Informal Micro Research Articles

Small family business in Russia: formal or informal?

PurposeThe purpose of this paper is to deal with informal entrepreneurial activity of micro and small family businesses in the specific transitional environment.Design/methodology/approachThe paper uses two cases – an informal micro business (“marginal” family business), and a formal retail small firm (“simpleton” family firm), respectively, of a panel conducted in 2013–2015 in Moscow.FindingsFirst, the real distribution of responsibilities between family members is informal; it relies more on interpersonal trust and “common law.” Second, exactly the ease of governing such trust-based businesses for the founders’ generation sets limits of succession of small-scale family businesses. Third, as trust in the state is very low, the policy of Russian authorities to quickly force informal entrepreneurs to become legalized is substantially wrong; the results would be either a transformation of “simpleton” into “marginal” businesses or quitting business.Research limitations/implicationsResearch limitations of the study are the number of observations and the localization of the panel only in the capital of Russia.Practical implicationsThe fundamental failure of Russian State policy toward small-scale family businesses is its attempt to convince “marginal” to formalize and to oppress “simpleton” family businesses pushing them into informality. In fact, it should be designed vice versa: tolerate “marginal” businesses and let them to “live and die” while shaping a friendly environment for “simpleton” family firms.Originality/valueThe paper argues that the most important facet of informality in small family entrepreneurship is the informal property rights and governance duties’ distribution among the family members.

Growth Constraints of Formal and Informal Micro and Small -Scale Enterprises and Their Impact on Policy Formulation in Zimbabwe

The new view on MSEs in the informal sector perceives them as being permanent, stable activities comprised of dynamic businesses that affect most economic activities. As such, they need to be considered in economic policies to ensure that they can grow and contribute to the national economy. In Zimbabwe, policies for entrepreneurial development are mainly informed by formal - sector enterprises. This study analysed the similarities and differences in the growth constraints of MSEs operating in the formal and informal sectors in Harare, Zimbabwe . Using descriptive statistics and principal component analysis, the study analysed 21 internal and external growth constraints. The findings were that formal - sector MSEs perceive internal factors as constraining them the most, while informal MSEs perceive external factors as constraining them the most. The study concludes that a common policy approach cannot work in addressing the needs of the two sectors. Sector- specific policies need to be formulated in order for the enterprises in both sectors to fully contribute to the national economy.

Analyzing the Determinants of Entrepreneurial Activity Level in Urban Micro Enterprises in Sri Lanka

Micro entrepreneurship’s potential as a main source of inclusive growth in developing countries is well acknowledged and therefore it emerges as a key agenda item for economic policy makers. The success of the enterprises is not only dependent on the entrepreneur’s ability but also on the other factors. Therefore, investigating the determinants of entrepreneurship activity level such as socio-demographic, economic, cultural environment and personality characteristics of the people are essential ingredients for formulating suitable policies for enterprise development. Hence the main objective of this study is to investigate the determinants of urban micro entrepreneurship activity level in Sri Lanka. Data were drawn from a sample of 300 micro entrepreneurs chosen under stratified random sampling method. The determinants of probability of being in different categories of informal micro entrepreneurs within the entrepreneurial process were examined on the conceptual basis of Eclectic framework decomposing the entrepreneurial process into three phases: nascent, young and old business owners utilizing multinomial logistic model. It was found that education is positively significant for all three levels of entrepreneurship and it is the most prominent which increasingly effects on the odds of being nascent entrepreneur. Young entrepreneur is more significantly negatively affected by administrative related issues and complexities, lack of financial support; internal locus of control rather than nascent entrepreneurs while availability of necessary infrastructure seems to encourage an active involvement in entrepreneurial activity at the nascent phase more significantly. This study suggests multipronged approach to assist micro entrepreneurs specifically providing easy access to credit, intensive follow-up trainings to overcome the issues related to knowledge, skills and attitudes, minimize disturbing factors like administrative issues (licenses, approvals, infrastructure providence etc.), and poverty reliefs to improve effective dynamic entrepreneurship and lessen hurdles on entrepreneurial activity and thereby economic growth.

