Micro-family-owned business : transitory survival mechanism or long term wealth creator?

Principal Topic: Entrepreneurship is key to employment, innovation and growth (Acs & Mueller, 2008), and as such, has been the subject of tremendous research in both the economic and management literatures since Solow (1957), Schumpeter (1934, 1943), and Penrose (1959). The presence of entrepreneurs in the economy is a key factor in the success or failure of countries to grow (Audretsch and Thurik, 2001; Dejardin, 2001). Further studies focus on the conditions of existence of entrepreneurship, influential factors invoked are historical, cultural, social, institutional, or purely economic (North, 1997; Thurik 1996 & 1999). Of particular interest, beyond the reasons behind the existence of entrepreneurship, are entrepreneurial survival and good ''performance'' factors. Using cross-country firm data analysis, La Porta & Schleifer (2008) confirm that informal micro-businesses provide on average half of all economic activity in developing countries. They find that these are utterly unproductive compared to formal firms, and conclude that the informal sector serves as a social security net ''keep[ing] millions of people alive, but disappearing over time'' (abstract). Robison (1986), Hill (1996, 1997) posit that the Indonesian government under Suharto always pointed to the lack of indigenous entrepreneurship , thereby motivating the nationalisation of all industries. Furthermore, the same literature also points to the fact that small businesses were mostly left out of development programmes because they were supposed less productive and having less productivity potential than larger ones. Vial (2008) challenges this view and shows that small firms represent about 70% of firms, 12% of total output, but contribute to 25% of total factor productivity growth on average over the period 1975-94 in the industrial sector (Table 10, p.316). ---------- Methodology/Key Propositions: A review of the empirical literature points at several under-researched questions. Firstly, we assess whether there is, evidence of small family-business entrepreneurship in Indonesia. Secondly, we examine and present the characteristics of these enterprises, along with the size of the sector, and its dynamics. Thirdly, we study whether these enterprises underperform compared to the larger scale industrial sector, as it is suggested in the literature. We reconsider performance measurements for micro-family owned businesses. We suggest that, beside productivity measures, performance could be appraised by both the survival probability of the firm, and by the amount of household assets formation. We compare micro-family-owned and larger industrial firms' survival probabilities after the 1997 crisis, their capital productivity, then compare household assets of families involved in business with those who do not. Finally, we examine human and social capital as moderators of enterprises' performance. In particular, we assess whether a higher level of education and community participation have an effect on the likelihood of running a family business, and whether it has an impact on households' assets level. We use the IFLS database compiled and published by RAND Corporation. The data is a rich community, households, and individuals panel dataset in four waves: 1993, 1997, 2000, 2007. We now focus on the waves 1997 and 2000 in order to investigate entrepreneurship behaviours in turbulent times, i.e. the 1997 Asian crisis. We use aggregate individual data, and focus on households data in order to study micro-family-owned businesses. IFLS data covers roughly 7,600 households in 1997 and over 10,000 households in 2000, with about 95% of 1997 households re-interviewed in 2000. Households were interviewed in 13 of the 27 provinces as defined before 2001. Those 13 provinces were targeted because accounting for 83% of the population. A full description of the data is provided in Frankenberg and Thomas (2000), and Strauss et alii (2004). We deflate all monetary values in Rupiah with the World Development Indicators Consumer Price Index base 100 in 2000. ---------- Results and Implications: We find that in Indonesia, entrepreneurship is widespread and two thirds of households hold one or several family businesses. In rural areas, in 2000, 75% of households run one or several businesses. The proportion of households holding both a farm and a non farm business is higher in rural areas, underlining the reliance of rural households on self-employment, especially after the crisis. Those businesses come in various sizes from very small to larger ones. The median business production value represents less than the annual national minimum wage. Figures show that at least 75% of farm businesses produce less than the annual minimum wage, with non farm businesses being more numerous to produce the minimum wage. However, this is only one part of the story, as production is not the only ''output'' or effect of the business. We show that the survival rate of those businesses ranks between 70 and 82% after the 1997 crisis, which contrasts with the 67% survival rate for the formal industrial sector (Ter Wengel & Rodriguez, 2006). Micro Family Owned Businesses might be relatively small in terms of production, they also provide stability in times of crisis. For those businesses that provide business assets figures, we show that capital productivity is fairly high, with rates that are ten times higher for non farm businesses. Results show that households running a business have larger family assets, and households are better off in urban areas. We run a panel logit model in order to test the effect of human and social capital on the existence of businesses among households. We find that non farm businesses are more likely to appear in households with higher human and social capital situated in urban areas. Farm businesses are more likely to appear in lower human capital and rural contexts, while still being supported by community participation. The estimation of our panel data model confirm that households are more likely to have higher family assets if situated in urban area, the higher the education level, the larger the assets, and running a business increase the likelihood of having larger assets. This is especially true for non farm businesses that have a clearly larger and more significant effect on assets than farm businesses. Finally, social capital in the form of community participation also has a positive effect on assets. Those results confirm the existence of a strong entrepreneurship culture among Indonesian households. Investigating survival rates also shows that those businesses are quite stable, even in the face of a violent crisis such as the 1997 one, and as a result, can provide a safety net. Finally, considering household assets - the returns of business to the household, rather than profit or productivity - the returns of business to itself, shows that households running a business are better off. While we demonstrate that uman and social capital are key to business existence, survival and performance, those results open avenues for further research regarding the factors that could hamper growth of those businesses in terms of output and employment.

Bootstrap approaches for estimation and confidence intervals of long term memory processes

In this work, we investigate an alternative bootstrap approach based on a result of Ramsey [F.L. Ramsey, Characterization of the partial autocorrelation function, Ann. Statist. 2 (1974), pp. 1296-1301] and on the Durbin-Levinson algorithm to obtain a surrogate series from linear Gaussian processes with long range dependence. We compare this bootstrap method with other existing procedures in a wide Monte Carlo experiment by estimating, parametrically and semi-parametrically, the memory parameter d. We consider Gaussian and non-Gaussian processes to prove the robustness of the method to deviations from normality. The approach is also useful to estimate confidence intervals for the memory parameter d by improving the coverage level of the interval.

Estimating short and long-term residential demand for electricity : new evidence from Sri Lanka

This study investigates the short-run dynamics and long-run equilibrium relationship between residential electricity demand and factors influencing demand - per capita income, price of electricity, price of kerosene oil and price of liquefied petroleum gas - using annual data for Sri Lanka for the period, 1960-2007. The study uses unit root, cointegration and error-correction models. The long-run demand elasticities of income, own price and price of kerosene oil (substitute) were estimated to be 0.78, - 0.62, and 0.14 respectively. The short-run elasticities for the same variables were estimated to be 032, - 0.16 and 0.10 respectively. Liquefied petroleum (LP) gas is a substitute for electricity only in the short-run with an elasticity 0.09. The main findings of the paper support the following (1) increasing the price of electricity is not the most effective tool to reduce electricity consumption (2) existing subsidies on electricity consumption can be removed without reducing government revenue (3) the long-run income elasticity of demand shows that any future increase in household incomes is likely to significantly increase the demand for electricity and(4) any power generation plans which consider only current per capita consumption and population growth should be revised taking into account the potential future income increases in order to avoid power shortages ill the country.

Framework for the long-term operation of a mobile robot via the Internet

This paper describes an autonomous docking system and web interface that allows long-term unaided use of a sophisticated robot by untrained web users. These systems have been applied to the biologically inspired RatSLAM system as a foundation for testing both its long-term stability and its practicality. While docking and web interface systems already exist, this system allows for a significantly larger margin of error in docking accuracy due to the mechanical design, thereby increasing robustness against navigational errors. Also a standard vision sensor is used for both long-range and short-range docking, compared to the many systems that require both omni-directional cameras and high resolution Laser range finders for navigation. The web interface has been designed to accommodate the significant delays experienced on the Internet, and to facilitate the non- Cartesian operation of the RatSLAM system.

