How do entrepreneurs respond to benchmarking information? To investigate this question causally, we carried out a randomized controlled trial among 194 entrepreneurs operating food stalls at 17 hawker centres across Singapore from September 2019 to January 2021. Both the control and treatment entrepreneurs were informed of their own performance. Additionally, treatment entrepreneurs were informed of benchmarking information---relative performance and best practices. We find that benchmarking affects entrepreneurs through selection and improvement. The selection effect shows that compared to control, treatment were more likely to exit if informed of low relative performance and were more likely to continue in business knowing relative performance to be high. On the intensive margin, benchmarking improved supply and financial management practices, both benchmarked and non-benchmarked. We interpret the results as due to entrepreneurs learning from benchmarking to sharpen self-evaluation of ability and resolve uncertainty over the profits associated with management practices. This interpretation is supported by heterogeneity analyses.
Supporting the below United Nations Sustainable Development Goals:支持以下聯合國可持續發展目標：支持以下联合国可持续发展目标：
How do entrepreneurs respond to benchmarking information? To investigate this question causally, we carried out a randomized controlled trial among 194 entrepreneurs operating food stalls at 17 hawker centres across Singapore from September 2019 to January 2021. Both the control and treatment entrepreneurs were informed of their own performance. Additionally, treatment entrepreneurs were informed of benchmarking information---relative performance and best practices. We find that benchmarking affects entrepreneurs through selection and improvement. The selection effect shows that compared to control, treatment were more likely to exit if informed of low relative performance and were more likely to continue in business knowing relative performance to be high. On the intensive margin, benchmarking improved supply and financial management practices, both benchmarked and non-benchmarked. We interpret the results as due to entrepreneurs learning from benchmarking to sharpen self-evaluation of ability and resolve uncertainty over the profits associated with management practices. This interpretation is supported by heterogeneity analyses.
Ms. Yun Hou is a currently a Ph.D. candidate at the Department of Strategy and Policy, NUS Business School. Before joining the Ph.D. program, she got her bachelors’ and master’s from Peking University. She enjoys researching innovation and entrepreneurship.