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7 Effectiveness

Effectiveness in OECD/DAC terminology refers to what extent a programme fulfils the stated objectives. The B2B did not formulate ex ante quantitative targets concerning, for example, number of expected partnerships formed and sustained, employment effects or similar outcome, hence the assessment by the Evaluation can only be qualitative.

7.1 Target setting during implementation

While B2B lacked clear targets in terms of outcome, the companies themselves established targets for the Programme Indicators concerning: employment, turnover, investments and CSR reach over a five-year period in their applications for the Project phase. These indicators were also used for reporting year-by-year by the companies. Targets and results for each partnership were then used by the embassies in their monitoring, aggregated targets and results annually for countries and for the programme as a whole by Danida. In this sense, the Annual Indicator reports constituted quantified targets on what was expected to be achieved as and as the applications were signed by the embassies, these targets can be considered also the official objectives by the programme.

While the accuracy of these Annual Indicator reports has been questioned earlier in this Evaluation, it is clear that the targets established for turnover, investments and employment far exceeded the self-reported progress. Often results were only a fraction of the expected outcome. This would indicate that the effectiveness of B2B in fulfilling its objectives was quite low. However, the targeting was clearly set optimistically by the partners. The programme, on the other hand, did not question the targeting in the applications.

7.2 Knowledge and technology transfer

A basic motivation for business alliance programmes such as B2B is that they stimulate transfer of knowledge and technology from companies in the ‘North’ to partners in the ‘South’. In the following, the Evaluation uses also the term knowhow transfer to include all forms of technology transfers, but also management techniques such as strategy formulation, organisation, human resource management, accounting principles and other forms of business knowhow. Management cultures such as Corporate Social Responsibility and other value-driven aspects on business principles are also essential parts of such knowhow transfer.

Some 420 Danish enterprises have been engaged with local partner firms with the purpose of setting up joint businesses, in some cases over a period of six to seven years in the programme context, and when collaborations succeed, soon for a decade in some cases. The B2B has mainly financed soft inputs such as training, technical assistance, studies, and so on, while the hardware components have been limited. This could be due to fact that only 25% of the cost of equipment could be reimbursed and that the local company have had to finance the cost up-front, often waiting a long time for the reimbursement from the embassy, making this less attractive.

The training and technical assistance has largely been carried out by the Danish firms themselves, hence the knowhow transfer has been intense, estimated to have a total cost in the order of DKK 700 million.[48] This is by any means a significant budget for a capacity building programme in development cooperation. The technical assistance, furthermore, has been hands-on, delivered by people engaged in business, and often by the entrepreneurs themselves for the purpose of achieving concrete results.

The Evaluation rated the technology transfers in three categories in terms of knowhow transfers (none, some and considerable) based on the evidence in the two case study countries and in the random sample with the following results:

Figure 14: Knowledge transfer in the B2B Programme (Uganda, Bangladesh, and random sample)

Figure 14

Some or considerable transfer of knowhow had according to the Evaluation taken place in more than half of the partnerships, while in the case of Uganda, the ratio was for two thirds. The results of such training and technical assistance inputs have in many cases had profound effect of the local companies. For example, the Uganda case study found several emerging agro-industries in animal husbandry and piggery, which significantly had improved in knowhow due to the personal engagement of experienced Danish farmers. In the fishing industry in Bangladesh, Danish engagement in production of fishing equipment had meant a shift and modernisation of this industry, driven by Danish partners need to seek new markets. For details of the Ugandan and Bangladeshi examples, see country case studies Annex J.

In Bolivia, the collaboration between a Danish company involved in coffee processing and retailing is in the process of influencing the Bolivian coffee sector in quality and retailing, involving technology development which might not only be essential for Bolivia, but also other high altitude producing countries. In Egypt, a plant-breeding expert has helped introduce, breed, multiply and refine the production of lupines and quinoa at a farm having an impact on land fertility, local income and potentially on food security and public health. In Uganda, a B2B project in major vegetable oil processing focussed on upgrading the environmental technology in partnership with a highly experienced Danish technical institution, resulting in that the company could avoid the threat of being closed down by the authorities due to its effluence. In Bhutan, a local company engaged in water and sewerages, learnt from the collaboration with two leading Danish firms in environmental technology the importance of delivering not just hardware, but services, and the local company has through the partnership been turned into a highly successful enterprise. In Mozambique, a partnership in aquaculture has provided knowhow in the cultivation of tilapia; and in Bolivia a Danish design company assisted the local partner to develop a new technology for using llama fibre in textiles for up-market clothes for export with potential impact on a large number of Bolivian producers. In Egypt, a Danish fruit distributor has assisted a local farmer in product diversification and introduced new species on the farm contributing to a quadrupling of the farm’s turnover.