Springbrook : Challenges in developing a long-term, rainforest wireless sensor network

We describe the design, development and learnings from the first phase of a rainforest ecological sensor network at Springbrook - part of a World Heritage precinct in South East Queensland. This first phase is part of a major initiative to develop the capability to provide reliable, long-term monitoring of rainforest ecosystems. We focus in particular on our analysis around energy and communication challenges which need to be solved to allow for reliable, long-term deployments in these types of environments.

Poster abstract : Energy-efficient rate adaptive MAC Protocol (RA-MAC) for long-lived sensor networks

This paper introduces an energy-efficient Rate Adaptive MAC (RA-MAC) protocol for long-lived Wireless Sensor Networks (WSN). Previous research shows that the dynamic and lossy nature of wireless communication is one of the major challenges to reliable data delivery in a WSN. RA-MAC achieves high link reliability in such situations by dynamically trading off radio bit rate for signal processing gain. This extra gain reduces the packet loss rate which results in lower energy expenditure by reducing the number of retransmissions. RA-MAC selects the optimal data rate based on channel conditions with the aim of minimizing energy consumption. We have implemented RA-MAC in TinyOS on an off-the-shelf sensor platform (TinyNode), and evaluated its performance by comparing RA-MAC with state-ofthe- art WSN MAC protocol (SCP-MAC) by experiments.

Long-Duration Solar-powered wireless sensor networks

This paper discusses hardware design principles for long-term solar-powered wireless sensor networks. We argue that the assumptions and principles appropriate for long-term operation from primary cells are quite different from the solar power case with its abundant energy and regular charging cycles. We present data from a long-term deployment that illustrates the use of solar energy and rechargeable batteries to achieve 24x7 operation for over two years, since March 2005.

Acute and long-term effects of exercise on appetite control: Is there any benefit for weight control?

Purpose of review: To examine the relationship between energy intake, appetite control and exercise, with particular reference to longer term exercise studies. This approach is necessary when exploring the benefits of exercise for weight control, as changes in body weight and energy intake are variable and reflect diversity in weight loss. Recent findings: Recent evidence indicates that longer term exercise is characterized by a highly variable response in eating behaviour. Individuals display susceptibility or resistance to exercise-induced weight loss, with changes in energy intake playing a key role in determining the degree of weight loss achieved. Marked differences in hunger and energy intake exist between those who are capable of tolerating periods of exercise-induced energy deficit, and those who are not. Exercise-induced weight loss can increase the orexigenic drive in the fasted state, but for some this is offset by improved postprandial satiety signalling. Summary: The biological and behavioural responses to acute and long-term exercise are highly variable, and these responses interact to determine the propensity for weight change. For some people, long-term exercise stimulates compensatory increases in energy intake that attenuate weight loss. However, favourable changes in body composition and health markers still exist in the absence of weight loss. The physiological mechanisms that confer susceptibility to compensatory overconsumption still need to be determined.

Molecular markers of obesity and diabetes

Recently it has been shown that the consumption of a diet high in saturated fat is associated with impaired insulin sensitivity and increased incidence of type 2 diabetes. In contrast, diets that are high in monounsaturated fatty acids (MUFAs) or polyunsaturated fatty acids (PUFAs), especially very long chain n-3 fatty acids (FAs), are protective against disease. However, the molecular mechanisms by which saturated FAs induce the insulin resistance and hyperglycaemia associated with metabolic syndrome and type 2 diabetes are not clearly defined. It is possible that saturated FAs may act through alternative mechanisms compared to MUFA and PUFA to regulate of hepatic gene expression and metabolism. It is proposed that, like MUFA and PUFA, saturated FAs regulate the transcription of target genes. To test this hypothesis, hepatic gene expression analysis was undertaken in a human hepatoma cell line, Huh-7, after exposure to the saturated FA, palmitate. These experiments showed that palmitate is an effective regulator of gene expression for a wide variety of genes. A total of 162 genes were differentially expressed in response to palmitate. These changes not only affected the expression of genes related to nutrient transport and metabolism, they also extend to other cellular functions including, cytoskeletal architecture, cell growth, protein synthesis and oxidative stress response. In addition, this thesis has shown that palmitate exposure altered the expression patterns of several genes that have previously been identified in the literature as markers of risk of disease development, including CVD, hypertension, obesity and type 2 diabetes. The altered gene expression patterns associated with an increased risk of disease include apolipoprotein-B100 (apo-B100), apo-CIII, plasminogen activator inhibitor 1, insulin-like growth factor-I and insulin-like growth factor binding protein 3. This thesis reports the first observation that palmitate directly signals in cultured human hepatocytes to regulate expression of genes involved in energy metabolism as well as other important genes. Prolonged exposure to long-chain saturated FAs reduces glucose phosphorylation and glycogen synthesis in the liver. Decreased glucose metabolism leads to elevated rates of lipolysis, resulting in increased release of free FAs. Free FAs have a negative effect on insulin action on the liver, which in turn results in increased gluconeogenesis and systemic dyslipidaemia. It has been postulated that disruption of glucose transport and insulin secretion by prolonged excessive FA availability might be a non-genetic factor that has contributed to the staggering rise in prevalence of type 2 diabetes. As glucokinase (GK) is a key regulatory enzyme of hepatic glucose metabolism, changes in its activity may alter flux through the glycolytic and de novo lipogenic pathways and result in hyperglycaemia and ultimately insulin resistance. This thesis investigated the effects of saturated FA on the promoter activity of the glycolytic enzyme, GK, and various transcription factors that may influence the regulation of GK gene expression. These experiments have shown that the saturated FA, palmitate, is capable of decreasing GK promoter activity. In addition, quantitative real-time PCR has shown that palmitate incubation may also regulate GK gene expression through a known FA sensitive transcription factor, sterol regulatory element binding protein-1c (SREBP-1c), which upregulates GK transcription. To parallel the investigations into the mechanisms of FA molecular signalling, further studies of the effect of FAs on metabolic pathway flux were performed. Although certain FAs reduce SREBP-1c transcription in vitro, it is unclear whether this will result in decreased GK activity in vivo where positive effectors of SREBP-1c such as insulin are also present. Under these conditions, it is uncertain if the inhibitory effects of FAs would be overcome by insulin. The effects of a combination of FAs, insulin and glucose on glucose phosphorylation and metabolism in cultured primary rat hepatocytes at concentrations that mimic those in the portal circulation after a meal was examined. It was found that total GK activity was unaffected by an increased concentration of insulin, but palmitate and eicosapentaenoic acid significantly lowered total GK activity in the presence of insulin. Despite the fact that total GK enzyme activity was reduced in response to FA incubation, GK enzyme translocation from the inactive, nuclear bound, to active, cytoplasmic state was unaffected. Interestingly, none of the FAs tested inhibited glucose phosphorylation or the rate of glycolysis when insulin is present. These results suggest that in the presence of insulin the levels of the active, unbound cytoplasmic GK are sufficient to buffer a slight decrease in GK enzyme activity and decreased promoter activity caused by FA exposure. Although a high fat diet has been associated with impaired hepatic glucose metabolism, there is no evidence from this thesis that FAs themselves directly modulate flux through the glycolytic pathway in isolated primary hepatocytes when insulin is also present. Therefore, although FA affected expression of a wide range of genes, including GK, this did not affect glycolytic flux in the presence of insulin. However, it may be possible that a saturated FA-induced decrease in GK enzyme activity when combined with the onset of insulin resistance may promote the dys-regulation of glucose homeostasis and the subsequent development of hyperglycaemia, metabolic syndrome and type 2 diabetes.