"This paper examines the role of private support institutions in determining small and medium enterprise (SME) growth and performance in Sub-Saharan Africa (SSA). It finds that SMEs in SSA get around market failures and lack of formal institutions by creating private governance systems in the form of long-term business relationships and tight, ethnically-based, business networks. There are important links between these informal governance institutions and SME performance. Networks raise the performance of "insiders" and, in the sparse business environments of the SSA region, have attendant negative consequences for market participation of "outsiders," such as indigenous African SMEs. This is indicated through the determinants of access to supplier credit. Policy interventions will be needed to improve the platform for relation-based governance mechanisms and to address the exclusionary effects of tight networks. "
This paper examines the role of private support institutions in determining small and medium enterprise (SME) growth and performance in Sub-Saharan Africa (SSA). It finds that SMEs in SSA get around market failures and lack of formal institutions by creating private governance systems in the form of long-term business relationships and tight, ethnically-based, business networks. There are important links between these informal governance institutions and SME performance. Networks raise the performance ofinsidersand, in the sparse business environments of the SSA region, have attendant negative consequences for market participation of outsiders, such as indigenous African SMEs. This is indicated through the determinants of access to supplier credit. Policy interventions will be needed to improve the platform for relation-based governance mechanisms and to address the exclusionary effects of tight networks.
This paper examines the role of private support institutions in determining small and medium enterprise (SME) growth and performance in Sub-Saharan Africa (SSA). It finds that SMEs in SSA get around market failures and lack of formal institutions by creating private governance systems in the form of long-term business relationships and tight, ethnically-based, business networks. There are important links between these informal governance institutions and SME performance. Networks raise the performance of "insiders" and, in the sparse business environments of the SSA region, have attendant negative consequences for market participation of "outsiders," such as indigenous African SMEs. This is indicated through the determinants of access to supplier credit. Policy interventions will be needed to improve the platform for relation-based governance mechanisms and to address the exclusionary effects of tight networks.
Abstract: Can perceptions data help us understand investment climate constraints facing the private sector? Or do firms simply complain about everything? In this paper, the authors provide a picture of how firms' views on constraints differ across countries in Sub-Saharan Africa. Using the World Bank's Enterprise Surveys database, they find that reported constraints reflect country characteristics and vary systematically by level of income-the most elemental constraints to doing business (power, access to finance, ability to plan ahead) appear to be most binding at low levels of income. As countries develop and these elemental constraints are relaxed, governance-related constraints become more problematic. As countries move further up the income scale and the state becomes more capable, labor regulation is perceived to be more of a problem-business is just one among several important constituencies. The authors also consider whether firm-level characteristics-such as size, ownership, exporter status, and firms' own experience-affect firms' views on the severity of constraints. They find that, net of country and sector fixed effects and firm characteristics, firms' views do reflect their experience as evidenced by responses to other questions in surveys. The results suggest that there are both country-level and firm-level variations in the investment climate. Turning to the concept of "binding constraints," the Enterprise Surveys do not generally suggest one single binding constraint facing firms in difficult business climates. However, there do appear to be groups of constraints that matter more at different income levels, with a few elemental constraints being especially important at low levels and a few regulatory constraints at high levels, but a difficult range of governance-related constraints at intermediate levels. Adjusting to a constraint does not mean that firms then do not recognize it-for example, generator-owning firms are not distinguishable from other firms when ranking electricity as a constraint. Overall, firms do appear to discriminate between constraints in a reasonable way. Their views can provide a useful first step in the business-government consultative process and help in prioritizing more specific behavioral analysis and policy reforms.
SMEs play a vital role in the growth of economies and are often described as the engine of economic development. However, SMEs in emerging markets struggle to survive and grow for a variety of reasons, including a lack of finance and management skills. Most of the growth-constraining factors in small businesses can be traced to weak corporate governance (CG) practices. As a seasoned practitioner in the field of corporate governance, Dr. Almona sees the need to build capacity to enhance sustainability in the SME sector. SMEs need to understand that CG is not a destination but a journey SMEs need to grow and mature into CG practices that are relevant to their stage of business. SME owner-managers need to understand and adapt to the level of formality expected and required by potential employees and providers of funds. This book provides ways and models that will encourage the adoption of sound corporate governance principles and practices for SMEs in Africa, to the benefit of society.
