Micro Family Business and Socioeconomic Development: Chilean Grocery Store

Introduction

The Chilean economy in recent decades is characterized as a commercially open market economy, but in which the economic role of the State remains as a regulatory entity, concentrating on strategic issues for the country. (Montero, 1997). According to Álvarez-Figueroa (2014), Chile, despite its low labor productivity and its scarce expenditure on research and development (R&D) occupies a prominent position in the Latin American region regarding international competitiveness. Although this competitiveness is of low sustainability in the long term, it founded its achievements mainly on comparative advantages for the specialized export of low value-added non-renewable goods (mineral) and difficult renovation (forest resources). There is, above all macroeconomic benefits at the level of monetary policy (inflationary control and anti-subsidiarity of business activity), in addition to efficiency in government management. To which are added good level corporate directors, training policies for people with an organizational efficiency orientation, legal certainty as a result of a civil legal system and a reputation for serious business.

At the employment level, Barrero, Fuentes, and Mena (2018), account for a slowdown in the generation of employment in the Chilean economy between 2014 and 2017. And whose slowed growth from 2015 onwards is mainly explained by self-employed, as well as workers who perform a free exercise of the profession or operate their own company, but who do not have a job as a wage earner. This type of workers is those of lower university education (12%), mainly focused on the trade sector (33%) and whose income regarding hours worked is less than employees by one third (33%). The characteristics of this exploitation of an own company, give account for micro business. For the Internal Revenue Service (2018) of Chile, a micro business is an entity that regularly exerts an economic activity, whether handmade or other, individually or as a family or as a company, and whose annual sales are less than 2,400 Chilean development units, about 99,000 American dollars.

In the Chilean case, the draft on micro family business (MFB) was submitted to Parliament in June 1994, and its prosecution concluded seven years later, approved in July 2001 under Law 19,749 that establishes norms to facilitate the creation of family members of the micro business. Several factors converged so that for the first time to enact a law of this kind in Chile, which introduces an exceptional regime to encourage the establishment, formalization, and development of micro business operating in the family residence. Factors that are related to the growing concern to eliminate barriers to the development of micro and small business, whose relevance regarding potential in the creation of jobs and wealth began to be recognized strongly, since the nineties. (Valenzuela, Di Meglio, & Reinecke, 2006).

These ideas are related to those presented by Valencia and Darío (2012) regarding the promotion of these entrepreneurial initiatives, for the development of entrepreneurship as a means of generating employment and competitiveness. Those are implemented in Latin America from public promotion policies with the support of private initiatives to stimulate new companies (Echecopar et al., 2006). In Chile, the relative weight of multi-personal micro business (operating with partners, family members and/or dependent workers) was higher than the average for Latin America and accounts of half of the employees in the micro business segment. (Valenzuela, Di Meglio, & Reinecke, 2006).

According to Prahalad and Hart (2002), marginalized can alter the way of life and security of rich people, as poverty generates discontent. And while full income equality is a utopian dream, the use of business development to bring people out of poverty and give them the opportunity for a better life is fundamental to stability and health of global economy. In this way, improving the access of poor people to financial services allows these agents to build productive assets and improve their productivity and potential for sustainable livelihoods. Therefore, the final argument is the improvement of financial services supplying for poor people, can directly contribute to poverty reduction according to (Green, Kirkpatrick, & Murinde, 2006).