The voice of struggle : an interpretive study of factors influencing success or failure of microenterprises in Brazil's urban favelas

Abstract

I Third World countries and in particular in Latin America the high birth rate and the forced rural exodus of farm hands has caused a extremely high unemployment rate among the migrants who have flocked into the peripheries of the big cities. Without jobs many of these squatters remain in a desperate waiting position of sheer survival, but those that are more enterprising they to make their living by starting and developing a business of their own. Although this form of activity dates back to the very beginning of the worlds economic history, it has dramatically increased if the countries of the Southern hemisphere during the last three or four decades. Policy makers and scholars have been stirred up by the phenomenon. While ' new terms, like °microentrepreneur° and microenterpn`se° have been coined, a better insight into the labours of the struggling community of microentrepreneurs is still being sought after. This study, in its first chapter, tries to set the stage to uncover the factors that lead to success or failure of microbusinesses as seen from the unique point of view of the microentrepreneurs while doing business in the environment of the Brazilianfavela. The second chapter introduces the background literature on the relevant issues of the thesis. It presents a short historical overview and sheds light on the current social and economic situation of Brazil, on the general structure of microenterpises, on the importance of active entrepreneurship and on the personal traits of a entrepreneur. A vast set of information on the subject of help to microenterpises has been published by many support organizations, but as the predominant concern of the emerging enterprises seemed to be the lack of capital, most publications are restricted on how to collect and administer ftmds. These publications express the view of the donors, but almost no literature exists on the views of the receivers. It is the purpose of this study to l this apparent gap. The present research is geared to bringing to light views and perceptions at the grass root level. It intends to penetrate into the microenterprise culture of the favelas of Brazils megalopolises. A array of possible methodological approaches for achieving this aspired goal is presented in the third chapter and the final decision to use grounded theory, as a theory generating approach, is explained. The next chapter presents the scope of the field studies. Out of the almost homogeneous body of rural-urban migrants that constitute the majority of Brazils favela tenants, forty two microentrepreneurs were selected to form the target group of the thesis. I order to achieve a geographic spread, the megalopolises of Porto Alegre, Säo Paulo, and Salvador da Bahia were selected. The h chapter presents as its core section the extensive narratives of twelve micro-entrepreneurs, who represent a continuum of outcomes from cases of encouraging success to cases of complete failure. I the next chapter, chapter six, the data is screened using a extensive and methodical cross case analysis. From the statements of the interviewees nine distinct propositions emerge as the core findings of the study. These propositions match with the factors that influence the success or failure of the microenterprises as seen by the microentrepreneurs themselves: Drive and dedication, Schooling and competence, Family ties and other networks, Capital and loans, Business project, Chance and risk, Support, Rules and regulations, and Environment and context. The study postulates that the factors Drive and dedication, Schooling and competence, and Family ties and other networks are the most important. Chapter seven covers the effects of the demographical attributes of the microentrepreneurs and describes the casual relationships between the nine selected factors. Special attention is paid to the relative importance of each factor. The final chapter, the Conclusion, offers a summary of the findings and describes how they contribute to the three domains of knowledge: the structure and the agency of enterprises, the insight into the microentrepreneurs perceptions, and the development theory of micro- enterprises. It also highlights the implications of the findings for practitioners, support organisations, and official institutions, as well as making suggestions for further study. The final chapter ends with words of encouragement and caution.