Entrepreneurial Human Capital and Micro and Small Business in Lao PDR

Abstract

This paper examines the determinants of performance in 1,776 micro and small enterprises that represent all industry sectors and geographical regions in Lao PDR. Although considerable resources are being directed toward promotion schemes in the country, empirical research on this subject is very limited. This study provides concrete insights into development strategies, particularly investment in basic education. The impact of business experience is small and insignificant. The differences between urban and rural, and Lao and ethnic minorities are narrowing in the younger generation, but still remain very large. The difference between male and female entrepreneurs found in most reports is rejected regardless of region, groups, and generation. These findings would help to formulate further efforts attempting to promote this sector.

<b>Entrepreneurship, Human and Social Capital, and Government Policy in Small and Medium Enterprise Development in Laos </b>

“…The result implies that entrepreneur's education would contribute to increasing business turnover or employment. Overall, the contribution of education to firm performance 13 is consistent with the findings in previous studies for developing countries, such as Pakistan (Kurosaki and Khan, 2004), Lao (Onphanhdala and Suruga, 2010), and Vietnam (Santarelli and Tran, 2013;Vixathep, 2013). …”

“…This result could also imply that the regression analysis might not comprehensively capture the relationship between education and successful entrepreneurship in the case of SMEs in Laos, most probably due to the quality of data on business turnover. Absence of impact of education on entrepreneurial performance is not uncommon for developing economies, such as Bangladesh's ready-made-garment industry (Vixathep and Matsunaga, 2015), Vietnam's manufacturing industries (Vixathep, 2013) and Laos (Onphanhdala and Suruga, 2010). The seemingly contradicting sign of the coefficient for lower secondary, vocational and technical education on employment is attributable to the inclusion of initial labor (lnlabor0) and a large difference in the samples (Table 4).…”

“…On the other hand, owing to increased availability of statistical data the recent period has seen an increase in empirical studies on SME development and entrepreneurship for developing economies, such as Pakistan (Kurosaki and Khan, 2004), Laos (Onphanhdala and Suruga, 2010), Vietnam (King-Kauanui et al, 2006;Santarelli and Tran, 2013;Vixathep, 2013), and Bangladesh (Vixathep and Matsunaga, 2015). In such studies, entrepreneur's 'human capital' is often represented by education or experience/skills of the owner/manager, while the 'performance' of an entrepreneur is evaluated indirectly by the success of the firm she manages.…”

“…Policy measures and action plans for SME development were also outlined in the government strategies (Lao PDR, 2005). In particular, the Action Plan for SME Promotion encompasses establishment of enabling environment, enhancement of competitiveness, improvement of access to finance and markets, promotion of entrepreneurship (entrepreneurial attitude) and the like (Onphanhdala and Suruga, 2010).…”

Estimating the capital assets of Laotian entrepreneurial families to compete in the garment industry

“…However, they lack the resource bases, technologies and raw materials required for success in competition. Many studies have found that human and social capital have an insignificant impact on competition in Lao PDR (Onphanhdala and Suruga, 2010; Daovisan and Chamaratana, 2020a, b; Daovisan and Shen, 2020). Sayvaya and Kyophilavong (2015) uncovered a positive association with financial capital, although it is statistically insignificant.…”