Challenges and Opportunities for SMEs Leaded by Women in the Context of CAFTA-DR

1. Challenges and opportunities for SMES
Leaded by women in the context of CAFTA-DR
Jeffrey Orozco, jorozco@una.ac.cr, CINPE, Universidad Nacional, Costa Rica
Roxana Durán, rduran@una.ac.cr Universidad Nacional, Costa Rica
March, 2011
PAPER PRESENTED TO GLOBELICS 2011
- Abstract
This paper studies the impacts of the CAFTA free trade agreement among Central
American countries, USA and Dominican Republic on firms leaded by women. The study
is based on the analysis of trade statistics and interviews to women leaden firms in Central
America. The theoretical framework is on system of innovation and performance. With
this, we consider the main factors and components in the systems of innovation that are
having impacts on the performance (economic, social and environmental) of the firms. A
conclusion is that a free trade agreement it is not a panacea or a disaster, as some of the
more extreme groups argued. The challenges and opportunities depend of the sector in
which the firms compete. For most of the firms in the study it seems that the changes will
be very small. For some other firms, improvements in the access to USA markets might
open new opportunities to export in better conditions. Some other firms will receive a
stronger competition due to the better conditions to the USA firms. Most of the women
leading firms consider that there are very good opportunities but the main challenges is to
introduce innovations. The women in the study argue that there are many institutional
issues that are affecting the possibility to manage the key issues determining the
competitiveness of their firms.

2. 1. Introduction
As in most of the world, the Central American countries have been part of a process of
globalization, promoting a growing open economy. From the decade of 1960 started the
process of the Common Central American Market, which combined free trade in the region
with a regimen of protection towards other economies. But in the 1980s the process of
liberalization of the economy was accelerated with a new regimen of a more open economy
combined with export promotion. The process was complemented with the adhesion to
GATT and from 1995, to the WTO. With this, Central America adopted the multilateral
rules for trade and investment, which in several ways conditioned the national policies.
From 1990s a new instrument for the region has been the negotiation of free trade
agreements, promoting the elimination of tariffs and other barriers for trade. CAFTA-DR is
one of these free trade agreements, maybe the most important for Central America, because
USA is the main commercial partner for the region.
CAFTA-DR is an agreement in more than twenty topics including barriers for trade fall,
service provider gain access, investment opportunities open and greater prosperity and
stability in the region. Due to the agreements, CAFTA-DR has a direct influence in the
national policies of the Central American countries and Dominican Republic. The process
to negotiate and approve CAFTA-DR was long. Many groups in the different countries had
distinct positions. Key points in the negotiation opened expectative about the possible
impacts in different sectors and especially in SMEs. One of the main arguments by groups
against the free trade agreement was that the Central American countries were not prepared
to compete in many sectors with USA firms. Other groups argued that even the agreement
is not a panacea for the development of the Central American economies; it would open
plenty of opportunities. Considering the different arguments, we decided to research on the
challenges and opportunities for SMEs in distinct sectors. Using a framework of inclusive
growth, we studied the possible impacts of CAFTA-DR in a group of firms leaded by
women. The main objective was to understand the strategies the firms are using to succeed
and their perception about the challenges and opportunities in the framework of the new
institutional framework introduced by CAFTA-DR.
The theoretical framework is on system of innovation and performance. With this, we
consider the main factors and components in the systems of innovation that are having
impacts on the performance (economic, social and environmental) of the firms. The main
theoretical argument is that innovation is a mean to promote performance improvements.
The analysis also considers the role of the systems of innovations. The argument is that
because innovations are the result of interactive processes, the systems of innovation are
key determinants of performance changes. The results of innovation are performance
improvements, related to the specific kind of targets the firm desire to reach, which are
defined in the economic, social and environmental dimensions. Because firms have targets
in different dimensions, the results of innovations are any, of economic, social or
environmental significance, or a combination of them. The research questions for the study
were: what are the main factors explaining innovation and performance of the firms? What
are the main challenges for the SMEs owned by women due to the institutional changes

3. introduced by CAFTA-DR? What are the strategies that the firms are following to
strengthen competitiveness in the framework of CAFTA-DR? How to improve the systems
of innovation in order to improve the performance of the SMEs in particular for firms
leaded by women?
We used a case study methodology combined with the analysis of the institutional changes
introduced by the agreement and some statistics on trade in the sector in which the firms
participate. The case studies were aimed to understand the factors explaining the
performance of the firms. The specific objectives for the case studies were: to understand
the factors improving the performance of the firms, according to the women; to understand
the concept of success and performance used by the women leading the firms; to identify
the main barriers hindering innovation; to investigate the challenges and opportunities for
the firms in the framework of CAFTA-DR; to generate policy recommendations. The
approach is mainly qualitative rescuing the experience of a group of firms leaded by
women, and complemented with some statistics on trade and scenarios about the changes
introduced by CAFTA-DR. To collect the information we had interviews, direct
observation and review of documents. To select the firms in the study we consider several
criteria: age of the firm, women as leaders and real participation in the market.
A conclusion is that a free trade agreement it is not a panacea or a disaster, as some of the
more extreme groups argued. The challenges and opportunities depend of the sector in
which the firms compete. For most of the firms in the study it seems that the changes will
be very small. For some other firms, improvements in the access to USA markets might
open new opportunities to export in better conditions. Some other firms will receive a
stronger competition due to the better conditions to the USA firms. Most of the women
leading firms consider that there are very good opportunities but the main challenges is to
introduce innovations. The women in the study argue that there are many institutional
issues that are affecting the possibility to manage the key issues determining the
competitiveness of their firms. Some policies suggested are: to improve the institutional
set-up in order to facilitate the procedures for formalization and operation of the firms; to
develop systems of information to facilitate innovation; to strengthen networks of
collaboration among firms, universities and governmental agencies; to develop more
efficient schemes of funding for SMEs; and to strengthen the educational and training
systems.
2. Theoretical framework
Our point of departure is the argument that innovation is a key determinant of the
performance and success of firms. Because of that, the main factors determining innovation
are key factor to determine the performance of firms (Orozco, 2004 and 2010). The main
factors determining innovation and therefore the performance of firms can be grouped as:
institutions, the processes of learning and generation and transmition of knowledge, and the
quality of interactions. Quality of interactions is a key for the performance of the systems of
innovation, affecting the innovation processes and the performance of firms (Orozco,
2004).

