Intervention(s)
We conduct an RCT to evaluate the impact of a large-scale business support program, the Enterprise Grow Program, implemented by the Government of Ghana through the Ghana Enterprises Agency (GEA) in partnership with the World Bank. In the RCT, 1,000 small enterprises (sized 6-30 employees) are randomly assigned to receive large grants of variable size (estimated mean: $10,000) and/or group-based managerial consulting (Iacovone, Maloney & McKenzie, 2022), group-based peer learning, and control conditions. Using this research design, we identify the causal effect of the program’s interventions and explore the underlying mechanisms of the effectiveness of group consulting and complementarities with grants in a scalable setting. Peer learning can be a cheaper alternative to group consulting and of policy relevance. We also examine heterogeneity in the marginal returns to capital, managerial group consulting, and peer networks/learning across small firms. With this, we can provide policy-relevant evidence on how these types of business support services could be targeted by firm type.
In a related prediction survey experiment (AEA’s RCT registry (AEARCTR-0013786)), we leverage this RCT to examine the ability of entrepreneurs’ business networks – their peers, suppliers, and customers – to predict entrepreneurs’ marginal returns to the program’s interventions and their future business performance in the short to longer term. By combining these experiments, we can obtain unbiased estimates of the marginal returns to these interventions across the distribution of predicted returns, allowing us to test the accuracy of marginal return predictions, and to measure the predictive power of information gathered about entrepreneurs’ absolute and relative performance.
This RCT includes firms from the GEA’s four calls for applications rolled out over two years. The program aims to use a rigorous screening process to target “high-growth potential” small and medium-sized enterprises (SMEs) – SMEs with promising prospects of scaling up their operations through increasing sales and job creation. Our study’s sample focuses on 1,000 small firms (6-30 employees) in the program. The treatment arms are: group-based consulting only, group-based peer learning only, group-based consulting and cash grant, cash grant only and a control group.
By combining the group-based consulting treatment and the group-based peer learning treatment in the same RCT, we can evaluate their relative performance and begin to disentangle possible underlying group mechanisms at play using experimental games. Furthermore, our research design allows us to examine heterogeneity in the marginal returns to capital, managerial group consulting, and peer networks/learning across small firms along many characteristics.