Table 4 - uploaded by Pontus Engström
Content may be subject to copyright.
OLS regression relating financial literacy and role models with micro-enterprise performance 

OLS regression relating financial literacy and role models with micro-enterprise performance 

Source publication
Article
Full-text available
This article analyses how financial literacy and role models contribute to explaining the performance of micro-enterprises in the informal economy. Grounded in human capital reasoning and social learning theory, we argue that financial literacy and personal knowledge of role models lead to improved firm performance. We test our hypotheses on a uniq...

Contexts in source publication

Context 1
... in Table 4, we find significant statistically significant relations between financial literacy and profits (Model 1; coeff. 0.084, p < 0.01) and financial literacy and ROA (Model 2; coeff. ...
Context 2
... suggests that the ability to understand basic financial concepts adds significant value to the micro-enterprises and their owners. Further, these numeracy skills and abilities, rather than formal education and previous experience -as seen most obviously when comparing the impact of financial literacy with that of education in Table 4 -act as a more context-appropriate view of human capital given its predictive power. As such, financial literacy seems to provide a clearer path forward to escaping poverty, or at least covering subsistence expenses. ...

Similar publications

Article
Full-text available
This article aims to understand the importance of the social relationships of the manicurist in Neiva (Huila- Colombia), in order to stay in the informal economy. For this study 63 women of different ages were selected. The manicurists were given a semi- structure interview guide based on the theory of categories by Granovetter (1973), Burt (2000),...
Article
Full-text available
This study examines an association between two important and historical administrative characteristics of civil service systems (i.e. professional and impartial public administration) and national-level innovation outputs. Scholars have examined the influence of macro-level factors such as the general level of human capital, culture, and social cap...

Citations

... Informalizing implies the foregoing of regulative legitimacy over time (Lent et al., 2019). This pathway may constrain financial performance (Brown et al., 2013;Engström & McKelvie, 2017), entrepreneurial growth (Krasniqi & Williams, 2020;Sonobe et al., 2011), and innovative capacity (Bu & Cuervo-Cazurra, 2020;Kabecha, 1999;Kurosaki, 2019;Ullah et al., 2019) in the long run. In fact, informal enterprises are generally smaller in size, less innovative, and characterized by lower productivity and higher capital intensity than formal enterprises (Amin & Islam, 2015;Nichter & Goldmark, 2009). ...
Article
Full-text available
Informal entrepreneurship (IE) has received increased recognition because of its theoretical distinctiveness and practical relevance. However, the burgeoning literature on IE is difficult to navigate, due to its rapid growth across different disciplines. Through an integrative review, we introduce a novel typology of informal entrepreneurs that captures their heterogeneity across various contexts. We point out a dynamic perspective of IE, consisting of three pathways—the reactive formalizing, the proactive formalizing, and the informalizing pathways—along which informal entrepreneurs move, acquiring or foregoing regulative legitimacy. Our review extends the theory on IE, outlines promising research avenues, and suggests relevant practical implications.
... labour) seem to have effects that are more consistent with those of the aggregated score but the interaction between financial resources and economic conditions at the founding stage is not significant when analysed separately. Perhaps, informal firms learn how to make do with limited access to financial resources (Engström and McKelvie, 2017) even when they are founded during poor economic conditions. Nonetheless, human resources are particularly relevant for navigating the formalisation process (Shahid et al., 2020;Thapa Karki et al., 2021;Xheneti et al., 2019). ...
Article
The informal economy makes an important contribution to economic activity but knowledge about the country-level conditions that influence an informal firm’s willingness to formalise is limited. This article integrates insights from institutional theory and the imprinting hypothesis to explain how factor markets and institutional quality affect the likelihood that informal firms formalise over time, as well as how these effects are contingent on economic conditions at the founding stage. Using data from the World Bank Enterprise Surveys comprising of 8005 observations from 2477 firms in 73 countries, the results suggest that better factor markets and institutional quality increase the likelihood of formalisation and these relationships are strengthened by favourable economic conditions at the founding stage. The low correlation between factor markets and institutional quality supports the importance of separating these dimensions, while the moderating effect of economic conditions at the founding stage supports the importance of imprinting.
