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Effective business training for small business performance: Evidence from combined training approaches
Article in Revue internationale de géomatique · December 2021
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Effective business training for small business performance: Evidence from combined training approaches
Ahoudou Waliou YESSOUFOU National University of Agriculture (Benin)
[email protected] Falylath BABAH DAOUDA University of Parakou (Benin)
[email protected] Jacob Afouda YABI University of Parakou (Benin)
[email protected] ABSTRACT
The belief that business training can help entrepreneurs in developing countries to improve their performances has pushed many public and private actors at the international level to invest in small business owners' training programs across the developing world. However, these programs suffer from a lack of evidence on training approaches that are effective in increasing small businesses' performance. Thus, there is an emerging assumption that the impact of business training depends on the way training approaches are combined. Using a field experiment, this study investigates this assumption by comparing the effectiveness of the combination of three training approaches. The study enrolled 354 participants distributed into four groups, the first group has been trained using only the traditional in-classroom training approach. The second group has been exposed to both the traditional in-classroom and e-learning training approaches. The third group has received the traditional in-classroom and one-on-one coaching and the fourth group benefited from the three training approaches. Over eight consecutive months after the in-classroom training, we monthly collected information on sales, profits, and the number of new employees hired by participants’
businesses. The results show that the combination of the traditional in-classroom training and the one-on-one coaching approaches is the best combination of training approaches for small businesses in developing countries.
Keywords: Business training, Small businesses, Training approach, e-learning, coaching, Business performance
REVUE INTERNATIONALE DE GESTION ET D’ECONOMIE
SERIE B - ECONOMIE / NUMERO 11 - VOLUME 1 - Décembre 2021 / pp. 21-44
RESUME
La conviction que la formation entrepreneuriale peut aider les entrepreneurs des pays en développement à améliorer leurs performances à pousser plusieurs acteurs publics et privés au niveau international à investir dans des programmes de formation des petites entreprises dans ces pays. Cependant, ces programmes peinent à prouver l’efficacité des approches de formation utilisées sur la performance desdites entreprises. De ce fait, il y a une hypothèse émergente selon laquelle l’effet de la formation des entrepreneurs dépend de la manière dont les approches de formation sont combinées. Se basant sur une expérience de terrain, cette étude teste cette hypothèse en comparant l'efficacité de la combinaison de trois approches de formation. L'étude a enrôlé 354 participants répartis en quatre groupes, le premier groupe étant composé de participants ayant été formés uniquement avec l'approche traditionnelle de formation en classe. Le deuxième groupe a suivi la formation en classe et les cours en ligne. Le troisième groupe a reçu le coaching individuel en plus de la formation en classe et le quatrième groupe a bénéficié des trois approches de formation. Suite à la formation en classe desdits groupes, des informations mensuelles ont été collecté sur les ventes, les bénéfices et la création d’emploi des participants pendant huit mois consécutifs. Les résultats montrent que la combinaison de l’approche traditionnelle de formation en classe et le coaching individuel est la meilleure combinaison d’approches de formation pour les petites entreprises dans les pays en développement.
Mots Clés : Formation des entreprises, Petite entreprise, Approche de formation, cours en ligne, coaching, Performance de l’entreprise
INTRODUCTION
Entrepreneurship is shown to generate economic and social wealth (Naudé, 2010), by structurally transforming the economy, creating employment, and increasing productivity (Gries & Naudé, 2010; Tobias, Mair, & Barbosa-Leiker, 2013). Thus, entrepreneurship has been widely used as a critical policy to expand employment and earning opportunities to reduce poverty (Yessoufou, Blok, & Omta, 2018). Entrepreneurship remains particularly important in developing countries where populations are capable to launch a subsistence business for achieving a reasonable standard of living and generate income opportunities (Bennett, 2010;
Bruton, Ketchen Jr, & Ireland, 2013; Kimhi, 2010; Tamvada, 2010), while also employing their peers (Nakata & Viswanathan, 2012; Toledo-López, Díaz-Pichardo, Jiménez-Castañeda, &
Sánchez-Medina, 2012). The way people in developing countries use entrepreneurship to pull themselves and their peers out of poverty is inspiring. Yet, these countries are struggling to transform small businesses into productive, sustainable, and scale enterprises that contribute to their economic growth.
