External Link(s)
Registration Citation
Citation
Anderson, Stephen et al. 2020. "'The Impact of External Modernization and Internal Modernization for Small-Scale Retailers in Emerging Markets: Evidence from a Field Experiment'." AEA RCT Registry. March 23. https://doi.org/10.1257/rct.4087-1.2000000000000002.
Former Citation
Anderson, Stephen et al. 2020. "'The Impact of External Modernization and Internal Modernization for Small-Scale Retailers in Emerging Markets: Evidence from a Field Experiment'." AEA RCT Registry. March 23. http://www.socialscienceregistry.org/trials/4087/history/64758.
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Experimental Details
Interventions
Intervention(s)
1. “External" Modernization intervention: Firm is partnered with a ‘Modernization Fellow’ (i.e. a top university student majoring in business, economics or related disciplines) who helps them implement external modernization structures in their business over 6 weeks. The Fellow helps the firm through 11 site visits, of 2.5 hours each, that are exclusively dedicated to hands-on implementation of external modernization structures. Fellows are trained and supervised by senior managers who also make 3 site visits (each 2.5 hours).

2. "Internal" Modernization intervention: Exactly the same format and intensity as the first intervention, except the Fellow implements internal modernization structures at the treated business.
Intervention Start Date
2018-01-01
Intervention End Date
2018-12-01
Primary Outcomes
Primary Outcomes (end points)
Modernization levels - external and internal; Sales - revenues and indicators
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Store branding; Product-planning
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The study consists of three parts: (1) business selection, (2) baseline, randomization and intervention, and (3) collection of followup data. Part one began in fall 2017. Across five residential zones of Mexico City, university students managed by our team approached retail business owners with a marketing pitch to apply for a ‘modernization’ program. Interested retailers signed up via a recruitment survey, which we used to screen candidates. Screened firms were invited to complete a baseline survey. About 1150 firms qualified and were randomized into three equally-sized groups:

• Group 1: offered to get external modernization structures changed.
• Group 2: offered to get internal modernization structures changed.
• Group 3 (control): formed a counterfactual group that did not receive any intervention.

Randomization happened at the firm level immediately prior to the scheduled intervention delivery.
Experimental Design Details
Randomization was stratified by location, baseline profits and sub-sector and happened at the individual firm level immediately prior to the scheduled intervention delivery. During the 6-week intervention period, data was collected on all firms in the treatment group to assess the intervention strength (and comparability across locations). To make the logistics of our RCT as smooth as possible, we ran the three parts of the study (entrepreneur recruitment; baseline, randomization and intervention delivery; follow-up data collection) over four
waves with a manageable sample size of approximately N = 300 in each wave.

We have wrapped up the two marketing interventions for the fourth and final wave of firms in our sample. To measure effects, we have launched our first post-intervention data collection round and expect to complete it by May 2019. This data is being collected 3 months post-intervention for the firms in our sample, wave by wave. In this survey, we measure sales outcomes such as monthly revenues, quantity sold, customer count, basket size per order. Moreover, we measure modernization levels by getting the enumerator to privately score every firm in our sample, upon detailed observation and evidence-gathering, on the 20 customer-facing modernization structures and 20 product-facing using a scale of 0 (no implementation) to 5 (excellent implementation). We also measure the mechanisms of store-level branding (by polling customers on how they rate the store on various branding dimensions) and product-planning (by using independent auditors to rate retailers decisions on own product knowledge and procurement efficiency).

We will conduct another follow-up survey with all firms in the study sample roughly 12 months after the program started, which is summer to fall 2019.
Randomization Method
Randomization done by authors on a computer, using statistical programming software (Stata)
Randomization Unit
Firm
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
N/A
Sample size: planned number of observations
1154 firms
Sample size (or number of clusters) by treatment arms
1. N = 385 in External Modernization treatment group
2. N = 385 in Internal Modernization treatment group
3. N = 384 in Control group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is 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