A Future for Small Businesses: Scale and Values of Sustainable Development

Small businesses play a key role in our society although they operate in a context of severe restrictions, many of which are associated with their small scale that does not allow them to deploy more effective management and access better opportunities. Until not long ago it was believed that this situation was inevitable: nowadays, this is no longer so. At present, there is modern business engineering that allows integrating into medium sized economic organizations small production that was until now scattered. Which are those business engineering tools? How to get organized in order to profit from them? Which support do we rely on so as to encourage and manage that leap in scale? How can we ensure that we are not launching to the market socially, economically and environmentally irresponsible players and work so that they become carriers of sustainable development values?Small businesses play a fundamental role in our society: they are a main generator of jobs making possible the productive insertion of a large part of the population; they generate income to support their subsistence; they provide a huge field for talent, creativity and effort; they represent a very significant segment of the domestic market. If small businesses rely on a much needed support, they can become one of the most powerful instruments to mobilize the economy and abate inequity and poverty.

In general, the small business operates in a context of severe restrictions: economic, financial, technological, as well as regarding management, knowledge, information, contacts and access to markets. Many of those limitations are associated with its small scale which does not allow it to deploy more effective management and access better opportunities.

Until not long ago it was believed that this was inevitable and that the problems of scale were inherent to the nature of small production. Limited scale and small production were considered for a long time synonyms. Nowadays, this is no longer so. At present, there is modern business engineering that allows to integrate into medium sized economic organizations small production that was until now scattered. This means to say that it is possible to incorporate several small producers (who remain small) into efficient medium sized companies by using already proven business engineering that is available on the market. Thus, each producer manages to overcome many of the restrictions that limit its functioning without changing its original size: the economic organization they join has the capacity to take advantage of better opportunities and translate them into higher results for all of its members.

Which are those business engineering tools? Among others, franchise systems, joint service providers, cooperative conglomerates or holdings, trade and export consortia, locomotive agribusinesses, and community supermarkets.

In fact, there is nothing automatic in the integration of small scattered production into medium sized organizations as success cannot be guaranteed by the mere adoption of some of those modern business engineering tools. As with any other medium sized company, their results will depend upon efficient management and internal organization, the sector in which they operate, local circumstances, the general context of national and global economy. But what stands out is that, by overcoming the scale limitation, they have, in principle, the possibility to access better opportunities and count on a better management structure.

Facing the challenge of raising the scale of small production

So, a critical challenge for current small companies is to increase their production scale so as to strengthen their management capacity and seize better opportunities, and this implies solving a series of matters, such as: which business engineering tool could be applied in order to attain a leap in scale, how to get organized so as to take advantage of this change, and which support could be used in order to encourage and manage that leap in scale.

(i) Each business engineering process has its nuances, factors that can facilitate or block its adoption and implementation. The most decisive ones are, on the one hand, aspects related to property and fair distribution of results and, on the other hand, the attitudinal and behavioural changes that are required from small producers and the very organization they have joined. Both aspects represent very different business and organizational cultures. The small producer will have to adjust to the demands of a medium sized venture, which are alien to his experience, and for its part, a medium sized company that intends to integrate small producers will not achieve its purpose if it does not understand and try to adapt as much as possible to the idiosyncrasy of origin and needs of those producers. It will be hard work to set up, in the course of business operations, the cultural bridges and reciprocal trust that will enable to create the identity and way of operating of the new project.

(ii) The organizational process of the new medium sized company can have countless characteristics yet there will always be an organizing person or group that will establish the purpose and general direction, and a certain amount of small producers who will be invited to join in the firm according to the norms and procedures that have been adopted. It will be necessary to secure agile and appropriate conditions so that management can be efficiently implemented and at the same time transparent and periodically subject to the review of the participating small producers. Permanent meetings that might enervate the decision making system, as well as extreme vertical structures that might inhibit the small producers’ contribution to setting goals and corporate strategies, would have to be avoided. Agile management and well regulated participation are essential pillars of the new organization.

(iii) In most cases no specialized support geared at encouraging and establishing -using modern business engineering- the leap in scale of a group of small producers is available. This does not mean that there are not diverse development, corporate and university entities, among others, that are capable of providing that assistance. Should they exist, the ideal thing would be to mobilize them so that they take on that responsibility. Should the existing organizations not have the will, knowledge or conditions to play the role of promotion and advising economic organizations that can integrate small scattered production, it would be necessary to create new entities such as the ones we have been calling [inclusive venture developers->http://www.opinionsur.org.ar/Inclusive-Venture-Developers?lang=en].

Productive ventures that are carriers of sustainable development values

Sustainable development values refer to the environmental, economic and social responsibility that the new inclusive ventures should implement. It would make no sense to sabotage the ultimate meaning of this effort by launching into the market more players who destroy the environment, who, guided by greed, meanness or selfishness, and conspiring against social and economic coexistence, are disrespectful of the perspectives, needs and interests of the others and their communities.

For that matter it will be necessary to work not only on the economic and organizational viability of the new ventures integrating small scattered production, but also on the social and corporate values that will guide them in their development. This is, ensuring that they are carriers of sustainable development values. How could this be achieved?

(i) Adopting sustainable development values from the very birth of the inclusive ventures, as a mandate of those who organize them, of those who help them do so (i.e. developers), of those who fund them (networks of socially and environmentally responsible angel investors, public and private investment funds), of public regulators and of those who work with them from civil society.

(ii) Through an educational and formative process of all the participants in the inclusive venture, so that those values are naturally integrated in their entrepreneurial vision, personal motivation and way of functioning.

In order to achieve better results, small producers of the Southern Hemisphere countries face challenges that are neither minor nor few; yet it is indispensable to address them if they intend to get out of the situation they are in. Personal determination matters –it is a more than necessary condition, it is indispensable-, but the restrictions are so numerous that this is not enough. The search of solutions needs to be geared to the construction of new economic structures of larger scale and management capacity that may enable them to access better opportunities; and, in that flux, help improve the course and way of functioning of their communities.

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