Several factors at the contextual and individual levels impede entrepreneurship in developing countries. At the contextual level, significant environmental complexities and limits such as institutional voids (Khavul, Chavez, & Bruton, 2013; Mair & Marti, 2009; Mair, Martí, &
Ventresca, 2012), a lack of access to finance, and the inability of governments to address market failures such as legal systems that enforce contracts and protect property rights (Olson, 1996) are holding back the development of transformative entrepreneurship (Acs, 2006;
Bruton, Ahlstrom, & Si, 2015). At the individual level, circumstances or factors such as limited resources and managerial capabilities mostly in the areas of record-keeping, stock control, marketing, and financial planning hinder the growth and sustainability of small scale businesses (Bakhtiar, Bastian, & Goldstein, 2021; London, Anupindi, & Sheth, 2010).
Even though access to finance is generally found to have a positive impact on small firms' productivity and profitability in developing countries (Kersten, Harms, Liket, & Maas, 2017), this is not sufficient for their success due to the lack of appropriate capabilities to use finance and combine this with others resources efficiently. Admittedly, business capabilities, such as entrepreneurial orientation and managerial skills are important for the business in general (Bloom, Eifert, Mahajan, McKenzie, & Roberts, 2013; Mano, Iddrisu, Yoshino, & Sonobe, 2012), and are particularly critical for small businesses in developing countries to succeed (Anderson, Chandy, & Zia, 2018; Campos et al., 2017; Glaub, Frese, Fischer, & Hoppe, 2014;
Higuchi, Mhede, & Sonobe, 2019). Studies provide evidence that managerial capabilities do matter for productivity and growth of businesses, including small scale businesses and self- employed businesses (Bloom et al., 2013; McKenzie & Woodruff, 2017). Indeed, many small businesses are not using basic business practices because entrepreneurs often come from vulnerable backgrounds where they have not had the opportunity to acquire the key managerial capabilities (e.g., business planning, marketing strategy, team leadership, basic accounting) required to lead their businesses above a certain scale. As evidenced by McKenzie & Woodruff, (2017), microentrepreneurs from several developing countries (Chile, Kenya, Ghana, Nigeria, Mexico, Bangladesh, and Sri Lanka) only use on average 39% of 26 basic business practices.
One way of addressing the lack of managerial capabilities of entrepreneurs is to provide training programs. Business training sessions provide a package comprising of an assortment of business practices and cost more than US$1 billion per year for about four to five million small businesses in developing countries (McKenzie et al., 2020). The faith that training can be a solution to overcome the lack of skill-set required to run a business has pushed international institutions and NGOs such as World Bank, German Corporation for International Cooperation (GIZ), International Labor Organization (ILO), BOP Innovation Center, the Netherlands Ministry of Foreign Trade and Development, and the Swiss Development Cooperation (SDC) to raise funds for scaling up business training programs across developing countries (Bakhtiar et al., 2021; Campos et al., 2017; McKenzie, 2021).
Although the potential benefits of the training provided, many businesses fail to adopt better business practices. Whereas early studies on the effects of business training on business performance provided little evidence (McKenzie & Woodruff, 2014), recent studies found a positive effect of business training on the implementation of best business practices, sales, and profitability (McKenzie et al., 2020). Thus, scholars started assuming that the positive effect of business training provided to entrepreneurs may likely depend on the content, the modality of the training, or the way training approaches are combined (Bardasi, Gassier, Goldstein, &
Holla, 2021; Brooks, Donovan, & Johnson, 2018; Campos et al., 2017).
The programs that delivered business training generally aimed to teach a fixed curriculum of content to a group of entrepreneurs and usually take the form of a workshop in a classroom (e.g., Babah Daouda, 2017; Karlan & Valdivia, 2011). While this form of training has the opportunity for scalability, it is limited in terms of its capacity to adapt the content of the training to the specific needs of each entrepreneur. Another challenge of traditional classroom-
based training is that it may not be suitable for many entrepreneurs to attend. Furthermore, in the COVID-19 pandemic context that the world is currently facing, having entrepreneurs physically in classrooms is not an option in many places.
