A Framework for the Development and Success of Microenterprises in India

--Debanjan Nag and Niladri Das

Microenterprises play a critical role in the economic development of any country, particularly in a developing country like India that is undergoing transition from the traditional subsistence to a modern industrial economy. The role played by these microenterprises in India is immense as they are effective tools for sustainable livelihood, employment generation and empowerment of women, thus contributing to the country’s GDP and social upliftment of the society. This paper tries to develop a framework for the development and success of microenterprises in India by considering two broad categories, i.e., individual and business factors. The individual factors are further subdivided into sociocultural factors, psychological factors and entrepreneurial skills-related factors.

© 2014 IUP. All Rights Reserved.

The Impact of Regulations on Microfinance Industry: A Strategic Perspective

--Debapratim Purkayastha, Trilochan Tripathy and Biswajit Das

Microfinance Institutions (MFI) promise to deliver poverty alleviation while being sustainable. However, in recent years, the idea of microfinance has been questioned. The study of MFIs or their business environment from a strategic management perspective has not been taken up. This is despite the fact that MFIs promise financial inclusion of the bottom-of-the-pyramid segment and, in turn, lead to sustainable development. Moreover, MFIs have to regularly negotiate various tradeoffs, the study of which could be interesting from a strategic perspective. For instance, empirical evidence suggests that MFIs face a tradeoff between profitability (financial sustainability) and outreach (reaching the poorest customers). A study of the ecosystem of MFIs from the strategic perspective would also be of interest to other stakeholders such as donors, investors, banks and government. For instance, subsidies can play an important role to help MFIs serve the poorest segment. Such subsidies may be in the form of donor and government grants, when MFIs have access to capital at below-market interest rates. This has important implications for policy makers as it shows one way where right kind of regulations could help MFIs. On the other hand, the rapid growth of microfinance has brought increasing calls for regulation, but complying with prudential regulations and the associated supervision can be especially costly for MFIs hurting their sustainability. In India, MFIs have been accused of seeking profits at the expense of the poor, attracting stringent regulations that stifled their growth. Regulatory interventions could help the MFIs to scale up and professionalize, or it may simply stifle their development. This paper attempts to approach the issue of regulatory impact on the microfinance industry from a strategic management perspective. The discussion in this paper entails a literature review that shows the importance of the industry and the regulatory effects on a firm; it then looks at some of the tradeoffs faced by MFIs and also looks at the literature on regulations of MFIs. An attempt has been made to identify the gaps in the existing literature and present them in the conclusion.

© 2014 IUP. All Rights Reserved.

Pursuing Eco-Innovation Within Southeastern European Clusters

--Jana Hojnik, Mitja Ruzzier and Aleš Lipnik

This paper explains Eco-Innovation (EI) activities of clusters deriving from 11 countries of Southeastern European (SEE) region. The study indicates that more than a half of the analyzed clusters in the SEE region have set objectives related to EI in their cluster strategies, while just a few of them primarily focused on EI. Thus, results suggest that being primarily focused on EI is positively correlated with most of the activities related to EI which are being implemented. These activities are mostly oriented towards spreading information and awareness-raising, while not towards investing ‘heavily’ in the implementation of EI. This study offers an outline of the current situation regarding EI activities in the analyzed clusters of the SEE region. Other findings of this paper are: first, clusters have the influential power/potential to steer companies towards engagement in EI by setting the objectives and focus on EI, and second, clusters’ primary focus is related to the extent of EI’s activities.

© 2014 IUP. All Rights Reserved.

A Profile of Malaysian International Small and Medium Enterprises: Mapping Current Performance on National Policies and Strategic Objectives

--Mohd. Najib Saad and Aida Idris

Internationalization is recognized in many countries as an important resource for organizations’ growth and expansion. In Malaysia, there have been numerous policies, strategies and support programs formulated by the government aimed at fostering the development of internationalization of Small and Medium Enterprises (SMEs). This paper intends to look into Malaysian policies on business internationalization and to derive a profile of its international SMEs, with the aim of evaluating the effectiveness of these policies in developing firm competitiveness in international markets. The findings revealed that Malaysian SMEs are still at their early phase of involvement in international business, with a low portion of their markets, sales and profits derived from internationalization, despite numerous policies, strategies and programs supporting their internationalization development. This suggests that present policies and strategies concerning SMEs’ internationalization require urgent reviews and revisions to better suit their needs and the ever-changing global environment. Policy makers are also advised to consider the relevance of various regulations which may hamper the growth of SMEs at the international level.

© 2014 IUP. All Rights Reserved.