Differentiation in Microenterprise: A Field Experiment in Zimbabwe

Natalie Carlson, Management, The Wharton School

Abstract: In explaining variation in productivity in microenterprise, research has focused primarily on the adoption of effective business practices and access to capital, with little focus on strategic positioning. In archival evidence, we find that offering a differentiated product or service is strongly correlated with firm performance. Using a combined sample of nearly 10,000 microenterprises across eight developing countries, we estimated that a standard deviation increase in differentiation is associated with approximately an 11 percent increase in revenues and an eight percent increase in profit, relative to the sample mean (Carlson, 2022). Given these findings, in this project we seek to test this relationship causally. With the partnership of a training organization in Zimbabwe, RBCT, we plan to implement a version of the ILO’s “Generate Your Business Idea” (GYBI) / “Start Your Business” (SYB) program for aspiring entrepreneurs that focuses specifically on differentiation and nudges business owners to stake out a differentiated market position. This program will serve as the treatment, while the standard curriculum will function as the control. We aim to enroll 500 participants across the country with RBCT’s assistance. We have also enlisted a local consulting firm, NEDICO, to help implement the study and seek local approvals.