Fortunately, alternative approaches such as mentoring, e-learning, and one-on-one coaching start receiving more and more attention. The rationale behind these alternatives is that the alternative approaches are supposed to better deliver customized knowledge to entrepreneurs and their businesses or to transcend the limitation on physical contact during training sessions (e.g., Acharya & Lee, 2018; Cul, 2006; McKenzie, 2021; Nielson, 2010 a and b; Singh &
Hussai, 2021; St-Jean, 2012). Again, these alternatives have some limits; while some of them are too expensive to implement (e.g., one-on-one coaching) or their effects remain relatively limited (e.g., e-learning), others take longer to yield some effects (e.g., mentoring).
This study aims at understanding which combination of training approaches is effective on the performance of small businesses. The study examines how the combination of three approaches – traditional classroom-type training, e-learning, and one-on-one coaching influences the sales, profits, and jobs creation of small businesses in Benin. To do so, it uses a program of training named BeniBiz of the international NGO Technoserve. BeniBiz is a business accelerator training program that aims to equip food and agribusiness entrepreneurs with the required skills for the growth of their businesses and economies and for contributing to food-secure communities. For this purpose, BeniBiz has recourse to a combination of training approaches providing us with the opportunity to investigate the effectiveness of the combination of training approaches.
This study makes three contributions to the business training literature. First of all, it addresses a gap in the literature about the appropriate training approach for small businesses highlighted by McKenzie (2020). The study unravels the combinations of training approaches that work the most for small businesses. Moreover, the paper generates insights on the appropriateness of e-learning for training small businesses in developing countries. It shows how e-learning is less effective as soon as entrepreneurs are exposed to an additional training approach such as one-on-one coaching. Furthermore, the study reveals that business training rarely translates into significant jobs creation in small businesses in the short run. Even the combination of training approaches has not changed the situation similarly to the effect of individual training approaches mentioned in the literature (e.g., Higuchi et al., 2019; Karlan & Valdivia, 2011;
McKenzie et al., 2020).
The rest of the paper is structured as follows. We first provide a background on entrepreneurs' training approaches. Following that section, we present our empirical strategy, particularly the data collected, the methods used, and the description of the Benibiz program, its structure, and training approaches. Next, the results and their discussion are presented, the study's limitations are delineated, and we ended the paper with a concluding section.
1. Background on entrepreneurs’ training approaches
Training approaches refer to assumptions or philosophy underlying the program, such as the knowledge deficiencies, lack of specific competencies and skills that have to be filled, or the sharpening of existing skills and competencies (Richards, 1990). Thus, training enhances the confidence of entrepreneurs in their roles through the development of their capabilities and by doing so improves their overall performance.
Several approaches are used to implement a training program such as the traditional approach of in-classroom learning, mentoring, coaching, and e-learning. As the most common approach of training, the traditional in-classroom training approach typically involves a trainer teaching a group of 15 to 40 trainees over a while on subjects such as business practices, operations management, and developing a business plan (McKenzie, 2021). The in-classroom training is usually a monologue by the trainer, where the trainee plays a somehow passive role of listener, and most importantly, the trainer's ultimate aim is to increase the skills and knowledge of trainees. While the traditional approach of in-classroom training is effective on the increase of the performance of the business (McKenzie et al., 2020), it is unlikely that participating entrepreneurs implement more than two to three additional best practices (McKenzie, 2021).
This is so because of the short nature of the courses and the fact that the courses are not often tailored to the needs of the individual participants (McKenzie, 2021).
One-on-one coaching usually operates in a form of business consulting that offers an individually tailored approach, starting with a diagnostic of existing management practices to find out the most important areas of improvement (McKenzie, 2021). This approach provides ground for intensive in-personal interactions that can last for a half year. Business coaching is aimed at coaching people to produce desired business results (Nielson, 2010a). Entrepreneurs coaching is meant to help entrepreneurs deal with their managerial requirements using technical and personal development of skills, attitudes, and knowledge with a focus on specific performance such as increasing sales (Nyamunda, 2014; Salisbury, 1998; Wilde, 2009). Thus, coaching contributes to reducing stress related to challenging situations of entrepreneurs and
enhances the efficiency of their managerial capabilities (Leimon, McMahon, & Moscovici, 2005; Wilde, 2009). The one-on-one coaching approach is supposed to have a long-lasting effect on management practices because of its customized advice and feedback. However, the approach appears to be costly and it is hard to detect whether the training program is effective or not in the longer term (Anderson & McKenzie, 2020; Bakhtiar et al., 2021).
