What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria
Why do more small firms in developing countries not use the market for professional business services like accounting, marketing, and human resource specialists? Two key reasons may be that firms lack information about the availability of these ser...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/407751617722646649/What-Prevents-More-Small-Firms-from-Using-Professional-Business-Services-An-Information-and-Quality-Rating-Experiment-in-Nigeria http://hdl.handle.net/10986/35409 |
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okr-10986-354092022-09-20T00:10:19Z What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria Anderson, Stephen J. McKenzie, David BUSINESS DEVELOPMENT SERVICES FIRM SIZE BUSINESS SUPPORT PROGRAM PROFESSIONAL BUSINESS SERVICES QUALITY RATING SMALL AND MEDIUM-SIZED ENTERPRISES SMALL FIRM GROWTH Why do more small firms in developing countries not use the market for professional business services like accounting, marketing, and human resource specialists? Two key reasons may be that firms lack information about the availability of these services, and that they struggle to distinguish the quality of good versus bad providers. A brand recognition exercise finds that most small firms are unaware of most providers in this market, and a survey of service providers reveals that they largely rely on word-of-mouth and informal reputation mechanisms for acquiring customers. This study set up a business services marketplace that contains information about the different providers present in the market and used mystery shopper visits to develop a quality ratings system. A randomized experiment with more than 1,000 firms provided access to this marketplace to the treatment group and randomized whether firms received just information or also quality ratings. The provision of quality ratings information shifts small firms’ preferences over which provider they would like to use, increasing the average quality rating of their preferred providers by 0.2 to 0.4 ratings points out of 5. However, neither the provision of information nor these quality ratings had any significant impact on the likelihood that small firms go on to hire a business service provider over the subsequent six months. The results suggest that alleviating information frictions alone is insufficient to increase usage of professional business services. 2021-04-08T18:28:33Z 2021-04-08T18:28:33Z 2021-04 Working Paper http://documents.worldbank.org/curated/en/407751617722646649/What-Prevents-More-Small-Firms-from-Using-Professional-Business-Services-An-Information-and-Quality-Rating-Experiment-in-Nigeria http://hdl.handle.net/10986/35409 English Policy Research Working Paper;No. 9614 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Africa Western and Central (AFW) Nigeria |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BUSINESS DEVELOPMENT SERVICES FIRM SIZE BUSINESS SUPPORT PROGRAM PROFESSIONAL BUSINESS SERVICES QUALITY RATING SMALL AND MEDIUM-SIZED ENTERPRISES SMALL FIRM GROWTH |
| spellingShingle |
BUSINESS DEVELOPMENT SERVICES FIRM SIZE BUSINESS SUPPORT PROGRAM PROFESSIONAL BUSINESS SERVICES QUALITY RATING SMALL AND MEDIUM-SIZED ENTERPRISES SMALL FIRM GROWTH Anderson, Stephen J. McKenzie, David What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| geographic_facet |
Africa Africa Western and Central (AFW) Nigeria |
| relation |
Policy Research Working Paper;No. 9614 |
| description |
Why do more small firms in developing
countries not use the market for professional business
services like accounting, marketing, and human resource
specialists? Two key reasons may be that firms lack
information about the availability of these services, and
that they struggle to distinguish the quality of good versus
bad providers. A brand recognition exercise finds that most
small firms are unaware of most providers in this market,
and a survey of service providers reveals that they largely
rely on word-of-mouth and informal reputation mechanisms for
acquiring customers. This study set up a business services
marketplace that contains information about the different
providers present in the market and used mystery shopper
visits to develop a quality ratings system. A randomized
experiment with more than 1,000 firms provided access to
this marketplace to the treatment group and randomized
whether firms received just information or also quality
ratings. The provision of quality ratings information shifts
small firms’ preferences over which provider they would like
to use, increasing the average quality rating of their
preferred providers by 0.2 to 0.4 ratings points out of 5.
However, neither the provision of information nor these
quality ratings had any significant impact on the likelihood
that small firms go on to hire a business service provider
over the subsequent six months. The results suggest that
alleviating information frictions alone is insufficient to
increase usage of professional business services. |
| format |
Working Paper |
| author |
Anderson, Stephen J. McKenzie, David |
| author_facet |
Anderson, Stephen J. McKenzie, David |
| author_sort |
Anderson, Stephen J. |
| title |
What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| title_short |
What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| title_full |
What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| title_fullStr |
What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| title_full_unstemmed |
What Prevents More Small Firms from Using Professional Business Services? An Information and Quality-Rating Experiment in Nigeria |
| title_sort |
what prevents more small firms from using professional business services? an information and quality-rating experiment in nigeria |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/en/407751617722646649/What-Prevents-More-Small-Firms-from-Using-Professional-Business-Services-An-Information-and-Quality-Rating-Experiment-in-Nigeria http://hdl.handle.net/10986/35409 |
| _version_ |
1764482966692560896 |