Knowhow transfer is often related to systems building, for example in creation of cold chain in the food industry and in general safety and hygiene in this sector, critical in developing country exports to industrial countries where food safety standards are generally very strict. Knowhow is also to a large extent related to market demands and quality issues in industrialised countries. In this respect, the Danish companies bring critical knowledge to local firms engaged in sub-contracting manufacturing in sectors such as information technology and food. The exchange of personnel between Denmark and the partner country was often a critical element, providing essential learning for the local company on how firms in the same business was organised in Denmark and the quality requirements on the Danish market. Financing such exchanges was an essential part of successful knowhow transfer and learning.

In general, collaboration between businesses from different cultures and markets mean learning from both parties. It would therefore be wrong to see the knowhow transfer as a one-way street. It goes both ways: Danish companies interviewed express overall the learning they have made through the partnerships of understanding of cultures and of new markets. While technology transfers from the North often can be a valid concept, technology is today globalised in many sectors and transfer of knowhow goes both ways, besides the aspect of mutual cultural learning.

As shown in the figure above, almost half of the partnerships in Bangladesh as well as in the random sample have not succeeded in knowhow transfers. The reasons for this are several: projects were aborted at an early stage of the Pilot or never took off. In other cases, the collaboration resulted in a partnership, but the local firm considered what the Danish firm had to provide added nothing to the capacity of the local firm. For example, in the majority of ICT partnerships in Bangladesh, the local firms claim there was no such technology or knowledge transfer. One company even maintained that they had to teach the Danish partner correct software development. In fact, the Bangladesh case study found only three partnerships, or 10% of all, which could be rated as having had considerable results in terms of knowhow transfers. They were all in the fishing/trawling sector as these are part of a nucleus of manufacturing of more modern fishing equipment than what was available in Bangladesh before.

Knowledge transfer was naturally different in Pilot only versus collaborations that went into the Project phase. In the Pilot phase, the focus was to determine feasibility of collaboration. The Pilot might nevertheless have contained such transfer as the partners often collaborated during a year in order to lay the foundations for a longer-term cooperation. Furthermore, the Project phase was no guarantee that the local companies perceived that a transfer of knowledge took place. In the random sample the distribution for Pilot only and the Project phase in terms of knowledge transfers is given below:

Figure 15: Knowledge transfer Pilot only and Project phase in the random sample. (Number of projects)

Figure 15

7.3 Determinants for successful knowhow transfers

The following table indicates the relationship between the company contextual factors and knowhow transfers as evident from the random sample. For details see Annex E.

Table 9: Relationship between various contextual factors and transfer of knowhow
Contextual factor Correlation with knowhow transfer
Size of the Danish company. Large companies considerably higher share of knowhow transfers.
Size of the local company. Large and medium-sized companies report higher share of knowhow transfers.
International experience of Danish company. Companies with considerable experience higher ratio of knowhow transfer.
Age of the Danish company. Older companies higher share of technology transfer.
Age of the local company. A higher share of technology transfer the older the company.
International experience of the local company. More experience higher ratio of successful transfers.
Financial robustness of the Danish company. Robust companies better in technology transfer.
Financial robustness of the local company. No clear correlation.
Business motive of the Danish company in B2B (market extension, outsourcing, in-sourcing of material, technical assistance). Outsourcing and market extension higher share.
Type of partnerships (agent; buy/sell; joint venture; technical assistance). Buy/sell highest share.
Business sector (agro & food, ICT, environment technology and other). No clear correlation.

The correlations or generally not strong for any of the contextual factors, but size of the partner companies matters (larger, better transfer), international experience and – at least for the Danish companies – financial robustness increase the chance for successful know-how transfer which largely is in line with the Evaluation’s initial hypotheses. The findings in the Uganda case study of partnership based on Danish technical assistance motive leading to good transfer is not confirmed in the random sample.

In the interviews, the Evaluation looked deeper into what creates successful transfer of knowhow. One factor is the commitment of the partners, and especially the local partner to the partnership. There has been a wide variety of this in the portfolio, from Danish entrepreneurs who have travelled to the partner country 60-70 times and engaged themselves deeply, to Danish companies which took the partnership light, with low priority, sometimes engaging only a locally-based consultant, and saw it more as a sideshow. Success in knowhow transfer requires considerable time inputs and above all motivation from both partners. Furthermore, similar to determinants for likely sustainability trust between partners played a role. If trust is not developed, the likelihood is that the local company will not take advice and information seriously. There are examples in the B2B portfolio of partners that have grown to be highly trusting of one another, resulting in the partner seeking advice and accepting advice on a number of issues as a matter of routine. Not seldom have these cases developed to deep friendships beyond the business. There are other cases in which trust has deteriorated to the extent that all advice is mistrusted. As mentioned earlier, trust, in itself, is a complex phenomenon. It cannot be treated as an exogenous parameter, but rather one that is a product of interaction, which can go both ways.

