NOVAFRICA Webinar: “Improving Business Practices and the Boundary of the Entrepreneur: A Randomized Experiment Comparing Training, Consulting, Insourcing and Outsourcing”

On Wednesday, October 7th, at 02h30pm, Lisbon time, the NOVAFRICA Center welcomes David McKenzie from the World Bank, to present his work on business practices and the boundaries of entrepreneurship.

Author:
David Mckenzie, World Bank

Abstract: Many small firms lack the finance and marketing skills needed for firm growth. The standard approach in many development programs has been to attempt to train the entrepreneur to develop these skills, through business training sessions or personalized consulting services. However, rather than requiring the entrepreneur to be a jack-of-all-trades, an alternative is to link firms to these skills in the market through insourcing workers with these skills, or through outsourcing these tasks to professional specialists. We conducted a randomized experiment in Nigeria to test the relative effectiveness of these four different approaches in improving business practices. We find that insourcing and outsourcing both dominate business training; and do at least as well as business consulting at one-half of the cost. Moving beyond the boundary of the entrepreneur enables firms to use higher quality digital practices, innovate more, and results in sales and profits growth over a two-year horizon.

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