Determinants and Impact of Consultancy Intervention on Small Enterprises

Abstract

Small enterprise sector plays an important role in the economic development of India. Over 33 lakhs small enterprises spread over rural, urban and semi-urban locations in the country have created a decentralised and large- scale employment opportunity. The contribution of the sector to the aggregate production and exports is significant. However, this sector also faces growing incidence of sickness among small enterprises. One of the causes of sickness is reported to be lack of managerial competency of owner-managers who generally work as solo-operators of the enterprise, often getting overburdened with the work. There appears to be reluctance to use assistance of external consultants to help improve the enterprise performance. Therefore the perception of owner-managers of small enterprises towards use of consultants has to be assessed. It is also necessary to understand their attitudes towards consultants and the determinants of consultancy intervention. The performance of small enterprises depends on several factors. Consultancy is one of the factors. The impact of consultancy on performance improvement, however, is also a less researched area. Hence this study was initiated. This study aims at finding out the determinants of consultancy intervention and .its impact on enterprise performance, as well as on managerial competency of owner-managers of small enterprises. The study was completed in Dakshina Kannada district in Karnataka. It was based on a mixed approach to include descriptive as well as explanatory aspects. The findings supported that there was an evidence of positive relationship between perceived enterprise performance and usage of consultancy. Also the complexity .of management was found to be one of the main determinants of consultancy intervention for small enterprises.