IDEAS home Printed from https://ideas.repec.org/a/wsi/jdexxx/v21y2016i03ns1084946716500199.html
   My bibliography  Save this article

Rethinking The Purpose Of Micro Enterprises In Developing Countries: Evidence For Mexico

Author

Listed:
  • ALEJANDRO MUNGARAY-LAGARDA

    (Universidad Autónoma de Baja California, México)

  • JOSÉ G. AGUILAR-BARCELÓ

    (Universidad Autónoma de Baja California, México)

  • GERMÁN OSORIO-NOVELA

    (Universidad Autónoma de Baja California, México)

Abstract

A large body of economic literature has established that the primary purpose of any firm assuming unitary and constant elasticity of substitution of production inputs, among other necessary conditions, is profit maximization. However, the prevailing operating conditions of the micro enterprises raise concerns about the applicability of this formalization. Through an empirical study for Mexico using a four-input translog function (capital, labor, energy and supplies), and based on cross-sectional data, we find that the elasticities of substitution between production inputs are not unitary; in fact, some of them are complementary. This forces us to consider that instead of seeking to maximize profits, some types of micro enterprises are looking to optimize their installed capacity or achieve financial survival of the owner and their family, thus relaxing the foundations of economic analysis for the very small-scale and nascent micro enterprises.

Suggested Citation

  • Alejandro Mungaray-Lagarda & José G. Aguilar-Barceló & Germán Osorio-Novela, 2016. "Rethinking The Purpose Of Micro Enterprises In Developing Countries: Evidence For Mexico," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 21(03), pages 1-16, September.
    • Handle: RePEc:wsi:jdexxx:v:21:y:2016:i:03:n:s1084946716500199
    DOI: 10.1142/S1084946716500199
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1084946716500199
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S1084946716500199?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Skinner, R C, 1970. "The Determination of Selling Prices," Journal of Industrial Economics, Wiley Blackwell, vol. 18(3), pages 201-217, July.
    2. Rémy Herrera, 2011. "A Critique of Mainstream Growth Theory: Ways Out of the Neoclassical Science (-Fiction) and Toward Marxism," Research in Political Economy, in: Revitalizing Marxist Theory for Today's Capitalism, pages 3-63, Emerald Group Publishing Limited.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mungaray Lagarda, Alejandro & Aguilar Barceló, José G. & Osorio Novela, Germán, 2017. "Los objetivos económicos de la micro y pequeña empresa en México. Un análisis desde las elasticidades de factores productivos || The Economic Objectives of the Micro and Small Businesses in Mexico. An," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 24(1), pages 129-146, Diciembre.
    2. Jeon, Heesang, 2015. "Knowledge and Contemporary Capitalism in Light of Marx's Value Theory," Thesis Commons g5njk, Center for Open Science.
    3. Rémy Herrera, 2013. "The U.S. economy today: Between systemic crisis and permanent war," Documents de travail du Centre d'Economie de la Sorbonne 13018, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. John Brierley & Christopher Cowton & Colin Drury, 2001. "Research into product costing practice: a European perspective," European Accounting Review, Taylor & Francis Journals, vol. 10(2), pages 215-256.
    5. van Dalen, Jan & Thurik, Roy, 1998. "A model of pricing behavior: An econometric case study," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 177-195, August.
    6. Ray, Saibal & Gerchak, Yigal & Jewkes, Elizabeth M., 2005. "Joint pricing and inventory policies for make-to-stock products with deterministic price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 97(2), pages 143-158, August.
    7. Nitzan, Jonathan, 1990. "Price Behaviour and Business Behaviour," EconStor Preprints 157851, ZBW - Leibniz Information Centre for Economics.
    8. Tzokas, Nikolaos & Hart, Susan & Argouslidis, Paris & Saren, Michael, 2000. "Strategic pricing in export markets: empirical evidence from the UK," International Business Review, Elsevier, vol. 9(1), pages 95-117, February.
    9. Riekhof, Hans-Christian & Lohaus, Benedikt, 2009. "Wertschöpfende Pricing-Prozesse: Eine empirische Untersuchung der Pricing-Praxis," PFH Forschungspapiere/Research Papers 2009/08, PFH Private University of Applied Sciences, Göttingen.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jdexxx:v:21:y:2016:i:03:n:s1084946716500199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/jde/jde.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.