... However, the Fornell and Podsakoff articles are only cited because of methodology issues; thus, they are not related to financial literacy topic. numerous and different measurements of the variables involved and through diverse samples of SMEs (Engström and McKelvie 2017;Eniola and Entebang 2017). Prior literature confirms not only a direct relationship between both concepts but also an indirect effect through various mediating variables, such as the recognition of opportunities , financial practices (Ismanto et al. 2020), enterprise risk management (ERM) (Kulathunga et al. 2020), sources of investment decisions (Hendrawaty et al. 2020), business growth (Resmi et al. 2019), capital structure (Nohong et al. 2019), access to financing and attitude towards financial risk (Hussain et al. 2018;Ye and Kulathunga 2019). ...
Article
Full-text available
Research on financial literacy in small and medium enterprises (SMEs) has raised a significant amount of interest in recent years and has evolved both rapidly and unevenly. This paper is the first to provide a reliable, consistent, and up-to-date review of financial literacy in SMEs through the combination of a bibliometric analysis and a systematic literature review. Specifically, and after identifying the most influential agents involved in this field of research, we carried out a co-occurrence analysis of the authors’ keywords, co-citation analysis of the cited references and a subsequent in-depth analysis of a total of 88 documents published between 2005 and 2020. The findings indicate that SME financial literacy research has been primarily analysed regarding the following topics: (1) performance, (2) access to finance, (3) innovation, (4) risk attitude and entrepreneurship, (5) owners-managers, and residual contributions. The theoretical foundations that support this research structure have been (1) the resource-based view, (2) pecking order theory, agency theory and trade-off theory, (3) the entrepreneurial orientation perspective, human capital theory and upper echelon theory, and (4) planned behaviour theory. Subsequently, we developed an integrative framework on which to base proposals of important avenues for future research. Thus, this review offers a thorough and comprehensive overview of this emerging research field.
... The poor financial literacy is the major reason for the failure of the small firms (Karadag, 2015). The literature depicted that the financial literacy is crucial in stimulating the success (Adomako and Danso, 2014;Sabana, 2014;Dahmen and Rodriguez, 2014;Musie, 2015;Ali et al., 2018), sustainability (Senevirathne and Jayendrika, 2016;Ye and Kulathunga, 2019;Munyuki and Jonah, 2021), survival (Bruhn and Bilal, 2011;Njoroge, 2013;Wise, 2013;Rachapaettayakom et al., 2020), financial wellbeing (Senevirathne and Jayendrika, 2016), growth (Eresia and Raath, 2013;Lusimbo and Muturi, 2016;Bongomin et al., 2017;Hussain et al., 2018), profitability (Ibrahim, 2017) and the performance (Patrick, 2015;Lentz et al., 2016;Mwithiga, 2016;Chepngetich, 2016;Kimunduu et al., 2016;Ngek, 2016;Eniola and Entebang, 2017;Engstrom and McKelvie, 2017) of MSMEs. Financially literate entrepreneurs save more and manage the risk better by procuring insurance policies (Nunoo and Andoh, 2011). ...
... The literature showed that there are high chances for financially literate entrepreneurs to be more successful (Patrick, 2015;Ali et al., 2018), perform better (Chepngetich, 2016) and survive in the market (Adomako and Danso, 2014;Patrick, 2015;Fernandes, 2015;Musie, 2015;Senevirathne and Jayendrika, 2016;Chepngetich, 2016;Ngek, 2016;Ali et al., 2018) than those with low level of financial knowledge. The firms having owners/managers with higher financial literacy reported higher profitability (Kimunduu et al., 2016;Ibrahim, 2017), better investment decisions, higher return on assets (Engstrom and McKelvie, 2017) and efficient working capital management than those led by less financially literate owners/managers (Mwithiga, 2016). Financially literate entrepreneurs manage their risks and financial difficulties in a better way, which in turn results in the growth of sales and assets of the firm (Bongomin et al., 2017). ...
