Micro and small business in Brazil: asymmetries and financial fragility

Abstract

Micro and small enterprises (MSEs) in Brazilian industrial manufacturing reveal a low capacity for innovation in products and management, poor performance in competitive environments and weak international orientation. Besides, the access to credit is restricted. In the aftermath of the global crisis, new flows of credit benefited bigger corporations in spite of the micro and small firms. In addition to their financial fragility, the strength of the domestic currency (real) enlarged the difficulties for successful entrepreneurs in industrial manufacturing. As a result of the competition with Chinese’s products, small firms recorded a fall both in the domestic market share and in the volume of exports. In this setting, new investments under the management of private-equity funds have turned out to threaten the survival conditions of firms in the MSE sector. Considering this background, our attempt is to highlight the major challenges regarding management, innovation and financial asymmetries.