The evaluation of small enterprise programs and projects : issues in business and community development

Based on a review of literature and field practices, this paper records and analyzes evidence regarding effective small enterprise programs. The author explores, in turn, definitions of the small enterprise sector, the effects of definition on the project design and evaluation process, and the question of project impacts on firms, individuals, and communities. He concludes that research on small enterprise interventions, though limited, suggests that such programs can increase employment and enhance income among the poor, encourage efficient use of capital, and promote integrative linkages throughout the economy. The effects of specific programmatic (e.g., credit provision, the use of financial intermediaries) and external (political, institutional, social, and psychological) factors are considered next. The variety of factors considered is seen as suggestive of major differences in the emphases of past projects. Assumptions and evidence relating to each factor are reviewed and assessed, and observations regarding the possible advantages of one type of approach over another in particular settings are made. The primary purpose of the analysis, however, is to organize factors for the use of evaluation teams. Finally, to further clarify the various diverse assumptions about what makes small enterprises work, three fundamentally different approaches to enterprise development - resource transfer, psychosocial motivation, and community-building - are identified and evaluated. It is suggested that awareness of these categories can provide evaluators with a sensitivity to the large range of alternative assumptions about project inputs and sequences as well as to all possible project outcomes. Appended are a comprehensive list of development indicators appropriate for small enterprise projects and a 7-page bibliography (1954-82).