There are not many angel investors in Latin America and the Caribbean, and venture capital is not that available. But what the region does show is some impressive cases of high growth small and medium sized enterprises (SMEs), providing interesting insights and ideas for policy advice.
Six case studies of SMEs in Brazil, Chile and Mexico reveal key success factors allowing certain businesses to reach high levels of growth, while they also identify the barriers holding back the growth of others. A recent summary of these studies, prepared by IDB specialists Juan Llisterri and Jaime García-Alba, highlights some of the attibutes shared by high growth SMEs and small-scale entrepreneurs in the sample.
The main common factors in success include strengthening intellectual assets use and protection mechanisms, promoting corporate entrepreneurship to leverage the symbiotic relationship between large firms and high growth SMEs, encouraging innovation at all levels, improving access to finance and facilitating potential entrepreneurs’ access to work experience.
“Most of the analyzed high-growth SMEs benefit from a symbiotic relationship with one or a few large companies," said García-Alba. "It is typically their major client, who buys an innovative product or service from them instead of developing it in-house.”
In most cases the entrepreneurs had academic or professional experience abroad, either through a business degree or through a job, which they combined with a deep understanding of the local market. In a number of cases, imitative entrepreneurship—adapting an idea from abroad to the local market—was the main driver of growth.
A complete analysis of these case studies was presented on May 8, 2008, at the “OECD Kansas City Workshop on High Growth SMEs, Innovation and Intellectual Assets: Strategic Issues and Policies” organized by the OECD in collaboration with the Kauffman Foundation and the International Trade Administration of the U.S. Department of Commerce. The event will offer an opportunity to analyze the innovative ability and management of intellectual assets as drivers of innovation and value creation in SMEs and their role in the fast growth of these firms.
These six case studies are part of the first phase of a research project on high growth SMEs in Latin America, launched by the IDB’s Science and Technology Division and the Multilateral Investment Fund with financing from the Spanish Innovation Support Program. The project’s second phase consists of a survey with a larger number of high growth SMEs in the region.
Read MIF brief: http://www.iadb.org/mif/newsDetail.cfm?language=English&ID=51