Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work

• Published in: Oxford review of economic policy Vol. 37; no. 2; pp. 276 - 301
• Main Author: McKenzie, David
• Format: Journal Article
• Language: English
• Published: UK Oxford University Press 2021
• Subjects: soft skills; microenterprises; management practices; business training
• ISSN: 0266-903X; 1460-2121
• DOI: 10.1093/oxrep/grab002

Abstract 
Despite the popularity of business training among policy-makers, its use has faced increasing scepticism. Most of the first randomized experiments could not detect statistically significant impacts of training on firm profits or sales. I reassess the evidence for whether small business training works, incorporating more recent results. A meta-analysis of these estimates shows that training increases profits and sales on average by 5–10 per cent. This is in line with what is optimistic to expect, but impacts of this magnitude are too small for most experiments to detect. I then discuss five approaches for improving the effectiveness of traditional training by incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. The challenge is then how to deliver a quality programme on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funnelling firms.