Mentoring entrepreneurs is one of the critical assets to grow their businesses, as it helps seize opportunities, predict future problems, craft answers to current ones and be an adviser for the entrepreneur (Cull, 2006; St‐Jean, 2012). Unlike the coaching approach, mentoring focuses on the individual and not on a specific task, quest of skill-building or performance, and then takes a more general role of the quest for meaning (Nielson, 2010a; St‐Jean, 2012). While a coach is usually assigned to an individual or a group of entrepreneurs, mentor relationships usually stem from shared interests, working modes, and backgrounds. However, whereas a compatible relationship-building between the mentor and the trainee requires a longer time, a mismatch between both parties can be disastrous for both parties (Cull, 2006). Therefore, to be effective, a mentoring program needs to be a long-term program. The expected return of a mentor is generally an affirmation or e-learning. Consequently, a mentoring program is unlikely to guarantee the success of the entrepreneur in a short term.
E-learning training known as the distance training approach is being more and more used to transfer knowledge and provide a platform for acquiring new skills. The e-learning approach uses a range of technologies in education and training programs with no need to meet in person the trainees and overcomes situations in which the trainer and the trainees are separated in time and space (Acharya & Lee, 2018; Singh & Hussain, 2021). This involves the use of television, SMs, voice messages, and online training, to convey the required knowledge and assist entrepreneurs in improving their business practices. According to Nielson (2010b), the cost of an e-learning program is reasonable, its maintenance is less expensive, and its requirement in personnel is lesser. However, certain categories of courses and information do not lend themselves to online formats (Nielson, 2010b). Moreover, as indicated by McKenzie (2021), the effects of these methods remain relatively little or limited.
While each of these training approaches has its advantages and disadvantages, combining the approaches may likely yield better impacts on the implementation of good management practices by entrepreneurs and by then lead to better performance of their businesses. Earlier studies have suggested that each of these approaches has an impact on profits and sales even
though the named impact may generally be relatively small (Anderson & McKenzie, 2020;
Bakhtiar et al., 2021; McKenzie, 2021). We argue that the effect of the combination of training approaches on business outcomes will be higher than the effect of a single training approach.
Given that the traditional in-classroom training continues to be the most widespread approach of entrepreneurs training and its effect on business performance seems to be approved, we consider it in this study as the basic training for all the groups of entrepreneurs included in the study. As a matter of fact, McKenzie (2020) has confirmed the effectiveness of the in- classroom training approach on business performance through a meta-analysis. Our investigations, therefore, went on the effects of alternative training approaches namely, the e- learning and the one-on-one coaching approaches on business performance (sales, profits, and jobs creation). We left the mentoring approach because of its need to last longer before yielding some effects and also for the fact that the field experiment, we used for our study did not implement that training approach.
2. Method
We used a field experiment to understand how a combination of training approaches can make a difference in the effectiveness of a training program on small business performance. The experiment involved the enrollment in a year span of entrepreneurs on a business training program called BeniBiz and implemented by an international NGO named Technoserve.
2.1. Context of the study
We conducted our study in Benin (West Africa), where the BeniBiz program is being implemented. Like many developing countries, Benin’s economy is highly informal (covering 97% of the economic activities in 2011) and depends on small-scale agricultural businesses, occupying 38% of its working population in 2019 (International Labour Organization, 2021;
SCRP, 2011). Constraints that impede business growth in Benin are among others, a lack of managerial capabilities, inadequate access to financial resources and markets, and a challenging business environment as in many developing countries. Among these constraints, the most common and fundamental barrier to business growth in Benin is the lack of managerial capabilities because they appear to be in many instances a prerequisite for the entrepreneur to overcome the other constraints. In fact, capabilities are overarching resources that integrate other resources such as financial, material, and technological ones to create value for clients (cf., Babah Daouda, Ingenbleek, & van Trijp, 2019).
2.2. The BeniBiz program
The BeniBiz program of Technoserve Benin consisted of a combination of three approaches of training, the traditional in-classroom training, e-learning, and one-on-one coaching that unfolds into three stages. The program aimed to develop larger, more sustainable, and gender-balanced businesses by accelerating the business's growth. The program covers eleven departments out of twelve of the country namely, Atlantique, Ouémé, Plateau, Atacora, Donga, Zou, Collines, Mono, Couffo, Borgou, and Alibori.
