Impact evaluation of an entrepreneurship program (cash and training) and of remote discussion groups for micro business owners.

Last registered on January 02, 2024

Pre-Trial

Trial Information

General Information

Title
Impact evaluation of an entrepreneurship program (cash and training) and of remote discussion groups for micro business owners.
RCT ID
AEARCTR-0012751
Initial registration date
December 22, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 02, 2024, 10:56 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Primary Investigator

Affiliation
Sciences Po

Other Primary Investigator(s)

PI Affiliation
Paris School of Economics
PI Affiliation
World Bank
PI Affiliation
Sciences Po

Additional Trial Information

Status
On going
Start date
2022-06-13
End date
2024-05-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Programs targeted at relaxing financial constraints of small and medium enterprises (SMEs) or at enhancing their business practices have shown strong potential for increasing firm growth and employment (de Mel et al. 2008, McKenzie and Woodruff 2008, or Bloom et al. 2013 among others). These programs are thought to foster inclusive growth through their immediate impact on the businesses they target. While impact evaluations of these programs show a positive impact on the firms that are part of the program, these measured effects may happen at the expense of other firms (Cai and Szeidl 2022). This can happen if, for example, these firms compete for the same customers or the same labor force. If so, the welfare implications—the overall economic impact in terms of revenue or employment—of such programs are ambiguous. If firms in the program benefit at the expense of other firms, then total growth generated depends on the relative growth potential of firms in the intervention’s selected group, compared to the firms they are taking resources away from. The program improves welfare only in cases where the firms supported by the intervention generate higher growth than the counterfactual firms who would have gotten these resources had the program not been implemented. Welfare implications are less clear when the firms supported by the program are low-growth-potential firms and capture resources away from high-growth-potential firms.
This project aims at measuring two key aspects that will help address welfare implications of such a program. First, through a clustered randomization design, we will be able to measure whether a grant-awarding program benefits firms at the expense of other similar and geographically close firms. The grant treatment comes packaged with a training treatment but, as we expect the grant to drive most of the effect of the grant and training treatment, the latter is simply referred to as “the grant” in the remainder of this document. The second aspect of this project is a business connectivity intervention similar to Cai and Szeidl 2016, where entrepreneurs are invited to meet weekly over a call in a focus group setting (5 to 6 entrepreneurs per group and 1 moderator to facilitate the discussion) and exchange on business-related issues, and share potential ideas. Allowing firms to communicate with one another might alleviate the information frictions they are facing and attenuate the negative externalities of a grant-awarding program. This project will allow us to measure what is the effect of relaxing these frictions, but also, thanks to a cross-randomization of the grant and the business connectivity intervention, we will be able to understand how solving information frictions interacts with relaxing financial constraints, and in particular whether this combination changes the welfare implications.
This project will, therefore, help answer the following key questions:
1. Do interventions financially supporting small firms help create net jobs, generate negative spillover, and/or improve overall welfare?
2. Can small firms benefit from an exchange of business-related information with other fellow entrepreneurs?
3. Does connecting small firms to one another improve the overall economic effect of financially supporting small firms?

This project is part of a World Bank funded project implemented in Liberia called REALISE (Recovery of Economic Activity for Liberian Informal Sector Employment Project). In collaboration with the Liberian government, the research team is evaluating the first component of this project.
External Link(s)

Registration Citation

Citation
Agarwal, Anubhav et al. 2024. "Impact evaluation of an entrepreneurship program (cash and training) and of remote discussion groups for micro business owners.." AEA RCT Registry. January 02. https://doi.org/10.1257/rct.12751-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-09-04
Intervention End Date
2023-08-31

Primary Outcomes

Primary Outcomes (end points)

Business Ownership and Practices:
Business ownership (last 5 years and current): measures the number of businesses owned by individuals in the past five years and their current ownership status, providing insights into entrepreneurial activity and continuity.
Business practices for the main business: measures informality and adherence to good-business practices, including planning, accounting, and bookkeeping, reflecting business organizational capacity.
Supporting activities for businesses: measures engagement in activities such as visiting competitors, interviewing clients, and talking with suppliers, indicating proactive business development efforts.
innovation: measures changes in habitual practices over the last 2 years: changes in the products sold / services offered; changes in marketing techniques; changes in processes, changes in geographical market.

