World Development 114 (2019) 220–236

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World Development
journal homepage: www.elsevier.com/locate/worlddev

Short- and medium-run impacts of management training: An

experiment in Tanzania
Yuki Higuchi a,⇑, Edwin P. Mhede b, Tetsushi Sonobe c
a
Graduate School of Economics, Nagoya City University, 1 Yamanohata, Mizuho-cho, Mizuho-ku, Nagoya 467-0802, Japan
b
Ministry of Industry, Trade, and Investment, P.O. BOX 2996, Dodoma, Tanzania
c
National Graduate Institute for Policy Studies, 7-22-1, Roppongi, Minato-ku, Tokyo 106-8677, Japan

a r t i c l e i n f o a b s t r a c t

Article history: While entrepreneurs play a key role in industrial development, the managerial capacity of those in devel-
Accepted 6 October 2018 oping countries seems limited. A number of randomized controlled trials have been conducted to evalu-
Available online 22 October 2018 ate 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
JEL classification: impacts on business performance—measured in terms of sales revenue, value added, or profit—were often
L2 statistically insignificant. Such mixed results may be attributed to experiment designs, including training
M1
content and the time elapsed till the follow-up observation. The present study attempts to substantiate
O1
this hypothesis by means of a randomized controlled trial of management training in Tanzania that tar-
Keywords: gets 113 small manufacturers. As in some recent studies, it extends the observation period to three years
Africa to examine the trajectory of training impacts. Unlike many other studies, it is an impact assessment of
Randomized controlled trial training programs that covered quality control and production management as the training topics in
Management training addition to entrepreneurship, marketing, and record keeping. The treated firms made adaptive efforts
Kaizen to select useful practices and modify them to fit their business operation. It finds that the training effects
Medium-run impacts
on business performance are large and statistically significant, particularly in the medium-run.
Ó 2018 Elsevier Ltd. All rights reserved.

1. Introduction In their survey of management training literature, however,

While entrepreneurs play a central role in industrial develop-
ment and job creation, the managerial capacity of those in the
developing world is severely limited, as Bloom, Genakos, Sadun,
and van Reenen (2012), and McKenzie and Woodruff (2017),
among others, attest. In recent years, there has been renewed
interest in managerial capacity building through business training.
An emerging body of literature finds, on the basis of randomized
controlled trials (RCTs) and quasi-experiments, that training can
improve management practices (e.g., Berge, Bjorvatn, &
Tungodden, 2014; Berge, Bjorvatn, Juniwaty, & Tungodden, 2012;
De Mel, McKenzie, & Woodruff, 2014; Drexler, Fischer, & Schoar,
2014; Higuchi, Nam, & Sonobe, 2015; Karlan & Valdivia, 2011;
Klinger & Schundeln, 2011; Mano, Iddrisu, Yoshino, & Sonobe,
2012).
⇑ Corresponding author.
E-mail addresses: higuchi@econ.nagoya-cu.ac.jp (Y. Higuchi), edwin.mhede@
mit.go.tz (E.P. Mhede), sonobete@grips.ac.jp (T. Sonobe).
McKenzie and Woodruff (2014) point out that a further compila-
tion of studies is needed to provide useful information for policy
makers. This is because although the literature finds that training
intervention induces treated firms to acquire knowledge on
management or to adopt good management practices, it has not
presented clear evidence that training improves business perfor-
mance in terms of sales revenue, value added, or productivity.
While this could be attributed to noisy data or small sample sizes,
it is also possible that the impacts were assessed too early. The
existing studies tend to use only data collected a year after the
intervention, but business consultants including Morgan and
Liker (2006) and Imai (2012) argue that it can take firms much
longer to see impacts on financial indicators compared to those
on knowledge, attitudes, or practices. Thus, Bruhn, Karlan, and
Schoar (2018) and several other recent studies had an extended
period of follow-up observation after intervention (e.g., Higuchi,
Nam, & Sonobe, 2017; Karlan, Knight, & Udry, 2015; McKenzie
& Puerto, 2017; Valdivia, 2015). They, however, show mixed
results in terms of measured training impacts on business
performance.

https://doi.org/10.1016/j.worlddev.2018.10.002
0305-750X/Ó 2018 Elsevier Ltd. All rights reserved.
 Y. Higuchi et al. / World Development 114 (2019) 220–236
Another possible explanation is that training impact on busi-
ness performance depends on training content and intensity.1 In
many existing studies, interventions use the Start/Improve Your
Business (SIYB) training materials developed by the International
Labor Organization; these are widely used in developing countries
to assist entrepreneurs starting or operating micro-scale businesses.2
The standard subjects in these training programs are entrepreneur-
ship, marketing, and record keeping. Quality control and production
management are seldom covered. In contrast, the Kaizen manage-
ment and lean production are common sense approaches to quality
control and production management that are useful when the divi-
sion of labor among workers or among different sections needs to
be coordinated. Bloom, Eifert, Mahajan, McKenzie, and Roberts
(2013) and Bloom, Mahajan, McKenzie, and Roberts (2018) under-
took training intervention featuring the lean production at textile
factories in India that employed about 250 workers because coordi-
nation is needed in such factories. They find strong and sustained
impacts of the training intervention on business performance; how-
ever, the intervention involved highly intensive consultation and
was quite expensive. Thus, a question arises as to whether less
expensive training programs featuring Kaizen or lean production
for smaller-scale firms are effective if the follow-up observation per-
iod is extended.
The present study is an attempt to answer this question. As a
training intervention, we provided a less expensive and shorter-
term training program featuring Kaizen for small-scale, garment
manufacturing enterprises in Tanzania; the owners or workers of
such enterprises were unaware of the concepts of Kaizen. The sam-
ple firms were small but employed, on average, a little more than
five workers. Hence, the owners and workers appreciated the
know-how on coordinating the division of labor. All the sample
enterprises were located in Dar es Salaam and faced the same set
of markets for materials, labor, capital, and products; this is
expected to mitigate difficulties arising from unobservable hetero-
geneity among firms.
We conducted a baseline survey with a sample of 113 firms in
early 2010 and then assigned them randomly to treatment and
control groups. We invited owners or top managers (hereafter
referred to as entrepreneurs) of randomly selected firms to partic-
ipate in a classroom training program, an on-site training program,
or both. There were also sample firms that were not invited to any
program. Classroom training participants learned from the trainers
about good management practices for a total of nearly 40 h. On-
site training participants received concrete advice on how to
improve efficiency and safety at work from the trainers who visited
their workshops several times. Follow-up surveys were conducted
in 2011, 2012, and 2014 to collect data on management practices,
as well as sales revenues and costs. Although our sample is small in
size, it allowed us to make frequent contact with sample enter-
prises; this led to a very low survey attrition rate.
There are four major findings. First, consistent with the results
of the existing studies, the treatment groups (i.e., those invited to
one of the three training programs) applied—soon after the training
programs—a significantly greater number of good management
practices than the control group. Second, the training impacts on
practices remained significant three years later; this is similar to
the finding obtained by Higuchi et al. (2015, 2017) from a similar
experiment in Vietnam. Third, and more interestingly, while the
treatment groups adopted a number of good practices at first, they
later stopped using some of these. Fourth, the effect of training par-
1
A number of recent studies systematically investigate the varied impacts of
different managerial interventions (e.g., Anderson, Chandy, & Zia, 2018; Brooks,
Donovan, & Johnson, 2018).
2
Information on SIYB training is available at http://www.ilo.org/empent/areas/
start-and-improve-your-business/lang–en/index.htm.
221
ticipation on business performance, particularly the effect of par-
ticipation in both programs, is large and statistically significant.
The estimated coefficients are larger in the medium-run (i.e., two
to three years after the training programs) than in the short-run.
However, we do not reject the null hypothesis—the treatment
effects are constant—for most specifications; this is likely because
of our small sample size.
One may wonder how a training program could keep improving
the business performance of participants if they ceased to imple-
ment some of the practices taught. According to some training par-
ticipants, they initially put as many training lessons into practice
as possible; however, they gradually discarded the ones that were
not found to be useful and adapted the remaining practices to their
own situations. This explanation is more plausible than other pos-
sible explanations, as we will discuss below.
In addition to the small and divided sample, the lack of ade-
quate treatment of information spillovers is a weakness of this
study. Many training participants were so satisfied with the train-
ing program that they could not keep what they learned at the
program secret from their friends, including those in the control
group. Data on spillovers are presented later, but they are not
used in the assessment of the training impact. This is because
the extent of spillovers is endogenous to the training impact as
participants who anticipated positive training impacts tend to
talk to acquaintances about the training content. Assuming away
spillovers is like to imply that our assessment results understate
the true impacts.
The remainder of the paper is organized as follows. Section II
describes the experimental design. Section III addresses the issues
of balance, attrition, and externality, while Section IV presents the
impact evaluation results. Finally, Section V summarizes the find-
ings and discusses implications for future studies.
2. Experimental design
2.1. Study site and sample firms
In Dar es Salaam, there are about 250 small-scale firms and
numerous self-employed businesses producing garment products.
The majority of them are owned and operated by female entrepre-
neurs. This is presumably because of a sewing business training
program provided by the United Nations Industrial Development
Organization (UNIDO) in the 1990s to nurture female entrepre-
neurs. Some participants’ sewing businesses became successful;
this encouraged many other females and a smaller number of
males in the city to start their own businesses. In this way, a cluster
was formed.
Our sample firms were selected from the member lists of three
associations of business owners: Tanzania Handicraft Association
(TANCRAFT); Handproducts of Tanzania (HOT); and Artisan Devel-
opment Association of Tanzania (ADAT). Members of these associ-
ations sew dresses, shirts, jackets, and textile home ware, such as
cushion covers and kitchen mittens.3 From the member lists, we
selected a random sample 113 firms for our survey. They are located
in the same city, face same or related markets for products and
inputs, and utilize the same information on market and technology
that they receive from the associations.
3
There was another association of garment producers, but we did not include its
members in the sample because they jointly sold their products in their own
marketplace and acted as a profit-sharing cooperative. For many entrepreneurs in the
sample, the associations are useful because they provide information on various
training programs and events, besides organizing trade fairs. Members who are
interested can participate in trade fairs held in neighboring countries, as well as
Tanzania, once or twice a year. They charter buses, carry sacks of their products with
them, and enjoy conversations with colleagues during travel.
222 Y. Higuchi et al. / World Development 114 (2019) 220–236
2.2. Intervention and randomization
Most of the existing studies of management training interven-
tions highlight the SIYB type of basic training. Such training is suit-
able for microenterprises with a few employees or none. In
contrast, our sample enterprises employed, an average, a little
more than five workers (see Panel A in Table 1). Thus, the training
intervention in this study included, in addition to the SIYB mod-
ules, the introductory lessons of production management and
quality control. Coordinating the division of labor among workers,
reducing wasteful use of materials and time, and preventive main-
tenance were among the major topics in the training program. Kai-
zen is now widely used in both developed and developing
countries. It is an approach pioneered by Japan by building on
the disciplines of industrial engineering and statistical quality con-
trol that originated in the US, and is the basis of lean production.4
Kaizen emphasizes productivity improvement by the collaborative
and continuous efforts of both managers and workers (Hosono,
2017; Imai, 2012). Our training program featured the basics of
Kaizen.
We hired a Tanzanian lead trainer—a qualified SIYB master trai-
ner—and her three co-trainers for the training program. Since they
had extensive experience in business training for small business
owners and spoke to the participants in the local language, there
is no reason to suspect that the trainers and participants had diffi-
culty in communication. Because the trainers were not very famil-
iar with Kaizen, we made arrangements with a business consulting
firm in Japan to send an experienced Kaizen expert to our training
program in Dar es Salaam. He communicated with the local train-
ers in English to transfer the essential knowledge of Kaizen, as well
as a method of teaching it to business owners and workers.
Although the Japanese expert also taught the participants directly
as well, the local trainers handled most of the classroom and on-
site programs.
The three-week classroom training program, which had 2.5 h of
daily sessions for five days of the week, imparted the basic knowl-
edge of Kaizen and covered the standard content of the SYIB train-
ing in entrepreneurship, marketing, record keeping, and
accounting.5 As part of its coverage of the basic knowledge of Kaizen,
the program taught not only the importance of encouraging workers
to reduce wasteful use of resources and materials and being con-
scious of quality control, but also useful communication methods
and tools for achieving these goals. To the classroom program, we
invited 52 randomly selected entrepreneurs; of these, 47 attended
the training for at least 10 out of the 15 days of the three-week train-
ing. We regard these 47 entrepreneurs as participants in this training
program.
During the period between the two short programs, the Kaizen
expert and the local trainers chose the workshops of two partici-
pants from the classroom program for conversion into model
workshops. This had a twofold purpose. First, model workshops
would serve as real examples of streamlined workshop layout,
proper maintenance of machinery, and effective use of shelves to
sort and store materials, intermediate inputs, and work in progress.
Second, during their setting up, the model workshops would serve
as venues for local trainers to learned from the Kaizen expert about
how to: spot inefficiencies; find implementable solutions; and
carry out relatively large-scale changes, such as layout change.
The expert and local trainers selected two enterprises that had rel-
atively spacious workshops and product lines common to many
4
In the 1980s, the US automobile industry adapted Kaizen to their circumstances
and called it lean production.
5
The classroom training was supplemented by a one-week optional course on
color coordination and product design.
sample enterprises and agreed to show their layouts and Kaizen
practices to other training participants.
From among the 113 enterprises, we randomly selected 55
enterprises and invited them to the on-site training program. It
began with a half-day seminar that all the invited entrepreneurs
attended. At the seminar, they were briefed about the on-site train-
ing and Kaizen management and were randomly assigned to train-
ers. Each trainer visited the workshops under his or her charge to
assess the situation and develop a coaching plan. Later, the trainer
visited each workshop at least twice more and, in many cases, sev-
eral times. The trainers decided on the number of visits according
to the willingness and availability of the respective participants.
The trainers explained to the participants not only how to intro-
duce Kaizen practices to their workers, but also keep improving
them with regular feedbacks from workers; they also recom-
mended layout change to some participants. If requested by the
participants, the trainers also gave advice on record keeping and
marketing. The training cost was approximately USD 2000 per par-
ticipating firm for both the classroom and the on-site program.
2.3. Take-up
As shown toward the bottom of Table 1, there are 28 enterprises
in the class + onsite group (this includes the two model enter-
prises); 24 in the class-only group; 29 in the onsite-only group;
and 32 in the control group. This classification is based on inten-
tion to treat, i.e., on invitations, as the result of randomization. Four
enterprises in the class + onsite group and one enterprise in class-
only group did not participate in the classroom training compo-
nent. Thus, the take-up rate for the classroom training was 90 per-
cent. The take-up rate for the on-site training was 100 percent. The
participants consisted of those that had been invited to the respec-
tive training programs; there were no uninvited participants.
A possible reason for the high take-up rate in the case of the on-
site program is that the participants did not have to travel to a
training venue. Another possible reason is that the entrepreneurs
became more willing to receive further training because the class-
room training program had established a good reputation, as we
will discuss shortly.
2.4. Timeline
Many studies of management training RCTs have found that the
management practices taught by the trainers are implemented
quickly by the trainees. However, the existing evidence of favor-
able impacts on business performance is relatively weak
(McKenzie & Woodruff, 2014). Our basic hypothesis is that this is
because it takes managers and workers some time to assimilate
new practices. It is possible that attempts to use a new practice
lower productivity temporarily, before managers and workers get
accustomed to it. In order to examine longer-run training impacts,
we conducted a baseline survey of enterprises in April 2010, and
provided the classroom training program during May–June 2010.
This was followed by a quick interim survey and the on-site train-
ing program; further, we conducted three full-scale follow-up sur-
veys in 2011, 2012, and 2014. Our timeline is presented in Fig. 1.
3. Internal validity
3.1. Balance
During the baseline and follow-up surveys, our enumerators
visited the sample firms and conducted personal interviews with
the entrepreneurs to gather information on their background
characteristics, management practices, and business performance.
 Y. Higuchi et al. / World Development 114 (2019) 220–236 223

