TY - JOUR A1 - Iacovone, Leonardo A1 - Campos, Francisco A1 - Frese, Michael A1 - Goldstein, Markus A1 - Johnson, Hillary C A1 - McKenzie, David A1 - Mensmann, Mona T1 - Teaching personal initiative beats traditional training in boosting small business in West Africa JF - Science N2 - Standard business training programs aim to boost the incomes of the millions of self-employed business owners in developing countries by teaching basic financial and marketing practices, yet the impacts of such programs are mixed. We tested whether a psychology-based personal initiative training approach, which teaches a proactive mindset and focuses on entrepreneurial behaviors, could have more success. A randomized controlled trial in Togo assigned microenterprise owners to a control group (n = 500), a leading business training program (n = 500), or a personal initiative training program (n = 500). Four follow-up surveys tracked outcomes for firms over 2 years and showed that personal initiative training increased firm profits by 30%, compared with a statistically insignificant 11% for traditional training. The training is cost-effective, paying for itself within 1 year. Y1 - 2017 U6 - https://doi.org/10.1126/science.aan5329 VL - 357 IS - 6357 SP - 1287 EP - 1290 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - Calderón, Gabriela A1 - Juarez, Laura T1 - Opportunity versus necessity: understanding the heterogeneity of female micro-entrepreneurs JF - The World Bank Economic Review N2 - Entrepreneurs that voluntarily choose to start a business because they are able to identify a good business opportunity and act on it -- opportunity entrepreneurs -- might be different along various dimensions from those who are forced to become entrepreneurs because of lack of other alternatives -- necessity entrepreneurs. To provide evidence on these differences, this paper exploits a unique data set covering a wide array of characteristics, including cognitive skills, non-cognitive skills and managerial practices, for a large sample of female entrepreneurs in Mexico. Descriptive results show that on average opportunity entrepreneurs have better performance and higher skills than necessity entrepreneurs. A discriminant analysis reveals that discrimination is difficult to achieve based on these observables, which suggests the existence of unobservables driving both the decision to become an opportunity entrepreneur and performance. Thus, an instrumental variables estimation is conducted, using state economic growth in the year the business was set up as an instrument for opportunity, to confirm that opportunity entrepreneurs have higher performance and better management practices. Y1 - 2017 U6 - https://doi.org/10.1093/wber/lhw010 VL - 30 IS - Supplement 1 SP - 86 EP - 96 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - Ferro, Esteban A1 - Pereira-López, Mariana A1 - Zavacka, Veronika T1 - Banking crises and exports: Lessons from the past JF - Journal of Development Economics N2 - This paper analyzes the impact of banking crises on manufacturing exports, exploiting the fact that sectors differ in their needs for external financing. Relying on data from 160 developed and developing countries during 1970–2012, we analyze 147 banking crisis episodes and separate their impact on export growth from the impact of other exogenous shocks (e.g., demand shocks, exchange rate shocks). Our findings show that during a crisis, the exports of sectors more dependent on external finance grow significantly less than other sectors. However, this result holds only for sectors that depend on banking finance as opposed to interfirm finance (i.e., trade finance or trade credit). For sectors that depend heavily on banking finance, the effect of banking crises on exports is robust, additional to external demand shocks, and not driven by exchange rate shocks. Y1 - 2019 U6 - https://doi.org/10.1016/j.jdeveco.2018.12.005 IS - 138 SP - 192 EP - 204 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - Crespi, Gustavo A1 - Bowen, J David A1 - Marcolin, Luca T1 - Decomposing firm-level productivity growth and assessing its determinants: evidence from the Americas JF - The Journal of Technology Transfer N2 - This paper provides novel empirical evidence on productivity growth in the manufacturing sector in Chile, Colombia, Mexico and Peru. Relying on plant-level data, we first decompose productivity and productivity growth into plant-level growth and market allocation forces. While the average productivity of the survivors is higher than the overall contribution of reallocation forces, during recessions the inverse is true and reallocation gives a positive, albeit small, contribution to aggregate productivity growth. Next we analyze how policy measures can determine allocative efficiency levels and growth, and find important scope for action on education, financial regulation, and structural reforms. Y1 - 2018 U6 - https://doi.org/10.1007/s10961-018-9678-0 VL - 43 IS - 6 SP - 1571 EP - 1606 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - Frese, Michael A1 - Campos, Francisco A1 - Goldstein, Markus A1 - Johnson, Hillary A1 - McKenzie, David A1 - Mensmann, Mona T1 - Closing the Gender Gap – Personal Initiative Training and Female Business Performance JF - Academy of Management Proceedings N2 - While female entrepreneurship has important impacts on economic development, female-owned businesses obtain lower profits and lower growth rates than male- owned businesses. We conduct a randomized controlled field experiment with 1196 entrepreneurs in Lomé, Togo, to determine whether personal initiative training constitutes a way to enhance female entrepreneurs’ business success and to close this gender gap. Basing our argumentation on social role theory and the process model of entrepreneurial action, we argue that because of their social gender roles female entrepreneurs perceive that entrepreneurial action incurs higher risks and lower returns. We hypothesize that personal