Entrepreneurship Training and Founders’ Perceptions of Ability: A Randomized Control Trial with Entrepreneurs in Tanzania

This paper studies the effects of training entrepreneurs in low-income countries to apply different approaches to strategic decision-making under uncertainty on their subjective perceptions of ability to cope with different challenges that can affect the development of new ventures. While entrepreneurs in these settings operate under extreme uncertainty and resource constraints, interventions to help them cope with those challenges are largely limited to short courses on basic business skills. Conversely, we use a field experiment with entrepreneurs in three regions of Tanzania to show that strategy-based training has important effects on their perceived ability to cope with different sources of uncertainty that can hinder the development of new ventures. Our findings suggest that training entrepreneurs in low-income countries to apply a theory-based approach to strategic decision-making increases their perceived ability to deal with uncertainty stemming from the development of a viable business model, and that this can have positive implications for business outcomes. We elaborate on the mechanisms behind these results and discuss the implications for current and future research.