The Myth of Small Enterprises

The popular view is that by leveraging on local competence, providing financial and technical support, the poor can be helped to grow small enterprises. They have been generally portrayed as being entrepreneurial and there are plenty case studies for cooperative, franchise and direct sales models being adopted to grow small enterprises successfully. How effective is small enterprise approach to address job and market challenges in poverty alleviation?

It's one of the key questions along with microfinance impact that Banerjee and Duflo explored through their book, Poor Economics. Their conclusion is that microfinance access to build small enterprises has been changing the lives of the poor but it's still premature to claim impact of poverty eradication. Banerjee and Duflo also dispelled popular claims of natural entrepreneurial talent of the poor, their research found majority of them start small enterprises because they could not secure stable jobs and many of those small ventures will struggle to grow and to be profitable.

Based on our pilot project to promote jobs and market opportunities for the socially underprivileged in Malaysia, it's unfortunate that I have to confirm much of that book passage. Irrespective of their poverty level/ forms of disabilities, we try to connect individuals who work hard to make a living/ run small enterprises with more potential customers and employers. The reality is that the majority still need some forms of charitable assistance or subsidy, the transition toward more competitive jobs and market opportunities is indeed challenging. So there is a high possibility that most ventures will fail and many more will struggle to be profitable, but these hard working talents persist in entrepreneurial path because they are shunned by employers.

One obvious challenge is that their enterprises are too small to scale with limited offerings and majority are still unable to match their skills with market demands. So we are trying to leverage on network potential by fostering collaboration among different NPOs working on the same job and skill training programs, in order to enhance their capacity to serve larger market, reduce unnecessary needs to compete on limited resources and small market demands.

Such attempt is not without serious obstacles, because NPOs in Malaysia have no track record in collaborating and working toward a shared agenda. As we learn along the way, it's much more complicated in reality to fix job and market challenges for the socially underprivileged with small enterprise approach. Even with the availability of funding and technical support, it's hard to ignore the need to create lasting change in how social sector players work and collaborate with one another to serve the market better.