African small and medium enterprises, networks, and manufacturing performance

Tyler Biggs and Manju Kedia Shah

No 3855, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the role of private support institutions in determining small and medium enterprise (SME) growth and performance in Sub-Saharan Africa (SSA). It finds that SMEs in SSA get around market failures and lack of formal institutions by creating private governance systems in the form of long-term business relationships and tight, ethnically-based, business networks. There are important links between these informal governance institutions and SME performance. Networks raise the performance of"insiders"and, in the sparse business environments of the SSA region, have attendant negative consequences for market participation of"outsiders,"such as indigenous African SMEs. This is indicated through the determinants of access to supplier credit. Policy interventions will be needed to improve the platform for relation-based governance mechanisms and to address the exclusionary effects of tight networks.

Keywords: Economic Theory&Research; Banks&Banking Reform; Business in Development; Business Environment; Technology Industry (search for similar items in EconPapers)
Date: 2006-02-01
New Economics Papers: this item is included in nep-afr, nep-cse, nep-ent and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:3855

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