International Best Practices in Micro and Small Enterprise Development

Topic :

This working paper forms part of a series of six prepared under the ILO/UNDP project on micro and small enterprise (MSE) development in Thailand. It aims to review some of the international best practice in the area of business development services and assess the potential for replication of some of the more promising approaches in Thailand.

This paper contends that MSEs require two types of services: financial services and non-financial services – also known as business development services. Financial services help entrepreneurs acquire the means for establishing or expanding a business (e.g. finance for machinery, production premises, and working capital). Business development services (BDS) refer to the provision of information, knowledge and skills, as well as advice on the various aspects of a business. The definition used in this paper implies a conscious action performed by the service provider for the benefit of the receiver of the service.

The paper also notes that the impact of BDS depends on the proficiency of the service provider and on the use made by MSEs of other services. BDS should be demand driven it argues, and the owner of the enterprise should recognise the need for BDS assistance. However, the service provider may also have a role in helping the entrepreneur to identify the specific problems of the enterprise, and in offering appropriate assistance.

Eight guiding principles of best practice in BDS are initially set out. The paper then moves onto to an assessment of BDS, including a review of indicators of good practice, an assessment of MSE needs and a discussion on assessing performance of BDS providers. Section three looks at BDS instruments such as training, access to information, technology development and transfer, access to larger and more profitable markets, and consultancy and counseling services. The final section assesses the provision of BDS, beginning with a look at BDS providers that have a record of good performance. This section also covers the topic of strengthening the capacity of service providers as well as lessons learnt from international best practice.

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