Journal
JOURNAL OF POLITICAL ECONOMY
Volume 126, Issue 2, Pages 635-687Publisher
UNIV CHICAGO PRESS
DOI: 10.1086/696154
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Funding
- government of the State of Puebla via Consejo para el Desarrollo Industrial, Comercial y de Servicios
- Strategic Research Program
- Research Support Budget
- Knowledge for Change trust fund of the World Bank
- Bill and Melinda Gates Foundation via Financial Access Initiative
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A randomized control trial with 432 small and medium enterprises in Mexico shows positive impact of access to 1 year of management consulting services on total factor productivity and return on assets. Owners also had an increase in entrepreneurial spirit (an index that measures entrepreneurial confidence and goal setting). Using Mexican social security data, we find a persistent large increase (about 50 percent) in the number of employees and total wage bill even 5 years after the program. We document large heterogeneity in the specific managerial practices that improved as a result of the consulting, with the most prominent being marketing, financial accounting, and long-term business planning.
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