Improving Management of Small Firms in Kenya

This study attempts to understand the impact of a light touch management programme on small firms in Kenya. Although there is now a growing literature on the importance of good management practices for firms (even in the developing world), most of these studies either focus on expensive consulting or on basic standardized training programmes. Instead, here the research team studies a more tailored, yet very cheap, programme aimed at improving management practices for small firms (not micro enterprises or start-ups) in Kenya. Understanding the impacts of a reasonably cheap programme such as this are important to better designing policies and programmes to help small firm growth in developing economies.

The study will be conducted as an RCT. The team will work with a set of small firms in Kenya, of between 3 and 20 employees and that have annual revenues greater than $10,000 but lower than $300,000. The intervention will be delivered by the African Management Initiative (AMI). It is a light touch management practice programme that costs $500 per participant. The programme that AMI runs is not simply “training” or “consulting”. It entails giving participants the ability to understand and implement simple practices that are associated with firm outcomes. They draw on technology (a blend of online and in-person with a strong element of peer-supported project work) to try and be both more effective and far less expensive.

The Ministry would find these results extremely useful. An important part of their work in Kenya over the last few years has been improving the Doing Business Indicators in Kenya dramatically. However, they would like to move on to other interventions and programmes that would help small firms more directly. If the results are positive, they could both encourage and possibly even subsidize some of AMI’s programmes, given the low costs. Furthermore, other NGOs will become interested in promoting this kind of programmes. Fundamentally, small businesses in Kenya will be more likely to put greater emphasis on improving management practices. This would lead to higher productivity growth and higher incomes for the firms, their workers and Kenya as a whole.

Authors

Tavneet Suri

Massachusetts Institute of Technology

Suleiman Asman

Innovations for Poverty Action

Jonathan Cook

African Management Initiative