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.
Management score and indicators of business performance.
Having access to any of the three versions of the support scheme (only in-class training, only on-site sessions or both) led firms to adopt a higher number of good management practices, including Kaizen practices. Firms adopted a number of good practices at first, but within the following years they stopped using those that were found to be unuseful and adapted the remaining practices to their businesses’ realities. In spite of that, the higher rate adoption of good management practices persists for at least three years. The short run effects in terms of practices adoption are the highest for firms receiving both the in-class training and the on-site sessions, while three years later the rate of adoption is the highest for those that only received the in-class training. Within the first two years, none of the support schemes lead to increased sales or value added. However, large positive effects on sales and value added appeared during the next two years for the group of firms receiving both the in-class training and the on-site consulting sessions.Four years after the programme, firms that received both components have average annual sales 90 per cent higher than those that did not receive any support, while value added is about 65 per cent higher. For those firms that only received the on-site consulting sessions, sales and value added also increased in the medium run, being respectively about USD 13.000 and USD 10.000 higher compared to firms that did not receive any support. The returns in terms of value added compensate by far the cost of the programme for the only on-site consulting sessions (about USD 2.000) and the in-class training plus on-site sessions scheme (about USD 4.000)