We have a special lecture by Prof. Rajeshy Chandy from London Business School (LBS)! He will present about "THE IMPACT OF BUSINESS SKILLS ON MICRO-ENTREPRENEUR PERFORMANCE: EVIDENCE FROM A RANDOMIZED CONTROLLED TRIAL IN SOUTH AFRICA" on April 3rd, at 10:30 a.m.-12:00 p.m. (Room 2125, blg N5).    

Abstract:  This research seeks to address a significant constraint to growth among businesses in

emerging markets: business skills.  Improvements in business skills offer the possibility of

increased growth and prosperity, however, there exists substantial evidence that it is not abundant

among micro and small businesses.  We present evidence from the first randomized controlled trial

examining the impact of marketing skills, relative to finance skills, on firm performance.  The

empirical setting of the study is among small business owners in urban and slum neighborhoods

across Cape Town, South Africa.  We offer intensive marketing and sales training to one randomly

selected group of firm owners, intensive finance and accounting training to another randomly

selected group of firm owners, and no training to a control group.  For the next two years, we

measure the effects of the interventions on the practices and performance of these small businesses. 

Our findings are threefold.  One, marketing skills and finance skills each have a positive and

significant effect on firm performance, including increases in: employment, sales, profits, and

survival.  Two, the pathway to prosperity differs for marketing relative to finance: profit and

survival effects are roughly equal across the two interventions, yet entrepreneurs who receive

marketing training tend to achieve these gains by increasing sales and hiring more staff (i.e. growth

focus) while those who receive the finance training tend to enhance profits by decreasing costs (i.e.

efficiency focus).  Three, an entrepreneur’s prior exposure to different business contexts can

influence her potential returns from training: developing skills in marketing and sales appears to be

most beneficial to small business owners with (ex ante) narrow exposure.