At stage 1, the program provided entrepreneurs a traditional in-classroom training.
Participating businesses that are selected during an advertising and social media campaign, based on their adherence to the eligibility criteria received blended in-classroom training.
Entrepreneurs participated in packaged training workshops of four modules of six hours each of them (which equals 24 hours in total) on how to efficiently manage and grow a business.
The training is also meant to facilitate networking among participating entrepreneurs and to provoke deep strategic analysis of their businesses. Module 1 trained entrepreneurs on how to choose the best strategy (option, path) to grow a business and how to identify and take advantage of the best opportunities for the growth of the business. In addition, module1 emphasized the importance of detaining the book of business income and expenses and knowing profits. Module 2 taught entrepreneurs how to design their value propositions and market their products and services. In module 3, entrepreneurs learned decision-making on price setting, defining financial needs, and planning for growth. Module 4 guided entrepreneurs on how to evaluate different scenarios taking into account the investment they want to make to ultimately find out whether or not to invest. The module also insisted on how to define an implementation plan and write an executive summary.
At stage 2, some participants received a login to access online modules focusing on building a practical and robust growth plan for their business in addition to the in-classroom workshops.
E-learning stems from the embodiment of technology in education. This method gives the opportunity to the accessibility to more learning materials and self-study. Each training module taught in-classroom format is now detailed into four submodules to which assignments are attached. The entrepreneur has a week to read the submodule and do the related assignments and submit them to the administrator of the platform. He or she then receives feedback on the submitted assignments. Consequently, at the end of four months, the e-learning is over, and the platform is closed.
At stage 3, certain participants received aftercare support focused on one-on-one coaching, network facilitation, and accessing finance critical to implementing their business plan in addition to either the e-learning modules or the in-classroom training workshops. Each of these participants received aftercare for eight months in the form of one-on-one coaching, which includes regular visits of a business advisor (BA) and advice from dedicated, trained program staff, who will also support entrepreneurs in the monitoring of achievements against their business plan milestones. The one-on-one coaching begins with a diagnostic that evaluates existing management practices across a range of functional areas such as production, logistics, human resources, and finance, and identifies a set of priority areas for improvement. The business advisor then works directly with entrepreneurs and workers of the business to implement improvements in the business in a sustained and intensive interaction. Typical topics for discussion at this stage included implementation of a marketing strategy, financial planning, cash flow management, operations plan development to meet new requirements, team leadership, accounting, legal, tax, and labor issues, supply chain linkages, formal and informal networking. In addition, business advisors helped entrepreneurs to overcome the constraints that are most critical to the growth of their particular business.
2.3. Data collection
The first co-author was part of the planning and implementing staff of the program and participated in the randomization of the sample in the field experiment to study the improvement in business performances (sales, profits, and jobs creation) using the combinations of three alternative approaches of training small firms (Chen, Sridhar, and Mittal, 2021). All participants were assigned to receive in-classroom training, at stage 1 of the program. After that, some participants were randomly selected to be part of the different groups. One group of entrepreneurs was assigned to e-learning in addition to initiation in- classroom training, so that they reach stage 2 of the program, whereas another group of entrepreneurs was assigned to receive only aftercare one-on-one coaching in addition to in- class training, and another group again was assigned to receive aftercare one-on-one coaching in addition to in-class training and e-learning training. The total number of participants is 354 distributed as follows. The first group (G1 made of 82 entrepreneurs) has been trained using only the traditional in-classroom training approach. The second group (G2 contained 58 entrepreneurs) has been exposed to two training approaches namely, the traditional in- classroom and e-learning training approaches. The third group (G3 included 69 entrepreneurs)
has received the traditional in-classroom and one-on-one coaching. The fourth group (G4 included 145 entrepreneurs) benefited from three training approaches, the traditional in- classroom, e-learning, and one-on-one coaching approaches. Table 1 shows the means and standard deviations of the four groups and the whole sample. There are no significant differences between the groups on observable background variables, which indicates that the randomization procedure was successful.
We conducted a follow-up study of all the four groups of participants who reached the different stages (stage 1, stage 2, and stage 3). For all four groups, we monthly collected information on sales, profits, and the number of new employees hired by their businesses (jobs creation).
Table 1. Means and standard deviations of groups
Total Group1 Group2 Group3 Group4
Variables Mean
Std.
