Determinants of Profitability in Micro-enterprises Incorporated by Migrants in“Mercardo Artesanal”, Guayaquil-Ecuador

Abstract

The main objective of the study was to examine the effects on profitability of socioeconomic factors and business management skills of migrant micro-entrepreneurs. Our results are based on 162 surveys conducted with migrant businesspeople at Mercado Artesanal, in Guayaquil-Ecuador, between February 18-22, 2020. We applied a modified composite index developed in 2016 by Bell for evaluating entrepreneurial skills of Otavaleño migrants, who own micro-enterprises at Mercado Artesanal. We found that over 81% of the microfirms operated by migrants in the examined marketplace are profitable. Differences in profitability between migrant and resident micro-entrepreneurs are also discussed. Like prior study findings our results suggest that migrant micro-entrepreneurs show greater business performance compared to local businessmen. In addition, a straightforward profitability index, SPI, was calculated for assessing the determinants of profitability of local and migrant micro-entrepreneurs. Authors believe that the proposed index should be useful mainly for micro-enterprises and market sellers, where the customary measurement methods cannot be applied.