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Role of social capital on tackling poverty at small and micro enterprises level (the case of tigrai region, Ethiopia)

Author: 
Tesfu Asmachew Mesfin, Araya Kahsu Mebrahtu, Negeri Kibret Desalegn and Weldie Assefa Shamie
Subject Area: 
Social Sciences and Humanities
Abstract: 

As the title indicates, the emphasis of the study was on the role of social capital on poverty reduction with specific reference to small and micro enterprises in Tigrai region. The reason that this area was studied is that, major emphasis of governments and economists was on the economic and human capital by excluding the social capital while they establish or describe the small and micro enterprises. But, current studies made by growth and developmental experts revealed that, the above mentioned capitals (economic and human) would not bring a sound result unless they are supplemented by social capital. As a result of this, governments including the Ethiopian government have returned their attention towards the social capital currently. Hence, the research team was largely motivated to assess the role played by social capital by putting the following objectives: • How SMEs define and articulate social capital • what norms and values are followed to enter and stay in SMEs business activities • what lessons can be transferred to policymakers and strategy designers To pinpoint the above objective, the research team has employed a survey study on three selected towns by approaching a sample of 217 SMEs owners/managers. The finding revealed that there is a networking system among the existing SMEs. This networking system helped the SME owners to share information, borrow and lend money in times of shock and they are active participant on the mentioned and other social capital indicators. Such networking system plays a great role on poverty reduction within the SMEs.

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