Innovation, social contacts and business acumen: a field experiment in Ghana

RESEARCH QUESTION

It is widely believed that innovations in technology, institutions, and organisational governance spread along social networks (e.g. Schelling, 1978). If this is true, reinforcing business networks in Africa should help the diffusion of innovations among firms in the private sector. This is particularly true of the informal sector where innovation is most needed to foster the emergence of a modern, small business sector that can play an active role in the development process.
 

PROJECT

We propose to organise a field experiment in Ghana to test whether building links among small entrepreneurs can help the diffusion of innovation. Participants will be recruited among some 800 small Ghanaian entrepreneurs, 60% of whom women, that were part of a recent panel study. Using a randomised controlled design, we will invite some participants to a team activity intended to encourage the formation of new social contacts. This activity is organized around a design from a laboratory experiment that elicits information about people’s talent for strategic thinking. We will also elicit information about business acumen using a set of psychological questions known to predict entrepreneurial success. Some of the participants will then be exposed to information about certain technological and organisational innovations, i.e., about business-oriented mobile phone services. After the experiment, treated and control participants will be surveyed to assess the impact of the treatment on their social network, level of technology, business practices, internal governance, and aggregate firm performance(1). The differential impacts on male and female entrepreneurs will be analysed. (1)Two interventions are implemented: one is to encourage social network formation, the other is to offer a technological innovation. Of a particular population, one part is randomly allocated to team activities in which they are positively encouraged to interact with each other (and therefore can be expected to expand their social network); the others belong to the control group.  Some of both the treatment and control group are offered information about some mobile phone service.