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Role
of Micro- and Small-Scale Enterprises: A Report on a Study in Java,
Indonesia
Safdar
Muhammad and Surendra P. Singh
Cooperative
Agricultural Research Program
Seminar Series
Tennessee State University, Nashville, TN
February 10,
1999
Introduction. Small enterprises are the
backbone of any economy, especially in rural areas generating income and
employment. In densely populated areas such as Java, Indonesia, with 7%
of the country's land and 54% of the population, the importance of such
enterprises is further enhanced.
Objectives. The primary objective of this
study was to assess the structure of selected micro- and small-scale
businesses in Java, Indonesia in terms of employment patterns and
growth. The specific objectives are: 1) to identify and analyze the
characteristics of enterprises regarding size, type, number of
employees, employment structure, and growth patterns of male and female
operated enterprises in Java, Indonesia, and 2) to determine the factors
affecting the rate of growth of selected enterprises.
Methodology. Primary data for the study were
collected in two provinces of Java. Two districts from each of the
provinces and four villages from these districts were randomly selected.
A stratified random sample of 50 small enterprises in each of the
selected villages was selected. Appropriate statistical methods were
used to analyze the differences between male and female operated
enterprises and socioeconomic characteristics of entrepreneurs.
Results. More than half of the enterprises
surveyed were owned/operated by females; their distribution among
various types of enterprises not only varied, but were found to be
different when compared to their male counterparts. Female operated
enterprises were concentrated in the traditional informal sector, had a
less dynamic product market, and were low income producing with limited
prospects for growth. Most of the employment structure of these
enterprises consisted of part-time paid and family workers. Growth of
employment in female operated enterprises was much lower than male
operated enterprises. The employment structure and growth pattern of
these enterprises also varied depending on type, size, location, and
other socioeconomic characteristics of entrepreneurs.
Impact. At the program level, it is
important to recognize that enterprises are heterogeneous groups with
different opportunities, needs, constraints, and that program assistance
must be tailored to reflect such differences. A better understanding of
enterprises and entrepreneurs can make a major contribution to the
development of improved approaches for the promotion of efficient and
equitable growth of MSEs. From a programming/policy viewpoint, the
finding raises a question on how best to invest in micro-enterprise
development. Given that the majority of micro- and small-scale
enterprises are owned by women and that these enterprises appear to be
less dynamic in terms of their contribution to growth, how should a
program be designed to intervene in specific enterprises?
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