Abstract:
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Microenterprise development is one of the most discussed antipoverty
strategies in contemporary development discourses. Many developing countries have
adopted this strategy to fight against poverty. In Nepal also, a microenterprise
development program with the objectives of increasing income and employment, and
thereby reducing poverty, has been implemented since 1998. Microenterprise
development is particularly targeted to the households living below the poverty line.
Among the people living below that line, the program is more focused on rural
women, unemployed youth, and people from socially-excluded communities such as
dalits, indigenous nationalities, religious minorities, other madhesi castes, differentlyabled
people, brahmin, chhetri, sanyasi, thakuri, disaster-affected families, conflictaffected
families, people living with HIV and AIDS, and Maoist youth ex-combatants
discharged from cantonments.
Antipoverty strategies often come under criticism for their poor performances.
The microenterprise development strategy also, apart from some success stories, is
not very far from such criticism. Most of the studies in Nepal have focused on
assessing the impacts of microenterprises. Some studies have found positive impacts
of these enterprises in improving the livelihood of the people, while other studies have
reported that not all microenterprises are as successful as there have been purported to
be. Therefore, in response to why some microenterprises are more successful than
others, or in other words, why some microenterprises perform better than others, this
study focused on the investigation of the socio-demographic and economic
characteristics of micro-entrepreneurs and microenterprises, exploring the
microenterprise performance, and identifying the factors determining such
performance.
Based on a rigorous review of related economic, organizational, and
entrepreneurial theories and the results of empirical studies, an integrated conceptual
framework was developed for the purpose of this study. The primary data for the
study were enumerated using a survey questionnaire or interview schedule with 501
randomly sampled micro-entrepreneurs stratified in the gender, caste/ethnicity, and
enterprise categories across three ecological belts in Nepal. The mixed research
method was adopted for the research; the quantitative research method was the main
method of analysis; and the qualitative method was used to triangulate the quantitative
results and enrich the discussion of the quantitative results with detailed information,
evidence, and contextual relevance.
The findings of the study, besides confirming the hypothesized association of
many factors, also nullified several other hypotheses and findings of previous studies,
and explored the interesting association of some of the factors with the performance
of the microenterprise. The study observed an increase in the level and growth of the
measures of the microenterprise’s performance, such as employment, profit, and sales
and assets between BS 2068 (April 2011 - March 2012) and 2069 (April 2012 -
March 2013). However, a noticeable variation in the level and growth of employment,
profit, sales and asset growth among microenterprises was also observed. The study
further revealed that entrepreneur-related factors, particularly gender, educational
attainment, managerial skills, the need for achievement, the need for autonomy,
creative tendency, internal locus of control, and managerial foresight; enterpriserelated
factors, particularly enterprise age, enterprise size and initial financial
constraints; and environment-related factors, particularly environment hostility and
social network, were among the key factors determining microenterprise performance
in Nepal. On the other hand, the age of the micro-entrepreneur, previous experience,
calculated risk taking traits, the enterprise sector, family environment, environmental
dynamism, and environmental heterogeneity did not appear to have significant effects
on microenterprise performance. The study also revealed the significant mediating
effect of managerial foresight on microenterprise performance. Managerial foresight
appears to mediate the effects of educational attainment, need for achievement, need
for autonomy, enterprise size, initial financial constraint, environmental hostility and
social network on the performance of the microenterprise.
In order to improve microenterprise performance and thereby contribute to the
reduction of poverty in Nepal, the study has made some policy recommendations. The
study suggests the following: that microenterprise development programs and related
policymakers focus more on strengthening the weaker microenterprises; that
managerial skills, managerial foresight and the creativity of the micro-entrepreneurs
be strengthened in order to improve microenterprise performance; organizing
refresher courses on the components of the microenterprise development model on a
regular basis; initiate awareness programs on the importance of managerial foresight
in relation to enterprise performance so that the micro-entrepreneurs can gain multiple
benefits from the significant effect of managerial foresight; encourage microentrepreneurs
to widen and strengthen their social network; strengthen the microentrepreneur’s
direct and convenient network with customers and suppliers;
encourage the micro-entrepreneurs to continue the microenterprise business as they
are likely to perform better in the long-run; encourage micro-entrepreneurs to invest
more or expand their enterprises, as bigger microenterprises seem to have higher
performance; facilitate the access of the poor to microcredit so that they can start
microenterprises; adopt corrective measures to strengthen the micro-entrepreneurs to
cope with environmental hostility; enhance the accessibility of the target groups of the
microenterprise development program or the people living below the poverty line to
education; encourage the micro-entrepreneurs to apply their full effort or work fulltime
so that they can achieve the higher performance of microenterprises. Last, the
study has explored the idea that the microenterprises owned by the microentrepreneurs
that are female, have more years of education, higher managerial skills,
higher managerial foresight, greater creative tendency, less motivational orientation of
need for achievement, need for autonomy and internal locus of control are relatively
more successful or exhibit higher performance. Therefore, the study encourages the
persons with these profiles to become involved in the microenterprise sector so that
they will be more successful.
The study has made some modest practical and theoretical contributions to the
field of micro-entrepreneurship. From the perspective of the practical contributions of
the study, it has significant value for microenterprise-related policymakers and
researchers. Similarly, the micro-entrepreneurship is still a novel field for scientific
research programmes. The micro-entrepreneurship as a field of scientific research
programme still lacks its own sound theoretical foundation. The results of this theory,
besides confirming some of the hypothesized theoretical associations, have also
nullified several other associations, and observed some other interesting results that
contrast with the conventional thinking and the findings of previous studies.
The study, considering the likely difference in the nature and the challenges of
a self-initiating micro-entrepreneur from those initiated under a microenterprise
development program, suggests that future studies focus on self-initiated
microenterprises. Last, but not the least, the study further suggests that future studies
carry out qualitative studies exploring the distinctive factors determining
microenterprise performance in a particular context.
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