Article
Purpose This paper aims to study the level of financial literacy of entrepreneurs across the globe and its role in financial access and performance of micro, small and medium enterprises (MSMEs) based on a systematic review. The present study identifies the measures to enhance the level of financial literacy for increasing financial access and performance of enterprises. Design/methodology/approach Systematic literature review has been undertaken by identifying 358 studies from various sources. After removing the 237 studies based on selection criteria, 67 studies have been found relevant for the present study. Findings The level of financial literacy of entrepreneurs around the world is generally low. It has been found that financial literacy improves performance of an enterprise, particularly when the funds are readily available as insufficient funds disrupt the operating efficiency of the firm, thereby hindering its growth and survival. The other most important factors i.e. access to formal finance, lending policies of financial institutions, ease of doing business and training programmes have a substantial influence on the survival of the firms. The literature also revealed that there is no standardised methodology to measure the financial literacy of entrepreneurs. Research limitations/implications The study conceptualises a research model which can be used by the policymakers to develop training modules for entrepreneurs. These training modules will contribute to the nation’s economic growth by virtue of enhanced performance and superior financial access. Originality/value This study proposes a hypothesised research model which is one of its kinds to demonstrate the influence of financial literacy on financial access and performance of MSMEs.
... In another study, Finke et al. (2017) postulated that financial literacy is the possession of financial knowledge and ability to manage money and enables the capacity to use knowledge and skills to manage financial resources for a lifetime of financial wellbeing properly." Financial literacy is also described by Engström and McKelvie (2017) in terms of financial knowledge and abilities. Financial literacy encompasses understanding financial ideas and using such information to make good financial choices and create methods for successfully managing financial resources (Lusardi and Tufano, 2015). ...
... It suggests from study findings that financial understanding allows appropriate selection of credit extension model and substantially reduces the risk of a future failure. According to Engström and McKelvie (2017), more financial knowledge improves financial decision-making and an increased appreciation for financial problems faced in the present or future. Additionally, Lusardi and Tufano (2015) discovered a stronger correlation between financial knowledge and financial literacy. ...
Article
Full-text available
The motivation of the study is to gauge the effects of access to finance, technical know-how, and financial literacy on women’s empowerment through establishing women’s entrepreneurial development. A sample of 950 women-owned SMEs was considered, and structured questionnaires were sent from getting target responses. After careful assessment through the data cleansing procedure, it was found that only 795 responses are suitable for further investigation, implying the sample response rate for the study is 74.71%. The study implemented structural equation modeling and multivariate regression analysis for gauging the causal association that is direct and indirect effects of target variables. According to findings, a positive statistically significant linkage was revealed with women’s entrepreneurship sustainability and women empowerment. Furthermore, the mediating effects were also established for women’s empowerment. According to the study findings, it is suggested that for women entrepreneurship sustainability, effective policies surrounding financing accessibility, technical knowledge expansion, and financial understating have to be promulgated in the economy, which allows bringing women empowerment at large.
... Financial literacy has often been defined purely in terms of 'personal financial education'. Concern is frequently expressed about the capability of individuals in managing their own finances and avoiding levels of debt which they are unable to repay (Engström and McKelvie, 2017). Given the number of people who get themselves into serious financial difficulties, this is an important social objective. ...
... FL as a more specific subset of knowledge allows relating to the established literature measuring and conceptualizing the relevance of FL for financial behaviours and outcomes. So far, FL has been very scarcely considered in the firm context outside of educational field experiments (Engström & McKelvie, 2017;Li & Qian, 2019) despite findings that for consumers it is linked to personal behaviours ranging from daily financial management (Hilgert et al., 2003) to long-term investing and planning, including stock market participation (Almenberg & Dreber, 2015;van Rooij et al., 2011), mortgage choices (Moore, 2003), choices of pension accounts with lower administrative fees (Hastings & Tejeda-Ashton, 2008) and retirement planning in general (Lusardi & Mitchell, 2007). Because the relevance of FL for behaviours and outcomes likely extends to the firm context yet is hardly explored, study IV proposes an extended measuring scale of managerial FL and tests its associations with MA practices and firm financial outcomes. ...
... The paper contributes to the scarce studies assessing FL of managers (Engström & McKelvie, 2017;Li & Qian, 2019) as it develops an extended measure of FL that captures the understanding of aspects concerning asset management, taxation, variable and marginal costs, risk and relations between key accounting concepts. This suggests that professional tasks are also particularly important attributes besides demographic characteristics in studies of the drivers of FL (Lusardi & Mitchell, 2014). ...