Una estrategia de autosostenibilidad de bajo costo para pasar de la economía informal a la economía formal. El caso de la Comuna 10 de Cali, Colombia

Como hipótesis de trabajo se plantea que los índices de informalidad están directamente correlacionados con las muy precarias y en ocasiones inexistentes garantías de protección social. La gravedad del problema estriba en que la falta de personería jurídica impide el acceso al sistema de seguridad social integral, lo cual origina un latente riesgo profesional en la ejecución de la actividad económica. En este orden de ideas, el objetivo de la presente investigación es sensibilizar a los microempresarios informales sobre la necesidad de hacerse visibles ante el sistema empresarial del sector público y privado estructurando una metodología para su formación contable administrativa-costos. El diseño metodológico se fundamentó en la integración de análisis cualitativos y cuantitativos, en un contexto social-histórico, para determinar el comportamiento de la microempresa informal en un tiempo y espacio determinados, y en condiciones culturales específicas. El firme acompañamiento de la Universidad de San Buenaventura a la población objeto de estudio en los procesos contables, administrativos y de costeo pretende estimular la toma de decisión de los microempresarios para encaminar su formalización y consolidación como empresa.

ICT Access and Social Infrastructural Facilities and the Performance of Informal Micro- and Small-Business Enterprises in Nigeria

This paper examines the roles that access to ICT and improved social infrastructure play on the performance levels of informal micro and small business enterprises in Nigerian. For formal sector organisations, studies have been conducted to verify this, but not much is known with respect to micro and small informal sector businesses. This study therefore intends to bridge this yawning gap by carrying out an analysis of the impact of the access to telephone (a major component of ICTs that is fast finding common usage among informal sector enterprise-owners) among informal micro and small businesses in Nigeria. The study relies on primary data on the informal sector enterprises collected by the Nigerian Institute for Social and Economic Research (NISER) in 2014. Basic descriptive statistics in addition to the Ordinary Least Squares Regression model is used in the analyses of the data. Policy measures that will enhance further diffusion of ICT infrastructure among micro and small business to enhance their growth and contributions to income and employment generation are recommended at the end of the paper.

A Proposed Framework on the Relationship between Islamic Microfinance Related Factors and Women Entrepreneurs Business Performance in Nigeria

Microfinance plays a key role in poverty alleviation, employment generation, mitigating rural urban migration, utilization of local resources and raw materials and contributing to the gross domestic product (GDP) of Nigeria. Women, majority of who are poor and engaged in informal micro, small and medium scale businesses are mostly the target of microfinance institutions. However, women entrepreneurs find it difficult to have access to the products and services of the conventional banks due to their stringent lending requirement. The presence of Islamic banking which promotes the profit and loss sharing (PLS) concept increases the awareness among women entrepreneurs to alternative funding sources. Despite availability of financing options, women entrepreneurs are constrained by their reluctance to use interest based microfinance services. This paper aims to provide a proposed framework that examines the impact of Islamic investment and financing contracts (Murabaha financing and Mudharabah savings) and other microfinance related factors (training, social capital and self-esteem) on women entrepreneurs business performance. Religiosity is a new moderating variable within the framework that is hypothesized to enhance business performance of women entrepreneurs. The proposed framework will fill the gap in Islamic banking and finance studies since the area of Islamic microfinance and the moderating effect of religiosity has not been empirically investigated.