Employment Inputs/Outputs:

Number of hours worked: captured in total, waged employment and self-employment, as well as hours spent on unpaid activities. Provides insights into individuals' labor input and the balance between paid and unpaid work.
Weekly earnings from all activities and earnings per hour worked: captured in total, waged employment and self-employment. Indicates individuals' income generation and productivity in different employment types.
Business size and financials: captures number of employees or workers, revenue, costs (labor and non-labor), and profits. Provides an overview of the size, financial performance and profitability of businesses.

Household Welfare:

Per capita household income: measures household welfare as per capita household income (where household income is self reported) in a given period.
Food insecurity: measures household welfare through indicators on food insecurity.

Assets Ownership:

Assets owned and used for business purposes: assesses the ownership and number of assets contributing to business and personal activities.
Expenditure on assets used for business and assets purchased in the last year: reflects investment in business-related assets and their recent acquisition.
Types and expenditures of assets used for business: captures digital, transportation, and equipment assets. Provides insights into the variety and costs of assets utilized in business operations.

Digital Literacy and Uses:

Ownership and use of phones for business: assesses the utilization of mobile phones for various income-generating purposes, such as mobile money transactions, data and call transfers, and local commercial calls.

Individual Finances:

Ownership and usage of bank accounts and mobile money: indicates the extent to which individuals utilize formal banking services and mobile money platforms for financial transactions.
Total amount of savings and enrollment in informal savings schemes (SUSU): reflects individuals' savings behavior and their participation in informal savings groups, including borrowing and contribution activities to such groups.

Women Empowerment Indicators:
Relevance of respondent’s input on household decisions regarding own economic activity, spending, child care.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Business Ownership and Practices:

Self-employment motivations and prospect of business opening: captures individuals' motivations for self-employment and their likelihood of starting their own businesses in the future, shedding light on entrepreneurial intentions.
Business challenges: examines obstacles faced by businesses, such as limited access to finance, licensing and permits, and political instability, affecting their growth and sustainability.

Digital Literacy and Uses:

Ownership and use of smartphones, including participation in social media platforms: indicates the engagement in popular social media platforms for communication and networking.
Engagement on social media platforms by type: measures the extent of involvement in social media platforms and the purposes served, such as business promotion, education, and community engagement.
Promotion of businesses through online advertisements: assesses the use of online advertising channels to promote and expand businesses, and reach potential customers.

Individual Finances:

Formal and informal loans taken (number and value) and total value of debt: measures individuals' borrowing behavior for personal and business purposes, and their debt levels related to personal activities.

Behavioral Indicators:

Behavioral risk measures: assesses individuals' risk-taking behavior and decision-making in investment-related scenarios.
Behavioral self-esteem measures: captures individuals' self-perception on causes of life and employment outcomes or behaviors.
Response to shocks: measures individuals' coping mechanisms in response to unexpected financial challenges or shocks (e.g., selling assets or belongings to pay for living expenses).

Network Variables:
Number of friends, number of friends whom the respondent asks for business advice, number of people outside of friends’ circle whom the respondent seeks for business advice.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The COVID-19 pandemic posed a major threat to the Liberian economy and its people, in particular urban informal non-farming firms, which saw large revenue losses, with the risk of closing due to limited access to formal credit. The World Bank-financed Recovery of Economic Activity for Liberian Informal Sector Employment (REALISE) Project aims to increase access to income earning opportunities for the vulnerable in the informal sector in response to the COVID-19 crisis in Liberia. Under the Project, the Small Business Support (SSB) program targets up to 4,000 households operating Non-Farming Enterprises (NFEs) in urban areas, with a specific focus on Greater Monrovia in Montserrado County. These businesses, typically engaged in the informal sector, often face difficulties in sustaining their economic activities and overcoming the impact of shocks. The SSB program aims to address these challenges by offering grants, training and the piloting of an add-on business connectivity intervention to support existing businesses and establish new businesses.

