MATRIZ DE EVALUACIÓN DE FACTORES EXTERNOS (EFE)

In this section, key factors affecting performances of female-headed RMEs are reported. Micro-entrepreneurs having insufficient resources is reported to be a key factor

contributing to low micro-enterprise performance. Such performance, importantly, initiates and motivates the micro-entrepreneurs to develop relationships with MAPs so as to gain access to available services. In order to present the factors learnt from the fieldwork, they are categorised in regard to the key resources of households, which are extensively

documented as the capital in the literature relating to household livelihoods (Carney, 1998; Ellis, et al., 2003; Johnson, et al., 2005). The categories include (i) finance, (ii) human, and (iii) physical and natural46. It should be noted that the influence of ‘social resources’ on the performances of micro-enterprises are presented in Chapter 6, together with information on relationships between entrepreneurs and MAPs.

Finance capital

Financial capital was a primary resource required to start-up the micro-enterprises at the centre of this study. In practice, the availability and amount of financial capital affected the extent to which the micro-entrepreneurs could operate their venture. The majority of these

45_{Beverages, for example coffee, were pre-made at their houses and kept in large plastic containers. The}

vendor then sold the coffee in a plastic cup or in a plastic bag with ice.

46_{In the literature relating to rural household livelihoods (Carney, 1998; Johnson, et al., 2005), physical}

capital and natural capital are separated into different categories. However, in the present work, these are included under one category in order to concisely present information. The study was not aimed at examining household livelihoods but to utilise the asset categorises known as the ‘livelihood pentagon’ in order to facilitate the data presentation.

Chapter 5: Descriptions of Female-headed RMEs and associated MFIs: Case studies in Khon Kaen, Thailand 101

micro-entrepreneurs were involved in low income activities. The amount of capital seed (start-up capital) was not high, usually in the range of 500 to 20,000 baht ($NZ 25-1,000). Most IEs reported typically using their savings as initial financial capital. The use of savings could, accordingly, limit the operation of certain activities, such as marketing promotions, or selling products which were different from (or alterative to) existing

products within the same markets. Furthermore, these entrepreneurs would not take the risk of investing all their savings into enterprise activities. They had to put some of their saved money aside to be used for other household needs, such as accidents or emergency issues (IE-10) and the education of their children (IE-19).

I could not use the whole saving to invest in the business because I had to save some for emergency needs somehow, for example accident or tuition fee of my kids. Thus, I had to use some from saving but it was not enough for buying a bigger amount or varieties of style and size of clothes in order to reduce the price per unit and have more styles and sizes to provide for the customers (IE- 19)

In order to overcome these financial limitations, IEs had to seek services from, most importantly, informal sources, such as family members (IE-1 and IE-4), friends (IE-8) and local moneylenders (IE-10 and IE-11).

The lender provided me loans of 10,000 baht. I used it to start up the (small) restaurant. Only my savings are not enough (IE-10)

High interest rates, such as 10% per month as required by a local moneylender, could affect the extent of returns gained. The limited profit earned relates to the limited financial capital invested in the activities as well as to the repayment of debts which emerged. Several pieces of anecdotal evidence, through the news47in Thailand, typically show that many informal moneylender clients could not afford to repay high interest rates and, therefore, failed to make their repayments on time. Such difficulties can also cause physical harm, in addition to losing their collateral. The physical harm is caused by assaults made by so-called ‘debt collection gangs’ hired by the moneylenders (commonly known in the New Zealand context as ‘loan sharks’). However, the IEs interviewed

acknowledged that there had not been any such physically dangerous incidences towards them personally initiated by local moneylenders. The local moneylenders just retained and then permanently seized their collateral if the repayments were well over the due date.

Compared to IEs, CBEs have minimal problems with financial resources because they are likely to get support from government departments. In contrast, the IEs’ financial

limitations are acknowledged and these are attributed to the amount of the financial grants provided by government agencies as many were lower than the amounts required to

operate the enterprise’s activities (CBE-5 and CBE-2). These lower than expected financial amounts could exert an influence on enterprise activities or performance. For example, the micro-enterprise could not make new products, because they did not have sufficient funds to buy specific equipment and ingredients to do so (CBE-2).

