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 may have limited information on good business strategies. While training programs have been extensively studied, another potential source of learning is through peer interaction–but many lack access to business networks that facilitate this. This paper examines the effect of virtual discussion groups of 4-6 micro-entrepreneurs each on business outcomes in Liberia. In an experiment involving 1,131 entrepreneurs, the treated group joined weekly phone discussions on business challenges, sales strategies, and financial management. We find that the intervention significantly influenced entrepreneurs’ business practices and strategies, with effects concentrated in three key areas. First, we find that treated participants use more innovative business strategies, including new marketing approaches and sales locations. Second, they are more likely to adopt digital technologies for business use. Finally, treated entrepreneurs shift away from seeking advice from friends and family, instead building professional relationships with peer business owners. For each output, moderator summaries of each discussion session allow us to directly map observed effects to specific topics and business strategies discussed during these meetings. While we do not find significant average effects on short-term profits or revenues, our results suggest that low-cost virtual platforms can facilitate knowledge transfer and business practice adoption among micro-entrepreneurs in developing countries.

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: