Alleviating poverty by engaging in microenterprise : how can INGOs in Vietnam help microenterprises overcome market constraints?

Microenterprise programs (MEPs) that aim to help poor communities engage in micro businesses have contributed significantly to poverty reduction in developing countries. However, a review of the literature suggests that the current approach adopted by MEPs has mainly provided services to microenterprises (MEs) based on what MEPs can supply rather than on what MEs actually need and what the market demands. Therefore, MEPs’ approaches are more likely to be supply driven. Yet when there are market constraints, such as high competition or low demand, this approach has been linked to the failure of MEs in their infancy. The alternative is a demand driven approach, in which MEPs provide MEs with support based on what MEs need, and what markets demand. However, research examining the application of this approach is limited. In order to gain an understanding of the approaches of MEPs, to identify whether these approaches are demand or supply driven, and to discover how these approaches are used to help MEs operate under market constraints, this study examined the operation of International Non-Government Organisations (INGOs) operating in Vietnam. This exploratory study involved in-depth interviews with senior executives from 10 INGOs. Thematic analysis was used to analyse data collected from the in-depth interviews. The results were further verified with publicly available data from the INGOs. The findings of this research indicate that the demand driven approach is dominant in most approaches of INGOs in Vietnam, and has become a key approach in helping MEs deal with market constraints. Further, rather than explaining the demand and supply driven dichotomy, the findings highlight that MEPs’ approaches can be viewed in two dimensions: a participant-demand driven approach focusing on the basic needs and capabilities of the extremely poor, irrespective of market demands; and a market-demand driven approach focusing on the capabilities of poor communities, while also accommodating market demands. This research provides contemporary and practical insights into the DD and SD approaches, and a better understanding of MEPs’ approaches to MED in Vietnam.