ANDE’s research initiative focuses on addressing critical questions for the sector by promoting collaborations between academics and practitioners to produce research that is both rigorous and relevant. Our primary efforts focus on understanding the impact of small and growing businesses on poverty and economic development, and identifying the most effective approaches to support these businesses. We support a number of research activities under the following areas:
- + What is the impact of small and growing businesses on poverty and economic development? How can we measure and manage this impact?
Small firms in developing countries have the highest job creation rate in developing countries, contributing to 48% of aggregate employment on average (abstract only). However, these findings are biased towards the small firms which survive, and typically, only a small percentage of entrepreneurs are able to actually grow their businesses.
However, small firms continue to suffer from low productivity, which is linked to unemployment and poverty in many developing countries. Recent studies find that improvements in labor productivity in agriculture contributed to poverty reduction (pdf link) in seven African countries. Additionally, greater industrial employment is also linked to poverty reduction, as workers shift from agriculture to more productive sectors such as manufacturing and services.
Products and Services
The poor not only suffer from low and unreliable incomes, but also lack of access to essential services. The World Economic Forum identified water, healthcare, housing, education, energy and financial services as the main target sectors for social enterprises working in developing countries and emerging markets. While the total level of global social enterprise activity is difficult to estimate (the Global Entrepreneurship Monitor estimates that the percentage of adults explicitly involved in social entrepreneurship is 2.8% on average, it is evident that these of firms may have great potential in addressing some of the most critical challenges to last mile service delivery.
The challenge of understanding markets at the base of the pyramid remains an exciting area of research on SGBs. We expect the sector to start moving beyond measuring success by outputs or the number of products sold, to measuring outcomes, or measurable changes in the lives of customers as a result of these products, and the determinants of consumer interest.
On the academic side, we are supporting rigorous evaluations of the impact of SGBs on poverty, with respect to employment, agriculture, and access to electricity. These studies were selected through an open request for proposals which resulted in 34 high quality applications in 2012. These studies will be released in 2015, and represent an important step in building a strong evidence base on the impact of SGBs on poverty, using rigorous experimental and quasi-experimental methods. In 2015, ANDE’s Research Director will collaborate with ANDE’s executive leadership to synthesize the findings from these studies as well as other relevant research, and develop a clear action plan and outreach materials to influence key stakeholders on the impacts of SGBs.
ANDE Literature Review (pdf link)
- + Impact Evaluation Grant Winners
Impact Evaluation Grant Winners 2012
Project Title: More Sweatshops for Africa? An Experimental Study of Firms, Factory Labor, and Poverty Alleviation
Primary Researchers: Dr. Christopher Blattman, Columbia University, Innovations for Poverty Action and Dr. Stefan Dercon, Oxford University, Innovations for Poverty Action
Amount Awarded: $120,000
This project seeks to present rigorous evidence on the effects of small and growing businesses on the workers they employ and, by extension, their households. The researchers ask: What is the effect of obtaining a formal sector, industrial job on the level, growth, and variability of income? Are industrial jobs stultifying and stupefying and unhealthy, or do higher and less risky incomes lower stress and raise health and happiness for workers and their households?
To examine these questions, they are conducting a randomized control trial of industrial labor in Ethiopia. Blattman and Dercon are presently collaborating with eight to ten small and medium size growing businesses in different sectors and regions, urban and rural. Each firm received many times more applicants to low-skill, low-wage positions than it could hire, and the firms agreed to select its new hires randomly from the pool of qualified applicants. The ANDE grant has expanded the study to include analysis of additional firms in Ethiopia, as well as neighboring countries in East Africa. The researchers have sought collaboration with ANDE members in the region, to broaden the pool of firms that are included in the study.
Project Title: The Effects of Small-Scale Electricity Systems on Rural Communities in South Asia
Country: India and Bangladesh
Primary Researchers: Davida Wood (PhD) and Bharath Jairaj, Senior Associates, Sanjoy Sanyal, World Resources Institute (WRI) and Narasimha Rao (PhD), International Institute for Applied Systems Analysis (IIASA)
Amount Awarded: $120,000
Providing universal energy access is a widely acknowledged vehicle for poverty alleviation, and there are a growing number of SGBs providing electricity products and services across rural areas in South Asia. This project is assessing the following question: How has the recent proliferation of small-scale electricity systems in South Asia improved the lives of communities that they serve? The researchers expect that communities and households that receive electricity access from these systems are likely to generate livelihoods and income, spend less time on household chores, and improve their health and education prospects. This study will focus on four districts in India, and four districts in Bangladesh in which some communities are served by SGB electricity providers. The researchers will use a quasi-experimental research design to compare development outcomes for communities that receive electricity from SGBs, those that receive electricity from the grid, and those that rely on other sources of fuel, such as kerosene or diesel.
