Alejandro Mungaray

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Paris International Conference on
Education, Economy and Society 2008
Measuring the Contribution of Service
Learning Programs in Microenterprises

• By
• Alejandro Mungaray
• Martin Ramirez Urquidy
• Michelle Texis
• David Ledezma
• Natanael Ramirez
• UNIVERSIDAD AUTONOMA DE BAJA CALIFORNIA, Mexico.
• Paris, France on July, 2008.

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BACKGROUND

• Micro and small firms are an important feature of
  the industrial structure of most countries 85-99
• In developing economies, overwhelming presence of
  microenterprises (MEs), a subset of the informal
  sector run by modest entrepreneurs in survival
  activities.

Establishments ()
Mexico
Employment ()
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BACKGROUND

• Governments and international development
  agencies have recognized their importance and are
  placing emphasis on promoting MEs as a
  market-based strategy for employment and poverty
  alleviation
• Support programs have been proposed to overcome
  human capital constraints in MEs and improve
  their performance, by offering Business
  Development Services (BDS), which are aimed at
  developing skills and knowledge.
• BDS Financial and Non-Financial Services

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BACKGROUND

• BDS training, technology transfer, marketing
  assistance, business advice, mentoring and
  information
• Financial Services Microfinance, other
  services Deposit, payments.
• Non-Financial Services Assets for
  livelihood, particularly human capital, by
  developing skills and knowledge.
• BDS support programs has been evaluated in
  different ways under different set of indicators,
  responding to their goals and interests.

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THE PAPER AIMS

• Research question
• To what extend service learning programs
  contribute to improve performance of low value
  added MEs?
• In answering this question, the research
  assesses the impact of the Program for Research,
  Assistance and Teaching of Small Enterprises
  (PRATS), Mexican Service Learning Program in MEs.
• The research proposes estimating learning
  curves applied to average costs, revenues and
  profits, with the use of time series data from
  the enterprises supported by PRATS

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IMPACT ASSESSMENT SYSTEMS

• The impact assessment is embedded on the wider
  concept Comprehensive Evaluation.
• A comprehensive evaluation is defined in the
  literature as an evaluation that includes
  monitoring, process evaluation, cost-benefit
  evaluation, and impact assessment.. (Beker,
  2000)
• An impact assessment system (IAS) can be defined
  as a set of internal and/or external indicators
  representing the performance of a BDS provider in
  terms of several areas.

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IMPACT ASSESSMENT SYSTEMS

• IAS attempts to determine whether the program had
  the intended effects on individuals, households,
  and institutions attributable to the program
  intervention, and also unintended positive and
  negative consequences on beneficiaries.
• IASs questions
• Can BDS produce more sustainable increases
  in microenterprise productivity than credit
  alone?
• To what extend the program reaches the
  intended population and impacts the targeted
  population?
• How did the project affect the
  beneficiaries?
• Were any improvements a direct result of
  the project, or would they have improved anyway?

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IMPACT ASSESSMENT SYSTEMS

• IES Classification (Baker,2000) Quantitative
  and Qualitative

• Quantitative
• Requires estimating the counterfactual, what
  would have happened had the project never taken
  place or what otherwise would have been true?.
• Control groups observations of the same
  population selected randomly, among those not
  intervened with the project.

• Qualitative
• Assesses conditions as they are perceived by
  beneficiaries of the projects
• Provide insights into the ways in which
  households and local communities perceive a
  project and how they are affected by it

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PRATS

• Community Service program in favor of
  Microenterprises, which implements Service
  Learning
• What is Service Learning?
• Derivation of Learning-by-Doing extending
  the general concept of Community Service, to
  include learning component that may carry
  academic units or may be part of a specific
  course requirement
• Service-learning is a method of
  experiential learning that links the classroom
  with the local community, and requires students
  to spend time in volunteer service and relate
  their experiences to the educational knowledge
  they see in the classroom (McGoldrick, 1998).

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PRATS

• Students in Service Learning
• Learn and develop themselves trough active
  participation in communitarian experiences
• Apply the concepts and instruments recently
  acquired to help their community
• Contribute to solve community problems, important
  for development

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PRATS

• Objectives
• Delivering BDS in situ at no cost to unprivileged
  enterprises
• Doing research on topics related to small firms
• Building up a model of teaching-learning for
  students in the field of Economics, and
  surrounding disciplines

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Basic Elements
Services
PRATS
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ASSISTANCE MODEL
PRATS
MEs Search Listing
Students Recruiting
Analysis and Evaluation
Students Training
Assistance Stage
-Final year enrollment -Registered in Small Firm
Analysis -Enrolled in PRATS
-Macroeconomic Context -ME development -Institutio
nal context -Market analysis -Marketing -Theory
of Production -Theory of costs.
-Finance -Strategic planning -Evaluation of
Investment Projects
-No accounting system -No formal management -Not
supported by any assistance program -Up to high
school -Underprivileged neighborhoods