Table 1
Balance check.

(1) (2) (3) (4) (5) (6) (7)

Mean by treatment status p-value for t-test
Class + onsite Class-only Onsite-only Control (1) = (4) (2) = (4) (3) = (4)
Panel A: Control Variables
Age (as of the baseline survey) 44.5 44.9 45.9 44.7 0.96 0.91 0.59
(8.48) (7.08) (9.35) (7.86)
Male (yes = 1) 0.07 0.17 0.14 0.28 0.04 0.32 0.18
(0.26) (0.38) (0.35) (0.46)
Chagga tribe (yes = 1) 0.18 0.25 0.34 0.28 0.36 0.80 0.60
(0.39) (0.44) (0.48) (0.46)
Years of education 11.6 10.3 10.7 10.8 0.26 0.52 0.86
(2.82) (2.12) (2.62) (2.84)
Prior business training participation (yes = 1) 0.75 0.67 0.59 0.56 0.13 0.44 0.85
(0.44) (0.48) (0.50) (0.50)
Work experience as textile employee (yes = 1) 0.14 0.25 0.24 0.19 0.65 0.58 0.61
(0.35) (0.44) (0.44) (0.40)
Years of operation (at the time of the baseline survey) 12.6 11.8 12.3 10.7 0.23 0.48 0.32
(5.83) (4.85) (6.44) (6.11)
TANCRAFT member (yes = 1) 0.43 0.46 0.48 0.59 0.21 0.32 0.39
(0.50) (0.51) (0.51) (0.50)
HOT member (yes = 1) 0.43 0.46 0.52 0.28 0.24 0.18 0.06
(0.50) (0.51) (0.51) (0.46)
Panel B: Outcome Variables
Management Score, 0–27 11.7 10.3 10.7 10.3 0.10 0.92 0.69
(3.44) (2.39) (4.49) (3.30)
Sales Revenue [GK$] (mean of the 2008 and 2009 values) 28,175 22,885 27,716 41,549 0.37 0.24 0.39
(23401) (20940) (45585) (74714)
Value Added [GK$] (mean of the 2008 and 2009 values) 17,176 13,550 18,065 27,631 0.33 0.22 0.41
(14543) (12171) (31017) (54275)
Employment Size (mean of the 2008 and 2009 values) 5.9 4.9 5.9 4.7 0.22 0.82 0.36
(4.44) (4.89) (6.39) (3.53)
p-value for joint orthogonality 0.48 0.91 0.38
Number of enterprises in the group 28 24 29 32
Number of participants in the classroom training 24 23 0 0
Number of participants in the on-site training 28 0 29 0

Notes: Numbers in parentheses are the standard deviations. Columns (5) through (7) show the p-values for the t-test of the null hypotheses that the two groups share the
same mean values. Sales revenue and value added are expressed in the international dollar (i.e., the Geary-Khamis dollar) by using the PPP conversion factor provided by the
World Bank’s World Development Indicators. The p-value for joint orthogonality is obtained from the F-test of the null hypothesis that all coefficients, in the OLS regression of
each treatment status dummy variable on the control and outcome variables, are zero.

