Stefan Dimitriadis - Organizational Behavior, Harvard University

"Cooperative frames and the formation of business relationships: A field experiment with entrepreneurs in Togo"

How can entrepreneurs form more business relationships? In the context of developing markets, where market-supporting institutions are absent, building new business relationships can be very challenging for entrepreneurs. In this study, I explore an important and overlooked factor in business relationship formation between entrepreneurs the perception of prospective interactions. I argue that, in the context of developing markets, framing initial interactions cooperatively leads to the formation of more relationships among entrepreneurs and to relationships that exhibit more skill complementarity, despite the lack of market-supporting institutions. To test this theory, I conducted a randomized field experiment in Togo with 301 entrepreneurs who participated in a business training program. A random subset of these entrepreneurs were exposed to cooperative frames, which are specialized scripts that draw attention to and motivate interactions guided by the mutual exchange of help. I find that exposure to cooperative frames leads to a 50 percent increase in the number of relationships formed among entrepreneurs and that these relationships are characterized by more matching based on the complementarity of entrepreneurs’ skills. Furthermore, I find that the businesses of entrepreneurs who were exposed to cooperative frames were significantly more profitable six months after the training program, holding everything else constant. This study shows that the formation of new business relationships in developing markets also depends on the initial framing of interactions, a factor that has so far not been taken into account.