MIT LIFT Lab
Lifting the Lives of the Bottom Billion
The MIT Low Income Firms Transformation (LIFT) Lab, led by Josué C. Velázquez Martínez from the MIT Center for Transportation and Logistics, is a new research lab founded in 2022 aimed at alleviating poverty in developing countries and LIFTing the lives of the bottom billion by helping poor and low-income communities and providing them with opportunities to grow. This initiative contributes to the survival and growth of micro and small enterprises (MSEs), specifically by improving their supply chain management (SCM) capabilities.
By using descriptive and inferential statistical analysis, utilizing standard methods, as well as sophisticated machine learning techniques, our projects are based on empirical research with real data from MSEs, including large-scale analysis and field interventions. The information used for our studies is based on primary data collected via immersion, shadowing and observation, which significantly increases the quality and impact of the analysis. We aim to develop a comprehensive model-based theory grounded in the data and the context, so the findings can be used in the future when conditions change.
The MIT LIFT Lab grew out of the MIT GeneSys project, which began in 2016 with the aim of contributing to small business growth specifically in developing countries.
“Micro-firms often get the worst purchasing deals. Owners without credit cards and with limited cash often buy in smaller amounts at much higher prices… The big suppliers are squeezing them.”
– Josué Velázquez Martínez, Director
In this new phase, we are working to expand the supply chain management and business capabilities of MSEs, and identify the challenges to adoption of technology and digitalization in Latin America and the Caribbean.
Our objective is to provide a framework for managerial insights for micro and small firms by focusing on the following topics:
Adoption of New Practices
How are owners of MSEs adopting general business practices, supply chain practices, and lean practices?
We want to improve cash availability and financial performance of MSEs by helping define the right product/service composition.
Therefore, we work to define and develop appropiate levels of technology to support long-term MSEs growth, including e-commerce, track & trace, digital procurement, customer segmentation, etc.
Time Allocation and Efficiency
How much time does the decision maker allocate to conducing different supply chain activities? How do they organize their time?
We tailor specific SCM capabilities to each MSEs context, including prioritizing processes and methods in order to improve productivity.
We help MSEs prioritize key SKUs, customers and suppliers.
Factors and Influences
- Firm size
- Firm type
- Service vs. Manufacturing
- Educational level
- Years of experience
- Time-management habits
Companies with fewer than 10 employees worldwide
Employees in Latin America and the Caribbean working in MSEs
Mortality rate of MSEs within the first 5 years of establishment
In developing regions, Micro and Small Enterprises (MSEs) are a crucial component of the economy. MSEs are the source of income to millions of families and the source of goods and services to the bottom billion. In Latin America and the Caribbean, MSEs represent 99% of the companies, contributing to 47% of the employment in the region (ECLAC, 2020).
However, MSEs struggle to survive. The mortality rate of MSEs in developing countries is estimated to be over 30% annually during their first five years of operations (McKenzie, D., & Paffhausen, A., 2018). This is mainly explained by their productivity gap with respect to larger firms. For example, large Mexican companies have exhibited significant productivity growth (almost 6%) while the productivity of micro, small, and medium sized companies have decreased almost 7% annually (Remes, J. ,2014).
Moreover, since the outbreak of the COVID-19 pandemic, the economic damage continues to mount across all countries, with a severe impact in Latin America and the Caribbean. It is estimated that the economic crisis derived from the pandemic has affected more than 60% of the MSEs across the globe, causing the definite closure of ~2.7 million MSEs in Latin America (CEPAL, 2021).
Therefore, the primary goal at MIT LIFT Lab is to contribute to the survival and growth of Micro and Small Enterprises (MSEs) by improving their supply chain management (SCM) capabilities.
The MIT LIFT Lab extends across ten countries in Latin America. We have strengthened our collaboration with 20+ partner universities in Mexico, Guatemala, Colombia, Ecuador, Peru, Chile, Brazil, Uruguay, Bolivia, and Argentina.
Each year, hundreds of students, faculty members, and research collaborators collect primary data on the field and provide practical recommendations to the MSEs based on our methodology.
Click here to read about the newest MIT LIFT Lab Research Fest winners from Querétaro, Mexico.