⇓ More from ICTworks

Wow! ChatGPT Business Advice Helps High-Performing Kenyan Entrepreneurs

By Guest Writer on June 20, 2024

Artificial Intelligence Kenya
In a groundbreaking study conducted by researchers from Berkeley Haas and Harvard Business School, the impact of Generative AI on entrepreneurial performance among 640 Kenyan entrepreneurs was meticulously examined.

The Uneven Impact of Generative AI on Entrepreneurial Performance delves into the nuanced effects of AI-generated advice on small business revenues and profits. The findings offer valuable insights into how AI can be leveraged to support entrepreneurs, particularly in developing economies where access to personalized business mentorship is limited.

Experiment Design and Context

The experiment involved two groups of entrepreneurs: a control group that received a standard business guide and a treatment group that had access to a GPT-4-powered AI business mentor via WhatsApp. This setup aimed to measure the tangible impact of AI advice on business performance metrics such as revenues and profits.

The choice of WhatsApp as a platform was strategic, given its widespread use in Kenya, making it an ideal medium for delivering AI-driven advice to a large and diverse group of entrepreneurs.

Overall Impact: A Tale of Two Outcomes

The study revealed a complex picture. On average, there was no significant overall impact of AI on business performance when considering the entire sample. However, this average effect masked substantial variations based on the entrepreneurs’ baseline performance levels. High-performing entrepreneurs saw notable improvements, while low-performing entrepreneurs experienced declines in performance.

  • High Performers: Entrepreneurs who were already performing well before the intervention benefited significantly from AI advice, with a reported improvement in business performance by over 15%. This subgroup was able to effectively leverage AI recommendations to enhance their business strategies and operations.
  • Low Performers: In stark contrast, entrepreneurs who were struggling before the intervention saw their performance decline by approximately 8% after receiving AI advice. This decline suggests that the AI recommendations may not have been appropriately tailored to address the complex challenges faced by these entrepreneurs.

Engagement and Interaction Patterns

Both high and low performers actively engaged with the AI mentor, indicating a strong interest and willingness to seek advice. However, the type of questions asked and the nature of the challenges faced differed significantly between the two groups.

Low performers tended to seek help on more challenging and complex tasks, which may have been beyond the AI mentor’s capacity to address effectively. This misalignment between the type of advice needed and the advice provided likely contributed to the observed negative outcomes for low-performing entrepreneurs.

How to Support Entrepreneurs

The study by Otis et al. provides a nuanced understanding of the impact of generative AI on entrepreneurial performance. While AI tools hold promise for enhancing business outcomes, especially for high performers, their effectiveness is not uniform across all groups.

Organizations supporting Kenyan entrepreneurs need to adopt a differentiated approach that considers the specific needs and challenges of different entrepreneurial segments. By doing so, they can harness the full potential of AI to drive economic growth and innovation in developing economies.

Here are some key takeaways:

1. Targeted Support at Performance Levels

The study underscores the importance of tailoring support mechanisms to the specific needs of different groups of entrepreneurs. High performers can benefit substantially from AI-driven advice, suggesting that such technologies can be an effective tool for scaling business mentorship and training. However, for low performers, more personalized and context-specific support may be necessary to address their unique challenges.

2. Understanding Task Complexity

The type of business challenges faced by entrepreneurs plays a crucial role in determining the effectiveness of AI advice. Organizations should consider integrating AI tools that can provide more nuanced and contextually relevant recommendations, particularly for complex and multifaceted business issues.

3. Enhancing AI Training and Customization

There is potential to improve the AI tools themselves by training them on data more representative of the specific contexts in which they will be used. This could involve incorporating more localized knowledge and business practices to ensure that the advice provided is practical and actionable.

4. Combining AI with Human Mentorship

For low-performing entrepreneurs, a hybrid approach that combines AI tools with human mentorship might be more effective. Human mentors can help interpret AI advice and provide the necessary context and support to implement recommendations successfully.

5. Cost-Effective Scaling of Business Training

AI tools offer a cost-effective way to scale business training and mentorship programs. The positive impact observed among high performers indicates that AI can deliver substantial benefits at a fraction of the cost of traditional mentorship programs. This makes it a viable option for broad-based entrepreneurship support initiatives.

This summary of The Uneven Impact of Generative AI on Entrepreneurial Performance was written by ChatGPT when asked to be a journalist writing for college educated readers, summarizing the study in 750 words as a journalist would for a major newspaper.

Filed Under: Economic Development
More About: , , , , ,

Written by
This Guest Post is an ICTworks community knowledge-sharing effort. We actively solicit original content and search for and re-publish quality ICT-related posts we find online. Please suggest a post (even your own) to add to our collective insight.
Stay Current with ICTworksGet Regular Updates via Email

3 Comments to “Wow! ChatGPT Business Advice Helps High-Performing Kenyan Entrepreneurs”

  1. Eva says:

    Hi Wayan, this was quite an interesting read, but I’m not quite sure how to perceive it from an ethical perspective. The study in itself is quite interesting, it’s the use of ChatGPT in Kenya I find to be challenging. Just recently , there was a widespread article on how the platform took advantage of and negatively impacted Kenyan workers during its development process, and now it’s use in the entrepreneur space is being tested on the same Kenyans? There needs to be a line of efhical accountability somewhere with the growing use of AI.

    • Isabelle Amazon-Brown says:

      This was my first reaction too, Eva, especially as I thought through the ramifications for my field of work (sexual health).

      At the same time, if research like this isn’t done in more vulnerable settings, then we will never know the impact of GenAI before harms are caused on an even wider scale. For example, similar research conducted in the West showed the opposite – that GenAI improves the performance of the ‘worst’ performers. If we didn’t have this study, or others like it, we might assume that this might also be the case in different contexts.

      In any case, I hope the researchers provided ample support for those involved in the study.

  2. Nichole says:

    Hi Eva,
    I’m a Kenyan Entrepreneur and I use Chatgpt for my work. It’s unanimous among my industry colleagues we love Chatgpt. Personally using Chatgpt I’ve been able to craft my pitch decks and proposals to investors and I’ve secured pre seed funding. Recently another Kenyan, uploaded the finance bill on to Chatgpt and broke it down for Civic Education. Keep up with world news. Word to the wise, keep Kenyans out of your mouth.#REJECTFINANCEBILL2024