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Business practices in small firms in developing countries
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McKenzie, David J. and Woodruff, Christopher (2016) Business practices in small firms in developing countries. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1112).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? We develop 26 questions that measure business practices in marketing, stock-keeping, recordkeeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria and Sri Lanka. We show that variation in business practices explains as much of the variation in outcomes – sales, profits and labor productivity and TFP – in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The association of business practices with firm outcomes is robust to including numerous measures of the owner’s human capital. We find that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices.
| Item Type: | Working or Discussion Paper (Working Paper) | ||||
|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||
| Divisions: | Faculty of Social Sciences > Economics | ||||
| Library of Congress Subject Headings (LCSH): | Small business -- Bangladesh, Small business -- Chile, Small business -- Ghana, Small business -- Kenya, Small business -- Kenya, Small business -- México, Small business -- Nigéria, Small business -- Sri Lanka | ||||
| Series Name: | Warwick economics research papers series (WERPS) | ||||
| Publisher: | University of Warwick. Department of Economics | ||||
| Place of Publication: | Coventry | ||||
| ISSN: | 0083-7350 | ||||
| Official Date: | February 2016 | ||||
| Dates: |
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| Number: | 1112 | ||||
| Number of Pages: | 45 | ||||
| Institution: | University of Warwick | ||||
| Status: | Not Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Open Access | ||||
| Funder: | Knowledge for Change Trust Fund | ||||
| Version or Related Resource: | This paper also appears as CAGE Working Paper No: 265 |
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