Anne Fitzpatrick, The Ohio State University, Associate Professor, Agricultural, Environmental, and Development Economics
Title: Competing for Quality: The Impact of Social Franchising on Firm Survival and Spillovers in Kenya’s Daycare Market
Abstract: High-quality daycare has the potential to be a “triple-win”: fostering child development, increasing parental income, and increasing daycare profits in a mostly female workforce. However, in many low- and middle-income countries, the daycare industry is largely unregulated. Quality is often low — especially in poor communities — and raises child safety and health concerns. Low quality may explain parental hesitancy to use paid care despite reporting a desire for additional childcare options. In this project, we partner with a social enterprise dedicated to improving daycare quality through training and facility improvements. We randomize the partner's entry into 51 communities in urban informal settlements across 11 counties of Kenya, and we examine quality and revenues 12 and 24 months after entry. By identifying providers highly likely to participate in the intervention, our design allows us to identify spillovers onto competing firms. Results after 12 months indicate that the intervention substantially improved daycare quality, as well as increased the likelihood of food provision by 12 percentage points (16%). We show that the intervention increased the likelihood of daycare firm survival by 6 percentage points (26%). This effect is driven by survival of higher-quality firms at baseline. We see no changes in price or revenues. However, we document positive quality and nutrition spillovers onto competitor firms, suggestive of competition over quality in childcare markets. The study will be concluded in June 2026, with final results available in October 2026. This study will contribute new information on whether a social-franchising model can improve daycare quality and improve child well-being in settings with limited regulation and no government provision.
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