Entrepreneurship


Original abstracts from the papers in the database are provided below. All abstracts are drawn directly from the papers referenced. Links to access the papers are provided, although
the papers may also be available from other web sources. By providing links to other sites, the United Nations Foundation and ExxonMobil Foundation do not guarantee, approve, or endorse the information or products available on these sites.

  • Employment Generation in Rural Africa: Mid-term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda

    Blattman et al (2011)

    Original abstract:

    Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start_up costs. Mid_term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of nonhousehold employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10%, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50% fall in interpersonal aggression and disputes among males, but a 50% increase among females. Neither change seems related to economic performance nor does social cohesion a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient form of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms.

    Intervention settings: Urban and Rural

    Intervention description: Cash grant of $304 per average beneficiary.

    Methodology: RCT

    Sample: 2,000 individuals (aged 16 to 35) then placed into groups.

    Findings: Hours spent on income-generating activities increases by 24%. Earnings increase 18% but statistically insignificant (linear estimate).

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  • Term Structure of Debt and Entrepreneurial Behavior: Experimental Evidence from Microfinance

    Field et al (2010)

    Original abstract:

    Financiers across the world structure debt contracts to limit the risk of entrepreneurial lending. However, certain debt structures that reduce risk may inhibit enterprise growth, especially among the poor. We use a field experiment to estimate the short- and long-run impacts of varying the term structure of the classic microfinance loan product. While the classic microfinance loan contract requires clients to make small and frequent repayment installments beginning immediately after loan disbursement, clients in our treatment group instead received a two-month grace period before repay- ment began. The shift to a grace period contract increased clients' business investments in the short run and profits and income in the long run, but also their rate of default, indicating a shift towards investments with higher average but also more variable re- turns. In this manner, the absence of a grace period reduces risk but also the potential impact of microfinance on microenterprise growth and household poverty.

    Intervention settings: Unknown

    Intervention description: Group liability credit. Tested the benefit of using a grace period for loans instead of starting repayment immediately.

    Methodology: RCT

    Sample: Poor microentrepreneurs and wage workers (75% have home-based business).

    Findings: Positive impact of grace period on businesses of some women. Women with grace period invested 6% more of loans in businesses than those with no grace period. After two years, women with grace period increased average profits by 30%. 19% of women with a grace period group defaulted on loans, (compared to 2% default rate among women with standard repayment).

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  • Kaizen for Managerial Skills Improvement in Small and Medium Enterprises: An Impact Evaluation Study

    Sonobe, Suzuki, and Otsuka (2011)

    Intervention settings: Urban.

    Intervention description: KAIZEN Production management training - to reduce non-value adding operations. Multifaceted classroom training and on-site KAIZEN training. Sample received both trainings, one or the other, or none.

    Methodology: RCT - Randomized invitation to participate.

    Sample: 100-180 male and female firm owners with typical revenues of $200-300,000 USD per year.

    Findings: Entrepreneurs in the sample knew little about standard business practices and attached low value to learning management, but the training improved participants' business practices and recognition of importance of management knowledge. Male owners 20% more likely to participate in training given invitation than females. One year older increases probability of participating by 1-2%.

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  • The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico

    Bruhn, Karlan, and Schoar (2012)

    Original abstract:

    We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow_up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to illicit the SME owners' confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group.

    Intervention settings: Urban.

    Intervention description: Consulting services.

    Methodology: RCT.

    Sample: 432 small and medium enterprises (30% women decision-makers) with average of 14 full-time employees. Firms existed on average 10 years.

    Findings: Increase in monthly sales by 80%. Profits and productivity increase by 120%. Significant increase in entrepreneurial spirit index (confidence in ability to manage business and deal with future difficulties). No signficant increase in number of workers employed.

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  • Do Traditional Institutions Constrain Female Entrepreneurship? A Field Experiment on Business Training in India

    Field, Jayachandran and Pande (2010)

    Intervention settings: Urban

    Intervention description: Training in business skills and identifying financial goals: A streamlined two-day version of SEWA Bank's financial literacy and business skills curricula, and added material on financial goals and business aspirations.

    Methodology: RCT

    Sample: 597 poor, self-employed women. Homogenous in socio-economic status (education) but differing in religion and caste (Muslims, upper caste Hindus and scheduled caste hindus, each facing different mobility and social constraints).

    Findings: Among upper caste Hindu women (more socially constrained than lower caste), training increased borrowing (13 percentage points, nearly twice the rate of controls) and business income (about 30%), and likelihood of engaging in labor market activity (25%). Muslim women, who face most restrictions, failed to benefit from the training program.

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