establish if managerial capital is a limiting factor in the growth of enterprises. But at the same time, we can only find a positive answer if this knowledge can be conveyed via a consulting intervention in the first place. It could be that managerial capital is indeed a hindrance to growth, but it might not be possible to transfer this knowledge by simply providing consulting services. Therefore, failure to find a result here would not prove that managerial capital does not matter, but may simply mean that this program was not effective in the transmission of managerial skills (or that managerial skills are innate skills and simply not teachable). However, this exercise provides a lower bound on the potential impact of improvements in managerial capital, given the limitation of the efficacy of this particular intervention to actually improve managerial capital. We set up a randomized control trial in Puebla, Mexico, where 432 micro, small, and medium sized enterprises applied to receive subsidized consulting services, and 150 out of the 432 were randomly chosen to receive the treatment. The remaining 282 enterprises served as a control group that did not receive any subsidized consulting services. Treatment enterprises were matched with one of nine local consulting firms based on the specialized services they needed. Enterprises met with their consultants for four hours per week over a one year period. The enterprise owner and consulting firm decided jointly on the focus and scope of the consulting services based on a first daylong diagnostic consultation between the enterprise and the consulting firm.

We measure impacts on the firms and the owners/managers in two different ways: (1) we administer a self-reported baseline and a one-year follow-up survey, and (2) we obtain confidential government data on employment levels and total wages for the firms in our treatment and control groups using five years of annual data (two years prior to three years after the intervention) from the Mexican Social Security Institute (IMSS). We find that the consulting intervention had a positive shortrun impact on the productivity of the enterprises in the treatment group in the one-year follow-up. Productivity and return on assets (ROA) both increased by one fifth of a standard deviation, compared to the control group. But we do not find an impact on sales, profits, or the number of workers employed within the first year. This is consistent with the idea that the impact of improved managerial skills is heterogeneous with respect to concrete channels through which the firms improved: for some, the impact may have been to increase revenues, for others to lower costs, for others to shed unproductive assets. No single channel dominated the sample to be statistically significant, but the comprehensive measures of productivity and ROA show positive short-run impacts within the first year.

In the longer run, the administrative data, collected from the Mexican Social Security Institute (IMSS), reveals important impacts on employment, with a 44% higher number of employees, and a 57% higher total wage bill. The point estimates of the positive treatment effects are quite large but we 3