... This is because previous studies indicate that older age (Finke et al., 2016;Gamble et al., 2014), less formal education and being situated in rural areas (Lusardi & Mitchell, 2014) -aspects representative of farmers in Sweden and other parts of Europe -are associated with lower FL. Studies are only beginning to measure financial literacy in the farm context (Gaurav & Singh, 2012) and for entrepreneurial households (Engström & McKelvie, 2017;Li & Qian, 2019), except for the literature on educational interventions for microentrepreneurs (Berge et al., 2014;Carpena et al., 2011). Farmworkers in Australia are identified among the categories with the highest likelihood of having low financial literacy (Marcolin & Abraham, 2006). ...
Article
This study explores dairy farmers’ accounts of farm animals in a context heavily influenced by the concept of farm animal welfare (FAW). We illustrate how external demands linked to FAW, performance concerns, and proximity to animals shape farmers’ formal and cognitive accounts of animals. We explain how different accounts underlie farmers’ accountability for animals. Using FAW as an example of a referent concept, we propose that accountability can be limited conceptually by its referent. This limit is not a matter of its (in)ability to account fully for all lived experiences. Rather, it is a matter of what one is or is not accountable for—such as the mortality rate but not culling—as well as assumptions regarding the referent—such as the nature of animal welfare and how it can be assessed and safeguarded. Even when it is conceptually bounded in this way, self-accountability has potential to alter farming practices by reflecting on caring about animals and on what this implies for oneself and the animals.
... Government becomes the actor with the biggest impact because the government serves as the primary stimulus in a policy where the government will contribute to all factors: human resources, operation production, marketing, financial management, and institutions. Next, the second actors that take part in the management model development strategy of the Micro, Small, and Medium-Sized Enterprises based on the economic potentials of the coastal communities are the institutions/Village-Owned (Engström & McKelvie, 2017) Enterprises have a score of 0.226. The part that the institutions play is quite crucial because of the activeness of the institutions, whether they are the banks or the NGOs that are striving for the Micro, Small, and Medium-Sized Enterprises in the coastal regions to grow. ...
... Corporate Social Responsibility (CSR) is one of the required programs for the enterprises for the surrounding communities or the government as a form of economic, social, and environmental improvement. The government, through the Cooperatives and Micro, Small and Medium-Sized Enterprise Offices, has to be keen in seeing this especially in offering CSR to enterprises in Bone Bolango Regency to help the Micro, Small, and Medium-Sized Enterprise in procuring the goods needed to increase the production capacity and the sales of the Micro, Small, and Medium-Sized Enterprise (Engström & McKelvie, 2017). ...
Article
Full-text available
The main aim of this research is to implement an application of the management models; micro, small, and medium-sized enterprises based on economic potential. The research applies a qualitative descriptive approach and the Analytic Hierarchy Process (AHP). This research has taken place at Bone Bolango Regency, Sulawesi, Indonesia. The result of the study shows that variable human resources and production operation are effective other three variables’ marketing, financial management, and institution are shows not that effective yet through the management model. This research finding shows that these fish farming enterprises have several challenges but through ability mind set increasing networking (AMIN) strategy, which is an effort in increasing the capacity and the ability of the businessmen in managing the productions, operational, administration management, financial and digital modernizations, and marketing network that will factually implicate in increasing the Micro, Small, and Medium-Sized Enterprises’ performance.
... Even with these difficulties and hostility to business, there is an intense presence of entrepreneurs out of necessity (Diochon et al., 2017;Sohns and Diez, 2018). These entrepreneurs have a constant challenge in dealing with an adverse business environment, an aspect that is accentuated when dealing with micro-entrepreneurs due to the scarcity of resources and skills to be developed (Wood and McKelvie, 2015;Vial and Hanoteau, 2015;Engstrom and McKelvie, 2017;Melo et al., 2018). ...
... These micro-entrepreneurs have limited technical training; this restricts the identification and interpretation of business opportunities, in most cases generating little added value to their clients (Wood and McKelvie, 2015;Engstrom and McKelvie, 2017;Hoang et al., 2018). This characteristic of micro-entrepreneurs intensifies the processes of "learning by doing and learning by failure." ...
