Mitigating Market Frictions by Monitoring Employees in SMEs: A Field Experiment in Kenya’s Public Transport Sector

Friday, 7 September, 2018
Abstract: 
Schoenholzer, Kelley, Lane and Wagacha (2018) provide firms a new technology that delivers real-time information to the owner of the vehicle about the driver’s productivity and safety. They find that owners use this information to change their management of drivers and re-optimize their contracts. Drivers respond to these changes by increasing their labour supply by twelve percent and taking better care of the vehicle. Overall, these changes lead to an increase in firm profitability and stimulate firm growth, thereby suggesting that improved monitoring technologies can help overcome important frictions faced by firms in developing countries.