Although the angel investor environment, and to a lesser extent the venture capital environment, are not yet well developed in the region, there are impressive cases of high growth SMEs in Latin America, providing interesting insights and ideas for policy making.

Six case studies of SMEs in Brazil, Chile and Mexico reveal key success factors allowing certain businesses to reach high levels of growth, while also identifying the barriers that have held back the growth of others. A recent summary of these studies prepared IDB specialists Juan Llisterri and Jaime García-Alba, highlights certain characteristics shared by high growth SMEs and small-scale entrepreneurs in the case studies

The main factors to achieve success include strengthening intellectual assets use and protection mechanisms, promoting corporate entrepreneurship to leverage the symbiotic relationship between large firms and high growth SMEs, encouraging innovation at all levels, improving access to finance and facilitating potential entrepreneurs’ access to work experience.

“It is important to emphasize that the most of the high growth SMEs studied benefit from a symbiotic relationship with one or a few large firms, typically their major client, which is interested in acquiring an innovative product or service instead of developing in-house,” said García-Alba.

Also in most cases the entrepreneurs had previous experience abroad, either through a business degree or through a job, which they combined with a deep understanding of the local market. In a number of cases, imitative entrepreneurship—adapting an idea from abroad to the local market—was the main driver of growth.

A complete analysis of these case studies will be presented on May 8 at the “OECD Kansas City Workshop on High Growth SMEs, Innovation and Intellectual Assets: Strategic Issues and Policies” organized by the OECD in collaboration with the Kauffman Foundation and the International Trade Administration of the U.S. Department of Commerce. The event will offer an opportunity to analyze the innovative ability and management of intellectual assets as drivers of innovation and value creation in SMEs and their role in the fast growth of these firms.

These six case studies are part of the first phase of a research project on high growth SMEs in Latin America, launched by the IDB’s Science and Technology Division and Multilateral Investment Fund with financing from the Spanish Innovation Support Program. The project’s second phase consist of a survey with a larger number of high growth SMEs in the region.

Read MIF brief: http://www.iadb.org/mif/newsDetail.cfm?language=English&ID=51