#MSMEDay: Generating Research to Support Micro-, Small, and Medium-sized Enterprises in India

This Micro-, Small, and Medium-sized Enterprises Day (#MSMEDay), we explore the urgent need for scientific evidence and data to design policies and programs that succeed in supporting small and medium businesses—the economic backbone of low-and middle-income countries such as India.

Challenges faced by MSMEs in India

Today, India has around 63 million MSMEs, which employ around 110 million people and account for a third of the national GDP. But running a small business is not an easy job, especially after the onset of the #Covid19 pandemic.

MSMEs often suffer from:

1. Poor access to formal banking services?
2. High barriers to market entry
3. Inadequately skilled workers
4. Poor technology and infrastructure

Supporting small business owners so they are able to grow, hire more people, and secure good livelihoods are seen as effective ways to revitalize the labor market in the aftermath of #Covid19.

Research to support small businesses

J-PAL's Jobs and Opportunity Initiative (JOI) has been funding research to help entrepreneurs grow and sustain their businesses by testing innovations to

1. Identify alternative training models?
2. Support high-growth entrepreneurs

A review of 22 randomized evaluations demonstrated that traditional training programs, with modules on financial management, marketing, and accounting, did not always lead to a significant increase in profits.

Conversely, evidence shows that alternative training programs for microentrepreneurs may be more effective when they are delivered one-on-one, tailored to participant needs, teach easy-to-apply skills, and foster entrepreneurial mindsets.

Consulting and alternative training programs were also found to increase the productivity, sales, profits, and the likelihood of survival of small, medium, and large businesses.

Supporting women-owned businesses

Women-led MSMEs face additional social and cultural constraints.?

With only 21 percent of registered MSMEs in India being female owned, evidence suggests that social barriers prevented women from using resources such as new skills or loans to start or grow their businesses.

Studies funded by JOI are also exploring how cultural norms affect women-owned businesses across the world.

For example, one such study in Ghana is examining the interplay between accepted family roles for women—such as the expectation to carry out unpaid domestic work and childcare responsibilities—and the business growth and performance of women-owned enterprises.

If you are working on or looking to collaborate on ways to improve MSME growth, provide business skills training at-scale, or support high-growth business, learn more about JOI and write to Niharika Betkerur at [email protected].