Staff Publications

In developing and emerging (D&E) countries, the large number of poor people, most of whom are female, earn a living based on small-scale self-employed units established in subsistence marketplaces in the large informal sector. With the recent rise of middle-classes in developing and emerging countries, micro-entrepreneurs, can potentially lift themselves out of poverty by seizing the opportunities provided by the new upcoming middle-class (UMC) customers. To exploit these opportunities micro-entrepreneurs have to make a step-change away from their current customers in subsistence marketplaces to create higher value propositions for UMC customers. As a strategic marketing decision, the step-change inherently comes with challenges in developing resources and capabilities required to cater to UMC customers. It hosts potential conflicts between informal- and formal-sector stakeholders as it requires both new resources and continued access to existing resources. The findings suggest that step-change is a three-step process consisting of three market entries, into, “passing-by customers”, UMC, and business markets. The value propositions associated with these markets are also hierarchical in terms of quality, quantity, consistency, and complexity. Although the processes within the steps (motivations, opportunity recognition, assessing the need of resources, resource accumulation and (re-)integration, value proposition, and market entry) have a similar structure, their content differs between steps. The findings also indicate that gender issues vary by step. Whereas, in step 1 and 3 gender differences are less remarkable, they are more pronounced in step 2, where women mainly use their relationships with individuals to access resources whereas men use both individuals and groups to access resources. The thesis suggests that to initiate and sustain step-changes, both female and male entrepreneurs have to invest in capability-building.

This thesis contributes to a growing literature that explores relationships between social networks and innovation diffusion within a developing country context. Given this context, the networks of interest within this thesis are the offline interpersonal relationships between community members. Diffusion channels for new innovation are therefore limited to word-of-mouth communication, observation, and personal experience.

Chapter 2 of this thesis analyses two policy tools in targeting these information gaps. The first is through social learning as part of a farmer extension program. The second combines social learning with experiential learning, reducing the cost to personal experimentation with subsidized improved input packages. Our results indicate that farmers who are exposed to both social learning and learning-by-doing more significantly impacts farmer productivity relative to those receiving no intervention and those exposed only to social learning. I interpret this result as an indication of learning-by-doing combined with social learning being a more effective strategy for facilitating adoption of technologies that have more heterogeneous returns to adoption.

Chapter 3 of this thesis tests the difference in diffusion patterns that result by varying the network contact- point. Specifically, network contact-points are selected as being either the most central or least central individuals within the network. I find evidence that centrality affects the speed of distribution but does not affect the width of diffusion nor which individuals are participating within the diffusion process. Furthermore, large attenuation is observed throughout the diffusion process, which suggests the importance of selecting a sufficiently large set of lead community members for the spread of new technology.

Chapter 4 combines a community-wide polling of network entry-points combined with detailed community network and socio-economic data. First we explore what attributes are prioritized by community members in nominating a resident farmer as an extension contact-point. Second, we use simulations to compare the diffusion spread of top-nominated individuals as network entry-points compared to entry-points that achieve maximal spread within diffusion simulations. We find that community members prioritize network connectedness, pro-social preferences, and socioeconomic indicators of gender, age, formal leadership, and education levels within their nomination decisions. Furthermore, receiving the top three most amount of nominations is found to be significantly correlated with selection as an optimal entry-point within the diffusion simulation. These results suggest that community-wide polling offers a less data-intensive opportunity to realize gains in diffusion warranted through network-based seeding.

Chapter 5 explore whether an individual’s observed social preferences is correlated with an individual’s centrality within the network structure. Our results indicate that individuals with high centrality are more trusting and more trustworthy than individuals with lower centrality. Moreover, individuals with low centrality are treated worse in these interactions—people trust them less initially, and return less money to them. Within a group context, little evidence is found of more central individuals displaying more cooperative behavior. Instead, for group cooperation, when a single monitor can observe contribution decisions, the presence of a direct link and more mutual network connections with a monitor correlates to more cooperative behavior by that individual. Our results suggest that network centrality and pro-social preferences are related but more localized network ties are more strongly correlated with pro-sociality than overall network connectedness.

Local institutions and rural development: Evidence from Liberia

This thesis focusses on the role of local (informal) institutions for development, based on data from Liberia. I show that dense family networks can be an obstacle for economic decision making, due to strict income sharing obligations that often belong to them. I also demonstrate the importance of local governance quality: corrupt village leaders negatively affect daily investment decisions by villagers. Finally, I evaluate the impact of a rural development project that aims to strengthen food security and social cohesion between villagers. The results indicate that the impact is marginal at most, and local institutions again do play a role.

Institutions are difficult to change, as they are rooted in an historical context. However, policy makers could support the emergence of alternative institutions. Either way, a deeper understanding of the far-going impact of local institutions is important: this research contributes to that.