-Financial statements -Cost statement -Proforma
statements -Net Cash flows -Financial ratios
-Learning Curves -Students Learning -Software
(SAM) -Enterprise Report
-Agreement -Diagnosis -Field Reports -Schedule
of Indicators
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PARTICIPATING STUDENTS AND SUPPORTED ENTERPRISES
2001-2007
1573 Microenterprises 981 Students
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PARTICIPATING CONSULTANTS AND SUPPORTED
ENTERPRISES BY REGION 2001-2007
Baja California
Sonora
Baja California Sur
Sinaloa
Yucatán
México City
Nayarit
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THE MES IMPACT EVALUATION METHOD OF PRATS

• Method
• It is quantitative in that it attempts to
  determine the effects derived form the project on
  MEs.
• Can any improvements be considered direct
  result of the project?
• Relies on data collected by the consultant
  students on a daily basis over a 12 week horizon,
  with the use of the Schedule of Indicators.
• The impact is measured using learning curves
  arranged to fit three basic dimensions of MEs.

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THE MES IMPACT EVALUATION METHOD OF PRATS

• Three dimensions
• Technical (Average cost, Ct)
• Market (Revenues, Rt)
• Profitability (Profits, pt )
• Notion of learning curve play an important role
  in the statistical significance of the results

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THE MES IMPACT EVALUATION METHOD OF PRATS

• Learning curves arranged to fit the three
  dimensions are equations 1, 2 (or 2a) and 3

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THE MES IMPACT EVALUATION METHOD OF PRATS

• The change of the relevant variables
  (Average cost, revenues and profits) are
  dependent upon
• The evolution of experience or cumulative output
  (nt-1)
• Associated with the period of
  intervention
• The scale or output (yt)
• Controls for some variables affecting
  performance which are related to the activity
  level of the enterprises, separating the
  learning component which is supposed to be the
  result of the assistance during participation in
  the program

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THE MES IMPACT EVALUATION METHOD OF PRATS
The method determines the presence of
statistically significant changes in the
performance variables Ct, Rt and Profits (pt)
during program intervention and enterprise
participation Equations 1-3 are estimated by
ordinary least square The impact of the
assistance is determined econometrically by
analyzing the overall significance of the model
in terms of F-test, which test jointly the
parameters in the multiple regressions and
verifying the theoretically expected signs for
learning to take place ß1 0, F1 0
and a1 0
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THE SAMPLE
MEs in the sample This sample was selected from
425 MEs registered in the program. Not all
having enough number of time series to perform
analysis Some enterprises may have accepted to
participate in the program and as intervention
progressed they either refused to provide
data Exit the market or switch to different
activity Showed intermittent business The
consultant students drop the project and the
associated academic units
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THE SAMPLE
The assessment method is applied to 220 MEs
participating in PRATS from the Mexican sates of
Baja California and Nayarit. The MEs were
supported during different points in time a long
2001-2007 period. MEs had at least 20 time
series to the perform assessment, the number of
daily observations of the assessed MEs ranges
from 20 to 84. Female entrepreneurs represents
the majority (60), whereas males the remaining
40.
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THE SAMPLE
The activities of MEs in sample are Processed
food, 50.4 Metal products, 5.7 Services, 17.2
Commerce, 26.7 Annual income in 2003 prices
averaged 107,240 pesos for female and 167,656
for male entrepreneurs, which corresponds to an
income per employee of 56,468 and 88,240
respectively. These figures are about 50 of
formal MEs counterparts in Mexico.
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THE SAMPLE
The enterprises have been under five years of
operation 73, with a significant proportion of
having been operated for one year, 25. The MEs
are basically self-employment units employing few
workers. The MEs employ 1 to 3 workers, 80.
The average worker age per MEs, including the
owner, ranges 16 to 78 years.
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RESULTS
65 of the enterprises benefited at least in
one dimension
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DISCUSSION OF RESULTS

• MEs exhibiting learning
• Good consulting
• High returns from knowledge transfer to low
  educated MEs
• Refreshing flow of ideas complementing the
  experience of the entrepreneurs, (they can not
  focus on planning)
• Continuous learning

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CONCLUSIONS

• The contribution of service learning strategies
  to support microenterprises was approached
  through the estimation of learning curves in
  three different dimensions technical, market,
  and profitability.
• Method attempts to measure the extent to which
  the MEs benefited form BDS delivered through
  service learning programs
• The assessment method suggested that 67 of the
  MEs benefited in at least one dimension, whereas
  49, 35 y 39 benefited in terms of the
  technical dimension, market dimension, and
  profitability dimension.

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CONCLUSIONS

• Human capital provision for livelihood is a
  fundamental right, so schemes should be developed
  in order to provide basic BDS off the market in
  order to get many MEs in the market.
• The Service Learning program PRATS has played a
  role in this discussion by delivering
  economically BDS to this segment of MEs, as a
  reciprocity act based on a compensating
  institution of CS.
• The experience of PRATS evidence that S-L
  programs in Higher Education can impact community
  (MEs), so they can be oriented toward
  development.

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CONCLUSIONS

• CS programs like PRATS have the potential to
  benefit developing countries in three ways
• Deepening the social returns of public resources
  devoted to higher education.
• Complementing industrial policy with specific
  programs providing BDS economically, suitable to
  the increasing sector of Mes
• Improving the teaching-learning process in HEI.

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• Merci !!
• Thank you !!