1. Monitoring in Small Firms: Experimental Evidence from Kenyan Public Transit.
- Author
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Kelley, Erin M., Lane, Gregory, and Schönholzer, David
- Subjects
SMALL business ,PUBLIC transit ,MORAL hazard ,MOBILE apps ,MINIBUSES - Abstract
Small firms struggle to grow beyond a few employees. We introduce monitoring devices into commuter minibuses in Kenya and randomize which minibus owners have access to the data using a novel mobile app. We find that treated vehicle owners modify the terms of the contract to induce higher effort and lower risk taking from their drivers. This reduces firm costs and increases firm profitability. There is suggestive evidence that some firms expand. These results suggest that small firms may be able to utilize monitoring technologies to overcome problems of moral hazard and enhance their profitability. (JEL D22, D24, D82, J41, L25, L92, O14) [ABSTRACT FROM AUTHOR]
- Published
- 2024
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