E_Introduction Nucleus Approach

The Nucleus Approach aims on the one hand at mobilising individual enterprises, especially SMEs, on the other hand at stimulating organizational development processes in business chambers and associations[1]. It has been designed and developed since 1991 within the framework of the partnership project between the Chamber of Crafts and Small Industries for Munich and Upper Bavaria, Germany, and several Brazilian chambers of commerce and industry in the federal state of Santa Catarina[2]. The national confederation of chambers of commerce, CACB, and SEBRAE, a SME promotion institution, took on the approach in 1999 and spread it all over Brazil to over 900 chambers of commerce and industry, involving at the end of 2005 about 4,500 Nuclei and 50,000 enterprises.

Chambers and technical cooperation projects in numerous other Latin-American countries experimented with the Nucleus Approach. In Uruguay, for example, there are presently some 100 Nuclei with close to 1,000 participants.

Since 2002, the Sri Lankan – German Economic Strategy Support Programme (ESSP) in Kandy, Sri Lanka – a GTZ-promoted programme for regional economic development and SME promotion –, successfully makes use of the Nucleus Approach, involving currently six chambers / associations. In addition, it is being applied in nine districts affected by the tsunami since 2005. In other Asian and African countries the introduction of the Nucleus Approach is in discussion.

Since the end of the nineties the Business Development Approach (BDS) is dominating as mainstream the economic development cooperation. Although the Nucleus Approach contradicts with its assumptions, deliberations and consequences some of the BDS ideas, it is being accepted and disseminated to some extent.

[1] Chamber is defined as an aggregation of enterprises in one geographical mostly political / administrative unity. Associations are organized sector wise. In Portuguese speaking regions a “associação” – translated directly “association” – corresponds to a chamber. In many countries chambers and associations exist side by side having partially the same and partially different functions.

[2] The project was promoted by SEQUA gGmbH – Partner of the Industry = Foundation for Development and Qualification, Bonn, maintained by several confederations of the German industry, the German Technical Cooperation (GTZ) and the German Federal Ministry of Economic Cooperation and Development

2. SME Promotion via Formation of Nuclei within Chambers

Focal point of the Nucleus Approach are behaviour patterns of SMEs, which essentially are the same all over the world, regardless of cultural differences in developing and emerging countries. These patterns vary only with respect to their specific manifestation:

The entrepreneur acts in isolation within his / her enterprise, not receiving impulses for innovations neither from within nor from without.
Due to limited education and vocational training, he / she has never come to systematically undergo up-grade training or even to learn “how to learn” and to apply the learning in the enterprise.
He / she considers other entrepreneurs from the same sector not only as competitors but even – to a differing degree in different countries – as personal enemies with whom he / she cannot neither possibly exchange know how and experiences nor cooperate.
He / she deeply distrusts the government, promoting institutions, suppliers, customers and colleagues.
He / she finds reasons for his / her unsatisfactory economic situation primarily outside the enterprise, not within himself / herself.
He / she tends to develop a rather demanding attitude towards external support rather than focusing on his / her self-help potential and relying on his / her own initiative. This attitude is especially strong, for example, in Sri Lanka and in Mozambique.

Entrepreneurs do have objectively existing needs in order to improve their businesses. But as a consequence of the above mentioned characteristics their subjectively perceived situation does not automatically lead to a demand for business development services. Any SME promotion strategy focusing exclusively on the supply side will most probably not reach these entrepreneurs and presumably remain suboptimal.

Therefore the Nucleus Approach aims at creating an organisational platform where entrepreneurs can start to open up, to better identify their problems, to compare themselves with others (benchmarking), to define their own demand for services, to develop self-confidence and to improve their enterprises.

Experiences with the Nucleus Approach in Latin America and in Asia show that this challenge can be met head on.

The core problem in the promotion of SMEs
is not the supply of services for them –
the core problem is the demand of the SMEs for services.
Vinícius Lummertz, ex-SEBRAE Brazil