SME Policy, Academic Research and the Growth of Ignorance, Mythical Concepts, Myths, Assumptions, Rituals and Confusions

Abstract

PROFESSOR ALLAN A. GIBB IS chairman of the Foundation for SME Development at Durham University, England. This paper focuses upon the value of academic research to policymakers and stakeholders in Small and Medium Enterprise Development. It argues that alongside the substantial growth in SME research and publication in the past two decades there has been a parallel growth of ignorance. As exemplars of this the paper examines a number of 'mythical concepts' and 'myths' that are used as a basis for key areas of policy development. It seeks to demonstrate how these have arisen. It also shows how these have led on to certain kinds of priorities being established and certain assumptions about development processes implicitly adopted. Finally, the paper explores three key issues which it is argued are at the core of this problem: first, the way in which academe interfaces with the SME, its stakeholders and policymakers; second, the assumptions that are made about the processes by which policy is arrived at; and, finally, academic approaches to research in the social sciences.

Micro-finance agencies and SMEs: model of explication of tacit knowledge

“…It is distinct from micro-equity lenders and angel investors who obtain shares for small amounts of money, and venture capital, which usually involves larger amounts of equity finance and providing management advice. The focus of this paper is the relationship in the financial transaction of micro-credit (Gibb, 2000), between SME borrowers and micro-credit lenders. Banks have traditionally been the primary providers of micro-credit loans; however this has not been without its limitations.…”

“…There is a call for improving the supply side of micro-credit (Gibb, 2000). Several interrelated elements account for banks' unwillingness to provide micro-loans at competitive interest rates.…”

“…Micro-finance is often associated with lending to the poor or to micro-firms in developing countries with transactions that are based on a group of borrowers, such as rotating loans (Auwal, 1996). Existing literature on SME finance focuses on debates about financial management credit analysis (for example, Howorth, 2001;Hutchinson and Ray, 1986;Holmes et al, 1994;McMahon, 2001McMahon, , 2003Ray and Hutchison, 1985), finance gaps (for example, Hamilton and Fox, 1998;McMahon, 2003) and access and availability to micro-finance (for example, Deakins and Hussain, 1994;Gibb, 2000;Kotey, 1999). Supplying micro-credit products is a way for micro-finance agencies including small banks or credit unions to differentiate themselves from larger banks in the marketplace.…”

“…Supplying micro-credit products is a way for micro-finance agencies including small banks or credit unions to differentiate themselves from larger banks in the marketplace. Explaining relationships between these types of suppliers and SMEs in the financial transaction of micro-credit (Gibb, 2000) is the focus of this paper. This can be a tripartite relationship that can also include an economic development agency.…”

“…A call has been made for more research on the role of the micro-finance agency and investigating greater efficiencies in the delivery of loans between the micro-finance agency and the client (Bhatt and Tang, 2001;Binks et al, 1992;Gibb, 2000;Scott 2006). Several studies have been carried out that examine agencies that are active in providing risk finance for new and emerging SMEs (Harris and Bovaird, 1996;Westhall et al, 2000).…”