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Incentives and the growth of Oaxacan subsistence businesses

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  • Toledo, Arcelia
  • Hernández, José de la Paz
  • Griffin, Denis
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    Abstract

    This research evaluates a theoretical model that explains the growth and internationalization of 76 small pottery subsistence businesses in two communities in Oaxaca, Mexico as an agency problem. The model complements resource-based explanations of growth and internationalization for small firms. Based on in-depth interviews and industry sector data, descriptive statistics, Pearson correlation, and partial correlation are used to confirm the viability of the model. Results suggest that government actions have countervailing positive and negative relationships to sales growth. In both communities, government programs are positively associated with desired outcomes such as net profits and growth because they reduce the merchants' perceived financial risks. Concurrently, government programs are negatively associated to growth because subsistence entrepreneurs' perceptions of the government's political and self-serving motivations hinder their adopting and taking full advantage of government programs.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 63 (2010)
    Issue (Month): 6 (June)
    Pages: 630-638

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    Handle: RePEc:eee:jbrese:v:63:y:2010:i:6:p:630-638

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Agency problems and incentives Subsistence entrepreneurs Growth and insertion of SMEs Government;

    References

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    Cited by:
    1. Patricia S. Sánchez-Medina & Jack Corbett & Arcelia Toledo-López, 2011. "Environmental Innovation and Sustainability in Small Handicraft Businesses in Mexico," Sustainability, MDPI, Open Access Journal, vol. 3(7), pages 984-1002, July.
    2. Toledo-López, Arcelia & Díaz-Pichardo, René & Jiménez-Castañeda, Julio C. & Sánchez-Medina, Patricia S., 2012. "Defining success in subsistence businesses," Journal of Business Research, Elsevier, vol. 65(12), pages 1658-1664.

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