Mentors or Teachers? Microenterprise Training in Kenya

Abstract

We use a randomized controlled trial to demonstrate that inexperienced female microenterprise owners in a Kenyan slum benefit from mentorship by an experienced entrepreneur in the same community. Mentorship increases profits by 20 percent on average with initially large effects that fade as matches dissolve. We conduct a formal business education intervention, which has no effect on profits despite changes in business practice. Our results demonstrate that missing information is a salient barrier to profitability, but the type of information matters: access to the localized, specific knowledge of mentors increases profit while abstract, general information from the class does not. (JEL D83, J16, L25, L26, O14, O15)