4. The impacts of innovation on performance have been studied by different writers. Some of
them consider that innovation does contribute substantially to organisational survival1 by
offering new growth opportunities. See for example Brouwer and Kleinknecht, 1994;
Audretsch, 1995; Metcalfe, 1995; Archibugi and Pianta, 1996; Lawless and Anderson,
1996. For Wakelin (1998) the benefits of innovation at firm level are related to cost
reductions, new markets and potential monopoly rents.
Many studies agree that, in general, innovation has an impact in some of the relevant issues
of performance. There is considerable macroeconomic evidence on the influence of
innovation can influence export behaviour (see for instance Fagerberg, 1988, for the OECD
countries and Greenhalgh, 1990, for the UK). Wakelin (1998), Greenhalgh (1990), Buxton
(1991) and Greenhalgh (1994), have found some evidence of a positive role of innovation
on trade performance. Improved skills are another result of innovation processes. Firms
accumulate skills from using new technologies, learning via the production process, and
from the implementation of innovations (Wakelin, 1998). Starlacchini (1999) concluded
that innovations provide countries and sectors with comparative advantages stronger and
more durable than those based on unit labour costs.
The differences in the innovative capabilities among firms will result also in different
performance among them. Innovation becomes a cumulative process (Lundvall, 1992,
Edquist, 1997, Rosenberg 1982) which is at least partly specific to the firm. “One outcome
from these firm specific innovation patterns is that asymmetries exist among firms in terms
of their technological capabilities and their general economic performance” (Wakelin,
1998)
When firms improve their performance, they also improve their innovative capacity. In this
way innovation becomes a virtual circle, resulting in performance improvements that
improve innovative capabilities (Orozco, 2004). However, past performance improvements
could also result in less innovative efforts and poor performance could give incentives for
innovation. In some cases “good performance induces managers to believe that they have
„gotten it right‟, making them reluctant to change, whereas poor performance widens the
gap between managerial aspirations and achievements and thus motivates remedial action.
Success can blind managers to the need for action, whereas failure provides managers with
an incentive to scan their environments to find out what is wrong” (Meeus and Oerlemans,
2000: 4).
The role of the systems of innovation on performance is derived from their role on
innovation processes, especially on the fact that innovation is an interactive process
(Orozco, 2004). Edquist (2001) argues that the most important function of the systems of
innovation is to produce, diffuse and use innovations. The relationships between
institutions and organisations in a system of innovation influence innovation processes and
thereby also the performance of the system (Edquist and Johnson, 1997).
1
In these studies “organisational survival” is used as a proxy of performance. In other studies the “proxy” is
costs, new markets, exports, international trade, etc. These studies are not using the same concept of
performance. Actually they don‟t present a clear definition of the concept (see the discussion in chapter 2).

5. The role of the systems of innovation is strong even in particular firms. Firm‟s efforts and
competencies are supported and shaped by the system or, as Nelson has pointed out, “what
firms do, and the technologies they employ and develop, are influenced to a considerable
extent by the environment they are in” (Nelson, 1998: 512). Cimoli (1998) argued
something similar. He considers that the interactions between competencies (referring to a
firm, organisation or country abilities to solve both technical and organisational problems)
and performance (as measured by variables such as competitiveness and contribution to
industrial growth) are shaped by the systems of innovation. He also argues that economic
performance depends on how each country implement policies and organises its
institutions, which are also part of the system of innovation. Some other studies emphasises
that growth and catch-up potentiality are clearly related to a country‟s historical path and to
the development of the systems of innovation (Katz, 1997; Kim, 1997; Lall, 1997).
The discussion on the determinants of innovation it is not an easy task. From a theoretical
perspective there are many factors that could determine the innovation processes. The list
from the literature on innovation and systems of innovation includes factors as the
institutional set-up, knowledge and learning, infrastructure, patterns of demand, production
structures, government policies, feedback mechanisms, the science, universities and other
organisations, the size and degree of affluence to the markets, the base of natural resources,
the performance of the industry in which a firm is situated, the education and training
systems, capabilities and stimuli generated within the firms, financial facilities,
macroeconomic trends, technological bottlenecks, the R&D system, the possibilities of
appropriation of the benefits in innovation processes, and asymmetries among firms and
other organisations. For Gregersen and Johnson (1998) the different factors are not
independent of each other, but are developing in interaction with each other. They also
argue that there are feed-backs mechanisms between the performance of a system of
innovation and its innovation determining factors.
The literature does not give any model prioritising the relevance of each determinant. This
kind of weighting is only possible in empirical studies. However, from a theoretical point
of view it is possible to generate models organising the different factors determining
innovation. Figure 1 was designed as a general model grouping the factors, according to the
main groups of actors in the systems of innovation. The model also considers some factors
being relevant for each group and for any innovation. This is the case of institutions,
knowledge and learning processes and quality of interactions. In that sense, the model
considers these three processes as the most relevant. There are also two more factors
affecting innovation processes in general: path dependency and the level of uncertainty2.
The other factors are grouped according to the different groups of actors who can have
relations with firms and with each other (see the original development of the model in
Orozco, 2004).
The main groups of actors in the sectorial systems of innovation in the model are: 1)
suppliers and related industries; 2) educational, training and R&D systems; 3) customers
2
Path dependency is considered as a “factor” in the sense that it has impacts on innovation processes in the
present and in the future. Uncertainty is a characteristic of innovation processes, but the level of uncertainty
can be considered as a factor because different levels can have different impacts on innovation processes.

6. and competitors of relevant markets; 4) regulatory authorities, including all kind of policy
makers; 5) other stakeholders; 6) the firm.
The model for explaining the factors facilitating or hindering innovation is built considering
both the groups of actors and the network domains which define interactions into the
systems of innovation. For developing the model, I considered the factors in the literature
and organised them according to the main groups of actors.
Figure 1 Factors facilitating or hindering innovation
S y s t e m o f I n n o v a t i o n
Institutions 1. Suppliers & related industries
(Laws, property rigths, Performance of the industry
customs, work norms, Asymmetries among firms
trust, policies,
Technological bottlenecks in the industry
financial facilities, etc) Path
dependency
3. Market customer
2. Educational
Quality 6.Firms and competitors
training & R&D
of systems Patterns of demand,
Internal capabilities,
Interactions Their resources and quality resources, organisation Production structure,
and stimuli Market pull
Appropriation of
benefits
Level of
Uncertainty
4. Regulatory authorities
Knowledge
and policy makers 5.Other stakeholders
and
Public opinion and
Learning Policies and regulations reperesentation, legitimacy
processes
Source: Orozco, 2004
There are several factors facilitating or hindering innovation in the literature that are related
to the group of suppliers and related industries. This is the case of the performance of the
sector in which a specific firm operates; the existence of asymmetries among firms; and the
existence of technological bottlenecks in the sector.
Into the educational, training and R&D systems the main factors are the resources they
have and the quality of these systems. In the group delimited by market customers and
competitors the main factors facilitating or hindering innovation are patterns of demand,
production structure, market pull, and financial facilities into the markets. Policies and
regulation, including financial facilities3 for innovation generated into the systems of
innovation are the main factors into the group of regulatory authorities and policy makers.
Finally, public opinion and representation as well as legitimacy are the main factors into the
group of other stakeholders.
3
Financial facilities are part of the institutions relevant for all the groups of actor.

