Abstract
Small and medium-scale enterprises around the world go through several challenges in a bid to achieve success. Many studies argue SMEs face challenges in different areas; some are critical for success whilst other are not. One of the critical challenges put forward by several studies is finding appropriate funding. Academics have described funds as the blood of every business and a key element that prescribes the supply of entrepreneurship. The challenge of funding remains a problem around the world both in developing and underdeveloped environments. The chapter provides insight into the funding issues faced by SMEs and provides practiced ways in which businesses in developing and underdeveloped environments can address the issue of funding.
TopBackground
Many small business researchers, economics, and entrepreneurship are yet to agree on a definition of entrepreneurship (Brockhaus & Horwitz, 1986; Gartner, 1988). The number of activities that influence the absence of a unified purpose includes establishing a business (Gartner, 1988), risk-taking and identifying opportunities, and managing the factors of production (Schumpeter, 1934; Kirzner, 1973). However, the variation in how scholars understand entrepreneurship is because the concept can address several socio-economic issues while application methods vary. Interestingly, the variation in definition and approach is influenced by various disciplines contributing to the idea from their viewpoints (Story & Green, 2010). Scholars like Story and Green (2010) proposed that fields like economics define entrepreneurship from choice and information processing, while organizational theories see the concepts from rational thinking (Baker and Nelson, 2005).
Notwithstanding this, both economics and corporate views identify a common position based on the range of activities that describe entrepreneurship (Phillips & Tracey, 2007; Shane & Venkataraman, 2000; Venkataraman, 1997). To better understand the concept of entrepreneurship, some definitions that have been useful in addressing Small and Medium Enterprises (SMEs) worldwide are considered. According to Stevenson and Jarillo (1990), entrepreneurs pursue opportunities with resources within their control. Also, Bygrave (1991) describes this concept as a function that creates a business or organization by identifying opportunities. Moreover, Shane and Venkataraman (2000) have defined entrepreneurship as a process driven by chance. In the same vein, professional groups, or bodies like the Global Entrepreneurship Monitor (GEM) believe it is the process of establishing a new business or company (Reynolds et al., 2005). In addition, recent studies have defined entrepreneurship as the formation or creation of Business (Klyver et al., 2008; Reynolds, 2009). These definitions support a position that entrepreneurship cannot be viewed from a narrow perspective given its role in economies (Battilana and Leca, 2008). Hence, it cannot be defined only from opportunity, as other factors like necessity determine the concept. However, irrespective of whether entrepreneurship is opportunity-driven or necessity-driven, it is essential to understand that the formation or creation is central (Battilana et al., 2009; Phillips & Tracey, 2007). Moreover, several elements apply to forming a business, which this study considers by exploring theories. This study defines entrepreneurship as those factors that influence individuals to start up a business and the process that allows for identifying opportunities (ECE, 2005; Battilana et al., 2009). In addition, entrepreneurship combines and mobilizes other resources to meet chance or the forces of market demand (Schumpeter, 1934).
Key Terms in this Chapter
Developed Country: A developed country—also called an industrialized country—has a mature and sophisticated economy, usually measured by gross domestic product (GDP) and/or average income per resident. Developed countries have advanced technological infrastructure and have diverse industrial and service sectors.
Government: The government of a country is the group of people who are responsible for governing it.
Financial Houses: A company concerned primarily with providing money, e.g., for hire-purchase transactions.
Small And Medium-Size Enterprise: SME is generally a small or medium-sized enterprise with fewer than 250 employees. While the SME meaning defined by the EU is also business with fewer than 250 employees, and a turnover of less than €50 million, or a balance sheet total of less than €43 million. Within this umbrella there are three different categories: medium-sized, small, and micro-businesses. These categories are defined by turnover and number of employees.
Under-Developed Country: An underdeveloped country is a country characterized by widespread chronic poverty and less economic development than other nations. ... These countries have very low per capita income, and many residents live in very poor conditions, including lacking access to education and health care.
Loan: A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
Economy: The state of a country or region in terms of the production and consumption of goods and services and the supply of money.