This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. Forthcoming Articles
  5. Monitoring in Small Firms: Experimental Evidence from Kenyan Public Transit

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Monitoring in Small Firms: Experimental Evidence from Kenyan Public Transit

  • Erin M. Kelley
  • Gregory Lane
  • David Schönholzer
American Economic Review (Forthcoming)

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.

Downloads