Small business training to improve management practices in developing countries: re-assessing the evidence for 'training doesn't work'

Despite the popularity of business training among policy-makers, its use has faced increasing scepticism. Most of the first randomized experiments could not detect statistically significant impacts of training on firm profits or sales. I reassess the evidence for whether small business training works, incorporating more recent results. A meta-analysis of these estimates shows that training increases profits and sales on average by 5-10 per cent. This is in line with what is optimistic to expect, but impacts of this magnitude are too small for most experiments to detect. I then discuss five approaches for improving the effectiveness of traditional training by incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. The challenge is then how to deliver a quality programme on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funnelling firms.

Automated summary

Research suggests that small business training can increase profits and sales by an average of 5-10%, but these impacts are often too small to be detected by most experiments. Different approaches to improving the effectiveness of traditional training, such as incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology, are discussed. The challenge lies in delivering a quality training program on a cost-effective basis at a larger scale, with possible approaches including utilizing the market, technology, or targeting and funnelling firms.