Dev. Mean
Std.
Dev. Mean
Std.
Dev. Mean
Std.
Dev. Mean
Std.
Dev.
Gender 0.62 0.49 0.67 0.47 0.66 0.48 0.54 0.50 0.62 0.49
Age 39.56 9.70 39.16 9.51 38.48 10.70 38.96 10.18 40.50 9.17
Job
Creation 1.47 3.94 1.79 5.00 1.28 1.91 0.99 2.38 1.60 4.44
Sales
2,275,4 81
2,597,9 78
2,382,3 69
2,519,4 43
2,487,1 60
3,608,1 92
1,902,1 31
1,673,0 60
2,308,4 81
2,530,3 52
Profits
703,42 1
1,043,4 17
801,45 9
1,398,1 65
808,48 4
1,241,9 67
550,98 9
484,37 5
678,31 7
907,95 8 Observati
ons 354 82 58 69 145
2.4. Defining and measurement of outcomes: Business Practices and sales in Small Firms Measuring performance outcomes for small businesses in developing countries is challenging given that administrative data usually does not exist (De Mel, McKenzie, & Woodruff, 2009;
Fafchamps & Quinn, 2012). Using the recall ability of the entrepreneurs often leads to a reliability issue that varies greatly across entrepreneurs. To overcome inaccuracies associated with self-reports. The sales, profits, and jobs creation variables were collected from what firms recorded in their books. We measured the outcomes over eight consecutive months after the in-classroom training.
2.5. Econometric model specification
Based on a random assignment of participants, we measured the impact of the combination of in-classroom training and e-learning, the combination of in-classroom training and one-on-one coaching, and the combination of in-classroom training, e-learning, and one-on-one coaching on sales, profits, and jobs creation of the studied businesses using the following OLS regression:
Yi =β0 + ℷXi + ℰ, (Model 1)
Yi =β0 +β1e-learningi + ℷXi + ℰ, (Model 2)
Yi =β0 + β2 one-on-one coachingi + ℷXi + ℰ, (Model 3)
Yi =β0 +β3e-learningi + β4 one-on-one coachingi + ℷXi + ℰ, (Model 4)
Where Yi is the performance (sales, profits, and jobs creation) measure variable for business i.
The variable e-learningi indicates whether a business was assigned to e-learning training while one-on-one coachingi indicates the same for one-on-one coaching, and Xi is a vector of control variables. β1 and β3 are the estimates of the causal impact of receiving e-learning, β2 and β4 are the estimates of the causal impact of receiving one-on-one coaching.
2.6. Data analysis
Table 2 summarizes the descriptive statistics of independent variables and Table 3 presents correlations of all variables in our models. Consistent with the literature, the variation in the performance of small businesses can also be explained by many external variables. To account for these external factors, our study includes two relevant control variables that may influence the research model: gender and age of the entrepreneurs.
Having specified the econometric model equation, a series of four hierarchical ordinary least squares (OLS) regression analyses was used to capture the effect of simultaneous exposure of the participants to additional training approaches. Hierarchical regression is a way to show if the variables of interest (the additional training approaches) explain a statistically significant amount of variance in the dependent variable (business performance) after accounting for all other variables (the first training approach (es) used for participants) (Greene, 2003).
Model 1 considered participants who received only in-classroom training. Model 2 took into account those who received in-classroom and e-learning training approaches. Model 3 captured the exposure of the participants to in-classroom and one-on-one coaching training approaches.
Model 4 assessed the effect of the exposure of participants to in-classroom, e-learning, and one-on-one coaching training approaches.
Because the in-classroom training effect on business performance is confirmed in the literature (McKenzie, 2020), Model 1was run with the control variables. Then, in Model 2 control variables and the main effect e-learning term were estimated. In Model 3, the control and the main effect one-on-one coaching approach term were estimated. Finally, a full model was estimated in Model 4 in which all variables were freely estimated. The three last models (i.e., Models 2 to 4) were compared with Model 1 by observing variations in model fits and R-square adjusted change to capture the effect of simultaneous exposure of the participants to additional training approaches.
Table 2. Descriptive statistics
Variables Observations Mean Std. Dev.