or the manner in which the entrepreneurs responded to their ques-

Baseline Class- Interim On-site First Second Third tions; in some case, both were used. The enumerators used 27
survey room survey training follow- follow- follow-
training up up up diagnostic criteria, which are listed in Appendix Table 1. The eval-
survey survey survey uation results are expressed in terms of the number of diagnostic
April May- Sept. Nov.2010- April Sept. Jan. criteria satisfied by the enterprise, as per the enumerator. This
2010 June 2010 Feb.2011 2011 2012 2014
(N=113) 2010 (N=113) (N=113) (N=110) (N=107)
number is henceforth called management score and ranges from
zero to 27. As our major indicators of business performance, we
Fig. 1. Notes: N is the number of operating enterprises at the time of each survey. use annual sales revenue and value added, which are expressed
All the operating enterprises were surveyed.
in terms of the international dollar (i.e., the Geary-Khamis dollar)
by using the PPP conversion factor provided by the World Bank’s
Columns 1 through 4 of Table 1 present data on the characteristics World Development Indicators.6 We refer to these performance indi-
of the sample enterprises and their entrepreneurs by treatment cators and the management score as outcome variables. Appendix A
status (i.e., on the basis of invitation, rather than participation). gives the details of our baseline and follow-up surveys, the construc-
The entrepreneurs are in their mid 40s, and females constitute a tion of the data, and our enumerators. Appendix B reports the corre-
majority. Chagga, an economically active ethnic group, accounts lation among the outcome variables and enterprise characteristics.
for a quarter of our sample. The educational attainment of the sam- Columns 5 through 7 of Table 1 report the p-values for the tests
ple entrepreneurs is much higher than the average schooling of equality in the mean between each treatment group and the
attainment in Tanzania, which was 5.1 years for those aged 25 or control group. Since the relatively small sample is subdivided into
above in 2010, according to Barro and Lee’s (2012) cross-country four groups, it is little wonder that there are two variables
human capital data set. Compared with male entrepreneurs,
female entrepreneurs are more highly educated. More than 60 per- 6
The results of the impact evaluation reported in this paper remain qualitatively
cent of the sample and an even higher percentage of the female the same and quantitatively similar if sales revenue and value added are deflated by
sub-sample had business training experience in the past. Less than applying the consumer price index (CPI) provided by the World Bank’s World
a quarter of the entrepreneurs had prior work experience as a tex- Development Indicators. The change in the PPP conversion factor and that in the CPI
deflator are similar during our observation period. Setting the year 2010 as a base
tile employee. (=1), the PPP conversion factor is 0.85 in 2008, 0.96 in 2009, 1.09 in 2011, 1.24 in
The management practices of the sample enterprises were eval- 2012, and 1.32 in 2013, while the CPI deflator is 0.84 in 2008, 0.94 in 2009, 1.13 in
uated by our enumerators either on the basis of visual inspection 2011, 1.31 in 2012, and 1.41 in 2013.
224 Y. Higuchi et al. / World Development 114 (2019) 220–236
significantly different at the 5 percent significance level. As shown
toward the bottom of Table 1, however, the joint orthogonality test
does not reject the null hypothesis that the treatment status is
jointly uncorrelated with the control and outcome variables. In this
sense, randomization has successfully generated a balance.
3.2. Attrition
There was no incidence of sample attrition in the first follow-up
survey. When the second follow-up survey was conducted in
September 2012, three sample enterprises (one in the class-only
group and two in the onsite-only Group) were not in operation,
and their data were not collected. The third follow-up survey in
January 2014 found that two of these three exiters (one in the
class-only group and one in the onsite-only group) had resumed
operation, but it found a total of six sample firms (one in the
class + onsite group, three in the onsite-only group, and two in
the control group) were not in operation.
Fig. 1 presents the numbers of operating enterprises at the time
of each survey. The attrition rate at the time of the third follow-up
survey, (113–107)/113, is low compared to the attrition rates
reported by many other studies of management training experi-
ments (McKenzie & Woodruff, 2014). We do not find that survival
is correlated with the treatment status. Column 6 of Appendix
Table 2, for example, shows that whether a firm was in operation
or not during the third follow-up survey does not depend on its
treatment status. For this reason, the exiters could be excluded
from the sample in the econometric analysis. Another way to han-
dle firm exits is to keep exiters in the sample and assume that their
sales revenue and value added are zero. We refer to the measured
training impacts on sales revenue and value added as conditional
impacts if they are analyzed as being conditional on firm survival,
and as unconditional impacts if the analysis uses the sample
including exiters under the assumption of zero revenue and zero
value added.
Related to attrition, the question may arise as to why the con-
trol group continued to cooperate with us in the three follow-up
surveys, even though they were not invited to either component
of the training program. A likely reason is that they expected to
participate in a future training program.
3.3. Externality
All the sample firms are located in Dar es Salaam. Because of
their geographical proximity and human network, knowledge
could easily spill over from the training participants to non-
participants.7 During the first follow-up survey, the list of all the
sample entrepreneurs, along with their enterprises’ names and
addresses, were shown to each sample entrepreneur and they were
asked about those on the list that they knew and if the training con-
tent had been discussed with any of them. Rows (a) and (b) of Panel
A in Table 2 summarize the answers to this question. For example,
entrepreneurs in the class + onsite group knew 26.9 other sample
entrepreneurs and had discussed the training content with 7.4 of
them. Row (c) addresses the question of how much the sample
entrepreneurs discussed the training with their co-trainees. An
entrepreneur in the class + onsite group talked with 5.8 other partic-
ipants. In short, participants tended to talk with participants rather
than non-participants. Although non-participants also shared the
same tendency, they talked much less about the training content
than the participants.
7
De Grip and Sauermann (2012) find that knowledge spilt over from trained
workers to co-workers. Bloom et al. (2018) find that management knowledge spilt
over from a treated factory to the other factories owned by the same entrepreneur.
Panel B presents results of the dyadic regressions to examine
how training helped expand the network of the sample entrepre-
neurs. The outcome variable is either a dummy variable taking
the value of one if a sample entrepreneur i knows entrepreneur j
in the sample at the time of the first follow up survey or that taking
the value of one if an entrepreneur i has discussed the training con-
tent with entrepreneurs j by the time of any of the first second, or
third follow-up surveys. Two dummy variables are included on the
right-hand-side: one is a dummy variable that takes the value one
if both entrepreneurs i and j were invited to any component of our
training programs; the other takes value one if only entrepreneur i
or j was invited to any component of our training programs. Panel
B shows that all the coefficients on these two dummy variables are
positive and significant and those on the former dummy variable
are larger in magnitude, suggesting that entrepreneurs established
a business network, particularly with other treated entrepreneurs,
through the training programs. This finding is consistent with
Fafchamps and Quinn (2016), and we find that such new network
was maintained even at the time of the third follow-up survey.
Last, less direct evidence for knowledge spillovers includes the
finding that the control group mean of the management score
increased from 10.3 in the baseline survey to 12.8 in the first
follow-up survey and, further, to 17.5 in the second follow-up sur-
vey (see column 4 in Table 1 and Panel A in Table 3). The existence
of knowledge spillovers is also suggested by the data on
willingness-to-pay. We asked each sample entrepreneur if he or
she was willing to pay the local currency equivalent of USD 150
for the combined program after explaining the purpose and fea-
tures of the program.8 Row (d) of Table 2 shows the fraction of
the sample entrepreneurs who answered in the affirmative. This pro-
portion increased to 100 percent after the training program in all
groups including the control group. The greater willingness-to-pay
among the control group indicates that information about the train-
ing program spilled over from the training participants to them.
Since there seem to be knowledge spillovers, we attempted to
consider them in assessing training impacts by using the conversa-
tion data. The results are reported in Appendix C. The use of the
conversation data, however, does not necessarily improve the
accuracy of impact evaluation because of the possibility of its being
endogenous. Some participants might share new knowledge with
friends because they were excited about the prospect of using
knowledge to increase profits. Those who talked less about the
training content with others might be less convinced of an increase
in profits. If this is the case, the use of the conversation data may
invite an estimation bias, even though it may allow us to control
the spillover effects to some extent.
The training impacts are estimated in the next section under the
assumption that the control group is not at all affected by the train-
ing intervention, that is, the stable unit treatment value assump-
tion (Rubin, 1978). In other words, we assume away knowledge
spillovers. In general, this assumption can lead to both overesti-
mates and underestimates. Overestimation can take place if the
greater market supply by the treated group reduces the sale rev-
enues of competitors, including the control group (i.e., business
stealing). Underestimation can take place if the knowledge spil-
lover effect outweighs the business stealing effect.
Although we expect such market rivalry to exist in our study
site, it is unlikely to be intense. As garment markets in East Africa
8
The question on willingness-to-pay is prone to reporting bias because of its
hypothetical nature. To reduce such bias, we followed the lead of Blumenschein et al.
(2008). After outlining our training program, we asked them a hypothetical question,
‘‘Would you pay 400,000 Tanzanian shilling (=150 USD) to participate in the training
program?” If the answer was in the affirmative, we asked further, ‘‘How sure are you
about the answer? Are you definitely sure or probably sure?” Based on this set of
questions, we constructed a dummy variable that takes value of one if the answer is
‘‘definitely sure of the willingness-to-pay” and zero otherwise.
 Y. Higuchi et al. / World Development 114 (2019) 220–236 225

Table 2
Knowledge spillovers.

(1) (2) (3) (4)

Class + onsite Class-only Onsite-only Control
Panel A: Descriptive Statistics
(a) Number of sample entrepreneurs the respondent knows at the time of 1st 26.9 24.8 25.2 22.6
follow-up survey (17.0) (13.1) (19.2) (13.9)
(b) Number of sample entrepreneurs with whom the respondent has discussed the 7.4 7.6 7.0 4.2
training content by the time of the first follow-up survey (9.8) (6.9) (9.8) (6.4)
(c) Number of treated entrepreneurs with whom the respondent has discussed the 5.8 5.8 5.0 3.7
training content by the time of the first follow-up survey (7.0) (5.0) (6.8) (5.4)
(d) Willingness to pay (yes = 1)
(d.1) Baseline survey 0.68 0.75 0.66 0.69
(0.48) (0.44) (0.48) (0.47)
(d.2) First follow-up survey 1 1 1 1
(0) (0) (0) (0)
(1) (2) (3) (4)
i knows j at the time i has discussed the training content i has discussed the training content i has discussed the training content
of the first follow-up with j by the time of the first with j by the time of the second with j by the time of the third
survey follow-up survey follow-up survey follow-up survey
(1 = yes) (1 = yes) (1 = yes) (1 = yes)
Panel B: Dyadic Regression
Both i and j were invited 0.064*** 0.043*** 0.056*** 0.057***
to training (1 = yes) (0.024) (0.011) (0.018) (0.012)
Only either i or j was 0.059*** 0.025*** 0.033*** 0.023***
invited to training (0.013) (0.0059) (0.012) (0.0054)
(1 = yes)
Constant (Neither i nor j 0.16*** 0.023*** 0.071*** 0.013*
was invited to (0.016) (0.0063) (0.011) (0.0068)
training; 1 = yes)
No. observations 12,656 12,656 12,656 12,656

Notes: In Panel A, the numbers in parentheses are standard deviations. In Panel B, they are results from dyadic regressions, where the outcome variable is either a dummy
variable taking the value one if a sample entrepreneur i knows entrepreneurs j in the sample at the time the first follow-up survey or if an entrepreneur i has discussed the
training content with entrepreneurs j by the time of any of the first, second, or third follow-up survey. Two dummy variables are included on the right-hand-side. The first one
takes the value one if both entrepreneurs i and j were invited to any component of our training programs and the other takes the value one if only either entrepreneur i or j
was invited to any component of our training programs. The number of observations is 113  (113–1). Numbers in parentheses are standard errors clustered at the enterprise
level. *** and * indicate significance at the 1% and 10% levels, respectively.

