ABSTRACT
This chapter presents an overview of the most salient problems small- and medium-scale industries (SMI) entrepreneurs envisage when setting up, expanding, or simply running their businesses. The nature and the relative importance of perceived impediments varies among different types of SMIs, with the type of market served, and with the economic environment. Innovations in product design are immediately imitated by competitors, but readily available information on product markets is scarce in most cases, and SMIs are often surprised by changes in the structure of demand. Two sets of causes for the problems of SMIs can be identified. The first relates to the question of why some SMIs perform better than others under the same external conditions; the second set relates to the question of why there are differences in the average performance of SMIs among countries. The labor-intensive techniques may restrict SMIs to the production of low quality products, precluding entry to more profitable markets.