7.4 Effectiveness of knowhow transfer on company performance

Attribution of transfer of knowhow to company performance is not easy to establish. First, there is a time dimension. Business development tends to not be a rapid process, and a time horizon of a few years for the development of a new partnership is generally too short to decide on success or not, and whether the knowhow transfer is translating into improved company performance. Market changes and changes in competition take place concurrently, continuously impacting company performance, and which forces that dominate are not easily established.

Below is the correlation between the Evaluation’s rating of knowhow transfer under B2B and the company performance in the random sample. As evident from the figure, there is a strong correlation in the sense that successful knowhow transfer is correlated to local company performance.

Figure 16: Correlation between transfer of knowhow and performance of local companies (random sample)

Figure 16

7.5 Occupational health and safety for employees

Occupational health and safety (OHS) for employees is a focus area in the B2B Programme. In the application form for projects, the partner companies have to elaborate on how this dimension will be handled, and for most projects, there is a specific budget item concerning this. Occupational health and safety has, as far as the Evaluation has been able to assess, been taken seriously by the partners. Visits to both the Ugandan and Bangladeshi companies bore witnesses of this, with various manifestations in occupational health and safety investments. There has been concerted efforts to upgrade local companies or newly started JVs to similar standards as in Denmark, especially in skilled-based companies such as ICT. There are even a few projects in the sample reviewed specialising in OHS services.

The importance of OHS varies considerably between sectors. In ‘white collar’ work as in ICT and management consultancy, good OHS standards are more easily established than in traditional manufacturing. In a number of workplaces visited in traditional industries, the conditions were still sub-standard not only by European standards, but also by conditions laid out in ILO Decent Work Agenda. Production was carried out under very noisy and polluted conditions without any protective gears for the employees being used. This seemed not to perturb the owners or management participating in some of the sites visited.

An assumed developmental impact of the B2B is that improved standards in OHS (or more general working conditions for workers) will diffuse in the business community. This happens occasionally. An example of this is a company engaged in cleaning services in Uganda claiming that the upgrading of the working environment and conditions for the workers as a result of the B2B had made competitors copy the company. The reason was that improved working conditions for the employees increased turnover and created greater loyalty to the company, hence reduced costs. A weakness of B2B is that there is no inbuilt mechanism in the programme to promote diffusion of any technology, including OHS, beyond the partner company. Rather, the programme has enhanced competition as an objective, and spreading technology can very well be seen as undermining competition.

7.6 Environmental standards

The external environment is, together with OHS, another focus area in the B2B Programme. In the application form, the partner companies have to elaborate on how this dimension will be handled, and for most projects, it is a specific budget item. The environmental issues vary to a great extent between sectors, from minor or non-existent such as in management consultancies and ICT, to most significant as in some heavy industries as steel production. While there was some apparent environment work in nearly all the collaborations investigated, more significant impact was evident in about a third of the partnerships based on the findings of the random sample.

In some projects, improving the environmental standards were entirely the focus of the grant support. This was, for example, the case with support to two large, capital-intensive industries in vegetable oil extraction and steel production, both clearly sub-standard prior to the B2B from an environmental point of view. In these cases, the B2B projects clearly made considerable improvements both through technical and management inputs and investments. Especially the oil company invested considerable amounts in new environmental technologies of own resources in addition to the B2B grants.

An environmental issue of major concern is risk of resource depletion. In Bangladesh there may be issues with regard to overfishing as modern trawlers promoted by B2B projects might further deplete existing fishing stocks, particularly as the Bangladeshi government appears to issue fishing licenses without concern of sustainable stocks (apparently, new licences for trawlers have for the last years been issued on political grounds, without any knowledge of the size of the fishing stocks). The question of over-fishing is too complex to fully address in this report, but all stakeholders interviewed in Bangladesh, maintained that the situation has got worse over time. The fishing season has been reduced, and this has hit both the producers of trawling equipment, of fishing nets, of ships, in addition to the fishing companies. A Danish company engaged in B2B claims to have tried to engage the Danish embassy in the issue of regulating the fishing industry, but without success as the sector was not a priority for the embassy. The situation is less serious in the deep-sea regions of the Bay of Bengal, as few domestic trawlers are equipped to operate there. The Danish designs and equipment are on the other hand very well suited to those areas. If the Danish engagement can ease the pressure on the coastal fishing, it would have positive environmental effects. The embassy appraisals of the B2B projects in the sector have not reviewed the potential negative (or positive) effects on the sustainability of the fishing stocks.

