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Annex D: Theory of Change for the B2B Programme

1. Introduction

The following is a reflection on how the conceived Theory of Change corresponded to the actual results as derived at by the Evaluation. The ToR for the Evaluation presented a tentative Theory of Change for the B2B Programme (please see Annex F). With the point of departure in the ToR, the evaluation questions and the preliminary desk analysis, the Evaluation Team presented its version of a Theory of Change in the “Inception Report, 31 January 2014”. The Theory of Change has been amended a few times during the Evaluation, and a consolidated version was presented in the “Update of the Evaluation Methodology, 12 May 2014”.

The Theory of Change was reconstructed based on the B2B Programme’s objectives, and presented the intended/warranted results of the B2B development interventions at the conceptual stage. Being a development programme, such impact is intended to be positive. However, given the level of investments in each of the B2B Programme countries, the macro-level impact on poverty reduction and in promoting economic growth and social development has been minimal and was thus left out of the analysis. The thrust of the Theory of Change as regards long-term outcomes and impacts is therefore on the local level, i.e. in those urban and rural communities in which the B2B partnerships have been established and functioned; and the extent to which the B2B partnerships have had systemic impact on the business environment in which they operate, such as technology transfer and market development. ‘Market access’ turned out to be an essential expectation among the partners, which was subsequently added in the Theory of Change diagram.

2. Theory of Change – The Project level

The total B2B portfolio between 2006 and 2011 comprised 445 collaborations of which 205 went through the pilot phase only and 240 through the project phase. The B2B has funded about 420 pilot collaborations, implying that 215 continued to the project phase, i.e. that about 90% of the project collaborations were preceded by a pilot collaboration. About 25% of all partnerships continued after the B2B support had ceased, i.e. approx. 110 partnerships.

The Theory of Change is indeed a theory, as it is based on the Programme’s objectives; hence it presents the expected results of the B2B Programme interventions in the ‘best case scenario’. During the country visits to Uganda and Bangladesh and the review of the random sample partnerships, it was realised that not all outcomes and impacts of the B2B Programme interventions were positive, and that there were also cases with either no or unintended negative effects. Once the results have been ascertained it would no longer be a theory, but a statement on the actual situation. A diagram depicting typical negative effects was drawn up to mirror the reconstructed Theory of Change – and was termed the ‘worst case scenario’. The results of the B2B Programme partnerships would not be either all positive or all negative for the programme as whole, as there is a great variation in performance of the partnerships. The overall result will be between the two extremes – as some collaborations would have positive impact, some mixed, and some negative. A Theory of Change could in principle be drawn up for each partnership.

3. Theory of Change – The Programme level

There are 445 B2B partnerships with varying results and impacts. The following is an account of the results chain for the programme in general terms – based on the Evaluation Team’s findings. The Theory of Change diagram has been amended to indicate the level of results.

Interventions

The key actors engaged in interventions leading to B2B partnerships were: DGG; the embassies; the business community in the B2B partner countries and in Denmark; and the business associations (DI and HVR) and/or consultants. The operational framework for the B2B partnerships were the B2B guidelines and procedures, which were interpreted by the embassies in terms of sectors to be promoted and forms of collaboration. This interpretation varied quite significantly among the embassies from being very flexible to being almost predetermined.

The main contextual factors for promoting partnerships were: the embassies motivation and the resources applied; the quality and scope of guidance provided by the business associations and consultants, and not least the potential partners’ motivation for engaging in partnerships. Some countries were more attractive than others from a Danish company perspective due to language, business environment, and investment climate. The global economic crisis prompted a number of Danish companies to seek new markets and to expand their business concepts – and saw the B2B Programme as an opportunity for doing that.

Outputs

The above interventions have prompted businesses in Denmark and in programme countries to enter into the contact phase to have a first impression of the potential partner and to judge the realism of a potential partnership. About 1,300 matchmaking arrangements were undertaken from 2006 to 2011. In those cases where a partnership looked promising, the partners agreed to enter into the pilot phase to explore the business opportunity and challenges in greater detail. Some of the pilot phase collaborations were mostly concerned with the feasibility assessment, whereas others also embarked on testing production technology processes through procurement of ‘modern’ equipment and TTA. Those pilot collaborations seeking further B2B support had to present a consolidated business concept as part of the application for the project phase. Some partnerships were dissolved at the end of the pilot, but some also continued without the B2B support. The main thrust of those partnerships that continued into the project phase was on transfer of knowhow and technology with a view to enhancing the local company’s performance.

The main contextual factors for maintaining the partnerships and thus being able to generate short-term outcomes were: the mutual trust between the partners including an appropriate level of engagement by the partners to sustain the project activities; the robustness of the partner companies in terms of human and financial resources and experience to overcome unforeseen difficulties; the business environment in the partner country; and that the performance forecasts were likely to be achieved to an acceptable extent.

Short-term outcomes during the project period

The B2B partnerships succeeded in transferring considerable new technology and knowledge due to the substantial interaction between partners during the pilot and project phases. In many cases this led to increased performance of the local company in terms of turnover and productivity, but only to a limited increase in employment. Generally, the performance forecasts were optimistic and were seldom achieved fully. Significant improvements in the internal as well as the external environment were achieved, as Danish companies generally have this high on the agenda in their domestic manufacturing and service delivery. Such improvements have been achieved through introduction of ‘clean technology’ and improved management systems of resource utilization and pollution control.

The partnerships have dealt with CSR quite differently. Some partners have defined internal CSR as improving the working environment for the employees, which is an obligation according to most countries’ labour laws. Other partnerships have provided socio-economic benefits to their employees that are in addition to improved working environment. In a few cases the main CSR activity has been provision of information on protective measures to avoid attracting HIV/AIDS. As regards the external CSR, some partnerships did not considered external CSR; other partnerships mainly focussed their CSR activities on the external environment resulting in better protection of natural resource; and some have conceived interventions that constitute a strategic element of their business vision and concept. CSR is a relatively new concept for most local partners, which was also the case for some of the Danish partners. For some Danish partners the main aim was the business perspective, whereas others also appreciated and accepted the development perspective of the B2B Programme and took great care to comply with this through CSR interventions.

The main contextual factors for facilitating the transition from short-term to long-term outcomes were: a continuing satisfactory level of performance of the local company in terms of turnover, expanded access to the domestic and/or international markets – which in turn is heavily influenced by the business environment in the partner country and region; and consolidated cooperation agreements securing the Danish and local partners adequate influence over the joint operations.

Long-term outcomes in the post-project period

The long-term outcomes are generated from successful pilot and project collaborations, especially so if the partnerships continued progressively after the B2B support had ceased. A number of pilot collaborations were ‘de facto’ projects having the potential to generate long-term outcomes. The positive outcomes of pilot and project collaborations enhanced the performance of the local companies in terms of work conditions, quality of services and products, and improved resource efficiency – all of which strengthened their competitive position. However, only in a few cases – mostly agro-based companies – were there substantial employment spill over effects that benefitted the local community.

A number of the Danish companies had previous international experience, some of which also had experience from developing countries – in some few cases gained from previous B2B engagements. Other Danish companies did not have any previous international experiences and were not well prepared for the many challenges they encountered in setting-up businesses in a developing country. Nonetheless, for the experienced as well as the less experienced companies in foreign operations important lessons were learned at the individual and corporate level that influenced their internationalisation strategies, whether it was adjustment of existing ones or preparation of new ones for companies that wanted to enter the foreign markets – including those in developing countries.

The main contextual factors for facilitating the transition from long-term outcomes to sustainable impacts were the extent to which: the successful local companies were able to maintain their technological achievements and market gains resulting in sustained performance; the local business environment was conducive for the local companies; the spill over effects to the local community increased overtime in terms of increased employment and income; and local government revenues stemming from company taxes and charges supported social welfare in the local community.

Impact

The B2B supported local companies did not adequately generate employment and income that enabled to raise the level of welfare significantly in the local communities in which they were located, except in a few cases. Correspondingly, the contribution to poverty reduction in the local communities has not been as significant as warranted. There may be numerous small-scale, indirect positive impacts that have not been detectable, but which nonetheless could have made a difference. Impacts may also materialise over time and in quite different situations and locations.

Despite the significant amount of transfer of knowhow and technology to the local companies, it appears that the diffusion of technological achievement has only taken place to a limited extent. A higher rate of diffusion of technology, management systems, CSR interventions, etc. would have added to the Programme’s overall impact.

The continued benefits for the local company depended on their management’s ability to further exploit technological and market opportunities – either through their own doing or through continued interactions with foreign partners, some of which could be the Danish B2B partners. Once local companies have been exposed to the kind of benefits that can be attained from partnering they may proceed along that avenue.

In monetary terms, the benefits have generally not been substantial for the Danish companies. A number of the Danish companies also had an altruistic perspective in supporting the local company. But the experience and lessons learned have been valued, as these provided insights on how best to expand their markets in developing countries.

In the Theory of Change diagram on the following page, the weight of the arrows has the following meanings:

Dashed right arrow   Strong link

Normal right arrow   Medium link

Bolded right arrow   Weak link

Theory of Change for the B2B Programme

Illustration of Theory of Change for the B2B 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 annex d
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