Human capital

The human capital presented refers to the skills and knowledge of micro-entrepreneurs, in relation to their micro-enterprise activities. Activities chosen by the micro-entrepreneurs were basically consistent with their professional skills or experiences. These were gained through several approaches but, principally, through (i) their families (such as cooking and fabric weaving skills) and (ii) previous employment. Often the micro-entrepreneurs

encounter difficulties in up-scaling-up the cooking or production for sale to the market despite having reasonably professional skills in such activities at the household level. These micro-entrepreneurs have to conduct a trial and error learning approach. This approach, however, risks causing wastage of raw materials and money invested. It is interesting to note that, although the micro-entrepreneurs have to conduct trial and error processes, not many of them have asked for advice through consultations with government departments.

Our group had to try nearly five large batches of the recipes to make chilli paste become viscous and moderate pungency [note although all group members know how-to make chilli paste for their household consumption]. We wasted quite a lot of raw materials during the trial period especially the shrimp which was high cost (CBE-16).

Chapter 5: Descriptions of Female-headed RMEs and associated MFIs: Case studies in Khon Kaen, Thailand 103

Nearly all female entrepreneurs (both IEs and CBEs), however, had only minimal skills and knowledge relating to micro-enterprise management, for example marketing

management, bookkeeping, pricing and stocktaking skills. A lack of such skills and knowledge is not uncommon amongst rural villagers. The majority of them have family backgrounds as farmers and wage labourers. In addition, the villagers were likely to have low education levels, for example, only five out of 19 CBE respondents had educational levels (vocational or tertiary studies) which were higher than compulsory primary-school levels.

The influence of these limited skills and knowledge relating to the management of micro- enterprise performances are not apparent, especially amongst individual micro-

entrepreneurs. Such limitations are not considered important factors leading micro- entrepreneurs to apply for services to improve such skills and knowledge. For IEs,

professional skills and knowledge appeared to be the sole requirement for them to operate their micro-enterprise’s activities. Their marketing activities were minimal, because they only sold their products in the local markets, where they waited for the customers to come and purchase their products (IE-4). A similar practice was undertaken by street vendors. The customer’s acceptance and preference for the existing product’s quality, such as taste and aspects of hygiene, was the key for them to re-purchase the product/s and this ensured maintenance of the micro-enterprise’s viability and performance. One respondent

mentioned that she got more customers compared to another seller whose stall is just opposite hers. This is because she had a plastic cloth covering her food as well as the fact that the customers loved the taste of her food (IE-4).

Accounting knowledge needed to record money flow was not considered necessary for IEs. One reason was that IEs used what they sold (usually food) for their household’s

consumption (IE-7). The other reason was that the money was spent on several needs, including repayment of debt to moneylenders (i.e. generally required as a daily

repayment). Keeping track of finances could be a tedious task for IEs. However, a number of micro-entrepreneurs knew the amount of net money earned in their savings account with the corporate bank, in which they saved their money, after deducting money for other needs (IE-3, IE-8).

It is very difficult to keep following the money because it is used in several things. However I periodically save the money with Oom-sin [note a local name of the Government Savings Bank- GSB] after spending for other needs. The number shown in the bank account at least

pleases me that I earn money from doing my own business (IE-3)

In contrast to IEs, members of CBEs are required by MFIs and government departments to have a fundamental knowledge, in order to keep the books and/or accounting documents that are required by the SMCE legislation (section 5.3.1). In particular, in the case of government departments, CBEs are provided with this knowledge through their training programmes (MAP-2, MAP-4 and MAP-5). It is interesting to note that members of CBEs, who attended training sessions, were generally CBE leaders and treasurers. In addition, training relating to professional skills and knowledge was also provided by government departments. During the fieldwork, the researcher participated in training related to colour dying (arranged by MAP-5). The department had invited an expert to provide this training for CBE-3.