7. Into the firms, the main determinants of innovation are the internal capabilities, resources,
forms of organisation, and stimuli to innovation. The possibility of appropriation of the
benefits in innovation processes is another relevant factor within the firms.
3. General description of the firms in the study
The companies that participated in the study present some similarities but also important
differences. The common factors are: a) female leadership (own the business or work in
general management positions); b) production originates in Central America; c) the services
and products are for export; c) there is commercial relationship with the United States of
America; d) export experience of at least one year; e) productive activity dating at least
three years back; f) have a staff of ten members.
Among the differences, highlight the following: a) firms are located in different sectors of
the industry (food, agriculture, precision mechanics, handicrafts, textiles and fishing items,
and, personal hygiene items); b) are located in urban and rural areas; c) some have the free
zone regime; and, d) their organization is different, some are under the form of
associations, other corporations and some are cooperatives.
The organizations analyzed are grouped into two blocks: the first consisting of corporations
and the second of cooperatives and associations. In corporations, the primacy objective is
profit from the effort, the commercial relation and, production of a service or product. Its
organization is determined by a joint venture between founding partners whose contribution
is generally working capital. The corporations analyzed are unique in that the founding
members work in their own business, run and manage the firms. Most of the members are
also involved in the production and marketing process. This is a form of self-employment
subsistence. Furthermore, as demand and supply grows, the business is associated with an
alternative way to stimulate the local economy with employment, education, culture, health,
and, in general improving the basic conditions of the communities directly involved.
The second largest group belongs to the companies organized as cooperatives and
associations. In practical life, besides generating self-employment, these companies
establish and promote forms of organization structures and partnerships that facilitate and
strengthen groups, in this case, groups of entrepreneur women. One of the most interesting
and outstanding aspects is the organizational capacity of the production process linkages;
knowledge sharing and development of women in areas such as social, cultural, economic,
family and personal. One of the themes of interest of this type of organization is that the
reality of communities and in particular of women is addressed in a comprehensive manner
and therefore the development of cooperatives and associations affects the dynamics and
lifestyle of communities comprehensively. The productive systems shelter providers
(organized into groups of cooperatives and unions), customers (members of women's
groups, types and consumer groups –fair market4- and groups of cooperatives and others).
The impact on communities results then, in contributions such as employment,
4
Fair market is a form of marketing that aims to reduce intermediation processes, in order to benefit both
consumers and providers. The remuneration for the direct participants in the marketing chain is expected to be
equitable. Also is governed by values of social and environmental responsibility.

8. infrastructure expansion, development of quality of life and addressing local growth and
planning.
TABLE 1. Main characteristics of the firms studied
Country Firm Characteristics
Candelas Aromáticas Pilandros, S.A. Dedicated to handmade candles and decorative accessories.
Guatemala Exports handicrafts related to the ancestral tradition of the
De La Selva, S.A.
Mayan culture. Antigua, Guatemala.
Frutas Tropicales de Guatemala, Exports fruits and vegetables (mango, snow peas,
FRUTESA, S.A. blackberries) Guatemala.
Dedicated to the industrialization of canned comfort food
Crafts, S.A.
(tamales, lorocco and parental seed).
El Salvador
Shuchil: Productos Naturales, Dedicated to the export of organic products for skin and
fabricantes y distribuidores, S.A. hair care. It also has a line of products for dog hair care.
Cooperativa Regional de Producción Mainly devoted to processing and marketing of cashew
Agropecuaria “La Sureñita”, Ltda. nuts. Other products include: wine, orange and cashew
(COREPROSUL) raisings.
Honduras Coordinadora de Mujeres
Exports organic coffee to Europe.
Campesinas de La Paz (COMUCAP)
Cooperativa Nuevo Amanecer de
Manufactures and sells paste5.
Soledad del Paraíso.
Nica Flies y Compañía Limitada, Elaborates clothing and textile accessories and fishing
S.A. hooks.
Nicaragua Cooperativa Maquiladora Mujeres de It is a assembly plant enterprise of "organic” clothing, shirts
Nueva Vida Internacional R.L. and other cuts (socks, bags, etc.) made from cotton
(COMAMNUVI) produced in organic farming systems.
Konig Sabrosa, S.A. The company is dedicated to produce healthy bread
Costa Rica Asociación de Mujeres
Agroindustriales de San Roque de Export Anthurium flower and orchid plants.
Naranjo.
Works the field of Metal Mechanics (Parts, automation, die
Costa Rica Desarrollos AKA Precisión, S.A.
and mold).
To understand the core of the study is important to note that entrepreneur women have
developed, mainly by implication, a number of concepts that are useful for strengthening
their business, including those of management, administration and consequently the notion
of success. The concepts have been generally associated with community and business
realities of organizations, for example: the success of a case associated with efforts to get
out of extreme poverty, or, the access to educational processes of women‟s personal
development. This issue is addressed further in the second part of the study.
To develop the study thirteen companies, led by women, are selected. In most cases, the
women own the companies and in others they are managers. The general characteristics of
the organizations are summarized in table 1.
4. Challenges and opportunities for the companies since CAFTA
It is expected that economic policies derive from the free trade agreement between Central
America and the United States, generate changes in the conditions faced by firms, resulting
5
Costa Rican products. Plant that can be used as a sponge for baths.

