Short- and medium-run impacts of management training: An experiment in Tanzania

While entrepreneurs play a key role in industrial development, the managerial capacity of those in developing countries seems limited. A number of randomized controlled trials have been conducted to evaluate the impacts of management training, coaching, or consultation programs. These studies found that the interventions had positive impacts on management knowledge and management practices, but the impacts on business performance—measured in terms of sales revenue, value added, or profit—were often statistically insignificant. Such mixed results may be attributed to experiment designs, including training content and the time elapsed till the follow-up observation. The present study attempts to substantiate this hypothesis by means of a randomized controlled trial of management training in Tanzania that targets 113 small manufacturers. As in some recent studies, it extends the observation period to three years to examine the trajectory of training impacts. Unlike many other studies, it is an impact assessment of training programs that covered quality control and production management as the training topics in addition to entrepreneurship, marketing, and record keeping. The treated firms made adaptive efforts to select useful practices and modify them to fit their business operation. It finds that the training effects on business performance are large and statistically significant, particularly in the medium-run.

Policy implications 
Combining in-class and on-site sessions based on Kaizen principles seem to help manufacturing firms become more efficient and increase sales. The effects on business performance of support schemes that aim to increase the adoption of good practices are likely to show in the medium term, after an assimilation period during which firms try out different practices to identify and focus on the useful ones. On-site consulting sessions seem to help firms make better decisions about which practices to adopt, given that on average firms that have access to the one-on-one consulting sessions do not adopt more practices than those that do not, but have better business performance in the medium run.
Higuchi, Y., Mhede, E. P., & Sonobe, T. , 2019. Short-and medium-run impacts of management training: An experiment in Tanzania. World Development, 114, 220-236.