NOVAFRICA Seminar: “Keeping Up with the Joneses: Relative Performance Feedback and Business Performance”

On Wednesday, September 19th, at 14.30pm, the NOVAFRICA Center welcomes Julia Seither from the Nova SBE, to present her work.

Julia Seither (Nova SBE)

In 2017, around 74% of the total employed in Sub-Saharan Africa were self-employed. Most of these business owners have no employees and generate low incomes only. These entrepreneurs further face strong pressure to share income with their social networks. This paper is the first to show that firm productivity increases with changes in the social norm of cooperation. During a randomized control trial, I give entrepreneurs information about their sales relative to a group of peers. One year later, entrepreneurs in the bottom of the distribution increased their effort by 8.7%. Providing information about the peers’ gender has no additional effect on effort but large implications for network cooperation. If the top seller of the group is a woman, individuals are much more likely to ask for support. For low-performing vendors, the combined effect leads to an increase in sales of 88% from the ranking treatment. This impact is further amplified if the top seller is a woman.

Find more information about this seminar here.