Business training sped up the process of starting a business for a sample of potential female entrepreneurs in Sri Lanka and increased profitability of new firms

The authors conduct a randomized experiment among women in urban Sri Lanka to measure the impact of the most commonly used business training course in developing countries, the Start-and-Improve Your Business (SIYB) program. They study two groups of women: a random sample operating subsistence enterprises and a random sample out of the labor force but interested in starting a business. They track impacts of two treatments – training only and training plus a cash grant – over two years. For women in business, training changes business practices but has no impact on business profits, sales or capital stock. The grant plus training combination increases business profitability in the first eight months, but this impact dissipates in the second year. Among potential startups, business training hastens entry – without changing longer-term ownership rates – and increases profitability. The researchers conclude that training may be more effective for new owners.

By Suresh de Mel, David McKenzie and Christopher Woodruff (2014)