The World Bank, Japan International Cooperation Agency (JICA) Research Institute, and the Foundation for Advanced Studies on International Development (FASID), in collaboration with researchers affiliated with the African Economic Research Consortium (AERC), recently conducted a study on Africa s domestic enterprises to improve the understanding of the constraints micro and small enterprises in Africa face in improving productivity and expanding their markets. In Africa, there are stark performance gaps between domestically owned enterprises and foreign-owned enterprises in terms of sales performance, productivity, and ability to reach distant markets. Among others, size appears to be a dominant factor in explaining the gap. Against this background, the study analyzes how naturally formed industrial clusters concentrations of enterprises engaged in same or closely related industrial activities in specific locations could potentially mitigate constraints Africa s micro and small enterprises face and enhance their business performance. The study is one of the first comprehensive quantitative inquiries on industrial clusters in Africa. The analysis specifically focuses on the role of spontaneously grown clusters of light manufacturing industries based on a set of original case studies of industrial clusters conducted for this research project. One of the key findings from the case studies was that cluster-based micro and small enterprises are performing better than similar micro and small enterprises outside of the clusters in terms of sales performance and ability to reach distant markets. Market access is a leading reason for cluster-based enterprises to choose their current locations. However, cluster-based enterprises face another set of unique growth constraints. By the very nature of spontaneous agglomera tion, new enterprises continue to flow to the clusters seeking the profit opportunities and better access to markets at such locations. The result can be intense competition in addition to increased congestion. Space constraints often impede growth within clusters. The lack of alternative locations available for industrial activities in the same cities, generic infrastructure bottlenecks, and unclear zoning policies and their unpredictable changes limit firms location choices and constrain their mobility. While competition should improve efficiency, lack of capacity among those competing cluster-based enterprises to invest and innovate does not generate growth out of the competition. The vast majority of naturally formed clusters of light manufacturing industries in Africa are still at a survival level, where agglomeration externalities are only limited to expand quantity but not quality as we observe in more advanced innovation-oriented clusters in elsewhere in the world. Existing studies on such natural industrial clusters in Africa have found that the lack of managerial skills among entrepreneurs running micro and small enterprises is a major constraint for innovation and growth in the clusters. As a part of this study, pilot managerial skills training programs were conducted in two industrial clusters on an experimental basis, where a group of randomly selected entrepreneurs within the clusters were given three-week long crush course of based management such as bookkeeping, marketing, business planning, and production management. The impact evaluation of the experiments showed significant positive impacts of the training programs on value added and gross profits of enterprises. Raising the current survival-type industrial clusters, which have been formed as a coping mechanism to weak investment climate, into more dynamic innovating clusters will be an important avenue for fostering growth of micro and small enterprises in Africa. While national efforts to improve investment climate and investments in human capital are undoubtedly important, there could be more targeted policies to be formulated, in complementing general policies, to support growth of micro and small domestic enterprises using existing industrial clusters as a natural springboard for their growth. In that context, the study discusses the merit of cluster-based managerial human capital development to build steps toward more innovation-oriented clusters, the importance of sound spatial planning policy, particularly at the local level in the context of urban planning, the need to expand market access and economic linkages for industrial clusters including regional integration and linkages with large enterprises.
This book details the activities of the private sector in developing and emerging economies and demonstrates how these activities are inter-related with government policies.
A multidimensional approach to entrepreneurship, especially in the post-COVID-19 era, will have an important influence on the state of business and government, especially when considering the effects of technological development, innovation, glocalization, and nationalization policies that need to be adopted for inclusive sustainable growth, as well as the enhanced and efficient utilization of global resources. That means there is likely to be a shift in how entrepreneurship development and entrepreneurial opportunities will be perceived, developed, and resourced. The question is how to sustain SMEs and entrepreneurial innovation in the post-COVID-19 era. Thus, comprehensive research and knowledge on designing policies and approaches to ensure the sustainability of SMEs and entrepreneurial innovation in post-pandemic times are essential to sustain, stimulate, and foster SMEs, entrepreneurship, and entrepreneurial innovations. The Handbook of Research on Sustaining SMEs and Entrepreneurial Innovation in the Post-COVID-19 Era provides research dedicated to entrepreneurship with a special emphasis on the sustainability of SMEs and entrepreneurial innovations in the post-COVID-19 era. It provides discussion and the exchange of information on principles, strategies, models, techniques, methodologies, and applications of entrepreneurship in the post-COVID-19 era in the field of public and private organizations. The chapters communicate the latest developments and thinking on the entrepreneurship subject worldwide by drawing on the latest developments, ideas, research, and best practice to examine the implications of the changes taking place due to COVID-19. This book is ideally intended for entrepreneurs, global organizations, small and medium-sized enterprises, managers, executives, government officials, policymakers, researchers, academicians, and students who are interested in learning about, designing, or implementing policies that are more effective in the post-pandemic era.
The Politics of Corruption in Dictatorships studies how institutional and social factors influence corruption in dictatorships. Dictatorships are often synonymous with high levels of corruption, yet Vineeta Yadav and Bumba Mukherjee argue otherwise. The authors ask why corruption has declined in some but not other authoritarian regimes. What are the main political factors that drive some autocrats to curb corruption? The book explores the role that business mobilization can play in reducing corruption under some conditions in dictatorships. It investigates how political competition for an elected legislature affects the incentives of dictators to engage in corruption. The study relies on case studies from Jordan, Malaysia, and Uganda. The book is accessible to a wide audience without requiring sophisticated statistical training.
This book focuses on the application of workstudy in productivity of manufacturing SMEs locally and abroad and also explores various industrial problems which face manufacturing SMEs in developing and underdeveloped countries in the rest of the world. Low productivity is currently a serious challenge facing manufacturing SMEs, where these SMEs are operating below expected production output levels which makes it difficult for them to compete in the global market. SMEs are the engine drivers of economic growth, one of which is manufacturing. The challenge is that government from various countries in developing and underdeveloped countries, mandated agencies in their respective areas, to ensure that there is economic progress for these SMEs, but productivity remains low in the manufacturing SMEs. When SMEs do not perform well, productivity of manufacturing SMEs declines and unemployment increases. Thus, an increase in unemployment results in a drop of GDP in the country and can become a global and economic crisis. This book describes a process which enables the reader to use effective knowledge that addresses problems facing the productivity of manufacturing SMEs such as work study tools and case studies and provides solutions and applications to improve the running of the manufacturing SMEs in growing their productivity.
