UNIDO-Harvard study urges innovative linkages to foster small firms

New Delhi, July 30 (UNI) A joint study by the United Nations Industrial Development Organisation (UNIDO) and Harvard University has called for innovative linkages to foster small enterprises to expand economic opportunity to a level that would enable millions of more people in developing countries to come out of poverty.

''Creation of new types of alliance between large and small enterprises, between public and private players, between domestic and foreign entities, and between commercial and social investors is essential to ........ expand economic opportunity to the level that would enable millions of more people in developing countries to come out of poverty,'' the study said.

The study on ''Building Linkages for Competitive and Responsible Entrepreneurship: Innovative partnerships to foster small enterprise, promote economic growth and reduce poverty in developing countries'' was published this year, a UNIDO statement said today.

Focussing on such alliances, the report has identified six models of collective corporate action and multi-sector partnership which can increase the scale and effectiveness of small enterprise development, through a combination of market-driven and public policy approaches.

These alliances are direct, commercially-driven business linkages; collective business initiatives that bring together groups of companies in the same industry sector or location; and extending the development impact and outreach of existing chambers of commerce and other representative business associations.

Such linkages also include public-private and blended value financing mechanisms that pursue both market-based and broader social returns; enterprise support services that meet the needs of small enterprises in a demand-driven and market-oriented manner; and multi - stakeholder public policy structures focused on improving the overall enabling environment.

The report recommends developing country governments to support efforts to strengthen the capacity and voice of organised, representative business associations, particularly those having a large membership of small enterprises or having targeted programmes to support competitive and responsible entrepreneurship.

It called for incentives for large domestic and foreign corporations that undertake strategic efforts to build local business linkages and support small enterprise development, either through their commercial value chains or their community investment activities.

This should be made a requirement in public procurement and tendering processes, the study suggests.

The report further said that large companies can individually or collectively contribute a lot to development and poverty reduction by expanding economic opportunities. For achieving this, these companies should ''adopt a more strategic approach to implementing responsible business standards and practices along individual value chains in order to maximise the development impact of existing business linkages.'' The number of such linkages that have a pro-poor or environmentally beneficial impact should be increased whereever possible, it added.

UNI