ABSTRACT
As discussed in the previous chapter, there is widespread recognition that small and micro-enterprises play a significant part in the process of economic development in every country (Mayrhofer & Hendriks 2003), meaning that the entrepreneur is the catalyst of economic progress. However, studies in developing countries − where most small businesses are better classified as ‘survival’ micro-enterprises given that they are driven by necessity rather than inspiration − show a low success rate and an apparent inability to grow (Roy & Wheeler 2006; Bloom, Mahajan, McKenzie & Roberts 2010). This is despite numerous initiatives executed over the last few decades to promote small business development as a means of alleviating poverty (Sievers & Vandenberg 2007). To uncover the reasons why the majority of the existing programmes have failed or produced results far off the mark, we need to first identify the unmet needs of the entrepreneurs. With a broad view on poverty, 1998 Nobel Prize winner Amartya Sen (1999) claimed that rising average per capita income is important, but not sufficient for real economic development. According to the Indian economist, certain freedoms need to be guaranteed, including access to credit, freedom of opportunity, political transparency and protection from abject poverty. Major needs remain unmet for the vast majority of the bottom of the pyramid (BoP) as the cost of basic goods and services, such as water, food, medicines, transport and credit often exceed what customers pay at the top of the pyramid in developed countries. This occurs because goods are rare and often unavailable, allowing large vendors to prey on the poor, selling them low quality goods at premium prices. These market conditions are felt not
just by the end consumer, but also by the micro-entrepreneur attempting to make a living.
