Missing Information - Why Don’t More Firms Seek Out Business Advice?

This paper tests whether providing more information on business practices can lead firms to seek out advice and improve their practices. The authors collaborated with a business advice provider in Brazil to implement a randomized experiment with 866 small firms. The treatment groups received different versions of an information sheet that benchmarked business practices to other firms and listed five practices to improve. Receiving any information sheet increased demand for business advice by 7 percentage points, relative to 21 percent in the control group in the f irst six months, suggesting that information matters for seeking out advice. However, the control group catches up over the next 12 months. The intervention did not affect business practices and performance outcomes, but it decreased the fraction of firms that report being happy with their performance.