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Improving Management with Individual and Group-Based Consulting: Results from a Randomized Experiment in Colombia

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  • Leonardo Iacovone
  • William Maloney
  • David McKenzie

Abstract

Differences in management quality are an important contributor to productivity differences across countries. A key question is how to best improve poor management in developing countries. We test two different approaches to improving management in Colombian auto parts firms. The first uses intensive and expensive one-on-one consulting, while the second draws on agricultural extension approaches to provide consulting to small groups of firms at approximately one-third the cost of the individual approach. Both approaches lead to improvements in management practices of a similar magnitude (8–10 percentage points). The group-based intervention leads to significant increases in firm sales, profits, and labour productivity, while the impacts on firm performance are smaller in magnitude and less robust from the individual consulting. The results point to the potential of group-based approaches as a pathway to scaling up management improvements.

Suggested Citation

  • Leonardo Iacovone & William Maloney & David McKenzie, 2022. "Improving Management with Individual and Group-Based Consulting: Results from a Randomized Experiment in Colombia," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 346-371.
    • Handle: RePEc:oup:restud:v:89:y:2022:i:1:p:346-371.
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    File URL: https://hdl.handle.net/10.1093/restud/rdab005
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    Cited by:

    1. Manaresi, Francesco & Palma, Alessandro & Salvatici, Luca & Scrutinio, Vincenzo, 2022. "Managerial input and firm performance. Evidence from a policy experiment," LSE Research Online Documents on Economics 117989, London School of Economics and Political Science, LSE Library.
    2. Louise Guillouet & Amit Khandelwal & Rocco Macchiavello & Madhav Malhotra & Matthieu Teachout, 2021. "Language Barriers in Multinationals and Knowledge Transfers," NBER Working Papers 28807, National Bureau of Economic Research, Inc.
    3. Daniela Scur & Raffaella Sadun & John Van Reenen & Renata Lemos & Nicholas Bloom, 2021. "The World Management Survey at 18: lessons and the way forward," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(2), pages 231-258.
    4. Cusolito, Ana P. & Darova, Ornella & McKenzie, David, 2023. "Capacity building as a route to export market expansion: A six-country experiment in the Western Balkans," Journal of International Economics, Elsevier, vol. 144(C).
    5. Anand, Gautam & Atluri, Aishwarya & Crawfurd, Lee & Pugatch, Todd & Sheth, Ketki, 2023. "Improving school management in low and middle income countries: A systematic review," Economics of Education Review, Elsevier, vol. 97(C).
    6. Macchiavello, Rocco & Morjaria, Ameet, 2022. "Acquisitions, Management, and Efficiency in Rwanda's Coffee Industry," CEPR Discussion Papers 17434, C.E.P.R. Discussion Papers.
    7. Anna Valero, 2021. "Education and management practices," POID Working Papers 007, Centre for Economic Performance, LSE.
    8. Keijiro Otsuka, 2020. "Strategy for Cluster-Based Industrial Development in Developing Countries," Discussion Papers 2019, Graduate School of Economics, Kobe University.
    9. De Haas, Ralph & Sterk, Vincent & Van Horen, Neeltje, 2022. "Start-up types and macroeconomic performance in Europe," Bank of England working papers 986, Bank of England.
    10. Daniel Payares & Indira Porto & Rafael Puyana, 2021. "Políticas públicas y reformas para incrementar la productividad : caso de estudio del programa Fábricas de Productividad," Coyuntura Económica, Fedesarrollo, vol. 51, pages 173-194, December.
    11. Rafael Puyana & Daniel Payares & Indira Porto, 2021. "Efectividad del esquema de extensionistas tecnológicos : estudio base para el Pilar 2 del programa Fábricas de Productividad," Informes de Investigación 19277, Fedesarrollo.
    12. Islam, Asadul & Lee, Wang-Sheng & Triyana, Margaret & Xia, Xing, 2023. "Improving Health and Safety in the Informal Sector: Evidence from a Randomized Trial in Bangladesh," IZA Discussion Papers 16150, Institute of Labor Economics (IZA).
    13. Anna Valero, 2021. "Education and management practices," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(2), pages 302-322.
    14. Stefan Dimitriadis & Rembrand Koning, 2022. "Social Skills Improve Business Performance: Evidence from a Randomized Control Trial with Entrepreneurs in Togo," Management Science, INFORMS, vol. 68(12), pages 8635-8657, December.
    15. Claudia Custodio & Diogo Mendes & Daniel Metzger, 2021. "The impact of financial education of executives on financial practices of medium and large enterprises," NOVAFRICA Working Paper Series wp2105, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    16. Jesse Groenewegen & Sjoerd Hardeman & Erik Stam, 2023. "Organizational adaptiveness during COVID-19: The role of absorptive capacity and management practices," Working Papers 2301, Utrecht School of Economics.
    17. Sivropoulos-Valero, Anna Valero, 2021. "Education and management practices," LSE Research Online Documents on Economics 114436, London School of Economics and Political Science, LSE Library.

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