Most aid providers for developing country small firms would like the recipients of their aid to be independent and profitable in the long run. This article examines the factors that contributed to the success of cottage firms in six Indian industries. It draws lessons from those cases and discusses implications for the design of programmes for cottage firms in developing countries.
The economic liberalization programmes being introduced in many countries are fundamentally changing companies' sources of competitive advantage, and forcing them to re-examine their business strategies in order to survive and thrive in the new, more competitive, environment. Liberalization's effects vary across companies; the impact on small companies is significantly different from that on large ones. This article analyses how liberalization is likely to affect small companies, and suggests that in order to enable them to tackle the new threats and opportunities stemming from liberalization, there may be a need to change the focus of government support.