Determinants of Performance in Microenterprises: Preliminary Evidence from Argentina

This paper proposes a theoretical multilevel framework that studies the determinants of microenterprises' performance. Using a unique data set of nearly 300 microenterprises located in Argentina, we find that human capital (proxied by educational level and degree of dedication), innovation, and intensity of use of own capital are important determinants of the microenterprise's performance. Moreover, we found that public policies give support primarily to microenterprises arising from unemployment. Additionally, these firms were found to be relatively less successful in terms of their performance, suggesting a pro‐poor bias. Finally, we provide a taxonomy of microenterprises which distinguishes four different microentrepreneurial profiles.