initiative training leads female entrepreneurs to decrease perceived risks of entrepreneurial action by increasing their entrepreneurial self-efficacy and error competence and to increase their perceived returns of entrepreneurial action by increasing entrepreneurial passion, which ultimately leads to female entrepreneurs’ business success. The results largely support our hypotheses. This study contributes to the literature on the gender gap in entrepreneurship and has important implications for entrepreneurial training interventions. Y1 - 2018 U6 - https://doi.org/10.5465/AMBPP.2018.10669abstract VL - 2018 IS - 1 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - Cruz, Marcio A1 - Bussolo, Maurizio T1 - Organizing knowledge to compete: Impacts of capacity building programs on firm organization JF - Journal of International Economics N2 - A growing literature aiming at explaining differences in productivity and access to global export markets across firms has focused on the internal organization of firms. This paper contributes to this literature by evaluating the impact of a program that aims at enhancing competitiveness of small and medium enterprises in Brazil by providing coaching and consulting on management and production practices. Specifically, the paper tests whether the program induces treated firms to reorganize knowledge by adding more layers of different skills and competencies to their workforces. Using a unique firm-level data set, the number of layers of knowledge of the firms are compared before and after the program. The impact of the program is identified by relying on an instrumental variable approach, exploiting the quasi-experimental roll-out of its implementation, which was carried out at different times across Brazilian regions. The analysis finds that the program had an effect and that this effect is heterogeneous. The program is particularly effective in promoting the reorganization of small and medium firms. The results confirm another finding of the literature, namely that in re-organized firms wage inequality increases. Finally, these results are used to discuss how the change in firms' organization is positively correlated with export performance. Y1 - 2018 U6 - https://doi.org/10.1016/j.jinteco.2017.12.001 IS - 111 SP - 1 EP - 20 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - De Hoyos, Rafael E T1 - Economic Performance under NAFTA: A Firm-Level Analysis of the Trade-productivity Linkages JF - World Development N2 - Did the North American Free Trade Agreement make Mexican firms more productive? If so, through which channels? This paper addresses these questions by deploying an innovative microeconometric approach that disentangles the various channels through which integration with the global markets (via international trade) can affect firm-level productivity. The results show that the North American Free Trade Agreement stimulated the productivity of Mexican plants via: (1) an increase in import competition and (2) a positive effect on access to imported intermediate inputs. However, the impact of trade reforms was not identical for all integrated firms, with fully integrated firms (i.e. firms simultaneously exporting and importing) benefiting more than other integrated firms. Contrary to previous results, once self-selection problems are solved, the analysis finds a rather weak relationship between exports and productivity growth. Y1 - 2013 UR - https://doi.org/10.1016/j.worlddev.2012.09.008 VL - 44 SP - 180 EP - 193 ER - TY - JOUR A1 - Cardot, Olivier A1 - Iacovone, Leonardo A1 - Pierola, Martha Denisse A1 - Rauch, Ferdinand T1 - Success and failure of African exporters JF - Journal of Development Economics N2 - Using a new dataset with transaction-level export data from four African countries (Malawi, Mali, Senegal and Tanzania), this paper explores the determinants of success upon entry into export markets, defined as survival beyond the first year at the firm-product-destination level. We find that the probability of success rises with the number of same-country firms exporting the same product to the same destination, suggesting the existence of cross-firm externalities. We explore several conjectures on the determinants of these externalities and provide evidence suggestive of information spillovers, possibly mediated through the banking system. Y1 - 2013 U6 - https://doi.org/10.1016/j.jdeveco.2012.12.004 VL - 101 SP - 284 EP - 296 ER - TY - JOUR A1 - Iacovone, Leonardo T1 - The better you are the stronger it makes you: Evidence on the asymmetric impact of liberalization JF - Journal of Development Economics N2 - This paper studies how liberalization affects productivity growth using micro-level plant data. While previous studies have already shown the existence of a positive relationship between competition and economic performance, the novelty of this paper is that it analyzes not only the average impact of liberalization, but also goes "beyond the average" and shows how the liberalization can affect dissimilar plants in a different way. The author first develops a model which predicts that, while the impact of liberalization on productivity growth is positive "on average", more advanced firms tend to benefit more. In fact, liberalization generates two competing effects: on one side it spurs more innovative efforts because of the increased entry threat by foreign competitors, on the other side, enhanced competition curtails expected profits and reduces the funds available to finance innovative activities. The pro-competitive effect is weaker for less advanced firms as for them it is harder to catch-up with the "technology frontier". These predictions are then tested focusing on Mexican plants during the NAFTA liberalization. The results show that a 1 percent reduction in tariffs spurred productivity growth between 4 and 8 percent on average. However, for backward firms this effect is much weaker if not close to zero, otherwise for more advanced ones this effect