are increasingly integrated, the majority of the sample enterprises
export their products to neighboring countries in small quantities;
further, Dar es Salaam imports garment products in large quanti-
ties. Because one of our training impacts was the greater likelihood
of exporting, the impact of greater sales of the treatment groups on
the control group would be limited. In addition, a recent experi-
ment by McKenzie and Puerto (2017) finds that small enterprises
in Kenya, after receiving business training, improved consumer
services and launched new products without causing negative
effects on control enterprises in the same market. Our treated
entrepreneurs also introduced a number of new products. Thus,
while both upward and downward biases are conceivable, we
expect that the stable unit treatment value assumption leads to
underestimates in our case.
4. Results
4.1. Econometric specification
To evaluate the impacts of the training on the management
score and business performance, we consider the following regres-
sion equation:
P BOTH BOTH P CLASS CLASS
yit ¼ a þ b sZ i T st þ b sZ i T st
s s
P XN1
þ bONSITE s Z ONSITE i T st þ cyi0 þ n¼1
dn mnit þ gt þ eit ;
s 9
where yit is the management score of enterprise i in the t-th round
of the follow-up survey (t = 1, 2, 3) or the enterprise’s sales revenue
or value added in year t (t = 2010, 2011, 2012, 2013).9 ZBOTH i is a
dummy variable indicating whether enterprise i was invited to both
the classroom and on-site training programs (i.e., whether the enter-
prise belongs to the class + onsite group). Similarly, ZCLASS i and
ZONSITE
i are dummy variables indicating whether the enterprise is in
the classroom-only group and whether it is in the Onsite-only group,
respectively. Tst is a dummy variable taking the value one if the data
point is s, where s can be 1, 2 or 3 for the management score and it
can be 2010, 2011, 2012, or 2013 for thesales revenue or value
added. Since we expect the training effects to change over time,
the coefficients bBOTH
s , bCLASS
s , and bONSITE
s have subscript s. In other
words, three coefficients are estimated on each treatment group if
the dependent variable is the management score and four coeffi-
cients are estimated if the dependent variable is the sales revenue
or value added. Taking advantage of the high compliance rate, we
estimate these coefficients by the intention-to-treat (ITT)
specification.
Following the lead of McKenzie (2012), we employ the ANCOVA
estimator, which is more efficient than the fixed-effect model esti-
mator. Specifically, the right-hand side of Eq. (1) includes the base-
line value of the dependent variable, yi0. When y is sales revenue or
value added, the baseline value is the mean of the values in 2008
and 2009 because the use of average baseline value improves effi-
ciency (McKenzie, 2012).
ð1Þ
The year 2010 was included as one of the outcome years because the classroom
training was conducted in May and June 2010 and the on-site training started in
November 2010; thus, there was a partial effect of the training programs on the
annual business performance indicator of 2010.
226 Y. Higuchi et al. / World Development 114 (2019) 220–236

Table 3
Impact on Management Score (Intention to Treat-ANCOVA).

(1) (2) (3) (4) (5)

First follow-up Second follow-up Third follow-up P-value equality P-value all zero
Panel A: Management Score [0–27]
Class + onsite 4.95*** 1.66** 2.94*** 0.01 0.00
(0.84) (0.80) (0.82)
Class-only 3.55*** 1.59** 3.87*** 0.07 0.00
(0.90) (0.71) (0.89)
Onsite-only 1.64* 1.61** 2.38*** 0.71 0.01
(0.94) (0.73) (0.87)
Control group mean 12.8 17.5 13.1
Panel B: Sales Promotion [0–4]
Class + onsite 0.77*** 0.44 0.55** 0.57 0.05
(0.29) (0.30) (0.26)
Class-only 0.65** 0.44 0.95*** 0.33 0.03
(0.32) (0.33) (0.31)
Onsite-only 0.24 0.086 0.44 0.62 0.58
(0.27) (0.29) (0.32)
Control group mean 1.5 2.6 1.5
Panel C: Record Keeping [0–4]
Class + onsite 0.82*** 0.25 0.94*** 0.01 0.00
(0.21) (0.19) (0.27)
Class-only 0.66*** 0.27 1.00*** 0.01 0.00
(0.22) (0.17) (0.26)
Onsite-only 0.032 0.18 0.84*** 0.01 0.01
(0.32) (0.20) (0.26)
Control group mean 3.1 3.6 2.9
Panel D: Marketing [0–4]
Class + onsite 1.37*** 0.24 0.17 0.00 0.00
(0.30) (0.16) (0.26)
Class-only 0.44 0.24 0.42** 0.74 0.04
(0.34) (0.16) (0.20)
Onsite-only 0.11 0.19 0.20 0.96 0.46
(0.33) (0.17) (0.20)
Control group mean 2.2 3.5 3.1
Panel E: Kaizen [0–15]
Class + onsite 2.31*** 1.08* 1.62*** 0.21 0.00
(0.54) (0.55) (0.59)
Class-only 1.86*** 0.80 1.61*** 0.42 0.00
(0.57) (0.56) (0.61)
Onsite-only 1.38** 1.23** 1.05 0.91 0.01
(0.57) (0.56) (0.67)
Control group mean 5.9 7.7 5.6

Notes: The number of observations in all panels is 330. Numbers in parentheses are standard errors clustered at the enterprise level. All regressions include the baseline value
of the dependent variable, the enumerator dummies, and survey round dummies on the right-hand side. Non-operating enterprises are excluded. There were no such
enterprises in the first follow-up survey, but there were three in the second and six in the third. P-value equality means the p-value for the test of the null hypothesis that the
treatment effect remained constant over time. P-value all zero means that the p-value for the test of the null hypothesis that the treatment effect is zero in all three follow-up
surveys. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

Eq. (1) includes a set of dummy variables, mnit, indicating which
of the N enumerators was in charge of collecting data from enter-
prise i in survey round t. The purpose is to control for enumerator
fixed effects, dn, that is, the heterogeneity in enumerators’ evalua-
tion of management practices and eliciting of information. Because
eight enumerators were engaged in the three follow-up surveys
(i.e., N = 8), Eq. (1) has seven enumerator dummies.10 The time
effects common to all enterprises, gt, are captured by the two time
dummies for the management score and the three time dummies
for the sales revenue (or the value added). The error term, eit, may
have autocorrelation among the sample enterprises, and thus, we
report hypothesis testing results based on standard errors clustered
at the enterprise level.
In Table 4, the main outcome variables for business perfor-
mance are sales revenue and value added. Estimation results are
reported for both conditional and unconditional cases. In the con-
ditional case, the sample consists of only the operating firms. In the
10
Although the estimated coefficients on the enumerator dummies are not
reported, the null hypothesis that the coefficients are all zero is rejected in many
cases, indicating that the inclusion of these dummy variables reduces estimation bias.
unconditional case, the sample includes exiters and their sale rev-
enue and value added are assumed to be zero. Table 5 reports the
estimated training impacts on other outcome variables, such as
exporting, the number of products, the number of employees,
and investment.
Table 6 reports results of employing different econometric
specifications for robustness checks. First, we use changes in
management score, sales revenue, or value added as outcome
variables, instead of adding the baseline values, as in the ANCOVA
specification; further, we remove subscript s from the coefficients
of interest to perform randomization inference to take into
account our small sample size. The randomization inference is
conducted by permutation tests, following the lead of Bloom
et al. (2013). In addition, we perform multiple hypothesis testing,
following List, Shaikh, and Xu (2016), to take into account the fact
that there are as many as three control arms. Last, we collapse
the three treatment dummies into one dummy variable indicating
whether an enterprise was invited to any one of the two training
programs, and report hypothesis testing results based on standard
errors clustered at the enterprise level, as well as on permutation
tests.
 Y. Higuchi et al. / World Development 114 (2019) 220–236 227

Table 4
Impact on Sales Revenue and Value Added (Intention to Treat-ANCOVA).

(1) (2) (3) (4) (5) (6)

2010 2011 2012 2013 P-value equality P-value all zero
Panel A: Conditional Sales Revenue [USD]
Class + onsite 823.1 2870.4 19112.0** 23622.6*** 0.12 0.04
(8936.1) (7325.4) (7616.3) (7840.1)
Class-only 3199.9 3668.3 8717.0 9029.5 0.82 0.75
(9663.1) (7716.0) (6652.2) (6783.5)
Onsite-only 4029.4 12919.2 12293.6 14055.5* 0.94 0.38
(17409.8) (8667.6) (9118.4) (8071.5)
Control mean 47,598 42,219 26,875 26,947
Panel B: Unconditional Sales Revenue [USD]
Class + onsite 3299.1 2837.5 16430.5** 22776.9*** 0.07 0.02
(9080.0) (7306.0) (7329.3) (7428.4)
Class-only 3200.3 3583.5 7311.4 8337.3 0.85 0.79
(9687.9) (7637.0) (6374.5) (6535.9)
Onsite-only 3852.5 12541.1 11548.9 13125.6* 0.94 0.38
(17434.7) (8547.4) (8381.5) (7446.4)
Control mean 47,598 42,219 25,195 25,263
Panel C: Conditional Value Added [USD]
Class + onsite 541.2 957.5 13873.6** 16177.6*** 0.09 0.02
(7687.3) (4972.8) (5485.2) (5274.1)
Class-only 4842.2 5330.6 6835.7 7421.5 0.72 0.54
(8159.9) (5675.7) (4794.1) (4600.6)
Onsite-only 5352.7 957.5 9645.4 11224.9* 0.51 0.43
(16284.9) (5238.1) (6363.3) (5983.9)
Control mean 32,367 25,368 13,281 13,142
Panel D: Unconditional Value Added [USD]
Class + onsite 1092.8 876.6 12395.8** 15588.4*** 0.07 0.01
(7720.5) (4948.0) (5275.4) (4991.1)
Class-only 4793.6 5208.8 5908.7 6941.9 0.70 0.55
(8181.0) (5583.3) (4584.7) (4440.8)
Onsite-only 5227.3 1321.1 8799.6 10221.4* 0.57 0.45
(16309.3) (5060.9) (5852.9) (5515.8)
Control mean 32,367 25,368 12,451 12,321

Notes: The number of observations is 433 in Panels A and C and is 452 in Panels B and D. Non-operating enterprises are excluded in Panels A and C, but included in Panels B
and D by assuming that they had zero value added and sales revenue. Numbers in parentheses are standard errors clustered at the enterprise level. All regressions include the
baseline value of the dependent variable, the enumerator dummies, and survey round dummies on the right-hand side. P-value equality means the p-value for the test of the
null hypothesis that the treatment effect remained constant over time. P-value all zero means the p-value for the test of the null hypothesis that the treatment effect is zero
throughout for the four data points. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

