| Abstract: |
In recent years, managerial capital has received attention as one of the major
determinants of enterprise productivity, growth, and longevity. This paper
attempts to assess the impacts of a management training program on the
business performance of small enterprises in a metalworking cluster in
Nairobi, Kenya. A previous study of this cluster observed that while several
enterprises had successfully expanded operation, the majority had been
experiencing declining profits due to increasing competition with imported
products and with new entrants in the cluster. Based on the observed
differences in management between successful and less successful enterprises,
we designed a management training program featuring the basics of KAIZEN, an
inexpensive, commonsense approach to management emphasizing the reduction of
wasted work and materials, for the less successful enterprises. Although our
initial intention was to use this training program as a randomized experiment,
we had to abandon randomization and allow every business owner interested in
the program to participate in it, due to circumstances beyond our control.
This paper finds that business owners operating smaller enterprises tended to
be self-selected into training participation. The training effects combined
with the self-selection effect, which we estimate with panel data, were
statistically significant and particularly stronger on profits than on sales
revenues, while other training programs that did not teach KAIZEN had positive
effects on sales revenues, not profits. As a result, the participants caught
up with and overtook the non-participants in terms of average sales revenues
and average profits, respectively. |