Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary This study asks why more small firms in developing countries do not use the market for professional business services like accounting, marketing, and human resource specialists and asks how this could be altered. A brief description of the project's goals and its current state Abstract <p>Why do more small firms in developing countries not use the market for professional business services like accounting, marketing, and human resource specialists? Two key reasons may be that firms lack information about the availability of these services, and that they struggle to distinguish the quality of good versus bad providers. A brand recognition exercise finds that most small firms are unaware of most providers in this market, and a survey of service providers reveals that they largely rely on word-of-mouth and informal reputation mechanisms for acquiring customers. This study set up a business services marketplace that contains information about the different providers present in the market and used mystery shopper visits to develop a quality ratings system. A randomised experiment with more than 1,000 firms provided access to this marketplace to the treatment group and randomised whether firms received just information or also quality ratings. The provision of quality ratings information shifts small firms’ preferences over which provider they would like to use, increasing the average quality rating of their preferred providers by 0.2 to 0.4 ratings points out of 5. However, neither the provision of information nor these quality ratings had any significant impact on the likelihood that small firms go on to hire a business service provider over the subsequent six months. The results suggest that alleviating information frictions alone is insufficient to increase usage of professional business services.</p> The full abstract of the study, if available Links http://documents1.worldbank.org/curated/en/407751617722646649/pdf/What-Prevents-More-Small-Firms-from-Using-Professional-Business-Services-An-Information-and-Quality-Rating-Experiment-in-Nigeria.pdf Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question Does providing information about business service providers, and quality ratings, is enough to get more firms to use this market for business services? Sample Trial population and sample selection The sample was constructed by using multiple methods: beginning with the set of providers that had been selected for the GEM program, then contacted the professional industry associations (Association of National Accountants of Nigeria; Institute of Chartered Accountants of Nigeria; the National Institute of Marketing of Nigeria) to get a list of their members, and supplemented this with web searches, snowballing, and word of mouth. Number of treatment groups Size of treatment groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description Firms are shown different amounts of information about the providers: A first group of firms is only shown basic information. A second group gets basic information supplemented with a five-star rating system for quality. A third group is provided the five-star ratings and any negative comments about the providers. A final group can access star ratings and both positive and negative comments about the providers. A fifth group doesn’t get access to the marketplace. Rounds of data collection Baseline data collection and method Firms were sampled using a combination of list-based interviewing and door-to-door screening. Kantar began with its own database of firms, and set of appointments to survey firms which met the sector and firm size criteria. Once the survey team were traveling to a given commercial area or industrial cluster, they then went door-to-door to find and interview other firms that met the sampling criteria. This resulted in an overall sample of 1,054 firms, of which 397 came from the original lists and 657 from door-to-door sampling. Data collection method and data collected Evaluation Outcome variables <p>Knowledge or use of the market for business service providers.</p> Results <p>Access to the marketplace didn’t get more firms to use business services, but it increased firms’ knowledge of the providers available in the market.</p> <p>Access to the marketplace didn’t significantly change firms’ confidence in being able to find a provider if needed.</p> <p>Firms that were provided information about the quality of the providers were more likely to choose higher quality ones (on average, with a rating of 0.2 to 0.4 stars higher) as the top three providers they would go for.</p> <p>Quality ratings information worked to both increase the number of providers with the highest score chosen (by 7 to 11 percentage points) and reduce the number of bottom-ranked firms (by 9 to 15 percentage points).</p> Intervention costs Not available. Cost benefit ratio Reference Anderson, S. J., & McKenzie, D. , 2021. What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria. Citation for use in academic references
