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Study summary

Marketplace for business services

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Removing informational barriers and quality concerns about business service providers isn’t enough to get most SMEs to use these services.

General description

Small firms that don’t use business services are offered information about providers in their region through an online marketplace. Some of the firms are also able to assess the quality of the services offered by providers thanks to a combination of a ratings system and a comment-based review system.

Aim

  1. To increase the use of business services by reducing barriers to access
  2. To help firms to choose high-quality providers 

Implemented by

World Bank

Context

A setting where the use of business services by small firms is low (only 10 per cent use them) and most small firms lack information about the available business service providers. A centralised database of providers doesn’t exist.

Providers don’t typically offer any sort of financial guarantee for their services and rely largely on word of mouth for gaining new clients. In other words, informal reputation is used as the main way of trying to overcome information and quality concerns.

Participants

Firms with 2 to 15 workers that have been in business for at least one year and operate in one of the following sectors: light manufacturing, construction, hospitality and tourism, ICTs and entertainment. Firms’ monthly sales are on average US$2,291. Their use of business services is very low (between 3 per cent and 5 per cent use human resources, marketing or accounting professional services).

Activities

  • Marketplace: A website that contains information about the different providers offering human resources, accounting or marketing professional services for firms. The marketplace lists providers operating in the region, including their brand logos, taglines describing their services and contact information.

Tweak

Firms are shown different amounts of information about the providers:

  • A first group of firms is only shown basic information.
  • A second group gets basic information supplemented with a five-star rating system for quality.
  • A third group is provided with the five-star ratings and any negative comments about the providers.
  • A final group can access star ratings and both positive and negative comments about the providers.

A fifth group doesn’t get access to the marketplace.

Results

  • Access to the marketplace didn’t get more firms to use business services, but it increased firms’ knowledge of the providers available in the market.
  • Access to the marketplace didn’t significantly change firms’ confidence in being able to find a provider if needed.
  • Firms that were provided with information about the quality of the providers were more likely to choose higher quality ones (on average, with a rating of 0.2 to 0.4 stars higher) in their top three.
  • Quality ratings information resulted in more high-ranking providers being selected (by 7 to 11 percentage points) and fewer low-ranking providers being chosen (by 9 to 15 percentage points).

Policy implications

  • Providing quality information about service providers to firms that are potential clients can change their provider preferences.
  • However, addressing the lack of information on providers in the market and concerns about quality isn’t enough to get most SMEs to use the business service provider market.

Full study