Small enterprise development

Introduction

Over US$24.5 billion of development aid is targeted at Small and Medium Sized Enterprises (SMEs) and donor interest is increasing; yet targeting small enterprises is controversial. Advocates maintain that smaller enterprises are the place where most poor people find employment and economic opportunity; targeting them with assistance makes more sense than helping larger companies (which may not need as much help anyway).

Opponents of such targeting, however, argue that much employment is also lost through ‘churning’, as small enterprises come and go. Besides, they note, it is important to look at the private sector as a whole, since small enterprises often depend on larger ones for their inputs and markets.

This page explores the debates in more detail, and points you to further reading and key resources on the topic.

 

Resources on small enterprises

 

Overview documents and links

• Small and medium-sized enterprises and decent and productive employment creation, ILO, 2015. This report presents evidence on the relevance of small and medium-sized enterprises (SMEs) for employment, the key constraints faced by SMEs and their workers, and the effectiveness of measures to support this enterprise segment.
• Micro, small and medium enterprise upgrading in low- and middle-income countries: literature review, DIE, 2013. This paper asks which factors constrain or promote micro and small enterprises in becoming larger and/or more productive.
• Which factors determine the upgrading of small and medium enterprises? Evidence from Egypt, India and the Philippines, DIE, 2013. This paper presents three extensive empirical case studies on Egypt, India and the Philippines. It argues that the entrepreneur matters much more than the recent literature would otherwise suggest.
• Is Small Still Beautiful? Literature Review of Recent Empirical Evidence on the Contribution of SMEs to Employment Creation, ILO, GIZ and BMZ, 2013. Donor agencies and governments have provided multi-billion dollar support programs for SMEs in developing countries. This study reviews the recent literature  concerning credible empirical evidence on the role of SMEs in employment creation.
• Entrepeneurship and Economic Development: Theory, Evidence and Policy, IZA, 2013. This paper provides an overview of the state of the art of the intersection of development economics and entrepreneurship. It deals with (i) recent theoretical insights; (ii) empirical evidence; and (iii) fresh insights for entrepreneurship policy that emerges from recent advances in this area, including female entrepreneurship.

 

Access to finance

• Scaling-Up SME Access to Financial Services in the Developing World, IFC, 2010.
• Assessing the Credit Gap for Micro, Small, and Medium Enterprises in the Developing World, McKinsey and IFC, 2010.

 

Business environment reform, trade facilitation and small enterprises

• The Impact of Business Environment on Small and Medium Enterprise, Erick Rocha, 2014.
• Micro-Multinationals, Global Consumers and the WTO. Towards a 21st Century Trade Regime, eBay, 2013.
• Commerce 3.0 for Development. The promise of the global empowerment network. An eBay report based on an empirical study conducted by Sidley Austing LLP, 2013.
• Doing Business 2014. Understanding Regulations for Small and Medium-Size Enterprises, The World Bank, 2013.
• Unleashing potential: The Internet’s Role in the Performance of Indian Small and Medium Enterprises, Nathan Associates, 2013.
• Donor approaches to improving the Business Environment for Small enterprises, Simon White, 2004.

 

High growth enterprises

• Accelerating Startups in Emerging Markets: Insights from 43 Programs, GALI/Deloitte 2017
• High-growth entrepreneurship in developing countries. A preliminary literature review, The World Bank, 2016.
• Small and Growing Businesses: Investing in the Missing Middle for Poverty Alleviation, ANDE, 2012.
• Constrained Gazelles: High Potentials in West Africa’s Informal Economy, World Development vol. 40/7, 2012.

 

Micro-enterprises

• Household enterprises in Mozambique: Key to poverty reduction but not on the development agenda? World Bank Policy Research Working Paper, 2013.
• Helping a Large Number of People Become a Little Less Poor: The Logic of Survival Entrepreneurs. European Journal of Development Research, 2012.
• Household enterprises in Sub-Saharan Africa: Why they matter for growth, jobs, and livelihoods, World Bank Policy Research Working Paper, 2012.
• Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, in: Reluctant Entrepreneurs, Abhitjit Banjeree and Esther Duflo, 2011.
• The Unofficial Economy and Economic Development, Brookings Papers on Economic Activity, The Brookings Institution, vol. 39/2, 2008.

 

Small enterprises and gender

• Growing micro-enterprises: How gender and family can impact outcomes – evidence from Uganda, ILO, 2017.
• The Women’s Entrepreneurship Index (FEI), GEDI Institute, 2015.
• Gender and the Business Environment for New Firm Creation, The World Bank Research Observer, vol 26/2, 2011.
• The Challenges of Growing Small Businesses: Insights from Women Entrepreneurs in Africa, ILO, 2004.

 

Small enterprise productivity and innovation

• The Performance of Firms in Latin America and the Caribbean: Microeconomic Factors and the Role of Innovation, UNU-MERIT, 2015.
• Market Dynamics and Productivity in Developing Countries: Economic Reforms in the Middle East and North Africa, IDRC/Springer, 2010.
• Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small and Medium Enterprises. World Bank Policy Research Working Paper, 2009.

 

Small enterprise support programmes and evaluations

• Improving market access for smallholder farmers: What works in out-grower schemes – Evidence from Timor-Leste, ILO, 2017.
• What do we know about the effectiveness of Business Management Training? Key studies referenced in the DCED Evidence Framework, DCED, 2013.
• The impact of SENAI’s vocational training programme on employment, wages, and mobility in Brazil, IRIBA, 2014.

 

Guidance for small enterprise promotion

• SME Promotion Agencies – Is there a best set-up? A quest for good practice, ILO, 2016.
• Toolbox for promoting innovation systems. GIZ, 2014.
• Innovation Policy in Developing Countries. A Guide for Developing Countries, The World Bank, 2010.
• Developing SMEs Through Business Linkages, IFC, 2008.
• Assessing the Influence of the Business Environment on Small Enterprise Employment, ILO, 2004.
• Business Development Services for small enterprises: Guiding principles for donor Intervention, DCED, 2001.