A research project examining entrepreneurial attributes of small and medium scale enterprises and wage workers for comparison purposes with SLMS micro-enterprise sample. A field survey of around 425 SMEs and 450 wage workers was carried out in Kalutara, Matara and Galle districts.


Research Publications

“Who are the Microenterprise Owners? Evidence from Sri Lanka on Tokman vs de Soto”

Is the vast army of the self-employed in low income countries a source of employment generation?

We use data from surveys in Sri Lanka to compare the characteristics of own account workers (non-employers) with wage workers and with owners of larger firms. We use a rich set of measures of background, ability, and attitudes, including lottery experiments measuring risk attitudes.

Consistent with the ILO’s views of the self employed (represented by Tokman), we find that 2/3rds to 3/4ths of the own account workers have characteristics which are more like wage workers than larger firm owners. This suggests the majority of the own account workers are unlikely to become employers. Using a two and a half year panel of enterprises, we show that the minority of own account workers who are more like larger firm owners are more likely to expand by adding paid employees. The analysis suggests that finance is not the sole constraint to growth of microenterprises, and provides an explanation for the low rates of growth of enterprises supported by microlending.

Book Chapter in International Differences in Entrepreneurship, edited by Josh Lerner and Antoinette Schoar, National Bureau of Economic Research (NBER) and University of Chicago Press, 2010.

Previous version of this paper is available as:

(1) IZA Discussion Paper No 3511, May 2008, downloadable from: http://www.iza.org/   (direct link:  http://ftp.iza.org/dp3511.pdf ),
(2) BREAD Working Paper No. 174, May 2008, downloadable from: http://www.cid.harvard.edu/bread/abstracts/174.html , and
(3) World Bank Policy Research Working Paper No 4635, May 2008, downloadable from direct link: http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2008/05/27/000158349_20080527134815/Rendered/PDF/wps4635.pdf