CBE leadership skills were important in order to operate micro-enterprises and their performance. All representatives of MFIs, government departments and members of CBEs interviewed held a common perspective on leadership, including (i) devotion to the

accomplishments of the micro-enterprises, (ii) having the ability to organise and lead members in order to conduct micro-enterprise activities, (iii) loyalty and honesty (i.e. no corruption or misspending of money for personal use), (iv) having the ability to operate the micro-enterprises, in order to gain profits and (v) socialisation.

Although most micro-enterprise leaders knew about the role of leadership and its function in principle, they might not have sufficient leadership skills. The government departments utilised such insufficiencies as key opportunities to develop and strengthen relationships with the leaders, through providing leadership development programmes. Examples of these programmes were skills training and visits to other enterprises with leaders renowned for their outstanding leadership and enterprise management (MAP-2 and MAP-6).

It should be noted that development programmes were not only provided for leaders but also extended to other administrative people within CBEs, for example, deputy leaders and

Chapter 5: Descriptions of Female-headed RMEs and associated MFIs: Case studies in Khon Kaen, Thailand 105

treasurers as these people might one day become successors to former leaders (MAP-4). Information obtained from the informal focus group sessions (CBE-1 and CBE-3) showed that leaders were likely to be the people in a CBE who joined the skill development

programmes. Most programmes were held in the provincial or regional offices, which were distant from the villages. Re-imbursement of travel expenses was, therefore, necessary.

Leadership skills were sometimes considered the critical factor that kept the micro- enterprises’ esprit de corps alive and intact during difficult times. It was essential,

especially during the start-up stage, when customers were not familiar with CBE products and services. Low micro-enterprise performance was unavoidable.

Our group has operated more than 10 years. This can happen because we have a good leader who always devotes herself to driving our business and she searches for more support from

several organisations to help our group” (CBE-3)

I thought our group is solid (there is no member who would like to quit from the group until now) and continues to get supported from the officer because of the leader. My group leader always supports not only the group’s activities, but also the group members’ life styles. Sometimes group members have problems, such as money. She lends us without charging any interest (a member of CBE-8)

All the government officers interviewed confirmed the importance of leadership skills and this could be considered one of the key ingredients which facilitated successful CBEs (for example, MAP-4 and MAP-9).

I thought the group leader is the key factor that can help the development and achievement of the group. If the groups have the leader who sacrifices, the group will develop effectively. For example, certain business groups in my responsible district, the leader always think about how to help developing the groups and offer all things that they have to support groups’ activities, such as using their own car to do marketing or using their land to build warehouses. They also contact several financial sources to get grants to be used for operating their business. Because of their devotions to maintain high quality and standard, their products won many awards and got quality endorsements from, such as the prestige Food and Drug Administration’s quality control schemes. Their products are exhibited at the Muang Tong Exhibition Centre in Bangkok quite often (MAP-9).

The group leader should be a solid and reliable person. Many groups failed because the heads do not have such characters. They did not stand up and kept the business ahead when difficulties, such as marketing disadvantages occurred. They simply discarded the group or passed the buck to other group members (MAP-4).

There are conflicts of interest amongst younger and older (age-wise) CBE members and these could affect the micro-enterprise’s performance. However, these conflicts appear to

be unavoidable and obvious during the start-up period (i.e. the first three to five years), because the micro-enterprise had to strive for consolidation and a reasonable performance (MAP-2, MAP-5, CBE-9 and CBE-18). The involvement of group leaders in all tasks was considered one of the key strategies, such as group meetings and creating an opened- minded and fair atmosphere, that helped to resolve conflict (MAP-8 and CBE-8).

