Study Highlights Factors That Impact Enterprise Growth in Central America
An analysis of hundreds of small businesses provides insights for effective business acceleration
Washington, D.C. – Social Enterprise @ Goizueta (SE@G), a research center at Emory University’s Goizueta Business School, and the international nonprofit organization TechnoServe have found TechnoServe’s Impulsa Tu Empresa accelerator program helped participating small businesses across a range of sectors, ages, and locations grow their revenue by an average of 33 percent after one year.
The comprehensive study examined the performance of 432 small businesses in Central America that participated in a specialized entrepreneurship training program. Performed by faculty and student researchers working from Emory University and staff at TechnoServe, the study also identified factors that influenced the growth of these small businesses.
Small-and-growing businesses (SGBs) are a vital part of the economy in Latin America, generating roughly 70 percent of jobs across the region. Nevertheless, the performance of the region’s SGBs lags behind that of larger enterprises.
In 2012, TechnoServe’s launched the Impulsa Tu Empresa program to help SGBs in Central America become more competitive and to build more vibrant local economies. With support from the Argidius Foundation, Inter-American Development Bank’s Multilateral Investment Fund, Walmart Foundation, Citi Foundation, PIMCO Foundation, and U.S. Department of State, the program has provided training, advice and market connections to more than 900 SGBs in a variety of sectors, from textiles to services and food. To build on this success, a second edition of the program will be launched this year, with support from the Argidius Foundation.
The researchers analyzed data from a sample of 432 SGBs that had participated in programs in El Salvador, Guatemala, Honduras, and Nicaragua. The study found that nearly three quarters of the businesses experienced significant revenue increases, and then analyzed which factors were correlated with superior growth outcomes.
The researchers found that the Impulsa Tu Empresa program’s success in spurring SGB revenue growth was not overly influenced by the following commonly-cited factors:
- Macroeconomic conditions and national business climates
- Working in rural versus urban settings
- The age of the businesses
- The sector or industry in which the businesses operate
- The business’ ability to access finance
However, the researchers did find that revenue growth was stronger for SGBs in which the entrepreneurs had higher levels of education and superior business skills prior to enrollment, those that made more and better use of technology in their businesses, and those who are ready and willing to seek out funding.
“We are happy to see such strong evidence that the Impulsa Tu Empresa program’s acceleration methodology benefits a wide variety of businesses, helping them to identify and capture high-growth opportunities,” said Juan Carlos Thomas, global entrepreneurship director at TechnoServe. “This research will help us as we shape the design of our entrepreneurship programs across Latin America, Africa, and India.”
“This study represents another analysis showing that well-designed programs can accelerate the growth of SGBs in emerging markets,” said Peter Roberts, academic director of SE@G. “When these programs are able to attract promising entrepreneurs, their main contributions to stimulating growth is doing the many little things that make SGBs ready for growth capital.”
For more information on the study, please download a copy of the full research report at technoserve.org/ite-report
TechnoServe is a leader in harnessing the power of the private sector to help people lift themselves out of poverty. A nonprofit organization operating in 29 countries, we work with enterprising men and women in the developing world to build competitive farms, businesses and industries. By linking people to information, capital and markets, we have helped millions to create lasting prosperity for their families and communities. TechnoServe has earned a 4-star rating from independent evaluator Charity Navigator for the last 11 years, placing us in the top 1 percent of all its rated nonprofits.
With nearly 50 years of proven results, TechnoServe believes in the power of private enterprise to transform lives.
ABOUT SOCIAL ENTERPRISE @ GOIZUETA
Social Enterprise @ Goizueta (SE@G), a research center within Emory
University’s Goizueta Business School, aims to generate positive societal impacts by
making markets work for more people, in more places, in more ways.
SE@G increases prosperity and reduces poverty in those places where markets
are currently ineffective through academic research that illuminates the factors
that induce and impede the realization of societal impacts; fieldwork programs
that inject knowledge, networks and capital; and teaching and student activities
that develop the next generation of principled social enterprise leaders. Learn
more at www.socialenterprise.emory.edu.