... The number of studies on micro-enterprises is limited, with the need to particularize the studies about these entrepreneurs and their businesses beyond comparisons based on company sizes (Kelliher and Reinl, 2009;Kelliher and Henderson, 2006;Prohorovs and Beizitere, 2015;Hoang et al., 2018). It is possible to identify studies with diverse themes involving both micro-enterprises in emerging markets (Engstrom and McKelvie, 2017;Sohns and Diez, 2018;Vial and Hanoteau, 2015) and technology-based micro-enterprises that Brazilian market perspective have a demand for innovations and consequently an international network dependency (McCormick and Fernhaber, 2018;Kraemer-Eis et al., 2016). ...
Article
Purpose The purpose of this paper is to understand the relationship between franchisee support and brand value in micro-franchise chains. This study aims to understand the importance of value delivery in support to the micro-franchisee aiming at increasing brand value. Design/methodology/approach The sample was composed of 148 micro-franchisees belonging to 70 chains located in Brazil. The questionnaire aimed to verify the franchisee’s degree of concordance with the support and brand value provided by the franchisor through a Likert scale. The questionnaire structure comprised of ten metrics associated with franchisee support, four metrics associated with the brand value perception and four potentially intervenient metrics. A regression analysis was carried out to confirm the results for the factor analysis, assuming that the three factors associated with support as independent variables and the brand factor as a dependent variable. Findings The three factors related to franchisee support were found to be significant predictors of brand value. Based on the values of the coefficients, it is possible to infer the positive nature of the association. An increase in franchisee support leads to an increase in the franchisee perception about brand value. The positive effect of training and franchisor’s support in prospection and installation improvement on the brand value evaluation by franchisees was supported by the statistical analyses conducted. Research limitations/implications This research complements the studies on brand citizenship behavior and franchisee brand commitment; the greater the support provided to the micro-franchisee, the greater its commitment to the brand values of the chain. This contribution is critical because we deal with micro-enterprises in a business environment with an intense resource scarcity. These aspects place restrictions on the delivery of support and brand value in these franchise chains. Practical implications Structured support plans and greater approximation with franchisees seem to be alternatives for this perception of value to be increased in micro-franchise chains. The attractiveness of a micro-franchise chain can be enhanced if the franchisor is able to show to its potential micro-franchisees that it offers adequate support for its business; and also for the capture of new micro-franchisees. Social implications The social implications aimed at entrepreneurs with low financial expenditure. The sustainability of these businesses is highly relevant in the case of emerging markets given the high rates of unemployment and informality. Hence, micro-franchises become one of the means for micro-entrepreneurs to enter the job market. Originality/value When dealing with micro-franchises, there is an intensification of this scarcity of resources due to the smaller amount captured by the franchisor, as well as the lower technical level found in the franchisees. The relationship between brand value and the perceived level of support and the consequent franchise satisfaction with the chain in franchises, symbolized by brand citizenship behavior, is still little studied, and there are promising new studies, especially on the different types of franchises.
... Nevertheless, strong family ties imply also multiple economic and moral obligations for the informal entrepreneurs, especially women (Khavul et al., 2009), and informal entrepreneurs need to rely on other ties, i.e. strong community ties, for counterbalancing family obligations during the establishment and growth of the informal business (Khavul et al., 2009). (Engström & McKelvie, 2017) influence informal enterprise performance. Moreover, the conversation on the achievement of entrepreneurial outcomes has been extended in some articles focusing on non-economic beside economic outcomes (Khan, 2018;Khan, Rowe, Quaddus, & Nuruzzaman, 2013), e.g. ...
Article
Informal entrepreneurship (IE) represents the process of opportunity recognition and exploitation in the informal economy, i.e. outside of formal institutional boundaries (laws, regulations), yet within informal institutional boundaries (norms, beliefs). This includes entrepreneurial activities that, while not complying with formal laws and regulations, remain legitimate for many entrepreneur’s stakeholders, including customers, suppliers, and employees. In this paper we review the stream of literature on IE, drawing on the multilevel causal mechanism framework. We employ a systematic and integrative literature review to synthesize the existing literature, identifying situational, action-formation, and transformational causal mechanism on three different levels (micro, meso, macro) for the puzzling phenomenon of IE. The multilevel mechanism framework generates new perspectives on IE. To advance theory in this field further, we propose some directions for future research on IE.