From Advice to Advantage: Lasting Impacts of Group Consulting on Firm Performance

This World Bank–led study finds that low-cost, group-based management consulting for Colombian auto parts firms led to much higher survival, sales, profits, and exporting even a decade later, while expensive one-on-one consulting delivered weaker long-term results. The evidence shows that peer learning helped firms embed better management practices, making them more resilient to shocks and competition.

A study, produced by researchers from the World Bank’s Development Research Group in the Development Economics Vice Presidency, in collaboration with Colombia’s National Productivity Center, and with funding from the Argidius Foundation, addresses a question that has long divided policymakers and business experts: do management consulting programs create lasting change, or do their effects fade once external support ends? Using a randomized experiment and nearly ten years of administrative data, the paper provides rare long-run evidence that the design of consulting matters enormously for whether benefits endure.

How the experiment was designed

The research is based on a Colombian government program launched in the early 2010s to support small and medium firms in the auto parts industry, a sector dominated by long-established manufacturers supplying domestic and regional markets. A total of 159 firms were randomly assigned to one of three groups. One group received no consulting and served as a control. A second group received intensive individual consulting, involving hundreds of hours of one-on-one advice across production, finance, marketing, logistics, and human resources. A third group took part in a novel group-based consulting model, where consultants worked intensively with small groups of peer firms, encouraging shared learning alongside expert guidance. Importantly, the group model costs roughly one-third as much per firm as the individual model.

What happened to firms over the next decade

The long-term results strongly favor the group-based approach. Nearly a decade after the intervention, firms that received group consulting are significantly more likely to still be operating. Their survival rate is around 11–13 percentage points higher than that of comparable firms in the control group, and no additional firm exits are observed among group-treated firms in the later years of the study. This survival effect is especially strong for firms that started out with weak management practices, suggesting the program helped prevent the failure of the most vulnerable businesses.

Performance gains are equally striking. Group-treated firms record much higher sales, profits, production, and value-added than firms that did not receive consulting. Annual sales are about 50–55 percent higher, translating into more than one million US dollars in additional yearly revenue. Profits increase by close to 50 percent, and firms also employ more workers, particularly when broader measures of employment are used. Crucially, these gains do not fade over time. If anything, the estimated benefits grow larger several years after the program ended, even as firms faced the COVID-19 pandemic and stronger import competition.

Why group consulting outperformed individual consulting

The individual consulting model tells a more mixed story. While firms that received one-on-one consulting show positive trends in sales, profits, and employment, these effects are smaller and statistically uncertain. The researchers cannot clearly distinguish them from zero, nor can they rule out that they are similar to the group effects. However, given the much higher cost of individual consulting, the group-based model clearly delivers far greater value for money.

The paper suggests several reasons why the group format worked better. Peer interaction allowed firms to benchmark themselves against others, realize where they were falling behind, and learn practical solutions from similar businesses. Firms also reported that knowing others faced the same challenges made it easier to sustain difficult changes. In contrast, individual consulting lacked this social reinforcement and did not generate lasting peer networks.

Management, exports, and resilience to shocks

The study also looks at how these long-term gains were achieved. One key channel is exporting. Over time, firms in the group consulting program became more likely to export, particularly to nearby regional markets. Better management helped them shift toward higher-quality or more specialized products, making it easier to compete outside Colombia when domestic markets were under pressure.

Another crucial factor is the persistence of management improvements themselves. Years after the intervention, group-treated firms continue to use better management practices, such as performance indicators, budgeting systems, and structured production monitoring. Qualitative case studies show that these practices were embedded into daily operations rather than abandoned once consultants left. Managers repeatedly described how these tools helped them respond quickly to shocks, diversify clients, and survive periods when less organized competitors shut down.

Overall, the paper delivers a clear and policy-relevant message. Management consulting does not have to produce short-lived gains. When designed around peer learning and collective problem-solving, relatively low-cost group-based consulting can generate durable improvements in firm survival, productivity, and growth, even in highly competitive and volatile environments.