4.2. . Impacts on management scores
Table 3 shows the estimated impacts of the training on the
management scores of the three treatment groups and a compar-
ison with the control group. Panel A reports the estimated impacts
on the management score, whereas the other four panels report
the estimated impacts on disaggregated scores.11 The first three
rows in each panel show the estimated coefficients bBOTH s , bCLASS
s ,
ONSITE
and bs for each data point. They also show the p-values for
two null hypotheses: the first is that the coefficient is the same for
all the data points, and the other is that the coefficient is zero in
all cases. The fourth row in each panel shows the average manage-
ment score of the control group enterprises.
Panel A in Table 3 shows that the coefficients on the class
+ onsite group dummy and the class-only group dummy are posi-
tive and significant at the 1 percent level in the first and third
follow-up surveys. The estimated coefficient on the onsite-only
group dummy is only marginally significant in the first follow-up
survey, but highly significant in the third follow-up survey. As
shown in column 5, these coefficients, on the whole, are highly sig-
nificant. Similarly, Panels B through E indicate that the three train-
ing programs had generally significant impacts on the partial
11
The way of disaggregation should be clear from the list of practices shown in
Appendix Table 1.
scores of the three treatment groups. The only exceptions are the
impacts on the sales promotion and marketing scores of the
onsite-only group. The salient finding from Table 3 is that the
effects of the programs on management practices were felt soon
and lasted at least for three years.
In Panels A through E, the coefficients in column 2 are less sig-
nificant than the corresponding coefficients in columns 1 and 3. A
reason why the significance level declines in the second data point
may be that the control group mean of the management score
increased sharply from 12.8 to 17.5, probably owing to knowledge
spillovers. Indeed, some sample entrepreneurs pointed out that
the training participants and even non-participants initially tried
to adopt as many practices as possible. The same informants, how-
ever, said that they had abandoned some practices subsequently
because they had found it tiresome to carry on those practices
or to keep telling their workers to do them. Appendix Table 1
reports the percentage of the sample enterprises that were using
each of the 27 practices included in the management score. As
indicated by the asterisk, between the second and third follow-
up surveys, six practices were abandoned by more than 30 percent
of the sample entrepreneurs. One was to spend money on adver-
tisements, but the remaining five practices were Kaizen practices
that were to be implemented by workers rather than the entrepre-
neurs. Probably, the non-participants who imitated some practices
would fail to learn from the participants to the ways of encourag-
ing their workers to carry on the practices voluntarily. It would be
more tiresome for the non-participants to maintain such practices.
228 Y. Higuchi et al. / World Development 114 (2019) 220–236

Table 5
Impact on Other Business Indicators (Intention to Treat-ANCOVA).

(1) 2010 (2) 2011 (3) 2012 (Second Follow-up) (4) 2013 (Third Follow-up) (5) P-value equality (6) P-value all zero
Panel A: Export (yes = 1)
Class + onsite 0.19** 0.19* 0.015 0.17 0.06
(0.080) (0.10) (0.12)
Class-only 0.24*** 0.18* 0.21* 0.86 0.05
(0.084) (0.11) (0.11)
Onsite-only 0.031 0.17* 0.12 0.35 0.31
(0.083) (0.096) (0.096)
Control mean 0.69 0.63 0.63
Panel B: The number of products
Class + onsite 1.61** 1.10* 1.48** 0.75 0.01
(0.64) (0.60) (0.56)
Class-only 1.12* 1.60*** 1.35** 0.70 0.02
(0.58) (0.55) (0.67)
Onsite-only 0.39 1.63*** 0.19 0.07 0.02
(0.70) (0.58) (0.62)
Control mean 5.3 5.0 4.1
Panel C: Share of Value Added in Sales Revenue
Class + onsite 0.0091 0.067 0.032 0.039 0.25 0.38
(0.035) (0.047) (0.042) (0.042)
Class-only 0.030 0.018 0.00015 0.027 0.66 0.81
(0.037) (0.049) (0.045) (0.041)
Onsite-only 0.040 0.073 0.013 0.0029 0.57 0.43
(0.036) (0.048) (0.038) (0.041)
Control mean 0.65 0.59 0.49 0.49
Panel D: Number of Employees
Class + onsite 0.65 1.05 1.08 0.89 0.61
(0.90) (1.03) (0.86)
Class-only 0.071 0.26 0.48 0.85 0.92
(0.76) (1.00) (0.69)
Onsite-only 2.71 3.75** 1.95* 0.26 0.20
(1.94) (1.89) (1.17)
Control mean 4.6 5.4 4.2
Panel E: Investment (yes = 1)
Class + onsite 0.022 0.27** 0.08 0.06
(0.12) (0.11)
Class-only 0.068 0.19 0.15 0.30
(0.11) (0.13)
Onsite-only 0.0018 0.081 0.57 0.72
(0.11) (0.10)
Control mean 0.25 0.13

Notes: The number of observations is 330 in Panels A, B, and D, 433 in Panel C, and 217 in Panel E. Non-operating enterprises are excluded. Numbers in parentheses are
standard errors clustered at the enterprise level. All regressions include the baseline value of the dependent variable, the enumerator dummies, and survey round dummies
on the right-hand side. Panel E, where the analysis is not ANCOVA, in an exception because the baseline data of the dependent variable are unavailable. Instead regression is
run separately for two periods: from January 2011 to September 2012 and from January 2012 to December 2013. P-value equality means the p-value for the test of the null
hypothesis that the treatment effect remained constant over time. P-value all zero means the p-value for the test of the null hypothesis that the treatment effect is zero
throughout for the data points. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

This is our conjecture about why the most drastic decline in the
management score occurred in the control group.12
It is useful to note here that with a small sample size and low
statistical power, there can be a bias in that any result that is found
to be statistically significant may have an overstated magnitude, as
pointed out by Gelman and Carlin (2014), who refer to such biases
as type-M errors. We concede that the regression results reported
in Table 3 and the subsequent tables could be subject to type-M
errors.
12
Although Bandiera and Rasul (2006) point out strategic delays in the adoption of
new technology, such a possibility seems unlikely in our setting because firms have
limited incentive to free-ride in learning good management practices. What is
difficult for entrepreneurs is not knowledge acquisition, but actual implementation
based on their own effort, as well as on their being able to motivate workers.
Supporting evidence for this is that adoption, as well as imitation of improved
management practices, took place soon after the training while many of the adopted
practices were discarded within a span of three years. In addition, good practices,
even after implemented for a while, can disappear from the workplace. Such a
disappearance does not seem uncommon. See, for example, Jackson and Schneider
(2015), who find that garage mechanics stopped using checklists despite these
working as a monitoring device and boosting productivity.
4.3. Impacts on Business Performance
Fig. 2 plots the cumulative distribution function (CDF) of the
baseline sales revenue by the treatment status. There seem to be
three outliers in the control group and one in the onsite-only
group. This is why the baseline sales revenue and value added of
these groups are greater than those of the other two groups, as
shown in Table 1. Except for these outliers in the upper tail, the
CDFs of the four groups overlap considerably. Indeed, the
Kolmogorov-Smirnov test does not reject the null hypothesis of
equality in the baseline distributions between any two groups.
Table 4 is similar in design to Table 3. As shown in the bottom
raw of each panel, the sales revenue and value added of the control
group fluctuated considerably during the observation period (see
also Panel B in Table 1). Our respondents described year 2010 as
a year of favorable market conditions and ascribed the subsequent
downturn to soaring material prices and a flood of low-priced
imports into the Dar es Salaam market. Although all groups suf-
fered, the control group was the most heavily affected, and the
class + onsite group was the least affected. The latter’s average
 Y. Higuchi et al. / World Development 114 (2019) 220–236 229

Table 6
Robustness Check (Randomization Inference and Multiple Hypothesis Testing).

(1) (2) (3) (4)

Coefficient P-value with cluster-robust P-value from P-value adjusted for multiple
standard errors permutation tests hypothesis testing
Panel A: Change in Management Score
Class + onsite 2.46 0.00 0.00 0.00
Class-only 2.97 0.00 0.00 0.00
Onsite-only 1.61 0.01 0.00 0.02
P-value treatment equality 0.22
All training pooled 2.46 0.00 0.00
Control group mean 4.20
Panel B: Change in Sales Revenue
Class + onsite 16091.6 0.05 0.02 0.03
Class-only 11268.3 0.17 0.10 0.08
Onsite-only 15152.5 0.10 0.02 0.08
P-value treatment equality 0.33
All training pooled 14289.3 0.08 0.02
Control group mean 6044
Panel C: Change in Value Added
Class + onsite 11880.0 0.04 0.01 0.06
Class-only 8892.3 0.11 0.06 0.07
Onsite-only 10059.8 0.12 0.03 0.16
P-value treatment equality 0.41
All training pooled 10309.8 0.07 0.02
Control group mean 6873

Notes: The number of observations is 330 in Panel A and is 433 in Panels B and C. Numbers in columns (1) and (2) report coefficients and p-values, respectively, obtained from
regressions with changes in the outcome variable from baseline to each data point (i.e., first, second, and third follow-up survey for the management score and 2010, 2011,
2012, and 2013 for the sales revenue and value added) on the left-hand-side, while controlling for the enumerator dummies and survey round dummies. Column (3) reports
p-values from permutation tests obtained using ritest STATA command for the regressions represented in column (2). Column (4) reports p-values adjusted for multiple
hypothesis testing for all pairwise comparisons among the treatment and control groups, following List, et al. (2016) and using the mhtexp STATA command for changes in
outcome variables. P-value treatment equality means the p-value for the test of the null hypothesis that the treatment effect of class + onsite, class-only, and onsite-only are
the same. Toward the bottom of each Panel, we collapse the three treatment dummies into one dummy variable that takes the value one if an enterprise was invited to at least
one of the training programs; further, the estimated coefficient with the corresponding p-values based on standard errors clustered at the enterprise level, as well as those
based on permutation tests, are reported.

