Differences in managerial quality appear to be critical to explaining productivity differences across firms, with poorly managed firms potentially unable to take advantage of opportunities for high growth. The question this study seeks to address is how to bridge the management gap among small and medium enterprises (SMEs). This study aims to experimentally test the impact of two different interventions to improve management and productivity among SMEs in the Colombian auto-parts manufacturing sector. 

Policy Issue 

Differences in managerial quality appear to be critical to explaining productivity differences across firms, with poorly managed firms potentially unable to take advantage of opportunities for high growth. The question this study seeks to address is how to bridge the management gap among Small and Medium Enterprises (SMEs). This study aims to experimentally test the impact of two different interventions to improve management and productivity among SMEs in the Colombian auto-parts manufacturing sector. 

Context of the Evaluation 
Colombia’s manufacturing sector accounted for 13 percent of GDP in 2014, making it an important source of jobs and income for millions of Colombians. Auto parts manufacturing, in particular, represents a strategic industry, given the country’s growing middle class and automotive market—which as of 2012 was South America’s third largest. Small and medium size auto parts manufacturers supply the local operations of global carmakers, such as Renault and General Motors. According to a survey conducted in 2013, however, Colombian manufacturers exhibited managerial capabilities comparable to lower-middle income countries, ranking between India and Kenya. This begs the question of whether poor managerial capacity has become a constraint for Colombian SMEs.
 
For this evaluation, the government of Colombia selected 159 small and medium-size auto parts firms to test whether poor management impeded SME growth, and whether management consulting could help overcome this challenge. A previous study in India had shown that providing management consulting services to textile firms had raised productivity by 17 percent in the first year. The Government of Colombia is interested in learning if such an intervention would work on a larger scale, and whether a more cost-effective approach than individualized consulting could be developed.
Details of the Intervention 

This evaluation is measuring the impact of two approaches, with 159 small and medium-sized auto parts manufacturers. In the first phase, a team of six consultants (five area specialists, and one team leader) conducted a detailed diagnostic of five different areas (Logistics, Human Resources, Finance, Marketing and Sales, and Production) at all firms in the sample. Then, some firms were randomly selected to receive individualized consulting, group consulting, or to the control group. The group consulting approach aims to provide consulting services at lower cost, by leveraging group-learning dynamics. If successful, the approach used here is expected to be scaled up by the Government of Colombia, and will serve as a model for other middle-income countries seeking to improve firm productivity.

Results and Policy Lessons 

Project ongoing. Results forthcoming.