Financing needs of micro-enterprises along their evolution

Ruslan Prijadi, Permata Wulandari, Putri Mega Desiana, Fajar Ayu Pinagara, Maya Novita

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


Purpose: The purpose of this paper aims to investigate micro enterprises financing in Indonesia and examines how this financing differs, depending on the enterprise’s development stage. This research also identifies some structural problems related to micro-financing and provides workable solutions. Design/methodology/approach: This research uses the entrepreneurial network model of Schutjens and Stam (2003) to examine how Indonesian micro and small enterprises (MSEs) evolve even before they become regular small businesses. Content analysis is used on 10 micro-enterprises from Jakarta, the capital city of Indonesia and its surroundings. Financing issues at each stage of enterprise development are identified and deeply examined. Findings: This research not only confirms the significant financing problems micro-enterprises face but also clarifies that these problems are unique to each stage of the MSEs’ development. One insight is that most micro-enterprises do not use funding from formal institutions. That is, business owners rely more on funding from non-formal institutions. This is because these enterprises’ managers generally cannot prepare loans application and/or they are lack of knowledge/training on financing matters. They hesitate to borrow from formal financial institutions, as the rates are high but the processing time is longer than those of the loan sharks. Originality/value: This research contributes to the field of entrepreneurial finance by identifying the structural problems inherent in micro-finance and providing workable solutions for overcoming these problems.

Original languageEnglish
Pages (from-to)263-284
Number of pages22
JournalInternational Journal of Ethics and Systems
Issue number2
Publication statusPublished - 9 Apr 2020


  • content analysis
  • Evolution
  • financing
  • micro-enterprises
  • ongoing
  • start-up


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