9. in a combination of challenges and opportunities. This section examines the issue of
challenges and opportunities since CAFTA for female entrepreneurs interviewed. It applies
a combination of two types of methodology. On the one hand, it continues with the
prevailing methodology in the study, in which women are asked their opinions. The
analysis is complemented with a study of trade policy changes arising since CAFTA for
each of the sectors in which researched firms are located. Some insights about the changes -
or gaps- are added, generating commercial agreement regarding the institutional policy
framework to enhance innovation and, in general, the performance of companies.
To prepare the analysis of the challenges and opportunities from changes in business
conditions, the study focuses in two fundamental aspects. In first instance, it focuses on the
importance of trade flows between Central America and the United States for the main
products generated by the companies in the study. In this regard, we analyze the relative
importance of each country as an export destination for the specific product and the weight
that each country has, as an origin of imports of that product. With this, we study the
composition of the market, to determine whether it is likely that changes in tariffs may pose
the risk of losing or gaining a competitive edge to the participants in the treaty.
The analysis is then supplemented with a study of the tariff structure before and after
CAFTA, to appreciate how significant are the changes to motivate firms for changes in
trade volumes and flows. This part of the analysis incorporates a comparison of the
conditions that the United States gives in tariff in other countries, so that one could generate
conclusions about the effective benefits that are generated with CAFTA for Central
American countries.
4.1 Products of Guatemala
The main products of Guatemalan companies in the study are mangos, strawberries, snow
peas, blackberries, raspberries and candles. All these products have the same tariff
conditions in Central America today, with tariff of 15%. Current conditions in the United
States varies somewhat, being candles free from taxes, while the mango has a current tariff
of 6.6 cents per pound, strawberries 0.18 cents per kilo, snow peas a cent per kilo and
blackberries and raspberries 0.18 cents per kilo. Tariff conditions in which the products are
with CAFTA in the United State free trade are imports from Central America, and equal
conditions to other countries with which the USA has signed free trade agreements. The
FTA introduces some degree of advantage over countries with which the USA has no trade
agreements because they are still charging fees (see Table 2). The allowance negotiated in
Guatemala is in the basket A for mangos, the B for strawberries, blackberries and
raspberries, and the C for snow peas and candles.
In general, Guatemala has a strong trade surplus in all products tested. Although for some
candles and mangos there are significant imports in the period studied, they are much lower
than exports. The USA market is very important for Guatemala's exports of snow peas,
candles, raspberries and mangos. The greater openness that involves the CAFTA by the
United States seems then to turn into an opportunity to strengthen the export capacity of
Guatemala. The fact that CAFTA will make a difference with respect to countries with

10. which the USA has not signed free trade agreements, and equated with other countries with
which that country has already signed an FTA, it also seems to open a further opportunity
to consolidate exports. In the case of strawberries, the United States is not a very important
market for Guatemala, while El Salvador is the lead partner. Greater openness in El
Salvador would also provide greater opportunities to strengthen exports to that country.
TABLE 2. Guatemala: Relative importance of USA and Central American Countries as destination of
exports and origin of imports. Selected products. 2000-2009
Exports
Destination of exports
Productos Exports Costa
USA El Salvador Honduras Nicaragua Otros
Rica
Snow peas $147.924.439 72,66% 0,24% 0,13% 0,01% 0,03% 26,93%
Candles $54.911.579 94,29% 2,34% 0,40% 0,91% 0,35% 1,71%
Blackberries $21.576.505 86,03% 1,25% 0,03% 0,01% 0,41% 12,27%
Strawberries $6.308.339 47,87% 49,00% 1,93% 0,52% 0,12% 0,56%
Mangos $22.745.904 69,43% 1,72% 3,53% 0,01% 0,00% 25,31%
Imports
Origin of imports
Productos Imports Costa
USA El Salvador Honduras Nicaragua Otros
Rica
Snow Peas $434.023 27,36% 0,04% 0,29% 0,00% 0,01% 72,31%
Candles $4.464.111 49,48% 3,16% 0,25% 0,01% 0,42% 46,67%
Blackberries $4.513 46,33% 0,00% 53,67% 0,00% 0,00% 0,00%
Strawberries $165.125 97,64% 0,03% 1,17% 0,00% 1,13% 0,04%
Mangos $421.727 17,83% 41,14% 0,22% 14,52% 0,25% 26,05%
Source: own elaboration with data by SIECA.
The risk of significantly increased imports is not very pronounced for the cases of
strawberries and snow peas, at least in the short term, given that the country is a net
exporter of those goods and only small imports has been done, and since opening is given
to five and ten years respectively. In the case of mangos, which comes in an opening, it
seems not to present a high risk of massive imports because the country is an established
exporter. In any case, we must keep in mind that exports could increase from neighboring
countries, especially from El Salvador, although previously imported volumes suggest not
much of an opportunity of massive imports from that country.
The greatest risk is not given by changes in business conditions, since in fact the market in
both directions has been quite open, but in other conditions, especially non-tariff barriers
that the USA could continue to apply. As mentioned in the interview, food exports to that
country has been highlighted by the requirements and health controls, among others.
In the case of candles there is greater risk of increasing imports from the USA in the middle
term. There has been a flood of imports from that country, and the gradual opening would
open up space to expand. However, it is also very likely that the Guatemalan companies
consolidate competitively, because the country has demonstrated competitive advantages to
export the product. Imports only reach about 10% of exports during that period, but

11. CAFTA favors in the middle term USA companies regarding current conditions. As the
USA market and other countries have been opened, the entrepreneurs interviewed in this
sector do not see great opportunities. What presents are some risks of non-tariff measures to
be applied at a disadvantage to their companies, for example poor handling of goods at
customs.
USA is a less important destination for exports of strawberries from Guatemala;
nevertheless, it is the main source of the few imports that have been given to this item. For
this product the main export destination is El Salvador. Guatemalan Market opening will
take place in five years; consequently, opens some risk of increased imports from the USA
in middle term. However, the FTA also opens the USA market immediately, which also
happens in the case of El Salvador. Then, conditions are given for the strawberry industry
to be consolidated prior to their opening in Guatemala. Must be taken into account,
however, that parallel to that, other Central American countries will be opening their
strawberry markets in five years, so that Guatemala will also have to compete with USA
exports to those markets. Measures are necessary to be applied in order to maintain
competitiveness in the middle term.
For souvenirs and its exports, in the company La Selva, there is no official trade statistics.
It was not possible to find the specific tariff headings assigned to the product, which was
not possible to analyze the current tariff structure post-CAFTA. The analysis is then based
on the opinion of the women interviewed. In general, the conclusion to be drawn is that
with or without CAFTA, the important thing is to strengthen the competitive capacity of
enterprises to be able to face the market. In this particular case, innovation in products is of
vital importance, and there is a mechanism to stay in the market. It is also essential that the
state apparatus contribute to competitiveness, through the simplification of export
procedures.
It is important to note that many of the women interviewed have uncertainty in the results
of CAFTA, because they are cautious given some adverse conditions that are not easy to
identify. Some say that some conditions are given, and do not see significant changes as to
identify opportunities or challenges clearly marked, but still believe that the USA will be
benefited.
TABLE 3. Innovation challenges faced by the Guatemalan firms to strengthen competitiveness
Firm Innovation Challenges
- Packaging raw organic material.
Candelas Aromáticas Pilandros, S.A. - Stay in first place (get the product in the market before the competition)
- Support from the National Education System (education of the
population)
De La Selva, S.A. - Analysis of the price system to begin USA sales strategy
Frutas Tropicales de Guatemala, - Insertion in the domestic market.
FRUTESA, S.A. - Promote literacy programs to the public, with government participation

