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

Based on a randomized control trial with 432 SMEs in Puebla Mexico, Bruhn et al. (2013) show that providing them with access to consulting services to increase their managerial capital led to better firm performance: within one year after the program treatment, firms reported positive effects on return on assets and total factor productivity. Owners also showed large increases in their entrepreneurial spirit, measured by a managerial confidence index. Further, the researchers find a large increase in the number of employees and total wage bill for the treatment group two to three years after the program. 

Authors

Miriam Bruhn

World Bank

Antoinette Schoar

MIT Sloan School of Management