The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

Using a randomized evaluation with 432 Mexican small and medium enterprises, this paper shows that access to management consulting led to better firm performance: one-year results show positive effects on return-on-assets and total factor productivity. Owners also had large increases in "entrepreneurial spirit" (an entrepreneur's' managerial confidence index). Using Mexican social security data, the analysis finds a large increase in the number of employees and total wage bill several years after the program. The paper documents large heterogeneity in the specific managerial practices that improved as a result of the consulting, but there is no singular mechanism as a panacea for all firms.

Policy implications 
A lack of managerial skills can constitute an important constraint to firm growth and their ability to withstand economic shocks. But there may be decreasing returns to consulting with firm size between the small and medium to large-size firms across those two studies.
Reference 
Bruhn, M., Karlan, D.S., & Schoar, A., 2013. 'The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico'. World Bank Policy Research Paper 6508.