The IE managerial structures and tasks are typically straightforward. IEs were solely planned and this planning preceded the required tasks, per se. This simple structure, however, might be a burden on the capability of the micro-entrepreneur, in addition to a burden on the micro-enterprise performance, because all tasks were solely handled by the micro-entrepreneur, who might not have sufficient time, for example, to update accounts and raw material stocks and, at the same time maintain customer relationships (MAP-4; IE- 8; IE-9). Although employees or family members were involved in the enterprise’s

operations, this involvement was likely to be temporary or on an occasional basis, for example, recruiting additional workers to increase stock-in-hand for forthcoming cultural and religious festivals (IE-15). Given simple management, the entrepreneurs could individually make decisions regarding customers like, for example, providing discounts (IE-7, IE-9, and IE-15).

In several incidences, the micro-entrepreneurs consulted and sought advice from their families (IE-3, IE-9, IE-11, IE-19) or friends (IE-1, IE-3, IE-7, IE-12) regarding uncertain management issues, such as future investments or the management. It should be noted that there is no evidence of IEs asking for consultations with MFIs or relevant government departments.

I never learnt doing business. However, I asked a friend who was a bookkeeper while I was

working in a textile factory before I started my own shop. She taught me how to record the money I had spent and received. It is an easy way to do (IE-12)

Unlike IEs, the managerial tasks and processes of CBEs were more structured. The hierarchy was taken into account, similar to the typical arrangements of commercial companies. CBEs were fundamentally comprised of a group leader, deputy leader,

Chapter 5: Descriptions of Female-headed RMEs and associated MFIs: Case studies in Khon Kaen, Thailand 107

officers48and experts. In practice, group leaders49, however, had to undertake nearly all designated administration tasks, in addition to professional ones, although tasks were functionally allocated to suitable members (CBE-3, CBE-4, and CBE-18). The

involvement of the leaders in nearly all CBE activities was not uncommon. This might also be referred as a ‘Jack-of-all-trades’ working style (MAP-2). Compared to other group members, the leaders were likely to (i) have higher educational levels and/or social status, such as being the wives of village leaders and (ii) be (age-wise) older (CBE-18).

It is interesting to note that younger members of CBEs were likely to hold back their new ideas, when certain older members were on the administrative board. This might be attributed to conflicts of interest between old and young people. As described by some younger members, certain older people would feel ashamed if the younger ones proposed some new ideas (i.e. they could not see the new idea in the same way as the younger members). Given such age-gap barriers, new or outstanding ideas were evidently shelved or rejected by the administration. These conflicts of interest were considered by younger members as a key factor which forced them to leave CBEs (MAP-2). This resulted in CBEs losing skills and knowledge (i.e. lost capabilities and, in turn, lower micro-enterprise performance) (MAP-2, MAP-3, MAP-5, CBE-9, CBE-17 and CBE-18). One former member of a CBE (CBE-9) became an IE (IE-3). She utilised her skills and knowledge, which she learnt in the CBE and, together with her new ideas, now successfully operates her own micro-enterprise.

Respondents, especially from the CBEs, acknowledged that they required a larger workforce (labour), in particular young adults or teenagers to join the micro-enterprises. The limited workforce appears to be related to the attitudes of young people, being unsure about the income and social welfare (note that welfare is paid by factory owners or

manufacturers). Such limitations can cause micro-enterprises to lose opportunities to expand their activities and increase the micro-enterprise’s performance and returns.

48

Officers on the advisory panel are representatives from both MFIs and government departments (MAP-5).

49_{Leaders of CBEs were basically chosen through votes amongst all members (essentially without the}

My group requires the young adult to do the job, in particular the logistics and marketing. They can drive motorcycles for longer distances and time better then other group members. They could take our products to the distance markets and the fuel consumptions of motorcycles are more economical than using the light truck (similar to the ute). However, most young adults or teenagers declined to join our group due to the lower payment compared to what they earn for working with the fishing net or tobacco factories (CBE-18).

The teenager told me if the group can provide social welfare as they got from the tobacco factory, they will join the group. They also told me that they got half of a daily payment if the factory becomes idle due to machine broken down or run-out of raw materials (CBE-18).