Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment

Lars Ivar Oppedal Berge (), Kjetil Bjorvatn () and Bertil Tungodden
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Lars Ivar Oppedal Berge: NHH Norwegian School of Economics, NO-5045 Bergen, Norway; and CMI (Chr. Michelsen Institute), N-5892 Bergen, Norway
Kjetil Bjorvatn: NHH Norwegian School of Economics, NO-5045 Bergen, Norway

Management Science, 2015, vol. 61, issue 4, 707-722

Abstract: Microenterprises constitute an important source of employment, and developing such enterprises is a key policy concern in most countries. But what is the most efficient tool for microenterprise development? We study this question in a developing country context (Tanzania), where microenterprises are the source of employment for more than half of the labor force, and we report from a field experiment that jointly investigated the importance of a human capital intervention (business training) and a financial capital intervention (business grant). Using data from three survey rounds, a lab experiment, and administrative records of the microfinance institution, we present evidence on business performance, management practices, happiness, business knowledge, and noncognitive abilities. Our study demonstrates strong effects of the combination of the two interventions on male entrepreneurs, while the effects on female entrepreneurs are much more muted. The results suggest that long-term finance is an important constraint for microfinance entrepreneurs, but that business training is essential to transform financial capital into productive investments. Our study also points to the need for more comprehensive measures to promote the businesses of female entrepreneurs.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1933 . This paper was accepted by John List, behavioral economics .

Keywords: microenterprise; human capital; financial capital; field experiment; lab experiment (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (51)

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Working Paper: Human and financial capital for microenterprise development: Evidence from a field and lab experiment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:61:y:2015:i:4:p:707-722

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