The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

Using a randomized evaluation with 432 Mexican small and medium enterprises, we show that access to management consulting had positive effects on total factor productivity and return-on-assets (about 0.2 standard deviations, relative to the control group). Owners also had significant increase in “entrepreneurial spirit” (an index that measures entrepreneurial confidence and goal setting). Using Mexican social security data, we find a persistent large increase (about 50%) in the number of employees and total wage bill even five years after the program. We document large heterogeneity in the specific managerial practices that improved as a result of the consulting, but the three most prominent areas are marketing, financial accounting, and long-term business planning. 1 We are grateful to the management and staff of IPPC and would like to thank the field research management team at Innovations for Poverty Action (IPA), including Sarah Craig, Alissa Fishbane, Javier Gutiérrez, Ashley Pierson, Douglas Randall and Anna York, and Ximena Cadena at ideas42, for excellent research assistance. We also thank Judith Frías at IMSS for her support in analyzing the employment impacts of the project. Financial support for this project was provided by the Government of the State of Puebla, via the Consejo para el Desarrollo Industrial, Comercial y de Servicios, the Knowledge for Change trust fund of the World Bank, and the Bill and Melinda Gates Foundation via the Financial Access Initiative for funding. All opinions and errors in this paper are those of the authors and not of any of the donors or of the World Bank.