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.

The Impact of Globalization and Corruption on Extraordinary Wealth: An Empirical Analysis

The billionaires of the world attract significant attention from the media and the public. The popular press is full of books selling formulas on how to become rich. Surprisingly, only a limited number of studies have explored empirically the determinants of extraordinary wealth. Using a large data set we explore whether globalization and corruption affect extreme wealth accumulation. We find evidence that an increase in globalization increases super-richness. In addition, we also find that an increase in corruption leads to an increase in the creation of super fortune. This supports the argument that in kleptocracies large sums are transferred into the hands of a small group of individuals.

Health, endogenous time preference, and inequality : a political economy perspective

We study an overlapping-generations model in which agents' mortality risks, and consequently impatience, are endogenously determined by private and public investment in health care. Revenues allocated for public health care arc determined by a voting process. We find that the degree of substitutability between public and private health expenditures matters for macroeconomic outcomes of the model. Higher substitutability implies a “crowding-out" effect, which in turn impacts adversely on morality risks and impatience leading to lower public expenditures on health care in the political equilibrium. Consequently, higher substitutability is associated with greater polarization in wealth, and long-run distributions that are bimodal.

Rethinking genre studies through distribution analysis : issues in international horror movie circuits

The existence of any film genre depends on the effective operation of distribution networks. Contingencies of distribution play an important role in determining the content of individual texts and the characteristics of film genres; they enable new genres to emerge at the same time as they impose limits on generic change. This article sets out an alternative way of doing genre studies, based on an analysis of distributive circuits rather than film texts or generic categories. Our objective is to provide a conceptual framework that can account for the multiple ways in which distribution networks leave their traces on film texts and audience expectations, with specific reference to international horror networks, and to offer some preliminary suggestions as to how distribution analysis can be integrated into existing genre studies methodologies.

Distribution of benefits of irrigation induced technological changes and commodity markets : new evidence

A plethora of literature exists on irrigation development. However, only a few studies analyse the distributional issues associated with irrigation induced technological changes (IITC) in the context of commodity markets. Furthermore, these studies deal with only the theoretical arguments and to date no proper investigation has been conducted to examine the long-term benefits of adopting modern irrigation technology. This study investigates the long-term benefit changes of irrigation induced technological changes using data from Sri Lanka with reference to rice farming. The results show that (1) adopting modern technology on irrigation increases the overall social welfare through consumption of a larger quantity at a lower cost (2) the magnitude, sensitivity and distributional gains depend on the price elasticity of demand and supply as well as the size of the marketable surplus (3) non-farm sector gains are larger than farm sector gains (4) the distribution of the benefits among different types of producers depend on the magnitude of the expansion of the irrigated areas as well as the competition faced by traditional farmers (5) selective technological adoption and subsidies have a detrimental effect on the welfare of other producers who do not enjoy the same benefits (6) the short-term distributional effects are more severe than the long-term effects among different groups of farmers.

Physical and environmental determinants

This chapter describes physical and environmental determinants of the health of Australians, providing a background to the development of successful public health activity. Health determinants are the biomedical, genetic, behavioural, socio-economic and environmental factors that impact on health and wellbeing. These determinants can be influenced by interventions and by resources and systems (AIHW 2006). Many factors combine to affect the health of individuals and communities. People’s circumstances and the environment determine whether the population is healthy or not. Factors such as where people live, the state of their environment, genetics, their education level and income, and their relationships with friends and family, all are likely to impact on their health. The determinants of population health reflect the context of people’s lives; however, people are very unlikely to be able to control many of these determinants (WHO 2007). This chapter and Chapter 6 illustrate how various determinants can relate to, and influence other determinants, as well as health and wellbeing. We believe it is particularly important to provide an understanding of determinants and their relationship to health and illness in order to provide a structure in which a broader conceptualisation of health can be placed. Determinants of health do not exist in isolation from one another. More frequently they work together in a complex system. What is clear to anyone who works in public health is that many factors impact on the health and wellbeing of people. For example, in the next chapter we discuss factors such as living and working conditions, social support, ethnicity and class, income, housing, work stress and the impact of education on the length and quality of people’s lives. In 1974, the influential ‘Lalonde Report’ (Lalonde 1974) described key factors that impact on health status. These factors included lifestyle, environment, human biology and health services. Taking a population health approach builds on the Lalonde Report, and recognises that a range of factors, such as living and working conditions and the distribution of wealth in society, interact to determine the health status of a population. Tackling health determinants has great potential to reduce the burden of disease and promote the health of the general population. In summary, we understand very clearly now that health is determined by the complex interactions between individual characteristics, social and economic factors and physical environments; the entire range of factors that impact on health must be addressed if we are to make significant gains in population health, and focussing interventions on the health of the population or significant sub-populations can achieve important health gains. In 2007, the Australian Government included in the list of National Health Priority Areas the following health issues: cancer control, injury prevention and control, cardiovascular health, diabetes mellitus, mental health, asthma, and arthritis and musculoskeletal conditions. The National Health Priority Areas set the agenda for the Commonwealth, States and Territories, Local Governments and not-for-profit organisations to place attention on those areas considered to be the major foci for action. Many of these health issues are discussed in this chapter and the following chapter.

