Academic journal article Academy of Entrepreneurship Journal

Disaggregating Jamaica's Micro, Small and Medium Firms on Challenges Faced for Better Policy Development and Planning

Academic journal article Academy of Entrepreneurship Journal

Disaggregating Jamaica's Micro, Small and Medium Firms on Challenges Faced for Better Policy Development and Planning

Article excerpt

ABSTRACT

This study is motivated by the overabundance of literature in the field of entrepreneurship that has inappropriately treated micro, small and medium entities (MSMEs) as a collective even after acknowledging vast differences among entity types in scope, definition and challenges. Moreover, MSMEs are known to perform such significant roles in employment generation, poverty alleviation and economic growth thus requiring a disaggregation of the troika for more targeted approach to policy and planning. This study has addressed this gap; and utilized both focus groups and survey for collecting data on challenges faced by the entities. On analysis of survey data through One -Way ANOVA and Scheffe Post Hoc test, the results showed that energy and security costs are the only two variables that micro firms are less challenged than small and medium; while on all other indicators (such as ability to prepare tax returns, technological capabilities, marketing and ability to access credit) micro firms were much more challenged than their MSME counterparts. Notably, no significant differences were found between small and medium firms on challenges faced. Recommendations for policy, limitations and opportunities for further research are also discussed.

INTRODUCTION

Jamaica has long recognized the need to support and stimulate business activity with the aim of developing the local economy as well as to provide a mechanism through which the unemployed can find gainful, profitable engagement to sustain their livelihoods. From as early as the 1950's (Jamaica gained its independence from the British in 1962), the country established the Industrial Development Corporation to provide technical and financial support to new industries; those that would reduce imports and stimulate exports; and those that are labour intensive. Since then, several policy positions have been put forward in response to the needs of the MSME sector. This policy intervention has recently culminated with the 13th draft of the MSME and Entrepreneurship Policy of 2012. Notably, MSMEs, both in the developed and developing economies, have contributed significantly to economic growth, employment generation, innovation and poverty alleviation (Beck, et al., 2005; Gruzina & Zvirbule-Berzina, 2012; Vega & Rojas, 201 l;Venkateswarlu & Ravindra, 2012; ); thus signalling the importance of this sector to modem economies. Despite Jamaica's early thrust to promote entrepreneurship, its economy has under-performed with cumulative growth since independence of approximately zero percent; and unemployment now standing at 20 percent.

One of the unsettling issues on MSMEs that was addressed by the 13th draft of the Policy is the definition of 'MSME'. Previously, several definitions co-existed in Jamaica, with different criteria used for measuring micro, small and medium entities. The Private Sector Organization of Jamaica used total sales as the criterion for delineating entity types within MSMEs; the Small Business Association of Jamaica used total sales and the number of employees, the Planning Institute of Jamaica used total sales and total assets, and the Ministry of Industry, Investment and Commerce (MIIC) used the number of employees and total sales. However, in order to craft a singular national definition, MIIC partnered with the Mona School of Business (University of the West Indies) to hold a one day workshop in July 2011. This workshop involved participants from the public and private sectors, including the respective associations representing MSMEs. At the end of the exercise, it was agreed that the MSME should be defined as contained in Table 1.

This definitional concern is no less a problem across international boundaries with classifications of micro, small and medium varying markedly among agencies, both within and across countries. For example, the Commonwealth Secretariat's classification for small states is much different from the European Commission; and classifications across multilateral institutions, in general, bear no relation either in subcategory definition [of micro, small and medium] or in aggregation. …

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