Research

• Informational Barriers to Market Access: Experimental Evidence from Liberian Firms, with Jonas Hjort, Vinayak Iyer, and Fei Ao

Evidence suggests that many firms in lower-income countries stagnate because they cannot access growth-conducive markets. We hypothesize that overlooked informational barriers distort market access, excluding productive but “information-poor” suppliers. To investigate, we gave a random subset of medium-sized Liberian firms vouchers for a week-long program targeting equal-opportunity access to the input purchases of government, companies, and other organizations–a market that makes up upwards of 80 percent of global GDP. The program exclusively teaches “sellership””: how to navigate large buyers’ complex, formal sourcing procedures. Firms that participate win three times as many formal contracts a year later. The impact is heterogeneous: informational sales barriers bind for about a quarter of Liberian firms. Three years post-training, these firms continue to win desirable contracts, are more likely to operate, and employ more workers. Our results help rationalize common demand-side policies in public procurement that nonetheless appear to scratch at the surface of a bigger distortion.

Coverage: VoxEU Blogpost

• Virtual Business Networks and Knowledge Diffusion: Experimental Evidence from Liberia, with Anubhav Agarwal and Roberto Sormani

Small business owners in low-income settings often face information frictions and limited access to professional networks. While formal business training programs have been widely studied, less is known about whether low-cost virtual peer interactions can facilitate the diffusion of business knowledge and practices. We study a randomized experiment in Liberia involving 1,131 micro-entrepreneurs, where the treatment group joined small, moderated discussion groups that met weekly by phone to discuss business challenges. We find that participation in virtual discussion groups leads to significant changes in business behavior. Treated entrepreneurs adopt more innovative practices, including new marketing strategies and sales locations; exhibit higher levels of financial planning; increase their use of digital technologies such as mobile phones, mobile money, and social media for business purposes; and reorient their advice-seeking toward other business owners. A distinctive feature of the study is the availability of detailed records of discussion content. We link treatment effects to the topics most frequently discussed within groups. Outcomes that are more commonly discussed—such as marketing strategies, digital tools, and saving practices—exhibit larger treatment effects, providing descriptive evidence on peer learning mechanisms. In contrast, we find no significant average effects on short-term profits or revenues, consistent with learning-driven adjustments that may precede performance gains. We document heterogeneity, with revenue gains concentrated among entrepreneurs who plausibly faced weaker access to high-quality business networks prior to the intervention. Together, the results show that virtual peer networks can shape business practices and information flows in settings where formal institutions and networks are limited.

Abstract

This paper experimentally tests two distinct strategies to alter how drivers apprehend risk
on the road. One first strategy mimics the typical information-provision intervention and
involves providing drivers with information on road safety risks and the role of driver be-
havior in preventing such risks. Surprisingly, this approach shows no significant effect on
driver beliefs and a moderate impact on behavior. In contrast, the second strategy draws
from the motivated reasoning literature, aiming to alter drivers’ beliefs and behaviors by
addressing their underlying preferences. The results provide evidence that drivers’ beliefs
about risk are shaped by their preferences over their driving activity. This study shows
that in order to change beliefs it can be more effective to target preferences than beliefs
directly, and opens up innovative avenues for developing road safety interventions.

Selected Work in Progress: