Firm-to-firm Referrals

Research Note
Published on 5 June 2023


Firm-to-firm trade represents a large part of economic activity, but we know little about how effective firms are in finding good training partners. Do firm-to-firm search frictions lead to inefficient matches between suppliers and clients? Can partnering interventions improve business outcomes? These questions may be particularly important in low-income countries in which weak infrastructure and poor contract enforcement can generate large search frictions. To make progress in answering them, we conducted a field experiment with about 800 firms in Jiangxi province, China, in which we evaluated the impact of referring business partners. Despite the firms having been in operation for many years, we find that the intervention had a large effect on firm networks and improved business performance. Our results suggest that firm-to-firm search frictions are an important growth barrier and that matchmaking interventions can generate substantial gains.


Jing Cai

University of Maryland

Wei Lin

Chinese University of Hong Kong, Shenzhen

Adam Szeidl

Central European University