Mitigating Market Frictions by Monitoring Employees in small and medium-sized enterprises (SMEs)

A Field Experiment in Kenya's Public Transport Sector

From:
Foreign, Commonwealth & Development Office
Published
1 January 2015
Country:
Kenya
Document Type:
Research Paper
Theme:
Economic Growth
First published:
1 September 2018
Authors:
Sch枚nholzer, D., Kelley, E., Lane, G. and Wagacha, P

Abstract

This 2018 study provides firms a new technology that delivers real-time information to the owner of the vehicle about the driver鈥檚 productivity and safety. They find that owners use this information to change their management of drivers and re-optimize their contracts. Drivers respond to these changes by increasing their labour supply by twelve percent and taking better care of the vehicle. Overall, these changes lead to an increase in firm profitability and stimulate firm growth, thereby suggesting that improved monitoring technologies can help overcome important frictions faced by firms in developing countries.

The 2015 paper develops and tests a fleet management system for Kenya鈥檚 semi-formal public transport system. The pilot study shows that firms with this system are more easily able to track their employees鈥� productivity and safety performance, which allows owners to incentivize better driving behavior.

This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme

Citation

  • Schoenholzer, D., Kelley, E., Lane, G., and Wagacha, P. (2018) Mitigating Market Frictions by Monitoring Employees in SMEs: A Field Experiment in Kenya鈥檚 Public Transport Secto鈥�, PEDL

  • Sch枚nholzer, D.; Kelley, E.; Lane, G.; Waiganjo Wagacha, P. Mitigating Market Frictions by Monitoring Employees in SMEs: A Field Experiment in Kenya鈥檚 Public Transport Sector. CEPR, London, UK (2015) 3 pp.

Updates to this page

Published 1 January 2015
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