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 A programme offering marketing and sales training, and finance and accounting training in Cape Town, South Africa, was found to significantly improve firm survival as compared with the control group. A brief description of the project's goals and its current state Abstract <p>This research seeks to address a significant constraint to performance among businesses in emerging markets: marketing skills. Improvements in marketing skills offer the possibility of increased growth and prosperity, however, there exists substantial evidence that it is not abundant among small businesses. We present evidence from the first randomized controlled trial to examine the impact of marketing skills, relative to finance skills, on firm performance. The empirical setting of the study is among small business owners in urban and slum neighborhoods across Cape Town, South Africa. We offer intensive marketing and sales training to one randomly selected group of firm owners, intensive finance and accounting training to another randomly selected group of firm owners, and no training to a control group. For the next eighteen months, we measure the effects of the interventions on the practices and performance of these small businesses. Our findings are threefold. One, marketing skills and finance skills each have a positive and significant effect on firm performance, including increases in: survival, employment, sales, and profits. Two, the pathway to profits differs for marketing relative to finance: profit effects are roughly equal across the two interventions, yet entrepreneurs who receive marketing training tend to achieve these gains by increasing sales and hiring more staff (i.e. growth focus) while those who receive the finance training tend to enhance profits by decreasing costs (i.e. efficiency focus). Three, the returns to business skills training differ depending on individual characteristics. Consistent with a ‘growth focus’ explanation, marketing/sales training appears to be most beneficial to small business owners who (ex ante) have been less exposed to different business contexts. By contrast, and in line with an ‘efficiency focus’ explanation, entrepreneurs who have been running more established businesses (prior to training) tend to benefit more from finance/accounting skills.</p> The full abstract of the study, if available Links https://pubsonline.informs.org/doi/10.1287/mnsc.2017.2920 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 Business owners with higher managerial capital (marketing skills and financial skills) will increase firm (a) survival, (b) employees, (c) sales, and (d) profits more than those with lower managerial capital. Business owners with higher 'marketing' managerial capital will increase firm profits by implementing more growth focused policies and practices than other business owners. Business owners with higher 'financial' managerial capital will increase firm profits by implementing more efficiency focused policies and practices than other business owners. Business owners with higher 'marketing' managerial capital will increase firm profits to a great extent when these owners also have narrow exposure. Business owners with higher 'financial' managerial capital will increase firm profits to a greater extent when these owners are also operating more established firms. Sample Trial population and sample selection "Slightly more established" micro and small enterprises in the greater Cape Town region of South Africa. Firms were recruited from urban, suburban and slum areas via a screening tool and registration step. Number of treatment groups Size of treatment groups Total treatment group: 533 firms; (Marketing group: 272 firms; Finance group: 261 firms) Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description 2 month-long intensive business training course requiring about 10 hours of business owner time per week. The course combined online e-learning content with face-to-face classroom teaching sessions. One part of the treatment group received marketing and sales training while the other part received finance and accounting training. Rounds of data collection Baseline data collection and method Survey was collected during the registration session, measuring pre-treatment levels of key firm performance variables, individual covariates and firm controls. Data collection method and data collected Evaluation Outcome variables <p>Firm Performance: Survival, employees, sales, profits. Firm Policies: Change in sales, change in employees, change in costs, change in outputs-to-inputs. Firm Practices: Market research, marketing tactics, sales tactics, tracking finances, analysing finances, planning finances.</p> Results <p>Firm Performance: Both marketing training and finance training led to significant and positive improvement in firm survival. Firms in the marketing group were 9.7% more likely to survive than those in the control group while firms in the finance training group were 12.7% more likely to continue in business compared to the control group. Both treatment groups increased the number of paid employees compared to the control group, who tended to decrease paid staff. The effect of the treatment was thus positive and significant. The impact of the marketing training on employment is nearly double to that of the finance training intervention. Both interventions had a positive effect on sales compared to control group. While for the marketing intervention the effect is significant, for the finance group the effect is only significant when the 14 largest firms are included in the sample. In both groups stronger positive and significant effect can be seen for participants who attended more training sessions. Both trainings appear to result in greater profits for treatment firms. Firm Policies: A positive and significant effect of the marketing training can be found on sales growth and on employment growth. For firms in finance training, there is no significant impact on change in sales, but there is a significant impact on employee growth. For firms in the financial training group that survived, a significant decrease in costs can be seen. Firms in the marketing treatment group show an increase in costs, but this is not significant. Both treatment group significantly increased their output-to-input ratio, although this effect is much stronger in the finance treatment group. Firm Practices: For the marketing treatment group, positive significant effects are found on market research, market tactics and sales tactics. The finance training group showed no significant effect on market research or marketing tactics, but a positive significant effect on sales. Overall the effect on these three composite variables was stronger for the marketing training group. The data also shows positive significant effect on financial practices overall for both marketing and financial training groups, although much stronger for the finance training treatment group. The marketing training had insignificant effects on financial tracking but significant positive effects on financial analysing and financial planning. For the financial training group, positive significant effects are noted for financial tracking, financial analysing and financial planning. Further data showed that the marketing training most benefited firm owners who had less exposure to different business contexts while the financial training most benefited firm owners with established businesses.</p> Intervention costs Not available. Cost benefit ratio Reference Anderson-Macdonald, S., 2014. 'The Impact of Marketing (versus Finance) Skills on Firm Performance: Evidence from a Randomized Controlled Trial in South Africa'. Job Market Paper, London Business School. Citation for use in academic references
