Small businesses are often believed to serve as engines for innovation, employment and social mobility, due to their flexibility in responding to new opportunities and their potential for rapid growth. In developing countries, small and medium enterprises (SMEs) account for a large part of the economy, yet data suggests that very few of these small enterprises grow into larger businesses. Human capital may be the biggest constraint on such growth if having adequate managerial skills in place is a prerequisite for accessing other resources. However, the market for business skills training is prone to under-investment. Young people and new market entrants are often unable to invest in their own training because of credit constraints--even though it would be privately and socially efficient. Furthermore, a perception exists that managerial skills must be learned through experience, rather than taught, leading to further under-investment in business skills training. This pilot study looks at the various constraints hindering SME growth and evaluates whether graduate business students providing consulting services to small business can be an effective conduit for skill transfer.
This study is being implemented in metro Manila, an area with a large population of small and medium enterprises (SMEs). Within Makati, the sub-district of Manila where this study takes place, there are over 26,000 businesses registered with the local government. These SMEs span a range of industry sectors, including retail, services, manufacturing, real estate, finance, consulting, trading and wholesale.
Results forthcoming.