Original source
Consulting and Capital Experiments with Microenterprise Tailors in Ghana
Dated research draft · Version date: October 2014
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Baseline Investment Intention Realization in Microenterprises
Targeted Capital Asset Spurt
"In column 1, we see that the capital grant group invested an average of 179 cedis more than the control group in Round 3 (about two months after the grants)... However, a year later (Round 8, Column 2) the effect disappears."
Microenterprise 'Big Push' Transformation and Poverty Trap Testing
"We designed the study with a hypothesis that large infusions of financial and managerial capital could be transformative... However, no treatment led to higher profits on average, and certainly not to the large effects hypothesized."
Microenterprise Capital Grant Induced Debt Displacement
"In the months following the capital drop (Column 1), we find a reduction in loan take-up for those in the capital group."
High-Cost Tailored Consulting Inefficiency
"Although this is not trivial, it is small relative to the cost of the consultants' labor."
Subjective Consulting Valuation and Profit Decoupling Paradox
"Given the results we have previewed, this willingness to pay is a puzzle, and we posit two possibilities: perhaps respondents felt loyalty to their consultant on a personal level... or, perhaps respondents felt that if they report satisfaction, they would have a chance of receiving some free future services..."
Entrepreneurial Experimentation Hypothesis
"In response to relaxed constraints, the tailors experiment with new techniques, learn that they are not profitable, abandon the techniques and return to their previous scale."
Heterogeneous Entrepreneurial Talent
"This sequence of events is consistent with the idea that entrepreneurial talent is heterogeneous and not perfectly observed, even by the entrepreneur herself."
Heuristic Rule-of-Thumb vs Complex Accounting Instruction
"The training included both simple, targeted lessons, similar to the 'rule of thumb' lessons in Drexler et al (2011), as well as more complicated modules. Examples of the rules of thumb are: 'keep your business and personal money separate'..."
High-Frequency Survey Recall Validation
"This gives two insights: (1) the recall data are on average quite similar to the daily visits data; and (2) the consulting group's reports do not appear to be more accurate than the control group."
Informal Credit Market Exclusion
"At the baseline, 82.5% of our sample frame had never accessed formal credit markets. Informal finance was similarly rare: over the course of the two-year study, the 160 tailors took only 13 loans from informal sources."
Management Practice Reversion
"Record keeping in the consulting group declined from a high of 63% of consulting tailors in round 3 to only 28% in round 8, so this impact is caused by consulting tailors abandoning record keeping, not control tailors catching up."
Persuasive Marketing Business-Stealing vs Product Quality Equilibrium
"For example, if the intervention primarily teaches better persuasive marketing, but not informative marketing, then business is likely simply being shifted from the less persuasive firm to the more persuasive one. If, on the other hand, product quality has increased, or costs have been lowered, then equilibrium benefits are likely accruing."
Unconditional Capital Grant Returns in Microenterprises
"Turning to the capital grant group, it seems that the capital grant lowered profits. The point estimate is a post-treatment drop in income of 45 cedis (p-value<5%), compared to a control group mean of 146 cedis."
Local Geographic Distance and Business Practice Non-Contagion
"There is no evidence that the number of nearby tailors who received the consulting treatment had any impact on the adoption of recommended business practices by either control group or consulting group tailors..."
Single-Industry Sectoral Standardisation in Enterprise RCTs
"We chose to work with microenterprises in a single industry because it allowed the consultants to develop expertise in that sector and allowed us to focus on industry-specific survey questions."
Susu Daily Micro-Savings Activation
"We find an impact on susu savings in the capital & consulting group, whose average monthly susu savings is almost twice the baseline value of 18.6 cedis a month (point estimate 16.6, standard error 8.4)."