Firm Growth Theory

2.4.1 The firm growth theory
The firm growth theory states that MSEs are more anticipated to dissolve and be interchanged by modern large-scale industry. This theory has, been expose to be imprecise in the perception that MSEs do not usually measure up or compute directly with large enterprises, somewhat, they often manage to continue micro and small enterprises, co-existing with large international companies, which phenomenon the World Bank (1989) has isolated as the missing middle (Ryan, 2005).
The most comprehensible activity where these functions occur in allocation to areas or income groups where their costs would have high for large enterprises. According to Liedholm and Mead (1993) in the literature survey on macro analyses of MSEs in

The labor surplus theory is one of main theory. Lewis (1955) debates that the dynamic force at the back of MSE development is extreme labor source or supply, which cannot be engaged in the excessive labors in public sector or large private companies/ enterprises / and is forced into MSEs in spite of inadequate pay and low productivity.
Perhaps, the MSE sector develops has immediate reaction or response to the growth in unemployment, working as last opportunity for people who are incompetent to find employment in the formal sectors. Corresponding to this theory, micro and small enterprises are anticipated to grow in the period of economic crisis, when the formal sector shrink or grows too slowly to engage the labor force. In spite of this, when formal employment grows, the MSE sector is thought to shrink again and thus improves an anti-cyclical correlation with the formal

The evidences show that MSEs have the direct relation through poverty reduction is significantly less robust than that involving them to economic drive, at the same time in the high developed economies. Currently Poverty Reduction Strategies (PRSs) formulated in many developing countries adopt and more declared importance on the influence that the private sector contribution compared to the over requirement on the social agenda that described earlier PRSs (Perumal & Prasad, Vandenberg2006).
According to Roy and Wheeler (2006) indicated that MSE deliver a significant center of employment, thus MSEs have a great contributing to reduce of poverty to the urban poor. According to the author, the important points for that reason the urban poor to be engaged in the MSE, due to the fact that the formal sector does not have the capability to engage this increasing demand for