Business practices in small firms in developing countries

David McKenzie and Christopher Woodruff

No 7405, Policy Research Working Paper Series from The World Bank

Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? This study developed 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria, and Sri Lanka. This paper shows that variation in business practices explains as much of the variation in outcomes ? sales, profits, and labor productivity and total factor productivity ? in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The effect of business practices is robust to including many measures of the owner?s human capital. The analysis finds that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices. Competition has less robust effects.

Keywords: E-Business; Business Environment; Competitiveness and Competition Policy; Emerging Markets; Business in Development (search for similar items in EconPapers)
Date: 2015-08-27
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ent and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... loping0countries.pdf (application/pdf)

Related works:
Journal Article: Business Practices in Small Firms in Developing Countries (2017)
Working Paper: Business Practices in Small Firms in Developing Countries (2016)
Working Paper: Business Practices in Small Firms in Developing Countries (2016)
Working Paper: Business Practices in Small Firms in Developing Countries (2016)
Working Paper: Business Practices in Small Firms in Developing Countries (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7405

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().