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Teaching personal initiative beats traditional training in boosting small business in West Africa

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Science  22 Sep 2017:
Vol. 357, Issue 6357, pp. 1287-1290
DOI: 10.1126/science.aan5329

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Helping people and their businesses grow

Many lower-income people in developing countries do not receive a wage but instead are self-employed in small firms of fewer than five workers. Helping entrepreneurs to grow small businesses by teaching them formal business skills has yielded mixed results. Campos et al. show that teaching entrepreneurial skills to the self-employed works much better in terms of increasing both sales and profits. The entrepreneurial training relies on psychological mechanisms that enhance personal initiative.

Science, this issue p. 1287

Abstract

Standard business training programs aim to boost the incomes of the millions of self-employed business owners in developing countries by teaching basic financial and marketing practices, yet the impacts of such programs are mixed. We tested whether a psychology-based personal initiative training approach, which teaches a proactive mindset and focuses on entrepreneurial behaviors, could have more success. A randomized controlled trial in Togo assigned microenterprise owners to a control group (n = 500), a leading business training program (n = 500), or a personal initiative training program (n = 500). Four follow-up surveys tracked outcomes for firms over 2 years and showed that personal initiative training increased firm profits by 30%, compared with a statistically insignificant 11% for traditional training. The training is cost-effective, paying for itself within 1 year.

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