Improving Management with Individual and Group-Based Consulting: Results from a Randomized Experiment in Colombia

Abstract

Differences in management quality are an important contributor to productivity differences across countries. A key question is how to best improve poor management in developing countries. We test two different approaches to improving management in Colombian auto parts firms. The first uses intensive and expensive one-on-one consulting, while the second draws on agricultural extension approaches to provide consulting to small groups of firms at approximately one-third the cost of the individual approach. Both approaches lead to improvements in management practices of a similar magnitude (8–10 percentage points). The group-based intervention leads to significant increases in firm sales, profits, and labour productivity, while the impacts on firm performance are smaller in magnitude and less robust from the individual consulting. The results point to the potential of group-based approaches as a pathway to scaling up management improvements.