12. Entrepreneur women in Guatemala raise the need to promote innovations in different ways,
which is seen as a challenge to be faced by the market, especially, given the increased
openness implied by the CAFTA. The following table summarizes the innovation
challenges that surface in each company (see table 3).
4.2 Products of El Salvador
For the Salvadoran case, two main products were studied: soap and shampoo. The other
products in the category of comfort products do not have adequate statistics. In the latter
case we refer only to the assessments made by the women interviewed. In the case of
shampoo, El Salvador shows a positive trade balance in the period. However, the amount of
imports is equivalent to 89.36% of exports. Thus, the flow of trade takes place sharply in
both directions. However, the export destination is very different from the origin of
imports; countries with which they trade are different depending on the direction of trade
flows. The destinations of exports are the Central American countries, especially Costa
Rica. Exports to the USA have been minimal (see table 4).
TABLE 4. El Salvador: Relative importance of USA and Central American Countries as destination
of exports and origin of imports. Selected products. 2000-2009
Exports
Destination of exports
Productos Exports Costa
USA Guatemala Honduras Nicaragua Otros
Rica
Shampoo $19.611.909 3,10% 17,35% 16,41% 35,35% 24,89% 2,90%
Soap $89.147.598 0,59% 14,86% 29,11% 37,29% 13,09% 5,07%
Imports
Origin of imports
Productos Imports Costa
USA Guatemala Honduras Nicaragua Otros
Rica
Shampu $112.947.444 9,08% 16,95% 0,42% 0,01% 0,34% 73,21%
Soap $340.332.546 3,23% 27,46% 55,61% 5,28% 3,12% 5,30%
Source: own elaboration with data by SIECA.
In the case of imports show a different situation. The main supplier is Guatemala. Other
countries, especially Mexico and USA are also significant suppliers. Although the market is
quite open, the shampoo category still has 15% tariff on all Central American countries,
while USA is free trade (zero tariff). The FTA negotiations would lead to an opening to
five years in Honduras, El Salvador and Guatemala, and an opening in ten years in Costa
Rica and Nicaragua.
What can be expected along these lines opening in Central America is that Salvadoran
exporting firms could face a much higher level of competition in the middle term,
especially from USA companies. Also face greater competition in the local market, both of
Guatemalan companies as USA companies. No additional benefits are displayed for exports
to Central America, because tariff changes will be parallel to all the countries of the region.
Deprive then the challenge of facing benefits acquired by USA companies.

13. In the case of soap, El Salvador has a negative trade balance. For the category of soaps
trade flow occurs markedly in both directions, being the other Central American countries
major trading partners. Costa Rica is the main destination for Salvadorian exports of soap.
Exports to the USA have been very low. Most imports come from Central American
countries also. Thus, imports coming from the United States account for 6.9%.
The soap market is quite open in Central America, but still maintains tariffs of 15% in all
countries. Meanwhile, in USA there is free trade (zero tariff) for that item. The FTA
negotiations lead to an immediate opening in Guatemala, five years in El Salvador and
Nicaragua, and an opening in ten years in Honduras and Costa Rica, although Honduras
rose in equal annual tracts and Costa Rica in a non-linear form.
It is anticipated that with these guidelines for opening in Central America, Salvadoran firms
see soap exporters facing increased competition level in the middle term, especially from
USA companies. Correspondingly, face greater competition in the local market, both of
Guatemalan companies and companies in Honduras and the USA It is not expected
favorable conditions compared to other countries in the region, because the tariff changes
will be parallel to all countries. Although imports from USA have not been very high, with
the highest degree of openness in the middle term, it generates the challenge of facing the
advantages acquired by USA companies.
TABLA 5. Innovation challenges that surface each Salvadoran firm to consolidate competitiveness
Firm Innovation Challenges
- Creation of a food plant attached to standards and best practices to
Crafts, S.A.
increase quality, differentiation and meet market requirements.
- Industrialization of lemon grass
- Access to information through AGRONATURE
Shuchil: Productos Naturales, fabricantes - Insertion in Ecotourism
y distribuidores, S.A., - Improvement of technology with government support
El Salvador. - Development of a different marketing strategy
- Insertion in dehydrated vegetable technology
- Involvement in agribusiness programs.
The entrepreneurs we interviewed are aware of these new challenges, but are clear that
survival in the market will depend on the competitive capabilities that are consolidated by
the companies, especially in the differentiation of products for ecological and social
characteristics. They also raise the need to promote innovations in different ways as a
means to improve competitiveness and address the consequences of CAFTA. The following
table summarizes the innovation challenges that surface each company (see table 5).
4.3 Products of Honduras
The study also included two Honduran products, green coffee and cashew nuts. In both
cases SIECA statistics were used for analysis. It also includes assessments made by the
women interviewed. In the case of coffee, Honduras is a net exporter, while imports
recorded very low amounts, so the trade balance is positive in that period. The trade flow is
then given in one direction. The destination of exports is far from Central America, as
elsewhere in the region are also exporters. The United States is an important partner,
absorbing almost 40% of Honduran green coffee exports. The list of buyers includes other

14. countries, but that percentage does not represent very high amounts.
The USA market is open to imports of green coffee from around the world with zero tariffs.
The Central American countries still have a tariff of 15%, except Nicaragua, which has it at
5%. The FTA negotiation leaves open the USA market and leads to an opening in fifteen
annual stages in each of the countries of Central America.
In this area in particular is not expected that Honduran exporting firms face a much higher
level of competition in the middle term, because the USA is not a producer of green coffee.
What it is feared, is that more elaborated coffee come to compete in the domestic market.
But strictly for green coffee is not CAFTA what are opening opportunities and challenges,
but other international market conditions. In this sense, CAFTA seems neutral.
In the category of cashew Honduras has a positive trade balance, with imports reaching
about 25% of exports. The flow of trade takes place sharply in both directions. The United
States absorbs around 40% of Honduran exports, and generating over 95% of Honduras
imports (see table 6).
TABLE 6. Honduras: Relative importance of U.S. and Central American Countries as destination of
exports and origin of imports. Selected products. 2000-2009
Exports
Destination of exports
Productos Exports Costa
USA Guatemala El Salvador Nicaragua Otros
Rica
Green coffee $3.430.001.385 19,71% 0,12% 0,28% 0,11% 0,00% 79,78%
Cashew nuts $274 0,00% 0,00% 99,64% 0,00% 0,00% 0,36%
Imports
Origin of imports
Productos Imports Costa
USA Guatemala El Salvador Nicaragua Otros
Rica
Green coffee $66.076 1,32% 0,00% 15,59% 0,00% 0,00% 83,09%
Cashew nuts $6.170 100,00% 0,00% 0,00% 0,00% 0,00% 0,00%
Source: own elaboration with data by SIECA.
The cashew market is quite open in Central America, but still maintains tariffs of 15% in all
countries. In the USA there is free trade (zero tariff) for that item. The FTA negotiations
lead to an immediate opening in El Salvador, Honduras and Nicaragua, and an opening in
ten years in Costa Rica and Guatemala.
It is expected that with movements towards free trade in Central America, Honduran
companies that produce cashew nuts face a greater level of competition, especially from
USA companies. It is also possible that they will face greater competition in the local
market, from both Guatemalan, Honduran companies as well as companies from USA It is
not visualized on favorable terms to other countries in the region, especially against Costa
Rica and Guatemala, where the opening will be slower. Although imports from USA have
not been very high, with the highest degree of openness that will immediately, expands the
scale of the challenge to address the advantages acquired by USA companies.

