Up Next

Market-Based Solutions to Vital Economic Issues


Kenan Institute 2024 Grand Challenge: Business Resilience
Market-Based Solutions to Vital Economic Issues
Apr 6, 2023

Does a Theory-of-Value Add Value? Evidence from a Randomized Control Trial with Tanzanian Entrepreneurs


Entrepreneurs making decisions under uncertainty are encouraged to evaluate their initial ideas through hypothesis testing, but entrepreneurial approaches vary in their emphasis on ex-ante theory development prior to collecting evidence. In this paper, we examine whether and how entrepreneurs benefit from adopting an evidence-based approach or a theory-and-evidence-based approach to decision-making. We conducted a field experiment with Tanzanian agribusiness entrepreneurs by randomly assigning entrepreneurs to two different training conditions. We find that entrepreneurs in the theory-and-evidence-based condition have higher revenue and profits during the observation period following the intervention. Such higher performance metrics stem from differences in the types of changes enacted: entrepreneurs in the theory-and-evidence-based training make more coordinated changes that encompass both core and operational elements of their business models.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.  

View Working Paper

You may also be interested in: