THE CONTINUUM OF CAPITAL FOR SMALL AND MICRO ENTERPRISES

Lisa J. Servon (), M. Anne Visser and Robert Fairlie
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Lisa J. Servon: Milano the New School for Management and Urban Policy, The New School University, 72 Fifth Avenue, 4th Floor, New York, NY 10011, USA
M. Anne Visser: Center for Puerto Rican Studies, Hunter College, City University of New York, 695 Park Ave E1411, New York, NY 10065, USA

Journal of Developmental Entrepreneurship (JDE), 2010, vol. 15, issue 03, 301-323

Abstract: Since the 1990s, interest in the role of small and microenterprises (SMMEs) in economic development has garnered considerable attention throughout academic and practioner circles. Widely known for their potential to help stimulate economic growth and as a potential avenue for poverty alleviation, the purpose and promise of small businesses have been widely publicized. However, to date, little research exists that adequately documents the specific capital needs of very small businesses (those with less than 20 employees) and microenterprises (those with less than 5 employees) and their owners at specific points in a business's development and growth. Using data from the 1992 Characteristics of Business Owners Survey, the 2002 Survey of Business Owners and the 2003 Survey of Small Business Finances, we analyze the different types of firms in the United States, the amount of capital used by firms of different size and the sources of capital used by firms of different sizes to assess how capital needs and sources differ for those businesses with less than 20 employees. Paying particular attention to businesses owned by women and minorities, we argue that the path of SMMEs differs substantially from the typical path of larger small businesses. In addition, we highlight the implications of our findings and provide our policy recommendations to address them.

Keywords: Small business; microenterprise; business development; finance; capital (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1142/S1084946710001579

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