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Good practice Imported

Bruhn-Karlan-Schoar Randomized Consulting Trial for SMEs in Puebla

Mexico · Puebla · See the Mexico profile · See the Puebla profile

Evidence: Randomised controlled trial Top 63% 62/100 · Ask Evidence Copilot about this practice

A randomized trial gave 432 small and medium Puebla firms a year of subsidized management consulting; treated firms' monthly sales rose about 80% and profits/productivity about 120% within a year, with employment gains of roughly 50% still visible five years on.

+80%
Monthly sales increase (treated vs. control) (1-year follow-up)
+120%
Profit / total-factor productivity increase (treated vs. control) (1-year follow-up)
~+50%
Employment and wage-bill gains, 5 years on (5 years post-programme)

Details

Maturity
Discontinued
Promoter
Innovations for Poverty Action (IPA), with World Bank and MIT researchers
Period
2009-2014
Keywords
SME consulting, business training, productivity, manufacturing & retail

Context

Small and medium enterprises in Puebla, Mexico, generally lacked access to affordable, high-quality management consulting and showed weak baseline management practices.

Activities

Innovations for Poverty Action, working with academic researchers Bruhn, Karlan and Schoar, randomly assigned 432 SMEs either to receive a year of subsidized professional consulting — covering marketing, financial accounting and long-term business planning — or to a control group with no consulting.

Results

A one-year follow-up survey found treated firms' monthly sales up about 80% and profits and total-factor productivity up about 120% relative to controls, alongside gains in owners' self-reported entrepreneurial confidence; a later follow-up using Mexican social-security records found employment and total wage-bill gains of roughly 50% persisting five years after the programme ended.

Conclusions

Effects were highly uneven across firms, concentrated in marketing, accounting and planning practices rather than every area tested, and the short-run study did not find a significant increase in the number of workers employed, so the large percentage gains partly reflect the very low productivity baseline of many participating micro and small firms.

Implementation
Indicative cost
Medium (€50k–€500k)
Time to results
Short (< 1 year)
Staffing & skills
Innovations for Poverty Action (IPA) researchers, academic team (Bruhn, Karlan, Schoar), professional consultants delivering marketing/accounting/planning training

Conditions for success

  • random assignment protocol to establish a credible control group
  • a full year of sustained, subsidized consulting engagement rather than a one-off session
  • follow-up data collection (including administrative social-security records) to track durability of effects

Common failure modes

  • effects were highly uneven across firms and concentrated in specific practice areas (marketing, accounting, planning) rather than uniform gains
  • no significant increase in worker headcount was found in the short run despite large sales/profit gains
  • subsidized consulting ended after one year with no described mechanism for firms to keep accessing it

Where it fits

Governance type
NGO/academic research trial
Scale
432 firms, single city (Puebla)
Income level
upper-middle-income

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Data sources

Where this practice's information was retrieved from, and when.

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