Policies and Regulations: Constraints of growth-oriented enterprises

The enabling environment is important-especially as the enterprise grows. This would appear to be related to the fact that the larger the enterprise becomes, the more difficult it gets to operate outside the formal economy. In talking about the enabling environment entrepreneurs tend to emphasize macro-economic conditions per se, rather than specific regulations. This implies that they are quite capable of working their way through (or around) regulations, but that they find it more difficult to deal with economic downturns.

Even if regulations are not always followed to the letter, they are of utmost importance to get an economy working properly. An overarching requirement in this regard is the need to stamp out corruption. The authority and integrity of the legal system is instrumental in this respect. The Supreme Court (or equivalent) and lower courts must be perceived as legitimate. Equally important is that entrepreneurs believe that court rulings will be carried out. That is, if indemnities are decided upon, there should also be a mechanism for payment. There is ample evidence from the Focus Group Discussions that, in the three countries where this study was carried out, there is yet a long way to go in these areas. This has ramifications regarding the extent to which the enterprises try to operate in the formal economy and to what extent they dare to develop contractual arrangements with other parties.

Constraints of growth-oriented enterprises in the southern and eastern African region Journal of Developmental Entrepreneurship, Oct 2002 by Trulsson, Per To learn more about this author, visit Journal of Development Entrepreneurship's Website.

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