Strategic Financing Adaptation and Financial Resilience in Microenterprises: Comparative Evidence from Colombia and Venezuela

The article examines how microenterprises in emerging economies respond to fluctuations in economic conditions through their financing strategies and investigates how these strategies enable the firms to optimise their financing costs and return on investment (ROI). The differences in financial performance sensitivity to the cost of financing and in ROI stability between stable and volatile economies are analysed based on a 24-month longitudinal survey of 54 microenterprises operating in a stable economy (Colombia) and a volatile economy (Venezuela). The results from two-way mixed analysis of variance, quantile regression and fixed-effects panel models reveal that the financial performance of microenterprises in stable economies is less sensitive to the cost of financing than that in volatile economies, and presents a more stable ROI. By contrast, the performance of volatile economies is highly sensitive to financing costs and exhibits high volatility. The findings generate new insights into the financing strategies employed by microenterprises in emerging economies, indicating that they use financing strategies as a means of strategic behaviour to cope with volatile environments, enhancing financial resilience and informal innovation. This study investigates the relationship between local economic conditions and some key financial decisions made by microenterprises. The findings are discussed in relation to policies to promote entrepreneurship and within the framework of the theory of entrepreneurship under economic constraint.