Which Businesses Enroll in Innovation Training? Evidence from a Field Experiment

Working Paper Forthcoming

(with Pasclale Crama, Reddi Kotha, Cintia Kulzer Sacilotto and Vish Krishnan)

We report results from a field experiment testing hypotheses that examine what drives firms to seek new learning opportunities. Specifically, we draw on behavioral theory of the firm to predict how prior performance affects the likelihood a firm enrolls in business training. We also evaluate cognitive mechanisms connecting recruitment messaging and CEO growth orientation to firm participation. Our study randomly allocates over 10,000 firms to one of three experimental conditions—prevention, promotion, and neutral messaging—that vary the framing of a recruitment message for an innovation program for small and medium enterprises (SMEs) in Singapore. We leverage pre-treatment heterogeneity in firm performance and CEO orientation to better understand the differential impact of the three message types. We find that businesses with declining performance are 64% more likely to register than those with performance improving year over year. In addition, we find mixed evidence of a congruence effect—where messages (i.e., promotion) resonate more with CEOs with matching orientations. Surprisingly, we find that the neutral messaging performs 46% better than the promotion message and 115% better than the prevention message in spurring enrollment. Our work sheds light on both the frictions and remedies for scaling up the diffusion of new knowledge to businesses. Specifically, we find that subtle differences in recruitment strategy affect who enrolls and the overall demand for business training. Overall, our findings suggest that targeted firm performance-heterogeneity and the varied experimental recruitment efforts significantly affect enrolment. Researchers must pay careful attention to  selection in attempting to understand who benefits from the training.