La traducción según el Marco Común Europeo de Referencia para las Lenguas

The theoretical framework presented in this chapter is based on the social network literature, and is included to provide some perspectives on the relationship between

female-headed RMEs and MAPs. The importance of social networks in rural development, through the economic development of RMEs, has been recognised (Coleman, 1988;

Fafchamps & Minten, 2002; Granovetter, 1995; Putnam, 1993). The networks that connect groups and society provide benefits to the enterprises. These benefits have been identified as, for example, accessing credit sources (Cornell & Welch, 1996; Montgomery, 1991), market networking (Kranton, 1996) and cultivating trustful and skilful employees

(Sherraden, et al., 2004). In low income countries, the levels of social networks have been documented as having a positive relationship with improved development outcomes in areas such as agriculture, water and sanitation and micro-credits (Anderson, Locker, & Nugent, 2002; Brown & Ashman, 1996; Uphoff & Wijayaratna, 2000).

The tenet underlying the theory relevant to social networks is that relationship networks can contribute a valuable resource for people and groups (Lin, 2008). The networks are developed through relationships amongst people, who are similar to each other, or who know each other, or relate through kinship, friendship, and/or residing in closely connected networks (Rose, 2000). Lin (2008) defined such social relationships as being a so-called ‘innermost layer’ in which the layer is characterised by intimate kinship and relationships where confidences are shared. In addition to the inner circle, there are relationships amongst people who are different from each other and these are also important networks and are reflected in relationships developed between micro-enterprises (MEs) and development agencies, for example. These relationships allow people to gain access to benefits such as resources and opportunities which may not have been available within their own intra-groups or communities (Granovetter, 1973; Putnam, 2000; Woolcock, 1998; Woolcock, 2001) while also allowing them to utilise those accessed through

Chapter 3: Conceptual Framework 35

diverse as people develop their relationships from their inner layer (Burt, 1992; Granovetter, 1973):

As the relationships extend from the inner layer to the outer layer, the intensity of relationships decreases, the density of the network decreases, and, most critically, resources embedded among members become more diverse or heterophilous. Heterophilous resources not only reflect different and new resource, but also increase the chances of containing better resources (Lin, 2008).

Because the relationship or social network is a specific set of linkages amongst a defined set of people, the relationship development essentially involves identifying and selecting social ties that can subsequently be used in accordance to a person’s actions, goals or needs that they hope to achieve (Lin, 2008). Lin (2008) proposed that the likelihood of accessing available resources may depend on (i) the extent of the networks connecting to the outer layers; (ii) the richness of the accessed resources; and (iii) the relationship between connections. In the literature, there is a range of services available (i.e. diversity and density) through, for example, MFIs and development agencies. The poor have

opportunities to select services in accordance to their needs, e.g. loan amount, interest and repayment period (Hulme & Mosley, 1996; Johnson, et al., 2005; Johnson & Rogaly, 1997a). In a study in Uganda (Cohen, 2002), for example, the poor could express their attitudes towards the services provided. Cohen reported that the drop-out rates of Ugandan micro-entrepreneurs from MFIs were as high as 60% and the key reason underlined was inconsistent credit services for their needs, especially in terms of amounts and repayment periods. A report on Thailand (ILO, 1999a) shows that the limitations of financial support for micro- and small-businesses have been subsided through development programmes, which are extensively implemented by several government agencies.

Given reasonable network availability and the quality of responding to need, the likelihood of a person accessing resources is essentially dependent on the relationship connections or strength. Kim and Aldrich (2005) argued that relationship strength or social ties can be greatly varied across an individual’s portfolio of relationships. Theoretically, tie strength can range from having no relationship between two actors to having a strong relationship. Similar to the customer/supplier relationship, the relationship strength would principally be dependent on personal involvement between the supplier and the customer and the length

of time the customer had been involved with the supplier and given appropriate service quality (Berry, 2006).

The poor and/or female entrepreneurs tend to have strong ties or close relationships with informal finance providers, such as moneylenders and pawnbrokers. For example, in a study on Thailand (Siamwalla, et al., 1990), resident lenders appeared to have strong ties with their clients, compared to MFIs which operated from outside the communities. This was because the lenders have more opportunities to get involved with their clients. In another study, it was found that Malaysian small retailers mostly utilised the services of pawnshops, in which the owner provides the financial services in the same markets as the retailers (Ismail & Ahmad, 1997). Hulme & Mosley (1996) argued that the poor (whose incomes are below the national poverty line and who reside in remote rural areas) were less likely to participate in micro-finance programmes because of, amongst other factors, the distant of the locations and limited available time to participate. In a study of Sri Lanka, Shaw (2004) interestingly noted the micro-entrepreneurs having similar characteristics as those reported by Hulme & Mosley (1996) with the majority selecting survival activities, such as having a small kiosk in an owner’s house or a temporary road stall (median earnings of about 2,000 rupee or $NZ 58 per month). These entrepreneurs are likely to apply for a loan from local moneylenders. Meanwhile, Sri Lankan entrepreneurs operating so-called ‘entrepreneurial activities24’ (median earnings of about 6,000 rupee or $NZ 170 per month) tended to both utilise their own savings and credit obtained from a formal provider, such as a local bank or MFI, namely the Women’ Development Federation (WDF) (Shaw, 2004).

Drawing upon those examples, it can be noted that the entrepreneurs’ characteristics, such as residence and micro-enterprise activities, in some ways appear to be factors which facilitate relationship development with resource providers. Micro-entrepreneurs’

characteristics can be affected by a range of factors which vary amongst individuals. Shaw (2004) pointed to four key factors which influenced the reasons why the poor in Sri Lanka selected survival activities. These included location (geography), financial capital (seed capital), human capital (technical or professional skill) and socio-cultural factors, where

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the latter was focussed on networks relating to both markets and raw material. Shaw (2004) argued that the poor faced limitations relating to these factors, which led them to limited alternatives for their activities. Cahn (2006) similarly reported that limitations in such capital caused entrepreneurs in a distant rural area of Samoa to be involved in low- profit activities.

The factors reported by Shaw (2004) (as noted above) are extensively documented in the literature on micro-enterprise development and these factors are key resources for

entrepreneurs, having a great influence on enterprise performance (Kantor, 2009; Lerner, Brush, & Hisrich, 1997; Lerner & Haber, 2001; Sherraden, et al., 2004). The poor or rural micro-entrepreneurs are likely to have resource limitations (Carney, 1998; Ellis,

Kutengule, & Nyasulu, 2003) and often, these can reportedly lead the enterprises into low performance. Given these low performances, the entrepreneurs in turn seek to develop relationships with suppliers, in order to gain access to available resources, such as the case of microcredit provided by MFIs, which is utilised for overcoming such unsatisfactory performances (Bhatt, Desai, Thamarajakshi, Pande, Arunachalam, & Sharmashakti, 1988; Bhatta, 2001; Lerner, et al., 1997; Paulson & Townsend, 2004).