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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

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.

Suggested Citation

  • Toledo, Arcelia & Hernández, José de la Paz & Griffin, Denis, 2010. "Incentives and the growth of Oaxacan subsistence businesses," Journal of Business Research, Elsevier, vol. 63(6), pages 630-638, June.
  • Handle: RePEc:eee:jbrese:v:63:y:2010:i:6:p:630-638
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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 1-19, July.

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