In Simple Words
Think of buying an expensive tune-up kit for a factory engine; even though the mechanic charges a steep initial fee, the engine runs so much more efficiently and saves so much fuel that the savings pay off the entire bill and generate extra profit within twelve months.
Textile plants near Mumbai
- Diagnostics and light advice
- Group used for comparison
- Added implementation help
- Total factor productivity 16.6% higher
The source reports a 16.6% total-factor-productivity increase for the whole intervention, alongside estimated annual profit gains and return on consulting costs. Original trial result, not 2017 follow-up. Whole-program comparison; absolute productivity not reported. Both groups received diagnostic consulting and light follow-up advice; implementation help was added for treatment plants.
See source →Research question
Manufacturing firms in developing nations often hesitate to engage international management consulting services due to high upfront costs and uncertainty regarding concrete financial returns.
Participants
28 manufacturing plants across 17 large, family-owned cotton textile firms near Mumbai, India (human participants, averaging 270 employees, $8.5M assets, and $7.5M annual sales).
Study Design
Randomized Controlled Trial (RCT) measuring output, Total Factor Productivity (TFP), and annual profit changes following a 4-month consulting implementation phase.
Results
Experimental treatment plants increased output by 9.4%, increased Total Factor Productivity by 16.6%, and expanded annual plant profit by approximately $325,000, representing an average 130% one-year return on the market cost of consulting services.
Takeaway
Calculate expected profit gains from quality defect reductions and machine downtime prevention before commissioning external operational consulting services.
Source and citation
See source →Read alongside the research
Plain-English glossary
Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.
- Randomized controlled trial
A study that uses chance, like drawing lots, to decide who receives each option being compared. Researchers compare the groups’ outcomes to estimate the effect of those options.
ExampleA lottery assigns volunteers to a training programme or a comparison group. Researchers then compare their outcomes.
GET-IT glossary · Randomized study ↗Read more about randomized controlled trial →