1 1

.8 .8

.6 .6

.4 .4

.2 .2

0 0
0 50000 100000 150000 200000 250000 300000 350000 0 50000 100000 150000 200000 250000 300000 350000
Sales_revenue Sales_revenue
Control Class-only Control Class-only
Onsite-only Class + Onsite Onsite-only Class + Onsite

Fig. 2. The CDF of the baseline sales revenue. Fig. 3. The CDF of the 2013 sales revenue.

sales revenue and value added did not sink below the baseline
levels. Fig. 3 plots the CDF of sales revenue in 2013. The CDF of
the class + onsite group is located to the right of the CDFs of the
other three groups except in the upper tail, indicating that the
combined program had a favorable effect on the business perfor-
mance of the treated entrepreneurs. The Kolmogorov-Smirnov test
rejects the null hypothesis of equal distributions between the class
+ onsite group and the control group in 2013 at the 10 percent sig-
nificance level.
In Table 4, Panels A through D have no significant estimates in
the first two columns. That is, none of the three programs had sig-
nificant impacts on business performance in the first two years. In
the next two years, however, the impacts of the combined program
on both sales revenue and value added became significant. The
magnitude of the impact of the combined program is large com-
pared with the corresponding average value of the control group.
Although we have to note that the point estimates have large
standard errors, the impact on value added in 2013 is estimated
230 Y. Higuchi et al. / World Development 114 (2019) 220–236
to be USD 16,178 (in column 4, Panel C), which is far above the cost
of USD 4,000 USD per participant for providing the class + onsite
training program. For the onsite-only groups, while the estimated
impacts on sales revenue and value added were insignificant until
2012, those in 2013 turned to be marginally significant, and the
coefficients on classroom-only groups are also positive and large,
particularly in 2012 and 2013. We find a similar pattern for condi-
tional and unconditional performance indicators; this is probably
because of the limited number of exits throughout the period of
the follow-up surveys.
Our sample is too small to undertake formal analysis of heteroge-
neous treatment effects. Our regression results, which are not
reported in tables, suggest that those entrepreneurs who do not
belong to the Chagga tribe and those with working experience at a
textile factory tend to benefit more from our training programs. This
is presumably because the training could compensate their lack of
tribal business network or the entrepreneurial mindset to operate
the business as an employer. According to a survey of literature on
business training experiments, female entrepreneurs tend to benefit
less from training programs (McKenzie &Woodruff, 2014). In our
sample, however, such a tendency is not found probably because
more than 80% of the sample entrepreneurs are female.
Table 5 reports training impacts on other business outcome
variables.13 In Panel A, the outcome variable is binary and indicates
whether the firm exports its product to a foreign market. In most
cases, the sample firms’ export markets are trade fairs in neighboring
African countries. The impact immediately after the classroom train-
ing program in 2010 was strong. This result is consistent with the
fact that participants were encouraged to be entrepreneurial and
proactive in marketing and that hearing about trade fairs through
their conversations with other participants encouraged them to par-
ticipate. In Panel B, the outcome variable is the number of products
that the firm produces. More or less common product categories
include men’s, ladies’, and children’s clothes, cushions, apron and
kitchen wear, and batik items. Again, we find a strong immediate
effect of the classroom training on the number of products.
Note, however, that the large immediate increases in exports
and the number of products were not accompanied by immediate
increases in sales revenues or value added. These results suggest
that the treated firms that increased the number of products and
participated in trade fairs sold their products at prices lower than
those obtained when they sold only their regular products in their
home markets. In order to restore and increase sales revenues and
value added, they would have to improve and control the quality of
products, which, in turn, would require bringing quality control to
the attention of their workers. In many cases, entrepreneurs would
have to break the ice to begin communication with their workers.
They had not needed effective communication earlier because they
had not tried to do anything new. The training programs taught
such participants some methods and tools to motivate workers
to pay attention to quality, facilitating communications, keeping
track of progress, among others. According to the Japanese expert,
the favorable impacts of these efforts of entrepreneurs and workers
would take a longer time to emerge than changes in entrepreneurs’
behaviors, such as beginning to keep records.
In Panel C of Table 5, the outcome variable is the share of value
added in sales revenue. This variable amounts to {1  (the sum of
material, transport, subcontracting, energy, and communication
costs)}/sales revenue. Hence, it is expected to increase if the intro-
13
In addition to the outcome variables reported in Table 5, we ran regressions on
the willingness to take risk and the willingness to compete. The data on these
variables were collected in the follow-up surveys but not in the baseline survey. The
treatment dummies were on the right-hand side of these regressions. We find that the
treated entrepreneurs were marginally more likely to take risk, and more willing to
compete, than the control entrepreneurs.
duction of Kaizen reduces the wasteful use of materials, and it is
expected to decrease if transport costs increase owing to an
increase in exports or if material costs increase owing to an
increase in the number of products. From the table, we do not find
any significant effects of the training programs on this variable in
the short or medium run. Thus, the effects of the training on waste
reduction or cost reduction were not substantial, if at all.
In Panel D, the outcome variable is the employment size.
Although all the coefficients are positive in years 2012 and 2013,
column 6 does not reject the hypothesis of no training impact.
Panel E reports the results regarding investment in sewing machi-
nes and other capital goods, which is undertaken infrequently. The
estimated impact of the class + onsite program on investment is
negligible in the earlier period, but significant later on.
The results reported in Tables 4 and 5, together with the previ-
ous discussion of knowledge spillovers, indicate that the control
group firms’ imitation of the practices taught to the participants
in the training programs did not improve their business perfor-
mance as much as that of the participants. Continuous improve-
ments in quality, productivity, cost reduction, safety, and so on,
would require entrepreneurs or managers to patiently encourage
and motivate workers and to modify the lessons from the training
programs to suit their own needs. During the classroom training
program, the participants learned various examples of application
of the lessons, as well as the spirit of continuous improvement.
During the on-site training program, the trainers would have been
able to give advice suitable to the specific needs of some partici-
pants. Compared with the participants’ adoption and adaption of
useful practices, the control group firms’ imitations would be
superficial.
4.4. Robustness Check
We report results using different econometric specification in
Table 6. In Panel A, the outcome variable is the difference between
the management score in the baseline survey and that in each of
the first, second, and third follow-up surveys. The coefficient esti-
mate reported in column (1) is 2.46 for the class + onsite group,
with the control group’s mean increase being 4.20. This estimate
suggests that that the class + onsite group benefitted more from
training participation than the control group did from knowledge
spillovers. Columns (2), (3), and (4) report the p-value with
cluster-robust standard errors, the p-value from permutation tests,
and the p-value adjusted for multiple hypothesis testing for all
pairwise comparisons among the treatment and control groups,
respectively. All columns show that the coefficient on the class
+ onsite training program is statistically significant. The same
applies to the class-only and onsite-only groups, as far as the man-
agement score is concerned. Since the p-value for treatment equal-
ity is small but falls short of the significance level, we collapse the
three treatment dummies into one dummy variable that takes the
value one if an enterprise was invited to any one of the training
programs. The estimated coefficient of 2.46 is positive and signifi-
cant both in terms of the p-value with cluster-robust errors and the
permutation test.
Panel B and Panel C present the results for changes in sales rev-
enue and value added, respectively, in a manner similar to that
used in Panel A. The control mean is negative because of the mar-
ket downturn, while all the coefficients are positive for all three
treatment arms. In terms of the significance level, the results
shown in Panels B and C are weaker than those in Panel A owing
to large variances in these indicators of business performance. Still,
the estimated coefficients on the class + onsite dummy are gener-
ally significant at the 5% level in Panels B and C and in columns
(2) through (4); further, even some of those on the class-only
dummy and onsite-only dummy are significant at the 5% level or
 Y. Higuchi et al. / World Development 114 (2019) 220–236
the 10% level. If the three treatment dummies are collapsed, the
estimated coefficients are positive and significant at the 10% level
in column (2) and at the 5% level in column (3).
Since business performance data are generally noisy (de Mel,
McKenzie, & Woodruff, 2009), we report additional robustness
checks on sales revenue and value added in Appendix Tables 4 and
Table 5, respectively. Since Fig. 2 indicates the existence of some
outliers, Panel A and Panel B of these tables show the results of win-
sorizing and trimming, respectively, the top 5 percentile of the dis-
tribution of these business performance indicators. Panel C reports
the results based on inclusion of the record keeping score in the esti-
mation of Eq. (1), following the lead of de Mel et al. (2014); this is
because the training participants may have become more meticu-
lous in record keeping than the non-participants and provided the
enumerators with more accurate information on revenues and
costs. The data on sales revenues and costs in 2008 were collected
through the baseline survey in April 2010, and those in 2012 were
collected through the third follow-up survey in January 2014. Panel
D shows the results obtained on excluding the 2008 data (i.e., yi0 is
the value added in 2009, and not the average of the value added in
2008 and 2009) and the 2012 data because the quality of these dis-
tant recall data may be low. Last, Panel E reports the results of using
the inverse-hyperbolic-sine transformation (IHST) of the outcome
variable. This transformation allows for zero or negative values,
but it also provides almost the same interpretation as the logarithm
transformation. The results shown in Appendix Tables 4 and 5 are
qualitatively similar to those in Table 4, even though some esti-
mated coefficients are less significant.
4.5. Discussion
We find a significant effect of a management training program
on business performance later than that on management practices.
This, however, is not specific about what the effect of training
would get stronger or weaker over time. What we have found is
that this effect became weaker in the medium run after being
highly significant and large in magnitude in the short run (see
Table 3). This finding is not surprising because the excitement
and fervor of the participants may ebb away when they find that
it is tiresome to implement practices or keep telling workers to
do so; they may also find some practices unfit for their operation.
Nonetheless, the participants did not abandon all the practices
that they had adopted after training. On the contrary, they retained
some practices. Moreover, the positive and significant estimate of
the medium-run effect of the combined program on business per-
formance indicators (see Table 4) suggests that these practices
contributed to the improved performance. In interpreting these
findings consistently, the key word seems to be assimilation. After
the training programs, the participants would try many practices
and then identify and focus on the useful practices that were then
assimilated. The favorable effect of training on business perfor-
mance would come after sufficient assimilation.
5. Conclusion
This paper has reported our follow-up observations, spread over
three years, after a randomized controlled trial of management
training. Two short programs and a combined program were pro-
vided to small firms as the interventions. In line with the stylized
finding of the existing studies, we found that all the three pro-
grams improved management practices in the short run; however,
none of the programs improved business performance in the short
run. By extending the follow-up observation period, we also found
that the favorable effect of training on management practices
remained statistically significant even in the medium run; how-
231
ever, the effect of the combined training program on business per-
formance became significant in the medium run. The effect of the
short program that provided on-site training also became margin-
ally significant on business performance in the medium run. These
findings suggest that the existing studies provided too little train-
ing or evaluated training impacts too soon to detect a favorable
training impact on business performance.
Interestingly, when the participants in the combined program
adopted many practices that they learned from the program, their
business performance was not significantly better than that of the
control group. Later they ceased to use some practices but outper-
formed the control group significantly. These findings suggest that
assimilating new knowledge obtained from a training program is a
necessary step in improving performance.
This study has also found a high willingness-to-pay for partici-
pating in the training program and the difficulty of imitation
among the control firms. From these findings, a question arises
as to whether this type of business training can be provided in
the market. The answer is positive, at least in the long run. Some
large enterprises in Africa have already introduced Kaizen manage-
ment or lean production by hiring reputed consultants or coaches.
In contrast, the vast majority of small firms are not yet aware of the
value of receiving management training, and, hence, the demand
for training services is not real or effective. The market will grow,
however, once their awareness has increased as a result of the pub-
lic provision of training programs or some other efforts.
There is a caveat regarding the comparison between our exper-
iment and many existing ones. They differ not only in the length of
follow-up observation period but also in two other respects. One
relates to the type of enterprises covered. Many sample enterprises
in many of the existing studies have no workers except for the self-
employed owners and their family members. In contrast, many
enterprises in our sample employ more than five paid workers
and are eager to expand their business sizes. Our experiment also
differs from the existing ones in terms of the training content.
Although ours included standard training content, it also covered
the Kaizen approach to quality control and production manage-
ment; this is expected to improve product quality and reduce the
wasteful use of materials and other inputs. Our experimental
design does not allow us to assess the degree of contribution that
each of these deviations from the existing experiments made to the
new results. This issue, together with the issue of information spil-
lovers, can be explored in future research.
Conflict of interest
None declared.
Acknowledgements
We would like to thank Paulo Bastos, Nicholas Bloom, Armando
J. Garcia Pires, Yuya Kudo, Takashi Kurosaki, David McKenzie,
Keijiro Otsuka, Yasuyuki Todo, Shinsuke Uchida, and John van
Reenen for their helpful comments. We also thank the editor-in-
chief and three anonymous referees for their useful suggestions.
Funding
This work was supported by the World Bank Japan Professional
Human Resource Development (PHRD) Trust Fund [grant number
TF096317], the Japan Society for the Promotion of Science (JSPS)
KAKENHI [grant numbers 25101002, 15K21728, 15H06540,
18H00850], and Grant-in-Aid for Research in Nagoya City
University.
232 Y. Higuchi et al. / World Development 114 (2019) 220–236

Appendix A. Surveys We measure business performance by sales revenue and value

Our enumerators conducted personal interviews with entrepre-
neurs while filling out questionnaires. They basically used the
same questionnaires in different survey rounds, although we
deleted some questions that were found to be irrelevant in the ear-
lier surveys. Among such questions, the most important one is
about the willingness to pay for the training participation (see
Panel A in Table 2). In the interim survey in 2010, almost all the
sample entrepreneurs, regardless of treatment status, answered
in the affirmative. In the first follow-up survey, all of them again
answered in the affirmative. As we expected that the affirmative
response would not change, we did not ask questions about this
issue in subsequent surveys. There was only one major addition
to the questionnaire. In the interim survey, we added a new sec-
tion, on acquaintances and conversations with them about the
training content (see Appendix C below), which was not included
in the baseline survey questionnaire.
Our questions about management practices cover the 27 diag-
nostic criteria listed in Appendix Table 1. For many criteria, visual
inspection was used to judge whether the criteria were satisfied.
For instance, the enumerators visually checked entrepreneurs’ note-
book to judge whether a record of sales or quality defects was regu-
larly kept; thus, it is not easy for sample entrepreneurs to
manipulate their adopted management practices. However, for cri-
teria such as ‘‘The entrepreneur has a clear sales or profit target for
the current year,” visual inspection is impossible, and direct ques-
tions such as ‘‘do you have a clear sales or profit target?” may lead
to false answers. The questionnaire, instead, asks the entrepreneur
to talk about his or her sales or profit target, and it asks the enumer-
ator to judge whether the enterprise has set a clear target.
added. The questionnaire does not directly ask about the value
added, even though de Mel et al. (2009) recommend directly asking
entrepreneurs about the profit they make rather than calculating
it. Our enumerators asked the entrepreneurs about the quantity
and price of each of their products as well as those of each material
used, the subcontracting costs, energy costs, and transportation
and communication costs. Wherever available, written records
were also used. The enumerators, then, estimated the value added
carefully and showed the estimate to the entrepreneur. If the esti-
mate did not make sense to the entrepreneur, the enumerator
would elicit further information to revise the estimate of the value
added until the amount was considered appropriate by the entre-
preneur. All the enumerators held bachelor’s degrees and received
survey training from us before each of the baseline and follow-up
surveys to handle such data collection procedures.
Appendix B. Baseline correlations
The baseline management score is closely associated with the
number of years of schooling and the number of years of business
operation, as indicated by column 1 of Appendix Table 2. These
results are consistent with the findings of Bloom and van Reenen
(2010) that the management practice score is closely associated
with the human capital of the managers. The baseline sales revenue
and value added are also correlated with the schooling years (see
columns 2 and 4), but the correlation becomes weaker when we
include the baseline management score as a right-hand side vari-
able (see columns 3 and 5). The baseline management score is
highly associated with both value added and sales revenue. In col-
umn 6, the dependent variable is the dummy variable that is equal

Appendix Table A1
Management score components and adoption rates (%).

Components Survey Round

Baseline 1 2 3
Sales promotion
(1) The enterprise has had expenditure for advertisement in the last 3 months 11 37 63 15+
(2) There is a signboard in front of the enterprise 39 57 75 60
(3) The enterprise distributes complimentary cards or calendar 25 43 80 57
(4) The enterprise issues invoices or receipts with its name or phone number 37 59 77 62
Record keeping
(5) Receipts and invoices are preserved 49 81 96 92
(6) Business and household expenses are separated 63 84 96 82
(7) Records of sales are kept 85 92 97 93
(8) Records of material purchase are kept 70 88 97 93
Marketing
(9) The entrepreneur can clearly characterize his or her major customers 43 67 93 85
(10) The entrepreneur can clearly describe its strength vis-a-vis its competitors 24 62 88 93
(11) The entrepreneur has clear sales or profit target in this year 45 73 96 67
(12) The entrepreneur has clear plan for its growth in the next five years 28 62 90 92
Kaizen
(13) A worker is assigned to inspect product quality before shipping 11 5 3 2
(14) Records of quality defects are kept 23 46 70 40+
(15) Records customers’ complaints about the products sold are kept 45 57 70 48
(16) The enterprise instructs the worker on the way to prevent defects 9 2 4 8
(17) Every tool has a designated place 35 53 71 35+
(18) Tools and their storages are labeled so that workers can easily find necessary tools 4 11 23 19
(19) Every raw material has a designated place 77 91 89 87
(20) Raw materials are stored separately from scrap or left-over materials 76 93 94 83
(21) No left-over materials and cutting wastage are scattered on the floor 14 62 61 56
(22) Scrap and wastage are removed and the floor is cleaned every day 83 94 95 96
(23) Machinery is maintained at least once a week 30 25 59 25+
(24) Regular meetings of all production workers are held 28 48 64 53
(25) All production activities have their designated places 30 38 52 22+
(26) The enterprise posts a flow chart describing the proper production process 9 11 39 6+
(27) The entrepreneur is aware of the sequence and duration of each production process 81 94 85 72

Notes: Numbers in the four columns on the right side are the percentage of the sample enterprises that implement the practices. + indicates practices that were abandoned by
more than 30 percent of the sample entrepreneurs between the second and third follow-up surveys.
 Y. Higuchi et al. / World Development 114 (2019) 220–236 233

Appendix Table A2
Baseline correlates of management score, business performance, and attrition (OLS).

(1) (2) (3) (4) (5) (6)

Baseline management score Baseline value added Baseline Sales revenue Operating at the time of the third
follow-up survey (1 = yes)
Age 0.47 4714.8 6441.5 6027.7 8514.1 0.019
(0.49) (4781.7) (5145.0) (5997.0) (6604.4) (0.023)
Age squared (/100) 0.0043 48.8 64.5 62.0 84.7 0.00023
(0.0056) (50.8) (54.1) (63.5) (69.5) (0.00023)
Male (yes = 1) 1.45 11537.8 16831.7 20096.6 27719.4 0.026
(0.94) (17043.3) (16718.8) (23311.2) (22498.8) (0.042)
Chagga tribe (yes = 1) 0.53 4382.1 2454.1 7242.4 4466.3 0.032
(0.75) (5517.2) (5299.3) (7793.9) (7312.3) (0.044)
Years of education 0.29*** 2460.9** 1381.1 3532.4** 1977.6 0.012
(0.10) (1078.3) (1003.9) (1488.3) (1457.9) (0.0074)
Past business training experience (yes = 1) 0.80 1505.0 1414.7 6505.6 2301.4 0.030
(0.78) (7879.5) (7532.4) (11288.9) (10517.2) (0.049)
Former textile employee (yes = 1) 0.97 26.8 3591.5 614.2 4518.7 0.0043
(0.97) (9369.1) (8543.6) (12809.3) (11670.1) (0.066)
Years of operation 0.17*** 845.9 208.3 1610.2* 692.0 0.0014
(0.065) (582.8) (556.6) (849.7) (759.1) (0.0053)
TANCRAFT member (yes = 1) 0.24 8807.5 7946.5 11565.7 10325.9 0.067
(1.06) (6640.9) (6428.0) (10069.2) (10115.2) (0.096)
HOT member (yes = 1) 0.85 1397.2 4515.8 3271.6 7762.1 0.022
(1.04) (5713.7) (5937.9) (8495.2) (9239.5) (0.10)
Baseline management score 3662.2*** 5273.3***
(1334.5) (1886.0)
Class + onsite 0.027
(0.061)
Class-only 0.078
(0.051)
Onsite-only 0.041
(0.070)
No. observations 113 113 113 113 113 113
R2 0.27 0.18 0.29 0.22 0.33 0.09

Notes: Numbers in parentheses are standard errors clustered at the enterprise level. All regressions, except for the one shown in column 6, control for the enumerator fixed
effects. In column 6, the enumerator dummies were not included because non-operating enterprises were so few in number that the inclusion of the enumerator dummies led
to insufficient variation for conducting regression. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

to 1 if an enterprise was operating at the time of our third follow-up
survey and zero otherwise. The regression result indicates that
enterprise survival was not correlated with the treatment status.
Appendix C. Knowledge spillovers
value of each outcome variable among the sample entrepreneurs
with whom the respondent has discussed the training content.
The latter is included to estimate the linear-in-means specification,
following the lead of Bramoullé, Djebbari, and Fortin (2009); it
examines how peers’ adoption or performance influences that of
the respondent.

Appendix Table 3 reports the results of the estimation that

incorporates two network variables on the right-hand side of Eq. Appendix D. Management score components
(1), while admitting the possibility of endogeneity. The first one
is the number of the sample entrepreneurs with whom the respon- Of the 27 practices constituting the management score, many
dent discussed the training content, and the other is the mean were increasingly adopted by the training participants and

Appendix Table A3
Spillover (Intention to Treat-ANCOVA).

(1) (2) (3) (4) (5) (6)

Management score Sales revenue Value added
Class + onsite 3.57*** 3.65*** 8383.5* 10842.1** 6596.9* 7872.7**
(0.55) (0.57) (5032.0) (5179.9) (3351.3) (3377.9)
Class-only 3.35*** 3.59*** 2119.3 4140.8 2652.4 3623.8
(0.56) (0.54) (4966.8) (5168.1) (3071.9) (3265.4)
Onsite-only 1.63*** 1.18** 11319.9 10248.6 6853.4 6585.8
(0.54) (0.52) (7613.3) (7957.1) (5306.6) (5640.0)
Network 0.087*** 497.1* 196.6
(0.032) (264.0) (182.5)
Mean among those in the 0.26*** 0.097 0.064
network (0.098) (0.13) (0.091)
No. observations 443 431 452 440 452 440

Notes: Non-operating enterprises are excluded. Numbers in parentheses are standard errors clustered at the enterprise level. All regressions include the baseline value of the
dependent variable, the enumerator dummies, and survey round dummies on the right-hand side. Network variable represents the number of sample entrepreneurs with
whom the respondent has discussed the training content by the time of the first follow-up survey. Mean among those in the network represents the mean value of each
outcome variable among the sample entrepreneurs with whom the respondent has discussed the training content by the time of first follow-up survey. ***, **, and * indicate
significance at the 1%, 5%, and 10% levels, respectively.
234 Y. Higuchi et al. / World Development 114 (2019) 220–236

Appendix Table A4
Additional robustness check on sales revenue.

(1) (2) (3) (4) (5) (6)

2010 2011 2012 2013 P-value equality P-value all zero
Panel A: Winsorizing the top 5 percentile
Class + onsite 10044.0* 1587.2 10079.4* 14510.1** 0.33 0.09
(5525.70) (6372.34) (5640.39) (5876.32)
Class-only 8191.2 911.0 2768.4 3579.4 0.72 0.59
(5982.90) (6637.87) (4456.58) (4398.52)
Onsite-only 412.1 9835.9 1567.0 4050.6 0.12 0.21
(4464.06) (7190.01) (4215.42) (5007.15)
Control mean 26,411 32,274 26,875 24,160
Panel B: Trimming the top 5 percentile
Class + onsite 7766.9 3490.4 12537.9** 17255.9*** 0.29 0.07
(5927.09) (6722.09) (5665.18) (5960.61)
Class-only 5838.2 3250.3 2841.6 3196.3 0.95 0.87
(6500.96) (7073.74) (4543.64) (4395.76)
Onsite-only 2121.0 9679.6 879.0 6785.1 0.09 0.17
(5047.67) (7040.06) (4936.98) (5575.27)
Control mean 33,740 37,434 26,875 26,671
Panel C: Controlling Baseline Record Keeping Score
Class + onsite 1787.9 1646.3 17792.8** 22249.8*** 0.15 0.08
(9274.70) (7277.42) (7815.89) (7863.40)
Class-only 4190.5 2264.4 7441.7 7726.1 0.92 0.64
(9979.60) (7855.54) (6808.73) (6892.36)
Onsite-only 3783.7 12401.4 11884.8 13646.8* 0.52 0.65
(17518.14) (8624.15) (9065.82) (7983.63)
Control mean 47,598 42,219 26,975 26,947
Panel D: Excluding Distant Recall Data
Class + onsite 630.0 3838.3 24881.7*** 0.06 0.02
(0.94) (0.61) (0.00)
Class-only 1459.2 5304.8 10662.9 0.64 0.54
(0.87) (0.50) (0.17)
Onsite-only 5291.6 13947.5 14745.3 0.85 0.27
(0.75) (0.11) (0.10)
Control mean 47,598 42,219 26,947
Panel E: In Logarithm
Class + onsite 0.14 0.10 0.30 0.33 0.74 0.56
(0.16) (0.18) (0.19) (0.20)
Class-only 0.14 0.088 0.15 0.15 0.99 0.86
(0.17) (0.20) (0.15) (0.17)
Onsite-only 0.060 0.31 0.13 0.19 0.30 0.39
(0.19) (0.21) (0.19) (0.20)
Control mean 10.78 10.83 10.52 10.56

Notes: Notes: The number of observations is 415 in Panel A, 433 in Panels B, C, and E, and 329 in Panel D. Non-operating enterprises are excluded. Numbers in parentheses are
standard errors clustered at the enterprise level. All regressions include the baseline value of the dependent variable, the enumerator dummies, and survey round dummies
on the right-hand side. P-value equality means the p-value for the test of the null hypothesis that the treatment effect remained constant over time. P-value all zero means the
p-value for the test of the null hypothesis that the treatment effect is zero throughout for the four data points. Please see the details of the estimation strategy described in
Section IV-D. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

non-participants. Appendix Table 1 shows the rate of adoption for
each practice. For three of the four sales promotion practices, there
was a substantial increase in adoption of more than 20 percentage
points in the period between the baseline survey and the third
follow-up survey. Two record keeping practices and four marketing
practices also witnessed a surge in adoption.
In contrast, only two out of the 15 Kaizen practices had a surge
in adoption. Interestingly, however, the adoption rate increased by
more than 20 percentage points by the time of the second follow-
up survey for eight Kaizen practices, but it fell sharply when the
third follow-up survey was carried out. According to our inter-
views with respondents, this is because some of the practices that
they initially adopted were later found to be not very useful. Their
point is reflected in the changes in the adoption rates of practice 17
(‘‘Every tool has a designated place”). The adoption rate of practice
17 increased from 35 percent during the baseline survey to 71 per-
cent at the time of the second follow-up survey; however, the third
follow-up survey showed that it had fallen back to 35 percent. The
sharp decline makes sense—having a designated storage area for
every tool would be meaningless if workers did not return the tools
to their storage areas.
If, however, the storage areas for some tools were labeled
clearly, workers are more likely to return those tools because it
would be clear to colleagues that the tools have not yet been
returned to their storage areas. The trainers taught the partici-
pants the usefulness of the visualization achieved by labeling
and other means when they taught them the importance of
returning tools to designated places. Many participants, however,
did not fully understand the visualization part of the story and
skipped it when they talked to their non-participant friends about
the training program. This is probably the reason why the adop-
tion rate of practice 17 increased rapidly at first and, then,
dropped sharply.
Practice 18 (‘‘Tools and their storages are labeled so that work-
ers can easily find necessary tools”) was not easily adopted by the
non-participants, who had never seen the labels that were used.
Even the training participants who missed the trainers’ explana-
tion about visualization would not be able to adopt this practice.
Thus, the adoption rate of this practice increased gradually from
4 percent to 23 percent. However, it remained at 19 percent in
the third follow-up survey probably because many of those who
adopted this practice found it useful.
 Y. Higuchi et al. / World Development 114 (2019) 220–236 235

Appendix Table A5
Additional robustness check on value added.

(1) (2) (3) (4) (5) (6)

2010 2011 2012 2013 P-value equality P-value all zero
Panel A: Winsorizing the top 5 percentile
Class + onsite 3760.3 2484.0 8147.2** 7113.5** 0.15 0.08
(3678.83) (3784.09) (3180.05) (2869.90)
Class-only 2617.0 2350.7 3330.7 2167.9 0.92 0.64
(4035.19) (4871.64) (2128.96) (2295.47)
Onsite-only 2548.7 2922.4 1332.9 1907.3 0.52 0.65
(3092.26) (4223.77) (1964.75) (2668.81)
Control mean 18,439 19,030 11,687 13,142
Panel B: Trimming the top 5 percentile
Class + onsite 6163.7 310.7 8636.0** 10046.4*** 0.22 0.03
(3937.34) (4410.03) (3758.05) (3203.26)
Class-only 2506.2 3788.3 1740.9 2127.8 0.98 0.86
(4029.76) (5182.14) (2692.87) (2337.41)
Onsite-only 1977.8 2257.1 1908.7 3738.6 0.47 0.61
(2975.76) (4237.66) (3040.57) (3042.40)
Control mean 21,262 22,243 13,154 13,142
Panel C: Controlling Baseline Record Keeping Score
Class + onsite 161.7 50.8 12912.3** 15178.5*** 0.09 0.03
(7905.00) (4867.28) (5558.83) (5282.19)
Class-only 5563.8 4314.6 5908.5 6479.3 0.73 0.67
(8343.99) (5649.10) (4771.83) (4556.39)
Onsite-only 5190.6 588.9 9350.3 10929.8* 0.51 0.45
(16351.41) (5125.82) (6297.13) (5899.81)
Control mean 32,367 25,368 13,281 13,142
Panel D: Excluding Distant Recall Data
Class + onsite 1865.6 1929.4 17309.7*** 0.06 0.00
(0.79) (0.72) (0.01)
Class-only 3254.8 6780.1 8923.2 0.51 0.38
(0.65) (0.24) (0.11)
Onsite-only 6402.1 1842.2 12032.7* 0.33 0.31
(0.68) (0.75) (0.08)
Control mean 32,367 25,368 13,142
Panel E: In Logarithm
Class + onsite 0.20 0.013 0.42** 0.43* 0.30 0.23
(0.18) (0.21) (0.21) (0.23)
Class-only 0.080 0.064 0.17 0.21 0.94 0.83
(0.16) (0.23) (0.18) (0.19)
Onsite-only 0.14 0.13 0.23 0.22 0.52 0.67
(0.20) (0.25) (0.21) (0.22)
Control mean 10.33 10.26 9.72 9.79

Notes: Notes: The number of observations is 415 in Panel A, 433 in Panels B, C, and E, and 329 in Panel D. Non-operating enterprises are excluded. Numbers in parentheses are
standard errors clustered at the enterprise level. All regressions include the baseline value of the dependent variable, the enumerator dummies, and survey round dummies
on the right-hand side. P-value equality means the p-value for the test of the null hypothesis that the treatment effect remained constant over time. P-value all zero means the
p-value for the test of the null hypothesis that the treatment effect is zero throughout for the four data points. Please see the details of the estimation strategy described in
Section IV-D. ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

Appendix E. Additional robustness checks
A major finding, as shown in columns 1 and 2, is that the net-
work variables have positive and significant coefficients; this indi-
cates that management knowledge spills over by conversation. We
have to note, however, that such associations may be because of
the direct effect of having a wider and better business network
or the sociability of entrepreneurs. The coefficients in columns 3
and 5 are positive and marginally significant, but the coefficients
in columns 4 and 6 are not significant and even negative. Hence,
the entrepreneurs in the network are not necessarily associated
with the respondent in terms of business performance. Another
major finding, shown in columns 3 to 6, is that the impact of train-
ing on business performance indicators is positive and significant.
This result seems to reinforce the results shown in Table 4 and sup-
ports the conclusion of this paper.
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