Risk And Firm Growth The Dilemma of Nairobi's Small-scale
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Date
1983Author
McCormick, Dorothy
Type
ArticleLanguage
enMetadata
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In Nairobi, where the economic and social consequences of business failure are high, entrepreneurs' risk-management strategies work separately and together to discourage firm growth. Many manage risk through flexibility. By working
in rent-free quarters, using family labour and little capital,
they minimise fixed costs and increase opportunities..
for
additional income. -
Business owners also avoid risk by manufacturing standard products for a known market. Successful entrepreneurs diversify their income and assets rather than expanding one enterprise. Finally, most prefer to preserve land and other assets unencumbered by debt. These rational responses to a risky business environment inhibit formation of a dynamic manufacturing sector. Policy-makers, NGOs, and the private sector can help by creating policies and targeting specific programmes to reduce risk.
Publisher
University of Nairobi Discussion Paper No. 291