Apresentação do artigo: The Causes of Success of the Micro and Small Enterprises in Brazil: a review of the last few years - Conferência anual (2010) do Conselho Canadense para Pequenas Empresas e Empreendedorismo - Calgary Canada Presentation of the paper: The Causes of Success of the Micro and Small Enterprises in Brazil: a review of the last few years - CCSBE 2010 - Canadian Council for Small Business and Entrepreneurship Annual Conference 2010 - Calgary Canada

1. The
Causes
of
Success
of
The
Micro
and
Small
Enterprises
in
Brazil:
A
review
of
the
last
few
years
of
research
Cris>ano
Machado
Allan
Costa
SEBRAE/PR

2. In our society, we find a growing need for
entrepreneurship, particularly as economic
growth has become a necessity in many
countries. When large corporations
downsize and reduce staff, the small and
medium sized enterprise sector (SMEs)
becomes more important
(Hills & Hultman, 2006)
Overview

3. Micro and Small Enterprises in Brazil:
 5.9 million formal micro and small
enterprises and over 10 million
informal ones
 More than 99% of formal
establishments
 60% of formal jobs
(IBGE and SEBRAE 2009)
Overview

4. Overview
The success rate of small
businesses that had survived at
least two years in Brazil in 2002
was 51 %, and in 2005 this rate
increased to 78%.

5. Overview
This study deals with an historical
series of events that evaluates the
evolution of the survival of the
Brazilian micro and small
businesses

6. Methodology
Exploratory research based on
secondary data

7. Economic Context
Between 1997 and 2009, Brazil
went through several rough
patches that directly affected small
businesses

8. Economic Context
The Asian crisis of 1997 and the
Russian crisis of 1998, which led
to dizzying oscillation and
skyrocketing basic interest rates
for the Brazilian economy, the
Selic rate

9. Economic Context
Starting in April of 2001, the
rationing of electrical power,
followed by crisis in the international
financial markets and the
Argentinean crisis in 2001 and
2002, which led to marked
oscillation of the dollar and a new
hike in the basic interest rate

10. Economic Context
A new increase in the basic
interest rate in the Brazilian
economy, starting in late 2004,
used by the monetary authorities
as the chief mechanism for
controlling the domestic rate of
inflation

11. Economic Context
Figure 1 – Selic Basic Interest Rate (a.p.r.) and Exchange Rate (R$/US$)
Jan/97 to Dec/07
Source: Brazilian Central Bank

12. Institutional Context
During the period analyzed there
were several changes in the
institutional context which, in part,
cushioned the adverse effects of
the foreign crisis

13. Institutional Context
 Implementation of the Federal
SIMPLES that is a simplified regime for
collecting taxes which had lower rates for
MSBs with gross domestic income of up
to R$ 1,200,000. Among the advantages
for the MSBs, lower taxation and reduced
bureaucracy stand out.

14. Institutional Context
 Implementation of special fiscal
regimes which favor MSBs at the state
level
 Implementation of special fiscal
regimes which favor MSBs at levels of
various municipal governments

15. Institutional Context
 Creation of the Micro business and
Small-sized Business Statute (Federal
Law no. 9.841 of October 5, 1999), which
deals with special and simplified legal
treatment for businesses with annual
income of up to R$ 1.2 million/year

16. Institutional Context
 Creation of de Individual Entrepreneur
(Complementary Law no. 12/08 of July 1,
2009), which deals with special and
simplified legal treatment for micro
businesses with annual income up to
R$ 36.000/year

17. Institutional Context
 The growth of Microcredit
programs throughout the country

18. Institutional Context
 More training for entrepreneurs and
entrepreneurial candidates through specific
programs available in the SEBRAE System
(for example, television programs, radio
shows, corporate guidance products and free
courses available on line, entrepreneurship
stimulus programs at schools and
universities, and more service posts)

19. Institutional Context
Effort to draft and pass the General Law for micro and
small business, considered to be the new national Statute
for MSBs which proposes a broad range for MSBs, in
fields of:
 unification of Federal, state and municipal tax regimes for
MSBs;
 reduced taxes on MSBs exports;
 exemption from some labor obligations;
 simplification of the process of opening and closing business;
 easier accesses to credit and to technological innovation
services;
 preference in governmental purchases;
 and incentives for MSBs to associate and form consortiums

20. Apparently, the improved economic
environment and increased support
for small business tend to contributed
to reduce rates of business mortality
Conclusion

21. Conclusion
This paper showed a spectacular
improvement in survival rates of the
Brazilian MSBs. The percentage of
small businesses that survived at least
two years increased from 51% in 2002
to 78% in 2005 (SEBRAE 2007)

22. Conclusion
In the economic environment, there occurred
a reduction and control of the inflation and a
gradual decrease in the interest rate; the
increase in the credit offer to the individuals
promoted the increase in consumption. As a
result, there was a favorable period for the
small businesses in Brazil.

23. Conclusion
Entrepreneurs that had a college level
education, complete or incomplete,
already represent 79% of the total, and
those with previous experience in the
private sector increased from 34% to 51%
(SEBRAE 2007).

24. Conclusion
Therefore, the rate of the entrepreneurs that
had identified one opportunity grew from
15% to 43% (SEBRAE 2007); this shows
that we have been changing from necessity
entrepreneurship to opportunity
entrepreneurship.

25. Conclusion
It should also be considered that at the
institutional context, implementations of
laws create special fiscal regimes which
favor MSBs at federal, state and municipal
levels.

26. Conclusion
This data shows that the entrepreneurial
environment has been improving in the
country, which has contributed to the
increased rate of success of Micro and
Small Enterprises in Brazil.

27. References
Brazilian Institute of Geography and Statistics. Estatísticas do cadastro
central de empresas 2001. Social Cmmuniqué from 22/Sep/03.
Retrieved on April, 8, 2010
http://ibge.gov.br
HILLS, Gerald and HULTMAN, Claes. (2006). “Entrepreneurial marketing.
Marketing broadering the horizons”. Stefan Lagrosen and Göran
Svensson.
PASSOS, Carlos Arthur Krueger et. al. (2008). Empreendedorismo no
Brasil 2007.

28. References
SEBRAE. (2007). Conditioning factors of the mortality rate of micro and
small business 2003 – Volume I.
SEBRAE. (2007). Conditioning factors of the mortality rate of micro and
small business 2004 Volume II.
SEBRAE. (2007). Conditioning factors of the mortality rate of micro and
small business 2005 Volume III.
SEBRAE. (2007). Conditioning factors of the mortality rate of micro and
small business 2006 Volume IV.
SEBRAE and VOX POPULI. (2007). Survival and mortality of MSBs –
Condicional factors.

29. Thank you very much !
Cristiano Machado
cmachado@pr.sebrae.com.br