Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230367
Authors: 
Shapiro, Dmitry
Year of Publication: 
2020
Series/Report no.: 
ADB Economics Working Paper Series No. 614
Abstract: 
This paper develops a theoretical framework to explain the limited effect of business development programs (BDPs) on entrepreneurs' profits. We argue that a mismatch between a BDP's narrow focus on business-promoting strategies and the wider context in which microentrepreneurs operate can limit the impact of business training. In our framework, entrepreneurs are ambiguity averse and have multiple sources of income (e.g., business and wage incomes). We show that for a sufficiently ambiguity-averse entrepreneur with multiple income sources, efficient training can result in a decline in expected profit. Notably, when the wider context (multiple income sources, ambiguity aversion) is considered, the business training impact is limited and can result in a posttraining expected profit decline. This limited impact is caused by the diversifying role that the business income plays in household finances.
Subjects: 
ambiguity aversion
business development programs
microentrepreneurship
JEL: 
D10
O12
O16
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.