One-on-one Coaching 354 0.60 0.49
E-learning 354 0.57 0.50
Table 3. Correlation Matrix
Variables 1 2 3 4 5 6 7
1 Gender 1.00
2 Age 0.02 1.00
3 Sales 0.08 0.07 1.00
4 Profits 0.05 0.15** 0.81*** 1.00
5 Jobs Creation 0.03 -0.06 0.00 0.01 1.00
6 One-on-one Coaching -0.08 0.04 0.30*** 0.19*** 0.08 1.00
7 E-learning 0.02 0.06 0.16** 0.08 0.02 0.30*** 1.00
*P< .1, **P< .05 , ***P< .01
3. Results
Table 4 lists the regression results for all four models. The fit statistics (F-statistics, R-square, and Adjusted R-square) reported at the bottom of Table 4 indicate the joint significance of the variables in the empirical models, and suggest that the fitted models have explanatory power.
First, we entered the control variables age and gender in Model 1 and found that age and gender, have a positive influence on sales and profits, and jobs creation.
Second, we added the main effect of the e-learning term in Model 2 to test the simultaneous effect of in-classroom training and e-learning training on business performance (sales, profits, and jobs creation). We found a significant and positive relationship between the combination of in-classroom training and e-learning training on sales (β = 0.277, p < 0.01). We also found a non-significant and positive relationship between the combination of in-classroom training and e-learning training on profits and jobs creation. The exposure of participants to the e-
learning training approach explains the additional variance in business sales performance (Δ R-square = 0.02, p < 0.05) as compared to Model 1.
Third, we added the main effect of the one-on-one coaching term in Model 3 to test the simultaneous effect of in-classroom training and one-on-one coaching approaches on business performance. We found a significant and positive relationship between the combination of in- classroom training and one-on-one coaching approaches on sales (β = 0.263, p < 0.001) and profits (β = 0.38, p < 0.001). Thus, the one-on-one coaching approach explains the additional variance in sales (Δ R-square = 0.09, p < 0.01) and profits (Δ R-square = 0.034, p < 0.01) as compared to Model 1.
Finally, in model 4, we simultaneously included the terms of the main effects of e-learning and one-on-one coaching approaches to test for the effect of the combination of in-classroom training, e-learning, and one-on-one coaching approaches on business performance. We found a significant and positive relationship between the combined in-classroom training, e-learning, and one-on-one coaching approaches on sales (β = 0.60, p < 0.001) and profits (β = 0.37, p <
0.001). However, together e-learning and one-on-one coaching approaches did not explain additional variance in business performance (sales, profits, and jobs creation) as compared to Model 3. This indicates that Model 3 is better than Model 4 in predicting the simultaneous effect of training approaches on business performance.
Table 4. Results of Hierarchical Regression
Model 1 Model 2 Model 3 Model 4
Variables Sales Profits
Jobs
Creation Sales Profits
Jobs
Creation Sales Profits
Jobs
Creation Sales Profits
Jobs Creation
Controls
Gender 0.151 0.005 0.061 0.147 0.082 0.06 0.202 0.112 0.076 0.197 0.11 0.076
Age 0.007 0.001* -0.006 0.007 0.014*** -0.007 0.006 0.013** -0.007 0.006 0.013* -0.007
Main Effects
E-learning 0.277** 0.135 0.05 0.125 0.04 -0.005
Coaching 0.634*** 0.38*** 0.182 0.602*** 0.369*** 0.183
Constant -0.41 -0.63*** 0.221 -0.539*** -0.692*** 0.20 -0.746 -0.83*** 0.11 -0.787*** -0.844*** 0.114
F 2.05 66.93 0.81 3.64 3.16 0.61 13.93 6.94 1.42 10.81 5.22 1.07
R-Square 0.012 0.752 0.005 0.031 0.026 0.005 0.108 0.056 0.013 0.111 0.057 0.013
Adjusted R-Square 0.006 0.741 0.742 0.022 0.018 -0.003 0.1 0.048 0.004 0.101 0.046 0.001
Δ R-Square 0.019** 0.00 0.00 0.096*** 0.034*** 0.008* 0.004 0.00 0.00
Note: Standardized coefficients are reported. Gender is dichotomic with a value of 1 if the participant is a man and 0 if the participant is a woman. Age is a continuous variable expressed in years. Sales and Profits are continuous variables expressed in XOF and jobs creation is the number of new employees hired. E-learning and coaching are dummy variables with a value of 1 if the participant attended the training session and 0 if the participant did not attend the training.