The program employs a geographical targeting method to select project communities based on factors such as poverty status, access to basic services, population density, living conditions (e.g., slum communities), and proximity to major commercial areas. The selection process utilizes national census data and consultations to identify eligible communities, ensuring an inclusive approach. Overall, the SSB program is implemented in 20 community clusters within the Greater Monrovia area. An on-demand targeting mechanism is then utilized within each community cluster, providing interested individuals the opportunity to participate in the recruitment process. Both community-based and individual-based targeting processes are led by the Liberia Agency for Community Empowerment (LACE), with support from the Ministry of Youth and Sports (MYS), other stakeholders and partners.

Beneficiaries selected for the SSB program gain access to business grants to revive or initiate new businesses. The grants, disbursed through mobile money accounts, are intended for investment in inputs, productive assets, and other essential business expenses. The first tranche of the grant amounts to US$600, and the second tranche, totaling US$300, is disbursed upon justifying the utilization of the initial tranche for business investments. To enhance business management skills and practices of vulnerable households operating NFEs, the SSB program offers comprehensive training. Beneficiaries with existing businesses participate in a 5-day Business Management and Financial Literacy training, while those establishing new businesses undergo a 15-day training program. These sessions are designed to develop effective business plans, improve record-keeping capabilities, promote savings practices, and enhance customer service skills. Moreover, the training curriculum includes personal initiative and growth mind-set sessions, leveraging role models, and cost-effective coaching/mentoring involving peers from the local community. Beneficiaries also benefited from enrollment in the National ID Registry (NIR) and received National Identification Numbers (NIN) and NIR ID cards, which facilitate their registration for Mobile Money accounts. In conclusion, upon successful completion of the subproject activities, beneficiaries will receive a certificate of participation issued by the Liberia Agency for Community Empowerment (LACE).

The focus of this study is the first round of SSB implementation, which focuses on supporting existing businesses, targeting 1,200 beneficiaries from 15 selected community clusters in Greater Monrovia. The targeting process for Round 1 involves identifying one representative from each household to participate in the program. Individuals representing the households must be at least 18 years old and willing to engage in all program activities. They must reside in a participating community and should not be enrolled in any social assistance program similar to the benefits provided by the REALISE project. Furthermore, they, nor a member of their household, must not hold public office or have any form of employment with a monthly income exceeding US$250. In addition, eligibility requires prior experience in operating a small business before March 30, 2021. To promote gender inclusion and ensure female participation, the representative of the household must be female for at least 50 percent of the households selected.

In addition to the grant, a random selection of applicants (beneficiaries or non-beneficiaries) within participating communities takes part in a Business Connectivity Intervention (BCI). The purpose of the BCI is to improve business outcomes by addressing information frictions that small firms face through a low-cost information sharing activity. In particular, BCI takes place at the community level. Randomly selected participants from 8 different (also randomly selected) communities are invited to an in-person meeting at a convenient location within their community where they are split into groups of about 5 members each. Transportation and food expenses are paid for. Each group, under the guidance of a moderator who asks questions and encourages participants to share information, meets for an hour to discuss business challenges. The group continues to meet in the presence of the same moderator once per week over the five following weeks, but this time through a conference call. Discussion topics include sales strategies and business growth amongst others. Finally, participants who attend all the sessions are awarded with an incentive of USD 1 in the form of mobile money.
Experimental Design Details
Not available
Randomization Method
- Randomization of the entrepreneurship grants
The subjects of the study are eligible applicants to the SSB program running a business in one of six selected sectors, from 49 communities grouped into 15 macro-communities. The survey sample was built based on the outcomes of the randomization: for this reason we will first describe the randomization of the SSB intervention and, afterwards, the sampling of the research subjects.
The intervention was targeted to poor and ultra-poor business owners in select communities in urban Monrovia whose businesses were affected by Covid-19. 39 communities (grouped into 15 macro-communities) were selected by the Liberian government based on a qualitative assessment of poverty and deprivation indicators, as well as proximity to five large street markets. Business owners from those communities were invited to register in order to apply for the intervention. Applications were screened based on several criteria (most notably a proxy means test based on 11 questions; having operated a business around the time of onset of the Covid-19 pandemics; residing in one of the target communities). This led to a total number of 6,446eligible applicants from 138 markets, with markets defined as “large sector X sub-community” or “small sector X macro-community”. This distinction was made based on market distribution and the assumption that competition would be more localized in larger sectors, while for smaller sectors the competition across businesses would probably span several neighboring subcommunities.
The first stage of randomization consisted in selecting the markets for the intervention, based on the number of eligible applicants. Half of the markets were assigned to treatment and half to control, with randomization stratified by sector and, among larger sectors, by macro-community. In other words: (1) for each of the four small sectors, half of the 15 markets in that sector were treated while the other half were not; (2) for each sub-community, only one of the two large sectors was treated while the other served as control; (3) in each macro-community, half of the sub-communities were assigned one large sector, and half the other; (4) in each macro-community, two small sectors were treated and two small sectors were controls.
Once treated markets were selected, invitations to participate in the lottery were randomized so to achieve a number of 170 invitees per community.

