Abstract:
We organized regular business meetings for randomly selected managers of young Chinese firms to study the effect of business networks on firm performance. We randomized 2,800 managers into several groups that held monthly meetings for one year, and a "no-meetings'' control group. We find that: (1) The meetings increased firm revenue by 7.8 percentage points, and also significantly increased profit, a management score, employment, and the number of business partners; (2) These effects persisted one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibited higher growth. We exploit additional interventions to document concrete channels. (4) Peers shared exogenous business-relevant information, particularly when they were not competitors, showing that the meetings facilitated learning from peers. (5) Managers created more business partnerships in the regular than in other one-time meetings, showing that the meetings improved supplier-client matching. (6) Evidence from the meeting logs connects conversations about management, partners, and access to finance with improvements in the associated domain.