ABSTRACT
Paradoxically, a large proportion of the poor households both in rural and urban areas all over the world end up as ‘microentrepreneurs’ in their struggle to ensure subsistence and survival. This apparently ironical setting in which microentrepreneurs operate implies that their enterprises face multiple layers of risk and uncertainty. 1 While cost and availability of inputs give rise to risk in production, the conditions of demand along with prices leads to market risks (Rani and Galab 2001). As the barriers to market entry for these enterprises are very low, they are constantly under the threat of new competitors crowding them out. With limited or no access to sources of working capital, these microentrepreneurs enter into agreements with input suppliers and buyers in order to face up to these risks. Such agreements, more often than not, involve exploitative conditionalities that gradually erode the already fragile bases of the enterprises.