The list of lottery invitees was further validated by community oversight committees and the final list of those paying this scrutiny was then publicized in each macro-community, with invitation to attend the lottery on a given day.
Then, on lottery day, participants would take part in the lottery in each of the 15 macro-communities. From each macro-community, about 80 winners would be drawn, stratified by market. Market stratification was obtained by creating different urns for each market and calculating the number of slots per market proportionally, following the Hare-Niemeyer method. It has to be noted that difficulties in oversight of the lotteries created some minor errors in this part of the process, implying a deviation from full proportionality. These errors are operational and we don't expect them to be correlated with business characteristics. Furthermore, we have identified these errors and will carry robustness checks to make sure results are not led by these errors.

- Randomization of the business connectivity treatment
Several rounds of pilot were run before conducting the final intervention. A few restrictions were imposed before choosing the final rollout sample. All participants who had been offered treatment in the pilot phase were removed from the sample. Furthermore, the Peace Island Community was excluded as a pilot had already been conducted over there. Finally, it was decided to limit the sample to the two largest sectors of activity: “Trades and Retail of Foods and Drinks” and “Clothing and Shoes”. Randomization was then performed in two steps. In the first step, 6 out of the 14 communities (the 15 communities minus Peace Island) were randomly selected. In the second step, 50 individuals from each community were randomly selected, stratifying on business revenue (below vs. above median), lottery winning status and sector of activity. Participants who showed up on the day of the in-person meeting were randomly assigned to 6 different groups, and each group was assigned a moderator. Groups met with their initially assigned group for 5 more meetings over conference call.
An overall turn-out of 153 out of 300 was recorded in the in-person meetings across the 6 communities with some attrition over the course of the intervention. The turn-out was 47 short of our target of 200, the number required to capture a statistically significant effect as per our power calculations. This mainly happened because of misunderstanding in two communities. It was therefore decided to conduct a second phase of the final rollout by randomizing two more communities, and randomly selecting 70 participants in each community following the same process. 30 participants from each community turned up at the in-person meeting, again with some attrition over the course of the intervention. The total number of treated individuals (who actually took up the BCI treatment) therefore stood at 213.
Randomization Unit
1. For the SSB grant + training intervention:
First stage of randomization: markets were the randomization unit for the market treatment.
Second stage of randomization (invitation to lottery), and third stage (lottery in person): individuals are the units of randomization.

2. Business connectivity intervention
Randomization units were individuals; however, randomized individuals were clustered in groups of 6 to 8 people.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
SSB: 138 markets.
Sample size: planned number of observations
SSB: 3,000 individual grant applicants at baseline.
Sample size (or number of clusters) by treatment arms
SSB (only among survey respondents)

Treated markets (69):
> Lottery winners: 1,036
> Lottery losers (participants): 758
> Lottery invitees, not attending: 304
> Lottery non-invited from 69 treated markets: 26

Control markets (69):
> 913 respondents
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Health Media Lab
IRB Approval Date
2022-06-06
IRB Approval Number
2054
Analysis Plan

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information