What's next in Business Training? Charting the course for effective policies and necessary research

Business training is in need of fresh ideas. Conventional classroom-based approaches that focused on teaching management, financial, and marketing skills have not always met expectations. So policymakers – tasked with helping business owners develop the skills they need for their businesses to survive and grow – have been exploring a wide range of new interventions focusing on non-traditional competences such as soft skills, decision-making abilities or alternative management models. 

Novel interventions both breathe new life into business training and raise new questions about its effectiveness. In order to make programme design decisions, policymakers need evidence on the effectiveness of mindset-oriented training, interpersonal skills training, or training to make decisions under uncertainty, among others.

We want to help, so we are charting a clear course: highlighting what we know about what works through our evidence portal and detailing what research we are still missing below. We want policymakers to have a clear and full picture of the things they should care about when designing and implementing business training schemes – and academics to have new policy-relevant research avenues based on what policymakers are demanding.

IGL Evidence Bites: A space for policymakers seeking to improve their business training programmes

In an effort to help increase the effectiveness of entrepreneurship and business support programmes, we have developed Evidence Bites, funded by the Ewing Marion Kauffman Foundation. The portal contains a series of evidence summaries that make it easier for policymakers and business support providers to access and act on the most rigorous evidence on how to effectively support entrepreneurs and businesses. 

The evidence summaries are organised using what we have named bitesize questions: specific questions that our work with stakeholders shows policymakers face when designing and rethinking support schemes. Along with the summaries, the portal includes actionable insights to take into account in the form of ‘Ideas worth trying’ and ‘Things to avoid’.

The section on Business Training summarises the existing experimental evidence on the topic – novel interventions aimed at building an entrepreneur’s skills and knowledge to help them better run their business. It provides an overview of what we know regarding skills policymakers should focus on: decision-making skills, interpersonal skills, an entrepreneurial mindset, and production management skills. Among the concrete conclusions from the research, we have seen that offering intensive in-class mindset-oriented training can help business owners develop psychological traits associated with entrepreneurial success, like self-efficacy and personal initiative; and that training entrepreneurs on how to make decisions following a scientific approach – establishing hypotheses and testing them – can help established businesses improve their performance and nascent entrepreneurs accelerate the ideas exploration process.

Make sure to visit the portal next time you are (re)designing a programme or to find ideas worth trying to improve your business training programmes !

Furthermore, our work has made us aware of studies currently underway in OECD countries that will soon expand the frontier of knowledge in Business Training. A study in Colombia is looking at the effects of enhanced business training for high-potential entrepreneurs. A study in Mexico is exploring the effectiveness of a combination of hard and soft skills (including personal initiative training) on the performance of female micro entrepreneurs. And the Evolve Digital project - part of the broader Business Basics Programme the Innovation Growth Lab helped deliver - will soon publish its results on a peer-group learning programme to foster technology adoption in small family businesses in the UK. The findings will be added to our portal as they become available. 

What’s next for research: Three randomised controlled trials we would like to see 

As we have reviewed the literature through the lens of policymakers’ needs for effective programme design, we have discovered some especially interesting and relevant areas in need of exploration. Here are the three that stood out the most and would make the highest impact in our understanding of what works for business training:

• In-class mindset-oriented training vs. in-class training plus individual follow-up sessions

It is possible to develop an entrepreneurial mindset through in-class training. However, the only persisting effects found in the literature were in programmes that included follow-up sessions. The question thus remains as to whether the programme itself or the follow-ups were driving the effects. Since there are no studies comparing in-class mindset-oriented training to in-class training plus individual follow-up visits, we do not know. The research on business consulting suggests that follow-ups can be helpful for certain types of firms and entrepreneurs. Thus, we would like to see a study comparing in-class sessions, to in-class sessions combined with on-site visits.

• Online vs in-person training

The Covid pandemic has normalised online interactions and, as a consequence, online training has become a more acceptable option. This development, in turn, has opened up the possibility to offer training that might never have been offered before. Online training is especially appealing to policymakers because it could, in theory, solve the question of scale and make this type of business education accessible to a broader audience. 

But we are still learning about the conditions under which online training is effective and the trade-offs associated with it. There is for example the question of whether asynchronous online training - with an infinite scalability - can be as effective as in-person or live online training. The better policymakers understand the constraining factors on the effectiveness of online training – be it e.g. the barriers to collaboration or face-to-face interaction – the more they can test the use of technological tools to make up for those constraints while maintaining scalability. There is also the question about what audiences are being reached through online training versus in-person training – and who is being left out. 

When it comes to business training the devil is in the detail, so we would like to see more studies looking at uptake and effectiveness of programmes comparing in-person training to variations of online and hybrid training.

• Modular training vs. standardised curriculum

Training programmes are often designed in a manner that delivers the same content to all participants, implicitly assuming that one size fits all. But from our conversations with policymakers, we know that they are acutely aware of the diversity in experience, skills and business knowledge of the audiences they are trying to reach – yet are having a hard time designing programmes that fit their needs.

Choose-your-own-adventure-style curricula, where a series of modules are offered and each business gets to choose the ones that fit them best, could be a solution to this issue. However, some initial pilots on this approach have experienced difficulties encouraging follow up from one session to the next. This opens possibilities to test approaches encouraging continued progression, e.g. through the inclusion of an accountability structure.

Further, a non-standardised curriculum raises the question of whether optimal choices are being made by entrepreneurs. Thus, a further variation of this approach would combine the power of business consulting and business training and include a condition in which participants choose their training with a support provider that contributes an external vision and helps business owners assess their needs. 

The evidence lessons: Tips for researchers

In our review of the existing literature we have observed likely pitfalls and potential tweaks to research that could greatly benefit our understanding of what works and what the different trade-offs are with regards to business training. 

• Keep the observation window wide (2 to 5 years)

From our review of the research, we know that 18 months might not be enough to capture effects on business performance when dealing with nascent entrepreneurs. Studies show that effects on business performance can take longer than two years to reveal. Further, short-term effects do not always persist. Thus, we recommend keeping observation windows wide to capture effects in the mid-term as well as gain insights about the length of the observed effects.

• Look for heterogeneous effects – by gender and sector

Current evidence suggests that mindset-oriented training is more effective for men than for women. There is also suggestive evidence that Kaizen training works better for light-industry than heavy-industry manufacturing firms.

So one should expect heterogeneous effects to appear in the data. In order to be in a position to capture these effects, make sure you collect baseline data on the firms and the individuals within them and try to have sample sizes that allow for these types of subgroup analyses. If the sample sizes are limited, a mixed-methods approach, combining qualitative and experimental research, can also be helpful to enrich our understanding of when, why and for whom a programme may work best.

I am a researcher/practitioner working on Business Training and I am interested in testing new ideas and contributing to building rigorous evidence on how to make business training more impactful. What should I do?

Get in touch! Our work at IGL is focused on building bridges between policymakers and research(ers). We help develop new ideas, test them, and amplify existing evidence. So, contact us if you are:

(1) working on projects related to Business Training and would like to share your work with the right policymakers, or 

(2) would like to explore the viability of ideas you are considering, or 

(3) would like to collaborate on making them happen

We can support you! Send us an email and we’ll continue from there!