*P< .1, **P< .05 , ***P< .01
4. Discussion
The study provides evidence of the simultaneous effects of (1) the traditional in-classroom training and e-learning approaches, (2) the traditional in-classroom training and one-on-one coaching approaches, and (3) the traditional in-classroom training, e-learning, and one-on-one coaching approaches on the sales of the participants’ businesses. Only, the combinations of training approaches (2) and (3) have significant effects on the participants' profits. This is in line with the insight from Mano et al. (2012) in Ghana, who indicated that basic-level management training improves business performance. In the words of Higuchi, Mhede, and Sonobe, (2019), entrepreneurs seem to have sufficiently assimilated valuable practices and amended them to match their business operations which translated into the improvement of their performances. It is however worth noting that Karlan and Valdivia (2011) have found little change in business profits after giving managerial training to small business owners in Peru.
The findings also indicated that the best combination of training approaches is the exposure of the participants to the traditional in-classroom and one-on-one coaching approaches. This result comfort studies that present the one-on-one coaching approach as having a long-lasting effect on managerial practices, focused on specific performance of the trainee and tailored to the needs of the entrepreneur (Nyamunda, 2014; Salisbury, 1998; Wilde, 2009).
Moreover, the results suggested that additional exposure to the e-learning approach of entrepreneurs who benefited from classroom training and one-on-one coaching has no significant effect on business performance. This can be explained by the barriers to the adoption of IT in developing countries. The inappropriateness of e-learning for entrepreneurs in developing countries is due to the insufficient bandwidth, reliability, and latency of connection (Acharya & Lee, 2018; Mwakyusa & Mwalyagile, 2016). The lower IT competencies of entrepreneurs, unstable electricity supply, lack of technical resources make it difficult for them to enjoy e-learning (Mwakyusa & Mwalyagile, 2016; Oluyinka & Endozo, 2019).
Furthermore, the study showed no significant effect of the training approaches on jobs creation, either individually or simultaneously applied to entrepreneurs. This lack of effect of training on jobs creation has been detected by previous studies pretesting that training impacts are often assessed too early to discern a positive training impact on business performance such as jobs creation (Higuchi et al., 2019; Karlan & Valdivia, 2011; McKenzie et al., 2020).
5. Limitations and future research avenues
One important limitation of this study is the criteria of selection of the entrepreneurs into the training program which is based on self-reports on the sales, profits, and jobs creation of their businesses. Thus, the sample is made of entrepreneurs with different education levels, variable backgrounds, and experiences. This can lead to differentiated ownership of the training content.
Future research should try to have less heterogeneous groups of entrepreneurs for the experiment. In addition, the study lacks information on non-trained entrepreneurs through the traditional in-classroom approach. Such information could have provided additional evidence of the approved effect of the traditional in-classroom training approach on business performance. Furthermore, our study also raises the question of generalizability to other types of businesses in the non-agribusiness sector. Last but not the least, while the paper enrolled the participants in small groups of training of 10 to 12 individuals to reduce the contact with other groups’ members, we cannot affirm that there was no spillover effect in our model. Future research may account for these limitations by extending to businesses in the non-agribusiness sector and for the spillover effect by separating geographically the different experimental groups.
CONCLUSION
This paper investigated the combination of training approaches that are more effective on small business performances in developing countries. Based on a field experiment, the study sheds light on the most appropriate combination of training approaches given the resources and technologies that entrepreneurs can rely on in their environment. It appears that the combination of the traditional in-classroom training and the one-on-one coaching approaches is the best combination of training approaches for small businesses owners in developing countries. This combination, relieves entrepreneurs from the burden of having a reliable internet connection, stable electricity supply, relatively affordable access to the internet, and skills and knowledge in information technology.The study has some implications for policymakers and the institutions involved in entrepreneurs' training. For better impacts of the training program, they need to complement the traditional in-classroom training and the one-on-one coaching approaches. They need to emphasize more one-on-one coaching for small businesses. The e- learning approach may be advisable for medium-size businesses that are in an urban environment where the internet connection is a little bit better as compared to other areas.
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Acknowledgments
The authors thank Technoserve Benin, for disclosing data for this research. The authors also thank the Business Advisors of BeniBiz program for their help in data collection.
