Mapping a Framework for Micro, Small and Medium Enterprise Resilience
When the coronavirus pandemic first took hold of the world last year, there were concerns about its implications for food production and food security. We heard of major disruptions to agricultural input access impacting agricultural systems everywhere. While at RTI International we had been using USAID's "Market Systems Resilience: A Framework for Measurement" to assess the resilience of market systems, we kept thinking about a specific market system actor — the agricultural input retailer or "agrodealer" — that was hit by a double whammy with COVID-19: shocks to supply and shocks to demand.
Exploring agrodealer resilience
How could an enterprise, such as an agrodealer, be more (or less) resilient to shocks? Can agrodealers draw upon resilience capacities to sustain access to inputs for farmers? In order to answer these questions, we recognized that there was not yet an agreed upon framework for assessing resilience at the enterprise level. The development community has worked a lot on resilience capacities at the individual, household, community and even systems level, but there has been a gap in understanding how enterprises — particularly micro, small, and medium enterprises (MSMEs) — could be resilient. The coronavirus pandemic only magnified this gap, when MSMEs such as agrodealers were walloped by a two-sided shock. At RTI International, we recognized that if agrodealers were not resilient, the implications for food production and food security could be dire.
We decided to explore the resilience of agrodealers in Ethiopia, a country vulnerable to recurrent shocks. Our first step in building an understanding of which MSME resilience capacities have helped Ethiopian agrodealers support producers’ continued access to affordable agricultural inputs during a shock such as COVID-19 was to construct a framework that would identify a set of resilience characteristics or behaviors that enable MSMEs to mitigate and manage shocks. We could then use this framework to develop a survey instrument to assess agrodealers’ resilience capacities.
A new framework
Developing a framework for enterprise resilience — specifically, one that was relevant to MSMEs in lower income countries — required a review of the literature written about enterprise resilience to date. While enterprise resilience is a concept that has been explored before, its application has primarily been to larger companies in larger, more stable market systems. In the past year, during the pandemic, attention has shifted towards the resilience of MSMEs, but the research is not widely shared or understood. We did identify some common themes and ideas and also reviewed any information we could find on how agrodealers in Ethiopia and the region were responding to COVID-19. This informed us on both the theoretical side of enterprise resilience, as well as how, practically speaking, agrodealer MSMEs were applying various capacities and behaviors to continue providing access to inputs in their communities.
Familiar terms, new concepts
As we synthesized all of this information, we started to notice that a lot of it could fit nicely into concepts we already understood from USAID’s market systems resilience framework. While the terminology being used by others wasn’t the same, many of the ideas — such as connectivity, cooperation, business strategy and evidence-based decision-making — were all there if you looked at the big picture. We decided to use that terminology to build our MSME resilience framework. We felt that this would allow those who are already familiar with that framework to readily apply the same thinking and principles to a new idea. Additionally, MSMEs are critical market actors within the market systems for which the original concepts were designed. We weren’t comparing apples to oranges, but apples to an apple tree.
There was, however, one critical domain of MSME resilience that we identified that did not fit into the same terminology from the USAID market systems resilience framework. Entrepreneurial orientation — typically defined by three traits: innovation, risk taking and proactiveness — was something unique to enterprises that came up in the literature and that we felt was important to include. This fifth domain rounded out our framework for MSME resilience.
Next steps: finding answers
We have taken this framework and used it to develop a quantitative survey instrument for agrodealers in Ethiopia. Our data collection will begin later this summer, and we are very excited to learn how agrodealers have applied the characteristics and behaviors identified in our framework and share our results. We hope our findings will contribute to the knowledge base for future programming to support continuing food production during a shock and will encourage further exploration of enterprise-level resilience capacities.