Single-Industry Sectoral Standardisation in Enterprise RCTs
Enterprise development studies often sample heterogeneous firms across multiple industries, introducing substantial unobserved variance in production functions and masking sector-specific constraint dynamics.
Picture this
Imagine testing a new training program on a group consisting of a farmer, a computer repairman, and a baker. Because their daily operations are completely different, a trainer must give vague, general advice that barely fits anyone. By contrast, if a trainer works only with bakers, they can master baking equipment, recipes, and ingredient costs, offering deep, tailored feedback that accurately tests whether better advice improves bakery operations.
What the evidence says
Concentrating on a single trade allowed four business consultants to deliver 1,200 hours of sector-specific coaching (averaging 10 hours per tailor), eliminating cross-sector noise and permitting precise tracking of 35 tailoring-specific operational practices over eight survey rounds.
- Who
- 160 microenterprise tailors across 8 neighborhoods in Accra, Ghana, where 35% operated with zero employees and 94% had three or fewer.
- How
- Single-industry randomized trial design selecting tailors within a defined geographic boundary to enable deep consultant specialization and eliminate cross-industry variance.
What to do
Restrict enterprise evaluation samples to single defined industries when evaluating specialized managerial capital interventions to maximize measurement precision.
From the source
"We chose to work with microenterprises in a single industry because it allowed the consultants to develop expertise in that sector and allowed us to focus on industry-specific survey questions."
Consulting and Capital Experiments with Microenterprise Tailors in Ghana