Business Development Programs and Their (limited) Impact on Entrepreneurs’ Profit

Business training is an essential part of business development programs (BDPs). Yet, its impact on entrepreneurs’ profits is limited. We develop a theoretical framework where limited effect of business training is due to mismatch between a BDPs’ narrow focus on business-promoting strategies and a wider context in which microfinance clients operate. We assume households have multiple sources of income, e.g. business and wage incomes, that are correlated with each other. Furthermore, entrepreneurs’ objectives go beyond profit-maximization and are a combination of businessand livelihood-ambitions (Verrest, 2013). We show that when the wider context (multiple income sources, multiple ambitions) is considered, the training impact varies and can result in post-training profit decline. If, however, we narrow the context to either one income source (business) or one ambition (profit-maximization), the post-training profit always goes up. The paper highlights the importance of applying holistic approach to microfinance clients when evaluating efficiency of business programs. Business Development Programs and their (Limited) Impact on Entrepreneurs’ Profit