Project Title: Evaluating Household Level Impacts of Small & Growing Business Creation and Impact Investing in Peru
Primary Researchers: Jason Spindler, Founding Partner of I-DEV
International & Managing Director and Martin Benavides, Executive Director &
Senior Researcher, Grupo de Análisis para el Desarrollo (GRADE)
Amount Awarded: $160,000
This study is focused on measuring the impact of SGBs that employ the poor primarily in the agricultural sector in Peru. They will focus on 4 key areas of impact: economic impact, impact on family health, children’s education, and social welfare. The team is also examining the extent to which these SGBs reach the poorest populations in each region, and the impact on these communities. The research team has selected 3-4 agricultural SGBs in Peru, and is analyzing the direct and indirect impacts each SGB has had on the communities where they operate. The team has also identified communities which closely match the communities that SGBs currently operate in, to develop a comparison group. The researchers are following a mixed-methods approach, which combines quantitative analysis of survey data with a qualitative assessment the SGB and its beneficiaries.
- + Data Innovations: Mobile Impact Measurement
Impact measurement in the SGB sector has seen considerable progress with the development of infrastructure and standardized metrics such as IRIS, PULSE and GIIRS, that push the sector to improve how it defines, measures, and communicates impact. However, these tools only focus on outputs or firm level measures, and cannot help us understand outcomes, or the ultimate impact of SGBs on households. Although the architecture to standardize metrics has been radically improved, the actual platforms and techniques to collect the data itself often remain impractical, keeping rigorous social impact measurement out of reach. However, the process of collecting data on poverty impact is often perceived to be expensive, time-consuming, and distracting for SGBs, investors, and the people being surveyed.
To address these issues, ANDE launched a new project in collaboration with Acumen, Root Capital and Grameen Foundation, to streamline impact data collection processes for practitioners. In this project, the partners are implementing several mobile phone based survey tools - remote SMS, in-person surveying using Android phones, and call-center based surveys - to test and contrast their respective efficacy and efficiency. The project also tests the value of various innovative short-form methodologies for estimating impact outcomes, such as the Progress out of Poverty Index, the Multidimensional Poverty Index, and the Wealth Index.
We believe it is the combination of new technologies and new short-form impact measurement methodologies that can be deployed on these platforms that will enable us to measure outcomes more cost-effectively than previously possible. Through this project, we expect to unlock a cost-effective means by which the SGB sector, and those focused on private sector development more broadly, can demonstrate and catalyze impact on poverty alleviation.
Lean Data Initiative – Acumen and ZHL
- + What are the barriers to SGB development, and how can ANDE members overcome those barriers?
Barriers to SGB development include a number of diverse and interlinked problems such as access to resources (capital, training, and talent), enabling environment (policy and regulation, infrastructure), and culture (entrepreneurial ambition). ANDE believes that SGBs need a strong enabling ecosystem, which requires the support of multiple actors working together on connected challenges.
- + Entrepreneurial Ecosystem Assessment Toolkit
A first step to stimulating entrepreneurship is mapping and measuring the existing entrepreneurial ecosystem. This analysis allows for diagnosis of potential challenges and opportunities that can be addressed through specific interventions. To support mapping efforts, ANDE developed a toolkit, with the support of the UK Department for International Development (DFID). This toolkit provides methodological guidance on assessing the current state of entrepreneurial ecosystems and offers a set of resources and tools that can be used by development practitioners. This toolkit does not aim to be exhaustive, but is intended to serve as a basis for other organizations to build upon. To develop this toolkit, ANDE conducted a comprehensive review of publicly available literature on entrepreneurial ecosystems and identified nine evaluative frameworks. We assessed these frameworks and synthesized key elements and indicators. ANDE encourages practitioners to use this toolkit as a resource guide that can be adapted and modified to fit the local and/sectoral context.
- + Global Accelerator Learning Initiative
Institutions funding global development are excited about the potential of accelerators and incubators, but rigorous research on the effectiveness of acceleration methods has not kept pace with the proliferation of these programs. Additionally, many accelerators face difficulties in tracking the performance of the ventures they support, and demonstrating their effectiveness to funders and other key stakeholders.
ANDE is collaborating with Emory University’s Social Enterprise @ Goizueta Center on a program that collects high quality data from both accelerators and individual enterprises in order to provide a data-informed view of what is and is not effective for accelerators under various circumstances. Together SE@G and ANDE developed a common set of survey questions which are included as part of accelerator and incubator application processes. This information allows us to systematically capture and track data from early stage enterprises. SE@G then implements a short follow-up survey six months after the acceleration program, with all of these enterprises, including the rejected applicants. We are currently working with over 40 acceleration programs worldwide, and have collected data from over 2000 enterprises. To learn more about the project, please click on the links below:
- For Accelerators: What are the requirements to join this project, and what are the benefits to your program?
- What do we know so far?
- + Other Relevant Links
ANDE works with a number of partners around the world that are conducting critical research on SGBs:
1. Social Enterprise @ Goizueta, Emory University
2. Center for International Private Enterprise
3. Innovations for Poverty Action – SME Initiative
4. Donor Committee on Enterprise Development
5. Center for the Study of African Economies, Oxford University
For more information or questions on ANDE's Research Initiative, contact our Director of Research and Impact, Genevieve Edens.
Metrics from the Ground Up Conference