Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary A randomized trial was conducted in urban Ghana in which tailoring microenterprises received advice from an international consulting firm, cash, both, or neither. A brief description of the project's goals and its current state Abstract <p>A randomized trial was conducted in urban Ghana in which tailoring microenterprises received advice from an international consulting firm, cash, both, or neither. The study was designed with a hypothesis that large infusions of financial and managerial capital could be transformative. It was found that all three treatments led to their immediate intended effects: changed business practices and increased investment. However, no treatment led to higherprofits on average, and certainly not to the large effects hypothesized. In fact, each treatmentat some point led to lower profits. Then, in the long run, microentrepreneurs in either consulting treatment group reverted back to their prior business practices, and microentrepreneurs in the cash treatment group reverted back to their prior scale of operations.</p> The full abstract of the study, if available Links https://doi.org/10.1016/j.jebo.2015.04.005 Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question Does providing urban microenterprises with capital, consulting services or both can help relax constraints and facilitate growth for microentrepreneurial tailors? Sample Trial population and sample selection The 160 study participants were randomly selected from an enumeration in eight neighborhoods in/around Accra of all tailors and seamstresses with five or fewer total employees and apprentices. Thirty five percent of participants had zero employees or apprentices, and 94% had three or fewer employees or apprentices. The eight neighborhoods were chosen because they had enough tailors to form the sample frame, and thus it was not overly costly for consultants and surveyors to visit multiple participants in a day. If two tailors were immediate neighbors, one was randomly chosen to be in the enumeration, to limit the chance the consulting lessons would be overheard by control group tailors. The density of the firms within each neighborhood varied. Number of treatment groups Size of treatment groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description Firms are offered different combinations of support in the form of one-on-one consulting, cash grant or both. A fourth group doesn’t receive any training. One-on-one consulting: Over a year, firms receive an average of 10 hours of business consulting from a major international consulting provider. Each firm is visited at least once per month, with each visit lasting from 30 minutes to 1 hour. The consulting is interactive, tailored to the firm needs and combines one-on-one training with collaborative work between the consultant and the owner to develop specific ideas for improving the business. The training combines rule-of-thumb lessons with more complex modules. It starts with a foundational lesson on record-keeping, which can be complemented with lessons on customer service, employee management, preparing cash flow statements and financial education. The consultants received a two-day training on microenterprise coaching before engaging with the firms. Cash grant: Firms receive a non-repayable grant of approximately US$133, which is slightly more than the average cash, savings and on-hand money that participating businesses have. Firms are asked to spend the money on their business. The consultants work with business owners on developing a plan for spending it. Rounds of data collection Baseline data collection and method The baseline survey was split into two separate rounds 1 month apart to reduce the length of each interview (December 2008 and January 2009, Rounds 1 and 2). The first visit focused on financial outcomes and the second visit on business processes and attitudes. Data collection method and data collected Evaluation Outcome variables <p>Knowledge of standard business, adoption of these practices, investment and savings behavior, and business income and profits.</p> Results <p>A few months after the programme ended, firms that had received consulting support had slightly higher business knowledge and had implemented a higher percentage of standard business practices. The most widely adopted practice was record-keeping, with the percentage of firms implementing this practice increasing from 17 per cent to 62 per cent six months after the programme ended. These short run effects disappeared two years after the programme, as firms reverted to their previous business practices. Two months after receiving the grant, firms had invested between US$60 and US$120 more than those that did not get the grant. However, one year later the investment levels of those who did and didn’t receive the grant were similar again. The programme only had small and non-persistent impacts on saving or borrowing behaviour. None of the support schemes had an effect on revenue, expenses, hours worked or employment or profits. If anything, firms that received support experienced temporary drops in revenue and profits at some point after adoption. The effect was more negative for those receiving the cash grant. This is consistent with a learning dynamic in which entrepreneurs experiment with new techniques and investments, learn that those aren’t profitable and abandon them.</p> Intervention costs Not available. Cost benefit ratio Reference Karlan, D., Knight, R., & Udry, C., 2015. Consulting and capital experiments with microenterprise tailors in Ghana. Journal of Economic Behavior & Organization, 118, 281-302. Citation for use in academic references
