Teach Them to Fish: When Does Business Training Improve SMEs’ Management and Business Practices?

High-quality management and business practices, such as keeping formal financial records, inventory management and formal strategic planning, have a strong and significant positive effect on the revenues, profits, and survival of small and medium-sized enterprises (SMEs) across many developing countries. Yet, business training programs, justified to improve the stock of SMEs’ business knowledge, have had no significant effect on the adoption of innovative “best practices.” We investigate whether business training improves the business and management practices of SMEs. Further, drawing on the teams and groups literature, we hypothesize that the complexity and the degree to which the tasks constituting best practices can be spelt out in advance significantly influence the adoption of the practices in people management, marketing, finance and record keeping. We test our hypothesis in a quasi-experiment involving 424 trained (treated) SMEs and 371 control group (untrained) SMEs in Kazakhstan. We find support for our hypotheses: management and business practices whose constituent tasks can be more readily spelt out in advance and/or which require lower levels of coordination within SMEs are more likely to be adopted than those that cannot be spelt out and/or which require high levels of coordination. Thereafter, we discuss the implications of our findings for the design of training programs.