Path to Scale Award
For High-Potential Innovations in SME Development
The Path to Scale Award for High-Potential Innovations in SME Development will recognize innovative ideas that have proven to be effective at addressing key constraints faced by entrepreneurs and SMEs in developing countries and will support replication efforts to test these ideas in a new context, with the goal of supporting them in their path to scale. This award is made possible through the support of the Templeton World Charity Foundation, Inc.
The Small and Medium Enterprise (SME) Program at IPA brings together a global network of leading researchers and decision-makers to identify, test, and scale up effective solutions to the constraints that affect SME growth and entrepreneurship in developing countries. Over the last seven years we have learnt important lessons about what works and what does not work in promoting entrepreneurship and SME growth in developing countries. In this new initiative, we seek to build on what we have learnt by recognizing the contribution of innovators and supporting effective solutions in their path to scale. The vast majority of impact evaluations of private sector development interventions to date have been at the “proof of concept” stage. However, if we want these solutions to affect thousand—or millions—of people, we need more rigorous evaluations that can validate and adapt the original ideas to different contexts and eventually bring them to scale. This initiative will aim to create a replications agenda to start moving innovative ideas from a proof-of-concept stage to having a more widespread impact at scale.
The award process will have three stages:
Stage 1: Call for nominations and selection of high-potential ideas
The SME Program launched a call for nominations in December 2018 to identify potential candidates for replications. We sought solutions that demonstrated innovativeness, cost-effectiveness, rigorous evidence of impact, and a potential to be sustainably scaled up.
In order to be nominated, ideas needed to meet the following criteria:
- Innovativeness: Address a key constraint faced by SMEs and entrepreneurs in developing countries (i.e. limited access to finance, poor managerial skills, lack of access to markets, etc). Innovative ideas may apply to product or process design, technology, service delivery, or business model. We also considered cases where the novelty does not lie in the solution per se but on the evidence of its impact (i.e. an intervention that has been implemented for some time already but whose impact has only recently been demonstrated by a rigorous impact evaluation). Nominated solutions must count on a clearly defined theory of change.
- Evidence of impact: Have rigorous evidence showing impact on key outcomes of interest (RCTs will be a preferred methodology). Impact evaluations must have already been conducted by the time of nomination, with results finalized and a working paper available.
- Cost-effectiveness. Solutions that have proven to (or could potentially) be better, faster, or cheaper than its alternatives, delivering high impact at low cost.
- Replicability/Scalability: Has the potential to be replicated in different contexts and eventually scaled up to reach thousands of SMEs in the developing world.
Stage 2: Exploration of replication opportunities
- Business plan competition with cash grants
- Original paper: McKenzie (2017) "Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition"
- Entrepreneurial mindset training
- Original paper: Campos et al (2017) "Teaching personal initiative beats traditional training in boosting small business in West Africa"
- Business networking program
- Original paper: Cai and Szeidl (2018) "Interfirm relationships and business performance"
- Business consulting services for SMEs
- Original paper: Bruhn et al (2018) "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico"
- Heuristics-based financial literacy training
- Original paper: Drexler et al (2014) "Keeping It Simple: Financial Literacy and Rules of Thumb"
At the end of this stage, a report describing the opportunities explored and the prospects for implementation should be submitted to the prize committee.
Stage 3: Prize award
Based on the final replication plans and the prospects of opportunities explored, one of the shortlisted ideas will be selected to receive funding for the implementation of the replication study, for up to US$220,000.
The aim of this replication study will be to better understand the mechanisms through which the idea is effective and identify which components of the intervention are crucial for success. Like the original study, this replication study should also be an RCT or another rigorous empirical method, and should be designed in a way such that allows for the abovementioned questions to be addressed. Small variations from the original study may be included—if needed—to adjust the intervention to a new context or better understand the mechanisms at play.
IPA will be responsible for managing the project implementation, which may include coordination with partners, staff hiring and management, data collection and processing, subcontracting of activities (if necessary), etc. In addition to the research study, during this stage we will also work with the partner to document the practical details of implementing the idea, including the associated costs, which will be used in the development of the related project outputs and dissemination materials.
IPA will honor the team behind the original idea with a cash prize of US$10,000.
- Open call for nominations: December 20, 2018
- Deadline to submit nominations: March 8, 2019
- Selection of high-potential candidates and development of replication plans: March 8, 2019 – April 12, 2019
- Announcement of shortlisted candidates: April 12, 2019
- Exploratory activities: April 12, 2019 – September 30, 2019
- Final award decision: Announced at 10th SME working group meeting (late September / early October 2019 – exact date TBD)
- Implementation of replication study: October 2019 – May 31, 2021 (project could extend beyond this date, but baseline and intervention rollout should finish here as per our main grant agreement)