Year
2021

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"Why do more small firms in developing countries not use the market for professional business services like accounting, marketing, and human resource specialists? Two key reasons maybe that firms lack information about the availability of these services, and that they struggle to distinguish the quality of good versus bad providers. A brand recognition exercise finds that most small firms are unaware of most providers in this market, and a survey of service providers reveals that they largely rely on word-of-mouth and informal reputation mechanisms for acquiring customers. This study set up a business services marketplace that contains information about the different providers present in the market and used mystery shopper visits to develop a quality ratings system. A randomized experiment with more than 1,000 firms provided access to this marketplace to the treatment group and randomized whether firms received just information or also quality ratings. The provision of quality ratings information shifts small firms’ preferences over which provider they would like to use, increasing the average quality rating of their preferred providers by 0.2 to 0.4 ratings points out of 5. However, neither the provision of information nor these quality ratings had any significant impact on the likelihood that small firms go on to hire a business service provider over the subsequent six months. The results suggest that alleviating information frictions alone is insufficient to increase usage of professional business services."

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"Entrepreneurial ecosystems have become a prominent concept, yet in its current state, the concept itself represents a paradox. While it draws on a rich intellectual history and provides an opportunity to synthesize different strands of research, it is also under-theorized and the mechanisms that govern ecosystem evolution are not well understood. This paper takes stock of recent advancements in ecosystem scholarship and synthesizes the empirical reality of the causal mechanisms. We use these dynamics to position ecosystems in a broader context, within and beyond the domain of entrepreneurship research, and propose a transdisciplinary research program for ecosystem research and practice."

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"A large portion of economic activity in low- and middle-income countries (LMICs) is driven by (micro)entrepreneurs, who face significant challenges in starting and running profitable businesses. More than half of workers in low- and lower middle-income countries run their own business, against around 10 percent in high-income countries (ILO, 2019). Around a third of these entrepreneurs are driven by necessity (e.g., running their own business as a means of providing a subsistence income), rather than opportunity (e.g., hoping to build a business that grows beyond the scope of subsistence needs). Well-documented barriers facing LMIC entrepreneurs include weak education systems that hamper human capital development, limited access to finance, poor infrastructure and information access, and weak institutions. Policy interventions have sought to respond to these challenges with often inconclusive or underwhelming results.

Insights from behavioral science can help us better understand how the complexities of the human decision-making process impact LMIC entrepreneurs and the policies aimed at supporting them. Behavioral science recognizes that people’s behavior does not only depend on internal drivers (personality, preferences) and external drivers (information, incentives, regulations), but also on the decision-making process itself, which is influenced by available mental resources, automatic thinking, social norms and relationships, and mental models. While these influences impact everyone, their importance is exacerbated by challenging living conditions, making them potentially more influential for individuals living in LMICs. The majority of entrepreneurship research and programming continues to focus on building capital and business skills, but adding a systematic focus on behavioral influences shows a broad range of potential barriers that might interfere with an entrepreneur’s decision-making process (Figure A). A deeper understanding of entrepreneurs’ decision-making context can help practitioners improve both their diagnosis of the obstacles facing entrepreneurs and the design of entrepreneurship-related policies and interventions."

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"As investors with experience in gender lens investing (GLI), our peers often ask us for information on how to kickstart their GLI journey. Many useful resources are available to do this. However, this brief addresses a gap in information on the tools and approaches used to design and implement gender-smart technical assistance for small and medium enterprises (SMEs) to improve their social and financial performance. We also share our reflections from our collective experience to date."

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"This document is a strategic guidebook developed by Argidius Foundation and Dalberg Advisors to support business development services (BDS) providers to successfully adopt digital practices and tools. It explores current practices and opportunities across the landscape to guide BDS providers in using digital technologies to provide services to entrepreneurs in an effective and inclusive way."

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"This interactive Guide gives development professionals the necessary theoretical background, concepts, approaches and practical tools to strengthen entrepreneurial ecosystems in developing countries. It is intended to be used as a reference after the professionals have completed their analytical ‘mapping’ of the entrepreneurial ecosystem. The Guide is supported by examples from GIZ and other programmes, all of which are intended to provide an in-depth understanding of how professionals approach various challenges in different regions and contexts – and since numerous sources of information on how to strengthen entrepreneurial ecosystems exist, each section of the document provides links to many of these useful sources and to opportunities for personal involvement."

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"Entrepreneurs in developing economies are vital to addressing climate change and promoting sustainable and resilient development. Developing countries will experience some of the worst climate impacts. and they also hold enormous potential for encouraging mitigation and adaptation on local and regional levels. Yet, entrepreneurs in developing economies face distinct challenges and barriers when it comes to addressing climate change. This report is intended to serve as an overview of the current literature on the intersection of entrepreneurs and climate action, as well as a call to action."

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"This study conducts a comparative analysis of social enterprise intermediaries in China and India to better understand how they legitimize social enterprises in new settings. To address theoretical weakness in this sphere, it combines several institutional theories to capture disruptions created by institutional innovation and also legitimizing processes. Drawing on data collected from surveys, interviews, and websites in each country, it finds that intermediaries mitigate negative and leverage positive influences of external institutions though their strategies vary due to country differences in institutional pressures. This information is key to building intermediaries' capacity to institutionalize social enterprises as new institutional actors."

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