Title: Small firm finance is a value chain governance issue: new evidence from Latin America
Authors: Lizbeth Navas-Alemán; Carlo Pietrobelli; Marco Kamiya
Institute of Development Studies (IDS), Sussex University, BN1 9RE, UK; Navas-Aleman & Co, Ltd., Kingsway House, 134-140 Church Road, Hove, East Sussex, BN3 2DL, UK
Inter-American Development Bank, 1300 New York Ave., NW, Washington, D.C. 20577, USA; University of Roma Tre, Via Ostiense, 159, 00154 Roma, Italy
UN HABITAT Headquarters – Nairobi, Kenya P.O. Box 30030, Nairobi, Kenya
Abstract: The literature on small and medium-sized enterprises (SME) finance suggests that linkages with large firms in value chains can improve access to credit. This exploratory paper looks at inter-firm linkages and SMEs access to finance and draws on the value chain literature regarding issues of coordination and governance. Using original enterprise-level data (agro-industry in Argentina, furniture in Brazil and ICT in Costa Rica), we compare sources of value chain finance and discuss the role of financial mechanisms based on 'hard data' and relationship finance. Findings confirm the importance of value chain financing and the role of governance in SMEs' access to finance.
Keywords: global value chains; SME finance; small and medium-sized enterprises; SMEs; relationship finance; Brazil; Costa Rica; Argentina; inter-firm linkages; coordination; governance; value chain financing; agro-industry; agriculture; furniture industry; ICT industry; financial mechanisms; access to finance.
Int. J. of Technological Learning, Innovation and Development, 2015 Vol.7, No.3, pp.218 - 243
Submission date: 03 Oct 2014
Date of acceptance: 10 Oct 2014
Available online: 03 Jul 2015