15. Entrepreneur women actually do not see those threats and, conversely, which arise as
barriers are high costs provided by their suppliers and the high costs that means not having
all the technological advances. Some are also concerned by the inability to cope with very
large orders that exceed their capacity. Subsequently, consider the need to reach separate
agreements with clients or with other producers, so that organizers can meet the demands.
The challenges of innovation that must be taken to strengthen competitiveness are
presented in the table below (see table 7).
TABLE 7. Innovation challenges that must be taken by Honduran firms to strengthen competitiveness
Firm Innovation Challenges
Cooperativa Regional de Producción - Diversification of the market
Agropecuaria “La Sureñita”, Ltda.
(COREPROSUL)
Coordinadora de Mujeres Campesinas - Literacy programs to educate women.
de La Paz (COMUCAP) - Development of other type of coffee with bigger beans.
Cooperativa Nuevo Amanecer de - Development of local tourism.
Soledad del Paraíso, Honduras. - Investment in new machines.
4.4 Products of Nicaragua
In the case of Nicaragua two main products were studied: hooks and cotton fabrics. The
women interviewed provided these findings as well. In the case of hooks, Nicaragua is a net
importer and records very few exports. Further was found that the exports made by the
companies studied are not registered, due to the fact that official statistics only covered
exports to Canada for a very low amount, but none to the USA, which is where the
company Nica Fly exports. Imports in the period are $ 63,767, which is a relatively low
amount. The main supplier is Panama.
The market of hooks is completely open in all participating countries in Central America.
Only Costa Rica and the USA have tariffs greater than zero. In Costa Rica are just 1% and
4% in the USA Since CAFTA, the immediate opening in Costa Rica and the United States
maintains the situation free of tariffs in all other countries.
The USA opening do not seem very significant to drastic changes in the situation.
However, some advantages open with CAFTA, as tariffs for other countries with which that
country has no trade agreements, are maintained at 4%. Therefore, there is no real threat to
Central American countries, but rather perceived a slight chance of expanding exports to
the USA market. Considering the physical skills of the female population in Nicaragua: the
manufacture of hooks requires fine finger dexterity (speed), and the proximity to the
southeastern USA coast.
In the case of cotton in Nicaragua, it presents an enormous trade deficit. In other areas of
the textile industry Nicaragua is a net exporter, particularly in Maquila, but suitably in this
area the country is importing tissues. Most of the imports are from the United States.
The cotton market has low protection in Central America and the USA The highest tariff is
presented in El Salvador (20%) and the lowest in Nicaragua (5%). Honduras and

16. Guatemala have tariffs of 14%, while Costa Rica keeps 10%. In the USA varies between
3% and 10.5%, according to different areas. The FTA negotiations lead to an immediate
opening in Central America and the USA. (see table 8).
TABLE 8. Nicaragua: Relative importance of U.S. and Central American Countries as destination of exports
and origin of imports. Selected products. 2000-2009
Exports
Destination of exports
Productos Exports
USA Guatemala El Salvador Honduras Costa Rica Otros
Hooks $4.994 82,76% 0,00% 0,00% 0,00% 0,00% 17,24%
Cotton
1/
Fabrics $1.759.279 1,02% 16,51% 1,60% 1,61% 74,68% 4,58%
Imports
Origin of imports
Productos Imports
USA Guatemala El Salvador Honduras Costa Rica Otros
Hooks $404.149 14,47% 0,42% 0,00% 0,00% 0,07% 85,03%
Cotton
Fabrics $23.355.777 24,21% 10,01% 27,08% 20,42% 2,31% 15,97%
Source: own elaboration with data by SIECA.
1/
Include all kind of cotton fabrics.
Although tariffs are already very low, it is expected that with these guidelines for opening
in Central America, Nicaraguan firms exporting cotton face increased competition level in
the short term in their target markets in other Central American countries. Also face greater
competition in the local market, both USA companies and other Central American
companies. Favorable conditions are expected in markets of other countries in the region,
because the tariff changes will be greater in those countries compared to those who must
make Nicaragua. Imports from the USA have been in itself very high, and with the greatest
degree of openness in the middle term, it creates the challenge of facing the advantages
acquired by USA companies. However, this item is widely used as feedstock for other
items that were subsequently exported to the USA, so it can also be a chance to place a
greater proportion of goods in the domestic market.
The entrepreneurs who were interviewed are of the opinion that indeed there are new
challenges but also opportunities that come and could be used if firms are consolidated. The
respondents are more optimistic and believe they have the ability to emerge strengthened.
Some of the challenges of innovation to improve the ability to seize opportunities and
confront the challenges that opens with CAFTA are presented in the table below (see table
9).
TABLE 9. Innovation challenges that arise for Nicaraguan firms to consolidate competitiveness
Firms Innovation Challenges
- Besides the Maquila industry they consider insertion in
Nica Fly y Compañía Limitada, S.A.
designing
- Program promotes a culture of conventional and
Cooperativa Maquiladora Mujeres de
organic cotton in the area, with government assistance
Nueva Vida Internacional R.L.
and international cooperation agencies.
(COMAMNUVI), Nicaragua.
- Cotton Spinning