English

  A five year longitudinal study (2007 to 2011) was conducted among a panel of informal micro businesses in the informal sector of South Africa. The study was aimed at examining micro business survival and attrition. A life-cycle analysis confirmed the survival of only 43.2% of these businesses in an increasing competitive environment over a period of five years. By contrasting the profiles of surviving businesses with those that closed their doors, a second objective was also attained, namely the identification of principle reasons for micro business survival. According to a categorical regression model with business survival as dependent variable, the human factor and, especially the entrepreneurial endowment and small business management skills materialised as the strongest predictors of micro business sustainability. Micro business support strategies, especially in developing societies with limited resources, should be focused on businesses with embedded entrepreneurial acumen. Hence the inherent dynamics to create and exploit new innovative business opportunities.   Key words:  Entrepreneurship, micro businesses, informal sector, sustainability, South Africa

BARRIERS TO ENTRY AND RETURNS TO CAPITAL IN INFORMAL ACTIVITIES: EVIDENCE FROM SUB‐SAHARAN AFRICA

This paper investigates the patterns of capital entry barriers and capital returns in informal micro and small enterprises (MSEs) using a unique micro dataset for seven West African countries. Our findings support the view of a heterogeneous informal sector that is not primarily host to subsistence activities. While an assessment of initial investment identifies some informal activities with negligible entry barriers, a notable cost of entry is associated with most activities. We find very heterogeneous patterns of capital returns in informal MSEs. At very low levels of capital, marginal returns are extremely high—often exceeding 70 percent per month. Above a capital stock of 150 International Dollars, marginal returns are found to be relatively low at around 4–7 percent monthly. We provide some evidence that the high returns at low capital stocks reflect high risks. At the same time, most MSEs appear to be severely capital constrained.

Core Competencies of Micro Businesses as Sources of Competitive Advantage: An Exploratory Study of Street Food Vending

It is evident that business practices in large and medium sized enterprise are well defined, but little research has been done on the field of small scale and micro businesses. This research study focuses on an important part of the urban informal micro businesses sector: The street food vending. The objective of the study is to find out and analyze the core competencies of street food vendors as sources of competitive advantage. No study has yet been conducted on this field and this made the writers interested to analyze the core competencies of street food vending. In carrying out the research work, a standard research methodology was followed starting with the deskwork, which include literature review and pilot survey. 42 vendors and 52 customers were interviewed and analyzed. From the literature review and pilot survey, the study pointed out number of core competencies of street food vending such as ‘the ability to maximize the use of opening and closing hours of shop,’ ‘the ability to provide special food,’ ‘special knowledge in ingredients and cooking methods,’ ‘the ability to cook and demonstrate in front of customer,’ ‘the ability to minimize production cost,’ ‘the ability to provide food in cheaper price,’ ‘the ability to choose convenient location,’ ‘the ability to deliver food in a shorter time,’ ‘the ability to provide food according to customer requirement,’ and ‘creativity in interacting with customer.’ In spite of some weak points, still the street food vendors have some core competencies compared to non-street food shop. In our study, it was found and recommended that ‘the ability to provide food in cheaper price,’ ‘the ability to choose convenient location,’ ‘the ability to deliver food in a shorter time,’ and ‘the ability to maximize the use of opening and closing hours of shop’ could be the core competencies of street food vendors.

Nuevas centralidades y prácticas de consumo en la Ciudad de México: del microcomercio al hipermercado

This paper addresses the phenomenon of the simultaneous and explosive expansion since the late eighties all over Mexico City metropolitan space, of the globalized retail chains and the street informal micro commerce. The processes linked to this phenomenon are explored by examining evidences regarding metropolitan population consumption practices, observed in a sample of neighbourhoods areas concerning a wide spectrum of urban environments and socio-spatial strata co-existing in the metropolitan territory. The analysis shows, on one hand, a transformation of consumption practices that, as it was expected, are differentiated according to residential location and its corresponding urban environment, individual and household socio-economic level, and alternative forms of mobility (private car – public transport). But, on the other hand, that these practices are also shaped by a specific economy of mobility and by specific compatibilities between globalized consumption forms -which tend to incorporate, though under different modalities, all social classes-, and the role played by the informal micro commerce.