Micro-Entrepreneurs and Financial Institutions

MICRO-ENTREPRENEURSHIP PROGRAMS CAN INCREASE THE PERFORMANCE OF THE LABOR MARKET. Name Instructor Course Date Micro-Entrepreneurship Programs Can Increase The Performance Of The Labor Market. It is not easy to manage performance. In several companies, one of the most daunting tasks for top executives is ensuring performance management. Even markets are not immune to issues of performance. Markets are judged based on how they perform. Like other areas where performance is an important indicator of success, markets are affected by several factors. These factors can contribute positively or negatively to the performance of the markets. The labor market is very sensitive. The market varies depending on economic conditions of each country. As economies expand and become large, the prospect of the market expanding and increasing more opportunities for skilled and unskilled labor increases. Therefore, the labor market is affected by entrepreneurship activities. Entrepreneurs play an important role especially in risk-taking and innovation that are important to adding value, creating more jobs and generating more income. There is a strong link between entrepreneurship and labor market. Therefore, in this essay, I argue that micro-entrepreneurship programs can increase the performance of the labor market.[Martínez, A., Puentes, E., & Ruiz-Tagle, J. (2018). The Effects of Micro-entrepreneurship Programs on Labor Market Performance: Experimental Evidence from Chile. American Economic Journal: Applied Economics, 10(2), 101-24.] Literature Review There is no standard definition of micro-entrepreneurship. However, micro-entrepreneurs are known to run micro-enterprises. The definition for micro-enterprises is different and depends on the administration of a country, their policy developments, and the stage of development that they are at. For developing countries, micro-entrepreneurs are many and they are responsible for improving the GDP and the quality of life for the residents of that country. They are mostly prevalent in these countries because they allow families to get a means of fending for themselves while providing goods and services for the people within these localities. Micro-entrepreneurs are normally known to operate on fixed capitals and a fixed number of workers but their importance to the labor market can never be understated.[Llanes, M., & Barbour, A. (2007). Self-employed and micro-entrepreneurs: Informal trading and the journey towards formalisation. Community Links.] Micro-entrepreneurs and Financial Institutions In several countries, micro-entrepreneurs never get funds from financial institutions for fear that it would be difficult to monitor how they spend these funds. Besides, on most occasions, there is a doubt that micro-entrepreneurs have the literacy level required to run a successful business. Most micro-entrepreneurs normally start small because they never have the collateral needed to help them secure large amounts so that they can start big. It is clear that micro-entrepreneurs play an important role in increasing employment opportunities and yet they are unable to get adequate financing. There is need to ensure that they can get the necessary funds to promote their activities.[Agier, I., & Szafarz, A. (2013). Subjectivity in credit allocation to micro-entrepreneurs: Evidence from Brazil. Small Business Economics, 41(1), 263-275.] Micro-entrepreneurs and employment Evidence suggests that micro-entrepreneurs do not show significant growth when considering the number of people they employ. While micro-entrepreneurs create and destroy so many jobs, it is evident that jobs created by micro-entrepreneurs are immune to recession effects. Therefore, jobs they create are normally not lost during difficult financial times. This is because micro-entrepreneurs have a better wage flexibility. However, large firms offer better in terms of wages, benefits, working conditions, job security, and skill enhancement. In most developing countries, micro-entrepreneurs go out of business winning a few years of being started up. Micro-entrepreneurs and economic growth Because micro-entrepreneurs can help in creating new employment opportunities, they can play a significant role in fueling economic growth and development. Micro-entrepreneurs can fuel economic development because they play a significant role as they expand the tax base, create employment, and fuel innovation. Through micro-entrepreneurs, the economy can have a constant supply of new ideas, innovations, and skills. With the rise of micro-entrepreneurs, there can be increased competition hence leading to a more efficient economy and enhancing productivity. All these can come in handy in positively impacting the labor market. The number of micro-entrepreneurs is on the rise globally compared to other areas of the economy. This only goes to shows that they are increasingly becoming important in the economy of every country. Most people agree that the main reason micro-entrepreneurs are so important is because they have the potentials to lower the cost of capital and create more economic opportunities.[Chandy, R., & Narasimhan, O. (2011). How micro‐entrepreneurs could change the world. Business Strategy Review, 22(1), 52-55.] Micro-entrepreneurship and Innovation Innovation is becoming an important trend in the world today. Innovation is responsible for the much advancement in technology in the world today. Innovation is the creation of new products or making changes to improve the existing products. Innovation concepts are presently being applied in almost every sector in the economy. Driven by the need to employ unique ways of conducting business to help their course in beating the competition and maintaining a competitive edge, micro-entrepreneurs have embraced innovative measures. Because of the role that they play in innovation, micro-entrepreneurs have played a crucial role in ensuring that the labor market is endowed with new opportunities and possibilities for those seeking jobs. Affecting change in the labor market is not easy. The paper here aims to uncover the role that micro-entrepreneurs play in contributing to the performance of the labor market.[Franck, A. K. (2012). Factors motivating women's informal micro-entrepreneurship: Experiences from Penang, Malaysia. International Journal of Gender and Entrepreneurship, 4(1), 65-78.] Empirical Evidence In a study conducted by Al Mamun & Ekpe to determine the “Entrepreneurial traits and micro-finance performance among the micro-entrepreneurs in Malayisia” he established that when entrepreneurs can identify and tap into the opportunities that are available to them, they can perform well and influence the labor market significantly. To arrive at the results, the researchers performed a cross-sectional design and quantitative approach study that involved collecting data from 407 mi...