17. 4.5 Products of Costa Rica
In Costa Rica, three main products were studied: bread and flowers, orchids and
anthuriums. Other products that the company AKA Precision generates could not be
identified in the statistics generated by SIECA, therefore the issue was addressed by the
interviews with the entrepreneurs. In the case of anthuriums, Costa Rica is an exporter par
excellence and only shows a sporadic importation of a low amount. Thus, the trade balance
is positive. USA is the main destination for exports. The other important trading partner is
Canada. There are no sales to Central America for this product.
Anthuriums market has tariffs of 15% in all Central American countries, while USA tariffs
are 4%. With the validation of CAFTA, as negotiated, all countries would enter into free
trade immediately. USA remain, however, a 4% tariff for imports of anthuriums that are not
from countries with which it has signed trade agreements (see table 10).
TABLE 10. Costa Rica: Relative importance of U.S. and Central American Countries as destination of
exports and origin of imports. Selected products. 2000-2009
Exports
Destination of exports
Producto Exports
USA Guatemala El Salvador Honduras Nicaragua Otros
Anthuriums $4.879.123 87,84% 0,02% 0,04% 0,00% 0,15% 11,95%
Orchids $3.353.789 69,02% 0,72% 0,15% 13,73% 0,47% 15,91%
Bread $319.096.347 1,68% 32,09% 11,01% 8,04% 17,99% 29,19%
Imports
Origin of imports
Productos Imports
USA Guatemala El Salvador Honduras Nicaragua Otros
Anthuriums $460 0,00% 0,00% 0,00% 0,00% 0,00% 100,00%
Orchids $23.546 76,34% 0,00% 0,00% 0,00% 0,00% 23,66%
Bread $175.597.935 28,89% 22,95% 0,60% 2,79% 7,65% 37,12%
Source: own elaboration with data by SIECA.
The country is not importing anthuriums, so it is difficult to predict, even with market
liberalization, that there would be dramatic changes to the local market and that it could be
attractive for foreign companies to put their production. What we can predict is that the
total opening in the USA generate more opportunities, although the reduction of tariffs is
just 4%.
For the category of orchids, the situation is very similar to that of anthuriums. Costa Rica
has made some imports but very small, and has emerged as an exporter. USA is, again, the
main trading partner. The other Central American countries also buy from Costa Rica, but
in very small quantities.
Most imports come from Thailand, Panama and Brazil. There have been imports from
Colombia and from Taiwan. Of all the CAFTA countries, the USA is the largest source of
imports. There were no imports from other Central American countries.

18. The market for orchids is also quite open. Still prevails a tariff of 15% in all Central
American countries, while USA tariff is 4%. Once CAFTA goes into effect, as negotiated,
all countries will enter into free trade immediately. As in the case of anthuriums the USA
would maintain a 4% tariff on imports of orchids that are not from countries with which it
has signed trade agreements, opening up an advantage, however slight, concerning the
current situation.
The country is not a heavy importer of orchids; consequently it is difficult that market
liberalization change drastically. However, it is clear that it is facing a higher level of
competition, and indeed USA companies gain more advantage to export to Costa Rica.
Nonetheless, local market size is not large, and most of the produce is exported, it seems
that FTA rather opens up new opportunities. The producers of anthuriums and orchids have
been able to compete in current conditions, thus ability to continue exporting has improved,
and still depends on the competitive capabilities of enterprises, focussing primarily on
producing quality and efficiency.
For the category of bread, Costa Rica has a negative trade balance in this period, although
the amounts of imports and exports are very similar. The flow of trade is quite marked in
both directions. However, the export destination is very different from the origin of
imports, countries with which they trade are different depending on the direction of trade
flows. The destination of exports is mostly Central American countries. Exports to the USA
have been very small. There have also being exports to third countries. In the case of
imports, the situation is different. The main suppliers are the USA and Guatemala.
The market is quite open for the category of bread, but still has tariffs of 15% in all Central
American countries, while USA is free trade (zero tariff). The FTA negotiations leading to
an immediate opening in Guatemala, and for ten years in the other Central American
countries, although Costa Rica's opening pose to fifteen years.
What appear to be the consequences to these opening lines in Central America are that
exporters in Costa Rica are being faced to a much higher level of competition in the middle
term, especially from USA companies. Also faces greater competition in the local market,
especially of Guatemalan and USA companies. No additional benefits are displayed for
exports to Central America, because tariff changes will be parallel to all the countries of the
region and instead will have to face competition from the USA, than if they acquire
different conditions. What seems to prevail then is the challenge of facing the advantages
acquired by USA companies.
The company interviewed in the area of metallurgy (Precision) also sees the FTA as an
opportunity. They are aware they will face more competition, but have the capacity to deal
with it. Specialized training, technological upgrading, are some elements that consolidate
the company.
The main challenges of innovation to improve the ability to seize opportunities and
confront the challenges that opens the CAFTA, as perceived by the Costa Rican companies
in the study are presented in the table below (see table 11).

19. TABLE 11. Innovation Challengers faced by costarrican firms to strengthen competitiveness
Firm Innovation challenges
Konig Sabrosa, S.A. Costa Rica. - Find other alternative markets
Asociación de Mujeres
Agroindustriales de San Roque de - Exports to new markest, such as Europe
Naranjo. Costa Rica.
- Developt new products such as mold
Desarrollos AKA Precisión, S.A. Costa
- Improve the quality of the customer service
Rica.
- Introduce high technologies
5 Conclusions: Success features for the companies in the study
The firms surveyed in the study are a clear indication that the entrepreneurship run by
women has been strengthened in Central America. These companies have developed
capabilities to be inserted in a competitive market, winning over a series of setbacks and
shortcomings of the institutional framework. From the study of these experiences is
possible to draw a series of lessons on the major factors on which success is based. Indeed,
despite the fact that the companies studied belong to different branches of productive
activity and the nature and organization seem antagonistic, they have common factors that
have gradually approach them to success.
Aspects such as financial management, marketing strategies, organizational culture and
linkage to collaborative networks have been present in the history of the different
companies. In some aspects, it has been presented as previously determined, then for other
firms, it has become a significant challenge that, however, has been adequately resolved. In
some cases institutional support has been vital, solving several fundamental requirements
for competitive companies. But in most cases that kind of support has been given by the
women involved, creating new ways to cover functions that the institutional framework
should be generating.
This section systematizes the experience of the companies studied, to derive lessons about
success factors that have been present in different cases.
5.1 The concept of success for entrepreneur women
Among the women interviewed is a widespread belief that business success is associated
with the effective contribution that the company achieved in family welfare and
community. These women associate success to the contribution that their companies has
by opening spaces for the participation of women, and the contribution that is generated on
the welfare of women, the community and especially families. Companies are not seen as an
end in itself but as a mean of personal and collective development, which are important not
only for financial results, but also mainly for the changes evaluated in terms of
improvements in the quality of life.