Environmental projects

Many of the B2B collaborations had environment as business idea in sectors such as renewable energy, energy conservation, climate impact assessment, water treatment and sewerage, and waste management. In the overall B2B portfolio some 60 partnerships, or 14% of all projects, concerned such environmental technologies, 20 of which were in China and Indonesia. There are some considerable successes in this ‘sector.’ An example is in Bhutan where two Danish companies in the water and sewerage sector engaged with a small Bhutanese company involved in water & sanitation. The objective of the cooperation was to provide an environmentally sustainable solution to the treatment of sewage in Bhutan as well as pioneer an environment friendly commercially successful treatment of water, an objective, which is underway of being achieved.[49] The collaboration has clearly had a pioneering result in Bhutan.

In Uganda, on the other hand, the environmental technology partnerships were problematic. All the five projects, which had environment as business idea either failed as collaborations or were struggling. Projects in energy experienced market conditions less promising than anticipated, which led to withdrawal of Danish firms; a company in waste management found the procurement of such services in the city of Kampala wrought in corruption and malpractice, seriously threatening a planned joint venture. One company claimed that the targeted companies for energy efficiency services were not ready for commercial investments, but expected aid agencies to subsidies such measures.

In the random sample partnerships, which are classified as environmental technology has a similar ratio of successful collaborations to the ratio in the total random sample portfolio, indicating that Uganda was not representative.

7.7 Corporate Social Responsibility

Corporate Social Responsibility (CSR) makes up another key feature of the B2B Programme with explicit targeting and budgeting. The number of persons exposed to CSR activities as a result of the B2B projects is one of the six Programme Indicators. The assessment from the case studies, random sample and other means is that, overall, the Danish partner companies have taken CSR seriously and implemented the intended measures. Common features of such CSR activities are distribution of mosquito nets and condoms to staff, establishment of locker rooms for male and female employees, HIV/AIDS information, workshops for management on CSR and so on. Lectures on ILO’s Decent Work Agenda and the UN Global Compact – promotion of sound business practices were part of this.

Of the targets established in the applications for Project phase grants, CSR was the only one of the six indicators with good results in performance reported relative to what was planned. The reason for this is probably that the CSR dimension of the projects was rather easy to implement and at a low cost. In general, CSR is not high on the agenda in most of the local firms, and probably not that much for the smaller Danish firms either. Thus, much of the support under the B2B Programme risks of becoming cosmetic with limited sustainability once the grant support is over. One Danish company interviewed expressed a view seemingly shared by many, that the most significant CSR a company engaging in developing countries has is to survive and thrive, thereby creating growth and employment.

There are, nevertheless, some outstanding cases on CSR work in the projects reviewed. An example is a joint venture in Vietnam engaged in back-office professional visualizations though digital graphics for the real estate sector. The company, today employing near 300 persons, have made CSR a key profile and since its establishment worked proactively to integrate CSR into its business operation and development. It has a strong focus on gender and on creation of employment for the disabled, the latter group today making up more than 10% of the workforce. The company is furthermore providing training for sex-workers and recovering drug-users, providing general training to groups of young people going through a public rehabilitation programme, and also providing employment opportunities for them. The company has a CSR policy and is member of the UN Global Compact.

As with environment, CSR is a dimension of support, which is expected to have spread effects to other companies and the population as a whole. While demonstration effects in cases do happen, for example through a company such as the one mentioned above, the B2B Programme lacks a mechanism to assure that such spread effects actually takes place more systematically. Overall, the efforts by B2B to engage outside the partner company have been weak. When spread effects have been attempted, this has not been through the B2B’s efforts, but rather through the enlightened work of Danish entrepreneurs, seeing their involvement not just as a business development, but providing development assistance to poor countries.


[48] The Evaluation’s estimate is that technical assistance, training, studies and similar activities account for about 80% of the average budgets for the Pilot and Project grants. These costs include fees and travel costs.

[49] In this three party collaboration, the Pilot was started under B2B, but the Project phase was approved 2012 under the new DBP Programme.

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This page forms part of the publication "Evaluation of Danida Business-to-Business Programme 2006-2011 – Evaluation 2014.05" as chapter 7 of 11.
Version no. 1.0, 2014-11-14
Publication may be found at the address http://www.netpublikationer.dk/um/14_danida_btb_programme_2006_2011/index.html