A Cautionary Tale : An Experiment on The Stability of Business Environment Perceptions in a Firm Survey

• Published in: Policy File 2021
• Main Authors: Islam, Asif Mohammed, Rodriguez Meza, Jorge Luis
• Format: Report
• Language: English
• Subjects: Business; The World Bank

Several studies in the literature have adopted attitude or perception-based survey questions to evaluate the business environment and its effect on firms. The Enterprise Surveys of the World Bank are not an exception. In the case of the Enterprise Surveys, these questions involve rating an element of the business environment at the end of each section of the survey instrument. Such questions are often used but sometimes are inconsistent with responses elicited on the experience of the firm over a specific timeframee-based questions. The literature is mixed as to whether perception-based questions are susceptible to anchoring or context effects. In this study, an experiment is set up to explore whether perceptions of the business environment are stable or vulnerable to the ordering of questions in the Enterprise Surveys questionnaire. The experiment entails randomizing the placement order of the perception-based questions at the end of a section or at the beginning of the survey. Significant question-order effects are uncovered only for perceptions of corruption and business licensing and permits but not the other elements, after accounting for a variety of factors. The study recommends that analysis in these two areas should go beyond perception-based questions and verify their findings with experience-based questions.