Barry West and Gibb Dyer, Organizational Leadership and Strategy
In developing countries throughout the world, one often-used approach to alleviating poverty has been to encourage entrepreneurship among the poor. Micro-credit is a highly popular solution to encourage the poor to launch new enterprises, but has somewhat mixed results (Field et al., 2013; Banjeree et al., 2009; Karlan and Zinman, 2011; Kaboski and Townsend, 2011). Current literature suggests that simply giving loans to those who start businesses out of necessity is not the best approach to encourage entrepreneurial success. These writers argue that these “necessity entrepreneurs” need education in the form of business knowledge and tools to help them succeed (Brewer & Gibson). Since The Academy for Creating Enterprise offers micro-enterprise education without micro-credit loans, this study will ultimately clarify the impact that micro-enterprise education has on the ability for a necessity entrepreneur to successfully start up a business without micro-credit.
The Academy for Creating Enterprise (ACE, the Academy) was originally established as a non-profit organization in Cebu, Philippines in 1999 by Stephen and Bette Gibson. The Academy was established to train young Filipinos, who had recently returned from serving missions for the Church of Jesus Christ of Latter Day Saints (LDS, the Church), to launch their own micro-enterprises. In return, they could then contribute to their community and other LDS communities as successful, self-sufficient leaders. Although the Academy is not funded or sponsored by the LDS Church, all students are members of the Church and a majority of them have served missions. Also, most of these students are considered necessity entrepreneurs.
For the purposes of this study, we focus solely on the Academy’s campus located in Mexico City, Mexico. This campus location was founded in 2010 by Dr. Jeremi Brewer, Dr. Rebecca Brewer, and Ghandi Blas (current Program Director in Mexico) under the direction of the original Academy founders. This location is of particular interest because it employs three different modalities of instruction: the residential, night, and regional training programs. The residential program requires students to live on campus for a period of five weeks. Night classes are designed for individuals who live within a two-hour traveling distance from the Academy’s campus in Mexico City. The regional program is designed for individuals who cannot attend night classes or stay on campus for five weeks. Each modality varies in intensity and duration. Consequently, this study will also shed light on whether the intensity and duration of training plays a role in entrepreneurial success.
The data in this evaluation comes directly from an initial survey distributed in the summer of 2013. This survey was taken by current ACE students and alumni (treatment group) and a broad population of LDS Church members in Mexico, aged 18 and over (control group). This survey provided a benchmark which will allow us to measure entrepreneurial success over time. The implementation of a follow-up survey is currently underway and we expect to receive results by January 2015.
The initial survey was comprised of 156 questions which include: several socio-demographic questions; business-practice questions such as book-keeping practices and employee management; business outcomes such as revenues, profits, and employees; and household outcomes such as average monthly income. To ensure quality and control, this survey was translated by a third-party translation company from English into Spanish and again—from a separate translation company—from Spanish into English.
It is important to note that the treatment group was asked each question to reference their situation before treatment as well as their current circumstances. The control group was asked each question only in reference to their current circumstances. Therefore, we cannot compare the treatment and control groups over time until we receive results from the follow-up survey. For this reason, this analysis only focuses on comparisons within the treatment group.
In this study, we focus on three different dependent variables: whether or not a subject launches a business, number of current employees, and personal monthly income. We assume these indicators help determine entrepreneurial success. We discovered that the difference in impact between the three different modalities of instruction were very minimal or insignificant. Business launch after receiving treatment was more likely among those who had previously served a mission or who were older. Missionary service within the LDS church is very intensive; therefore, we expected that many of the attributes attained during missionary service would prepare an individual for entrepreneurial training and activities. There were no significant relationships between other variables and the number of employees hired by members of the treatment group.
Increased personal monthly income only shows a significant relationship with the male gender. For example—regardless of missionary service, age, or any other independent variables—males are more likely than females to show an increase in personal income after receiving treatment. We assume the reasons behind this finding are mostly cultural; males are considered the primary bread-winners in both Mexican and LDS cultures.
The greatest finding from this study shows a significant relationship between missionary service and an increased likelihood to launch a new business. We can say with confidence that missionary service for the LDS Church prepares individuals to better receive entrepreneurial training at the Academy than individuals who never served a mission. However, we have not yet arrived at a conclusion regarding the effectiveness of ACE as an effective education tool. This is because we have not compared ACE graduates with the control group or tracked their progress since our first measurements in the summer of 2013. The results of the follow-up survey will allow us to perform an effective comparison and enable us to arrive at a more concrete conclusion.