Consulting and capital experiments with microenterprise tailors in Ghana

Dean Karlan, Ryan Knight and Christopher Udry

Journal of Economic Behavior & Organization, 2015, vol. 118, issue C, 281-302

Abstract: We conducted a randomized trial in urban Ghana in which tailoring microenterprises received advice from an international consulting firm, cash, both, or neither. We designed the study with a hypothesis that large infusions of financial and managerial capital could be transformative. We find that all three treatments led to their immediate intended effects: changed business practices and increased investment. However, no treatment led to higher profits on average, and certainly not to the large effects hypothesized. In fact, each treatment at some point led to lower profits. Then, in the long run, we find that the microentrepreneurs in either consulting treatment group reverted back to their prior business practices, and that microentrepreneurs in the cash treatment group reverted back to their prior scale of operations.

Keywords: Entrepreneurship; Credit constraints; Business training; Consulting; Managerial capital (search for similar items in EconPapers)
JEL-codes: D21 D24 D83 D92 L20 M13 O12 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:118:y:2015:i:c:p:281-302

DOI: 10.1016/j.jebo.2015.04.005

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