Group vs. individual livelihoods: Can the graduation model help mitigate information asymmetries that hinder group enterprise development?

This graduation intervention has four key components that are delivered to each treatment arm over a 12-month period and integrated with International Care Ministries’ core program, Transform: 1) 15 livelihood lessons on how to start and maintain businesses appropriate to the local context. Each lesson also has an additional hour of health and values training, that are part of ICM’s regular programing; 2) a cash grant, conditional on meeting attendance requirements and submitting a business proposal form; 3) 8 monthly coaching sessions after the cash grants are disbursed, that provide continued mentorship to businesses, outside the lessons; 4) VSLA-type savings groups.

2024-04-01

2025-01-31

This RCT is primarily focused on household welfare outcomes and individual psycho-social outcomes, which will be measured through the in-person follow-up survey that is the focus of this proposal. Key outcomes at the household level include monthly income, monthly consumption per capita, savings and borrowing, productive assets, labor, and food security. At an individual level we will measure subjective well-being, life satisfaction, subjective socio-economic status, community engagement and trust, and risk preferences. These will be combined with intermediary outcomes from a business health survey and monitoring data, including proportion of participants that elect to set up a group business, business survival, revenue growth, profitability, and indicators of business group dynamics including decision-making processes, division of labor and specialization within teams, profit-sharing, and collaboration among group members.

See the attached protocol.

To address the research questions, the intervention will be evaluated through a cluster randomized trial (N = 6,075 participants in 405 communities) with the following arms:
Control: Participants will not receive any intervention.
T1: Small grant with group businesses required - The grant is disbursed in two installments. The first PHP6,000 is shared by a group of 3, upon submitting a business proposal for a joint business. The second PHP3,000 installment is disbursed 6 months later, given that the first transfer was invested in a joint business and the business survived.
T2: Large grant for individual businesses - PHP11,000 disbursed upfront, upon submitting a business proposal for an individual business.
T3: Large grant with group businesses encouraged - PHP11,000 disbursed upfront, per individual, upon submitting an individual or group business proposal. Participants will be encouraged by the trainers —but not required—to form a joint enterprise. If participants choose to form a group business, their group can include up to three people.
The treatment will be assigned at the community level, so all participating households in a community will receive the same treatment.
In both the group arms (T1, T3), the lessons will additionally discuss the economies of scale that can be achieved by pooling their grants together and the advantages of partnering with individuals with varied skill sets. They will also receive supporting documentation on the challenges and advantages of working in groups and managing group dynamics. All businesses (group or individual) will be required to submit a business plan to receive the cash grant, including details like required investment, product pricing, and marketing plan. Group businesses will additionally need to submit a partnership agreement that outlines the responsibilities each group member will take on, the amount each will invest, and the profit-sharing agreement. These aspects of the intervention are designed to overcome barriers participants may face in setting up equity-sharing group businesses.
The variation in individual and group businesses in T2 and T3 allows us to assess whether the graduation model can successfully support participants in setting up larger, jointly–owned enterprises. We also vary the grant amounts between T1 and other arms to test whether there are increasing returns to investment when participants have access to larger grants.

Randomization is done by computer with R software.

Barangay (Philippines' municipality)

Yes

405 communities

N = 6,075 participants in 405 communities

1,215 participants in 81 communities in each of the 3 treatment arms, and 2,430 in 162 communities in the control group.

Given standard assumptions of power set to 0.8, statistical significance of 0.05, intra-cluster correlation of 0.07, take up/compliance rate of 93% and a variance of 1, our study is powered to detect a minimum detectable effect size of 0.14 standard deviations when comparing each treatment arm to the control, and 0.16 standard deviations when comparing the group-encouraged business treatment arm to the individual business treatment arm.