Microbusiness Collaboration as a Strategy to Increase Resilience in Natural Disasters: The Case of Coastal El Niño in Peru 2017

Microbusiness Collaboration as a Strategy to Increase Resilience in Natural Disasters: The Case of Coastal El Niño in Peru 2017

Jorge Vargas-Florez (Pontificia Universidad Católica, Peru), Eliseo L. Vilalta-Perdomo (University of Lincoln, UK), Martin Hingley (University of Lincoln, UK) and Rosario Michel-Villarreal (University of Lincoln, UK)
Copyright: © 2019 |Pages: 17
DOI: 10.4018/978-1-5225-8160-4.ch017

Abstract

Microbusiness, MB, importance for the global economy is uncontestable; they have huge participation of the world's production. In Peru, small-and medium-enterprises, SMEs, are 99% of the total of existing companies and contribute approximately 47% of the country's GDP; MBs are grouped within SMEs. They are the greatest generators of employment, although this may be informal and of poor quality. MBs confront difficulties, mainly due to their limited human and financial resources. Theories around how to deal with it have been developed mainly with big enterprises in mind, and this has little connection with what happens inside MBs. Accordingly, this chapter offers “collaboration” as a response strategy in case of a disruptive event to support MB resilience construction. This is contextualized from the experience of the Peruvian Costal El Niño 2017 and illustrated through the actions that a MB case (a beekeeper) took to deal with it.
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Background

MBs are usually grouped inside the concept of Small and Medium Enterprises (SMEs). SMEs importance for world’s economy is uncontestable as they account for at least 70% of the world’s production (Moore and Manring, 2009). They often constitute more than 90% of all enterprises inside a country (Poon and Swatman, 1999; Cull et al., 2006; Ozgulbas et al., 2006). Ates and Bititci (2011) cite a European Commission report, which asserts that SMEs perform a significant role in EU competitiveness. In the particular case of Peru, the influence of SMEs is also important, as they represent 99% of the total of existing businesses (INEI, 2014). According to Vásquez (2015), SMEs contribute to almost 50% of Peru’s GDP, and are the largest generators of employment; even though, these jobs may be informal and low-paid. In the particular case of micro-businesses (MBs), these are the most common size of business organization in the World. For example, more than 90% of businesses in the European (EU28) formal economy are MBs, which employ 30% of the workforce, and contribute with more than 20% of the added value to the European GDP (Muller et al., 2014). In Peru, to be considered a MB current legislation states that it should generate annual sales below USD $187 thousand or have less than 10 workers.

Even though MBs have positive impacts for the economy, they suffer a high-mortality rate. For instance, in Peru, it is estimated that 200 thousand companies close every year (Diario Correo, 2014). Zorrilla (2013) says that after two years of operation, 50% of the SMEs, and particularly new ventures, close. This phenomenon is not restricted to Peru; for instance, in UK only 4 in 10 survive after 5 years (ONS, 2016). There are several reasons for such a level of attrition. A survey, carried out by Avolio et al. (2011) concerning eleven Peruvian SMEs, determined that 46.3% of the tasks that can limit their growth are associated with supply chain challenges; for instance, the control of their inventories, the management of suppliers and sales, and the conducting of market research. This coincides with the wide-held view that logistics and supply chain management are key disciplines for achieving the success and competitive performance of firms (Kherbacha and Mocan, 2016). Furthermore, companies are no longer just competing between each other; with the supply chains where they participate are the new arena for competition (Holland, 1995; Christopher, 2005).

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