More for Less: Evidence from Cost Reduction Management Trainings for Micro-Enterprises

Abstract

Management trainings have shown to be effective in improving business outcomes. However, the impact on severely resource-scarce micro-enterprises which usually operate in Bottom of the Pyramid (BoP) markets remains unexplored. This is surprising, given their distinct need for cost reduction programs in this environment. We address two important questions: First, what is the impact of cost reduction management trainings on business outcomes of micro-enterprises? Second, which businesses are helped most by improving cost reduction management skills? Based on a randomized controlled trial in Zambia, this study finds that cost reduction management trainings improve several business practices. However, we only observe an effect on business profits for micro-entrepreneurs which are equipped with higher levels of capabilities and complementary. This implies that the effectiveness of management trainings is contingent on the available resources of micro-entrepreneurs in the emerging economy context.