is stronger with productivity growing between 11 and 13 percent. Consistent with the theoretical model the results are stronger in those sectors where the scope for innovative activities is more pronounced. These results are particularly important for policy makers because they suggest that while increasing competition may be good in spurring average productivity, it is also true that this effect does not hold for all type of firms, in particular more backward firms may need some complementary support policy to upgrade their capacities and keep up with the more competitive environment. Y1 - 2012 UR - https://openknowledge.worldbank.org/handle/10986/4124 UR - https://doi.org/10.1016/j.jdeveco.2012.06.001 VL - 99 IS - 2 SP - 474 EP - 485 ER - TY - RPRT A1 - Javorcik, Beata A1 - Fitriani, Fitria A1 - Iacovone, Leonardo T1 - Productivity Performance in Indonesia's Manufacturing Sector T2 - Indonesia PREM policy note N2 - Relying on firm-level data from Statistik Industri this note analyzes the evolution of productivity dynamics of Indonesian firms over the past 20 years (1990-2009). Economy-wide and sectoral productivity changes are decomposed into their two main components: changes due to the evolution of average productivity and changes due to 'allocative efficiency'. This decomposition shows that while during the 20 years both components have increased, the changes in allocative efficiency have been mainly driven by average productivity growth and less by increases in allocative efficiency, even if the latter has also improved during the period under analysis. Interestingly, the note shows that both average Total Factor Productivity (TFP) growth and allocative efficiency improvements are especially driven by a few sectors: electronics, machinery and instruments, and textiles, clothing and footwear. Limited improvements in both allocative efficiency and average TFP have occurred instead in natural-resource-based sectors, sectors characterized by more limited competition and higher rents. This note emphasizes the importance of 'allocative efficiency' for productivity evolution because, in a context where firms are very different in their productivity, it becomes crucial how resources are allocated in the economy. This series of policy notes suggests that regulatory reforms, exposure to foreign competition and access to imported intermediate inputs are important determinants of allocative efficiency. The problem of a 'missing middle' is closely related to that of sub-optimal allocation of resources across firms: a strong feature of Indonesian firm-size distribution. Going further, the note suggests that burdensome regulations and imperfect financial markets are two important causes of this missing middle. To complement the focus on productivity, the note also analyzes firm-level job dynamics and points to the crucial role of 'start-ups' and new companies as a key driver of job creation. This finding suggests that the focus of policymakers on Small and Medium Enterprises (SMEs) may be misplaced and that this focus should start realigning towards supporting more dynamic 'start-ups' rather than SMEs. Y1 - 2012 UR - http://documents.worldbank.org/curated/en/485831468044119749/Productivity-performance-in-Indonesias-manufacturing-sector PB - World Bank Group ET - 5 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Gonzalo, Varela A1 - Aldaz-Carroll, Enrique T1 - Determinants of Market Integration and Price Transmission in Indonesia T2 - Policy Research Working Paper N2 - This paper investigates the determinants of price differences and market integration among Indonesian provinces, using data from retail cooking oil, rice and sugar markets during the period 1993-2007, and from wholesale maize and soybean markets during the period 1992-2006. The authors measure the degree of integration using co-integration techniques, and calculate average price differences. They use regression analysis to understand the drivers of price differences and market integration. For rice and sugar, they find wide market integration and low price differences, in the range of 5-12 percent. For maize, soybeans and cooking oil, they find less integration and higher price differences (16-22 percent). Integration across provinces is explained by the remoteness and quality of transport infrastructure of a province. Price differences across provinces respond to differences in provincial characteristics such as remoteness, transport infrastructure, output of the commodity, land productivity and income per capita. Y1 - 2012 UR - http://hdl.handle.net/10986/9312 PB - World Bank CY - Washington, DC ET - No. 6098 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Javorcik, Beata Smarzynska T1 - Getting ready: Preparation for exporting T2 - Centre for Economic Policy Research N2 - This study examines developments at the plant-product level preceding an expansion into foreign markets. It relies on very detailed Mexican data for 1994-2004, a period of liberalization in US trade policy vis a vis Mexico, mandated by the North American Free Trade Agreement. Our approach is novel in that we focus on quality, proxied by domestic price premium, of current and future export products. Our findings are consistent with quality upgrading taking place in preparation for entry into export markets. We show that manufacturers who export a particular product variety tend to obtain a price premium for their domestic sales of this variety. Consistently with the hypothesis of quality upgrading before exporting, we find evidence that this premium emerges exactly one year before a variety starts being exported. We find no evidence of upgrading after entering export markets. Our IV estimates suggest that the changes in the price premium are driven by the anticipated cuts in US tariffs and are particularly pronounced among producers exhibiting better performance in the initial period. Y1 - 2012 UR - https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8926 ET - DP8926 ER -