MICRO ENTERPRISES, BUSINESS LINKAGES AND VALUE-ADDITION AN ECONOMETRIC ANALYSIS

This study econometrically analyzes various determinants of value addition in micro enterprises. The empirical results suggest that capital investment versus total investment, skilled labor versus non-skilled labor and training of micro-entrepreneurs positively correlate with value-addition. Hence, if motivation is to achieve value-addition in micro enterprises, it may be achieved through enhanced investment in capital goods and skills of the labor engaged; training of entrepreneurs would also positively contribute towards value-addition. All three types of micro enterprises’ sales – sales to micro-enterprises, sales to other businesses and sales to final consumers – also positively co-relate with value-addition. However, sales to final consumers accounts for the highest contribution, followed by sales to other businesses and sales to micro enterprises. Hence, sales to final consumers and sales to other businesses should be preferred. Purchases, both from other businesses and micro businesses are negatively correlated with value-addition. Since higher negativity comes from purchases from other businesses compared to purchases from micro enterprises, the enhanced purchases from micro enterprises relative to other businesses would help increase value-addition