A common concern with efforts to directly help some small businesses to grow is that their growth comes at the expense of their unassisted competitors. This study tests this possibility using a 2-stage randomized experiment in Kenya.
The experiment randomizes business training at the market level, and then within markets to selected businesses. 3 years after training, the treated businesses are selling more, earn higher profits, and their owners have higher well-being. There is no evidence of negative spillovers on the competing businesses, and the markets as a whole appear to have grown in terms of number of customers and sales volumes. This market growth appears to come from enhanced customer service and new product introduction, generating more customers and more sales from existing customers. As a result, business growth in underdeveloped markets is possible without taking sales away from nontreated businesses.
This 2018 study measures the impact of a business training program for women in Kenya, finding that training increases the profits, sales, mental health, and subjective well-being of women. Moreover, this growth comes without significant negative spillovers on other women operating in the same markets, so that overall market size grows.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme
McKenzie, D. and Puerto, S. (2017), Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya, Policy Research Working Paper.
McKenzie, D. and Puerto, S. (2018), Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya, PEDL
Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya: 2017 Study