Entrepreneurial Training Under Limited Property Rights: Explaining Gender Productivity Gaps

This study examines the impact of firm ownership and control rights for decisions on the incentives to invest in human capital and its productivity. We test a theory of how asset ownership and control rights govern the investments of small retail entrepreneurs in firm-specific human capital, resulting in higher productivity. Specifically, we examine the issue of productivity gaps between male and female entrepreneurs using a large-scale field experiment in Malindi, Kenya among small retail entrepreneurs. Despite similar training compliance rates as males, females are less likely to adopt proposed business practices such as book-keeping or deploying credit, and exhibit lower performance measured by both company wholesale ledgers sales as well as self-reported revenues. These findings suggest barriers for females that are beyond the mere access to training. We link the gender productivity gap to factors that may limit the ability of females to own and control their businesses. Females with sole ownership along with control rights do benefit from the training, indicating that interventions that aim to increase female ownership and control can help to close the gender productivity gap. Importantly, we show that the availability of control rights have relatively greater impact on improving performance post training as compared to ownership rights over the shop. Control rights may be even more beneficial for females with improving bargaining powers and when the outside value of working the asset is low.