Business Training and Mentoring: Experimental Evidence from Women-Owned Microenterprises in Ethiopia

M Mehrab Bakhtiar,Gautam Bastian,Markus Goldstein

doi:10.1086/714592

Abstract

Recent research shows that microenterprises in developing countries are constrained by their managerial capacity, especially in the areas of marketing, record keeping, financial planning, and stock control. In a stratified randomized controlled trial, experienced businesswomen in Ethiopia were given formal business training that addressed these constraints. A second-stage mentoring component in which a random selection of female mentees within the social and business network of the trainees from the first-stage business training received customized mentoring from these trained mentors. Pooled results using three rounds of posttraining surveys carried out over 3 years show that business training causes profit and sales to improve by 0.21 standard deviations, while business practices improve by 0.13 standard deviations. The overall impact of mentoring is muted—strong impacts are observed on the adoption of business practices among mentees, but there is no statistically significant impact on profits.

Highlights

Ownership of, and employment in, microenterprises account for a large fraction of the labor market in the developing world
Along the lines of Mckenzie and Woodruff (2016), we investigate whether the effect of the mentoring treatment on profit is consistent with the predicted effect given the observed changes in business practices, to which we turn
Over a post-training period of three years, we find that formal business training for the mentors causes large impacts on business performance such as reported profits as well as the number of business activities

Summary

Introduction

Employment in, microenterprises account for a large fraction of the labor market in the developing world. Several recent studies had an extended period of follow-up after training interventions were completed (Bruhn, Karlan, and Schoar, 2018; Higuchi, Mhede, and Sonobe, 2019; Karlan, Knight, and Udry, 2015; David McKenzie Susana Puerto, 2017; Valdivia, 2015). These studies show mixed impacts of business training programs on business performance

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