The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

Using a randomized evaluation with 432 Mexican small and medium enterprises, we show that access to management consulting had positive effects on total factor productivity and return-on-assets (about 0.2 standard deviations, relative to the control group). Owners also had significant increase in “entrepreneurial spirit” (an index that measures entrepreneurial confidence and goal setting). Using Mexican social security data, we find a persistent large increase (about 50%) in the number of employees and total wage bill even five years after the program. We document large heterogeneity in the specific managerial practices that improved as a result of the consulting, but the three most prominent areas are marketing, financial accounting, and long-term business planning.