Motivation: What Constrains Firm 
                                               Growth?
      • Small and medium size enterprises (SMEs) in 
         developing countries seem to grow slower than 
         equivalent firms in the developed world
           Less transition from small to large firms
           Documented high returns of small firms suggest they are sub-
            optimally small (i.e. constrained from growing)
      • Need to understand bottlenecks that prevent SMEs 
         from growing
           Focus has been on access to finance
           In the past, comparatively little attention has been paid to the 
            role of managerial (human) capital and management skills
              But there are several new and ongoing studies in this area
    Why Is Managerial Capital Important?
    Managerial capital can affect the productivity 
     of firms
      Improving managerial capital can lead to higher 
       production with the same amount of inputs (for 
       example, by maintaining machinery or identifying better 
       marketing or pricing strategies)
    Better managerial capital can also improve 
     decisions on the amount and type of inputs a 
     firm buys or rents
      Increasing managerial capital can improve the way in 
       which firms use their financing, increasing the impact of 
       access to finance
     Cross-Country Evidence on Management 
                            Skills
   
     Management education, as well as 
     management practices tend to be of lower 
     quality in developing countries than in 
     developed countries
      In a survey, firms in lower income countries were 
       more likely than firms in higher income countries to 
       say that locally educated MBAs were inadequately 
       prepared (Chaudry, 2003) 
      Firms from non-Organization for Economic 
       Cooperation and Development (OECD) countries score 
       significantly below firms from OECD countries on a 
       measure of management practices (Bloom and Van 
       Reenen, 2010) 
                         Impact Evaluation Questions
       • Does lack of managerial capital impede the 
           growth of small and medium size businesses in 
           emerging markets?
       • Can a lack of managerial knowledge be alleviated 
           by providing training or consulting services?
       • Several recent and rigorous impact evaluations 
           aim to answer these questions by 
           •    Offering business training or consulting services to a 
                randomly selected group of firms (e.g. among firms 
                interested in participating)
           •    Later comparing business practices and performance to the 
                firms that were randomly selected to not be offered 
                training/consulting
                  Overview of Existing and Ongoing Impact 
                                                          Evaluations
       • Many completed and ongoing impact evaluations 
           focus on micro firms/self-employed, often 
           providing class-room based business training in 
           collaboration with a microfinance institution
           •    Peru: Karlan and Validivia (2010), Pakistan: Gine and 
                Mansuri (2011), and others
       • Relatively fewer studies focus on small, medium, 
           or large firms
       • Also, relatively few studies provide individualized 
           consulting rather than class-room type training