data from them, including weekly data on quality, output, and inventories. They find that adopting these management practices raised productivity by 17% in the first year through improved quality and efficiency and reduced inventory, and some evidence that within three years this led to the opening of more production plants. The results thus show that in large firms, at least, changing management practices can lead to substantial improvements in firm performance. However, they can only indirectly estimate the changes in profits from this effort.

# **6. What We Do Not Know**

There are now a range of studies which look a variety of business training programs, and examine impacts on business practices, business outcomes, and potentially outcomes for microfinance institutions. However, there are still a number of open questions that existing studies have barely touched upon, but that are important for thinking about the case for policy action to support business training.

# _Who does training help most?_

Our discussion above has touched on heterogeneity in outcomes by gender of the owner and, to some extent across studies, by firm size. Several studies have examined heterogeneity in other dimensions such as owner’s education and baseline business skill levels, business sector, and interest in training. However, the low power of most studies to find average effects for the full sample also means there is relatively little power for examining the heterogeneity of effects.

As a result, who benefits most from training (or which types of training are most suitable for which types of firms) is still an open question. On one hand, poor subsistence firms whose owners are only running the business because they cannot find a wage job may have very low business skills. This suggests that it should be relatively easy to make improvements, but perhaps the owners will be less interested or able to implement the practices taught, or perhaps these practices only start having an effect as businesses reach a larger scale. There is much talk of targeting gazelles- firms that grow rapidly – but even if characteristics to identify such firms in advance can be found, it is unclear whether these firms need the help, or would grow fast anyway. Theoretically one would like to target firms where skills are the binding constraint on growth, but there is little evidence to date to say who such firms are, especially among the smallest firms.

# _How does training help firms – and do any gains just come at the expense of other firms?_

Most studies have not explored the channels through which training has impacts on business outcomes, in part because of their lack of power in detecting an impact on profits in the first place. Does training enable firm owners to use the same inputs more efficiently (thereby reducing costs and wastage), or is the main impact through increasing marketing and sales efforts thereby increasing revenues at the same cost ratios? The policy implications will differ depending on the channels. In particular, one possibility is that gains to the treated firms come as a result of them taking customers from other firms. For example, Mano et al. (2012) note that their training encouraged participants to be proactive in getting new customers. Participants began issuing invoices and receipts with their mobile phone numbers printed on 20