Optimal allocation and sizing of DGs in a distribution system using PSO

In this paper, the optimal allocation and sizing of distributed generators (DGs) in a distribution system is studied. To achieve this goal, an optimization problem should be solved in which the main objective is to minimize the DGs cost and to maximise the reliability simultaneously. The active power balance between loads and DGs during the isolation time is used as a constraint. Another point considered in this process is the load shedding. It means that if the summation of DGs active power in a zone, isolated by the sectionalizers because of a fault, is less than the total active power of loads located in that zone, the program start shedding the loads in one-by-one using the priority rule still the active power balance is satisfied. This assumption decreases the reliability index, SAIDI, compared with the case loads in a zone are shed when total DGs power is less than the total load power. To validate the proposed method, a 17-bus distribution system is employed and the results are analysed.

A rights management approach to securing data distribution in coalitions

As network capacity has increased over the past decade, individuals and organisations have found it increasingly appealing to make use of remote services in the form of service-oriented architectures and cloud computing services. Data processed by remote services, however, is no longer under the direct control of the individual or organisation that provided the data, leaving data owners at risk of data theft or misuse. This paper describes a model by which data owners can control the distribution and use of their data throughout a dynamic coalition of service providers using digital rights management technology. Our model allows a data owner to establish the trustworthiness of every member of a coalition employed to process data, and to communicate a machine-enforceable usage policy to every such member.

Distribution of polycyclic aromatic hydrocarbons in urban stormwater in Queensland, Australia

This paper reports the distribution of Polycyclic Aromatic Hydrocarbons (PAHs) in wash-off in urban stormwater in Gold Coast, Australia. Runoff samples collected from residential, industrial and commercial sites were separated into a dissolved fraction (<0.45µm), and three particulate fractions (0.45-75µm, 75-150µm and >150µm). Patterns in the distribution of PAHs in the fractions were investigated using Principal Component Analysis. Regardless of the land use and particle size fraction characteristics, the presence of organic carbon plays a dominant role in the distribution of PAHs. The PAHs concentrations were also found to decrease with rainfall duration. Generally, the 1- and 2-year average recurrence interval rainfall events were associated with the majority of the PAHs and the wash-off was a source limiting process. In the context of stormwater quality mitigation, targeting the initial part of the rainfall event is the most effective treatment strategy. The implications of the study results for urban stormwater quality management are also discussed.

Distribution of forces during fulcrum bending radiographs on adolescent idiopathic scoliosis patients

At the Mater Children’s Hospital, approximately 80% of patients presenting with Adolescent Idiopathic Scoliosis requiring corrective surgery receive a fulcrum bending radiograph. The fulcrum bending radiograph provides a measurement of spine flexibility and a better indication of achievable surgical correction than lateral-bending radiographs (Cheung and Luk, 1997; Hay et al 2008). The magnitude and distribution of the corrective force exerted by the bolster on the patient’s body is unknown. The objective of this pilot study was to measure, for the first time, the forces transmitted to the patient’s ribs through the bolster during the fulcrum bending radiograph.

A new method for improving reliability and line loss in distribution networks

In this paper, both Distributed Generators (DG) and capacitors are allocated and sized optimally for improving line loss and reliability. The objective function is composed of the investment cost of DGs and capacitors along with loss and reliability which are converted to the genuine dollar. The bus voltage and line current are considered as constraints which should be satisfied during the optimization procedure. Hybrid Particle Swarm Optimization as a heuristic based technique is used as the optimization method. The IEEE 69-bus test system is modified and employed to evaluate the proposed algorithm. The results illustrate that the lowest cost planning is found by optimizing both DGs and capacitors in distribution networks.

The application of phonetic distribution normalisation to likelihood-maximising speech enhancement for robust ASR

Traditional speech enhancement methods optimise signal-level criteria such as signal-to-noise ratio, but such approaches are sub-optimal for noise-robust speech recognition. Likelihood-maximising (LIMA) frameworks on the other hand, optimise the parameters of speech enhancement algorithms based on state sequences generated by a speech recogniser for utterances of known transcriptions. Previous applications of LIMA frameworks have generated a set of global enhancement parameters for all model states without taking in account the distribution of model occurrence, making optimisation susceptible to favouring frequently occurring models, in particular silence. In this paper, we demonstrate the existence of highly disproportionate phonetic distributions on two corpora with distinct speech tasks, and propose to normalise the influence of each phone based on a priori occurrence probabilities. Likelihood analysis and speech recognition experiments verify this approach for improving ASR performance in noisy environments.

Fold back current control and admittance protection scheme for a distribution network containing distributed generators

Islanded operation, protection, reclosing and arc extinguishing are some of the challenging issues related to the connection of converter interfaced distributed generators (DGs) into a distribution network. The isolation of upstream faults in grid connected mode and fault detection in islanded mode using overcurrent devices are difficult. In the event of an arc fault, all DGs must be disconnected in order to extinguish the arc. Otherwise, they will continue to feed the fault, thus sustaining the arc. However, the system reliability can be increased by maximising the DG connectivity to the system: therefore, the system protection scheme must ensure that only the faulted segment is removed from the feeder. This is true even in the case of a radial feeder as the DG can be connected at various points along the feeder. In this paper, a new relay scheme is proposed which, along with a novel current control strategy for converter interfaced DGs, can isolate permanent and temporary arc faults. The proposed protection and control scheme can even coordinate with reclosers. The results are validated through PSCAD/EMTDC simulation and MATLAB calculations.