20. Thus, the fact of competitively consolidating in the market makes sense for them just as it
contributes to a broader purpose, associated with improvement in quality of life. Is is
successful, then, a company that generates jobs, contributes to community development,
and gives more space for participation of women. It is clear, however, that profitability,
however minimal, is a requirement, but it is not, for these women an end in itself.
The success is also associated with the capacity for innovation, and that is derived from the
opportunity to open the enterprise to the active participation of women, allowing them to
materialize the innovative potential.
Ultimately, the major contribution is the prospect for personal development of women,
which becomes tangible in the form of national and international sales. The company is
successful in both new opportunities for personal and family growth and to develop the
innate potential of work and creativity.
The successful business model for the women interviewed is a far from the theoretical
model of profit maximization. There are much broader purposes such as generating jobs,
increasing the motivation of women, and the welfare of children.
In some cases this conception of success on the social contribution prevents from
determining the balance in corporate profitability. An example of that is the case of
Comucap, where sales levels and income distribution did not maintain equitable
relationship, threatening the stability of the company.
Success was achieved in a process in which many issues are of great importance. Not
everything is easily obtained and requires a prolonged period to obtain favorable indicators
in some areas. However, other aspects, such as growth and improvement, from the
beginning have strengthened the participation of women in their companies.
5.2 Financial Management.
The way to all financial management and access to financial resources is a factor that all
companies consider as essential for success.
Capital contributions have been a source of great importance in most enterprises of women
in the study. Even in cases where the company emerged as a strategy to address poverty,
and where, therefore, women did not have cash to contribute, they managed to make capital
contributions by means of hours worked. This is the case of the Cooperativa Maquiladora
de Mujeres de Nueva Vida Internacional (COMAMNUVI).
These capital contributions in many cases come from the reinvestment of profits. This has
meant the sacrifice of current income, which was much needed to meet basic needs, but the
women understood that they were of vital importance to strengthen the company. It was
instituted then, the social fund, which is fed by a percentage of profits that is generated by

21. the firm6.
A key factor for succes has been that the fund have sufficient working capital to enable it to
meet the production processes. Women's groups have managed in different ways to have
that fund. For some companies it is not enough capital the contribution their owners can
make, so it is necessary to resort to other sources. However, access to credit is a limiting
factor in many companies. Thus, the existence of financial programs tailored to small
companies is of great importance. In the case of Nicaragua, apparently there have been
changes in the Nicaraguan Investment Fund, enabling different credit lines for businesses
led by women.
Several companies have used their relatives to channel some funding. Others have a
combination of sources to meet financial needs. Of great importance is the contribution
made by customers through down payments in their contracts, which are combined with
loans from different financial institutions. Some of the companies in the study received
financial support in the form of cooperation, which have been given a major stimulus for
the strengthening of the company. For other companies, lack of access to financing
becomes a serious difficulty, which restricts the ability to strengthen the business.
The reinvestment of capital, in most cases, follows credit forms from horizontal linkages.
Vendors have served as suppliers of credit through billing and soft collection systems. In
general, this form is the product of long-term business relationships, which to date are
supported by references and recording of payment made by the administration or
management.
5.3 Business Management
A key factor for business success, as revealed by the women interviewed in the various
Central American countries, is to make a proper business management. There are several
important aspects. For example, some of the entrepreneurs argue that it is vitally important
to have clear mechanisms to form a portfolio of clients. For these companies it has been
contributory the initial support of a customer who has placed their trust and supported them
to start their production.
In some industries the best has been to focus on fewer clients with projects of a certain size,
rather than generate a lot of small projects for many different clients, as in the case of AKA
Precision. It is also vital to keep customers, which is achieved by meeting the quality
standards and complying with the terms of sale, including delivery datelines.
One mechanism for improving marketing has been the system of “referrals”. Indeed,
satisfied customers work as a means of advertising, as they provide good references from
the company. Thanks to this mechanism, some companies have increased their customer
database.
6
In the case of COMAMNUVI the social fund feeds up of five or six percents of the sales .

22. There are also institutional aspects that become allies of the marketing strategy. For
example, the entering into export arrangements as Free Zone creates many advantages for
businesses, because they decrease the paperwork and transaction costs.
The trade fairs have been a mechanism for attaining new customers. Several companies
have resorted to this strategy, often with support of different organizations or government
entities.
In some countries, the government has promoted these types of fairs, creating meeting
places where new businesses are displayed. From that initial impulse companies are
beginning to strengthen their marketing channels and more carefully selecting their target
markets. In other cases some companies have been more aggressive, joining business
networks that provide space for marketing or, more generally, to do business. Also, have
chosen to develop outlets in which to exhibit and sell their products permanently. Thus
capturing new customers who then go generate higher sales.
A local mechanism has been used to organize tastings for people to know the products,
especially those belonging to the food industry.
The support of organizations that promote fair trade has been of great importance for some
companies. This has opened direct marketing channels in marketplaces that conditions are
favorable, though not necessarily been steadily strengthened.
A vital mechanism to visualize new opportunities has been the direct observation of
markets to which they want to access, identifying details of the marketing process. In some
cases this is achieved by direct visits to supermarkets or other places that could situate the
products the company wants to sell.
Markets and advertising activities have not always been stable. This has meant that women
are very enterprising, identifying new markets and new forms of publicizing. Some
companies have not yet managed to establish innovative marketing systems and therefore
are forced to use intermediaries. In these cases the firms have the challenge of product
differentiation and generation of new outlines to sell.
Different marketing strategies used are characterized by constant monitoring of the needs of
final customers and intermediaries. The market demands and a continuous process of
transformation and expectations of new business directions, have forced companies to
develop ways of working partnerships that strengthen the quality of supply of services and
products. Therefore, in most cases, the value added to the product or service, not enclosed
in using high quality components, it becomes necessary to include processes channels
involved in pre sales and after sales. Here is how, processes and procedures for
procurement, production, sales and after sales are part of the components that help the
quality of commercial relationships.

23. 5.4 Developing organizational skills.
One of the key factors for business success, as the women interviewed expressed, is that
companies develop a flexible organizational structure to adapt to changing circumstances,
and allow a proper division of labor in which teamwork is promoted and can harness the
expertise that people will reach.
According to statements of the entrepreneurs, the organizational culture makes room for a
high turnout of women workers, in a way that leverages their creativity and motivation to
seek improved ways of doing the work, while eliminating vices that threaten high labor
productivity.
For companies to be successful, we need to promote the development of proactivity and
aim at high productivity. And for that, conditions must be generated to analyze the
performance of the staff, and mechanisms to encourage creativity.
Of fundamental importance to business is to generate an environment conducive to personal
growth and job stability. That way the employees feel more secure and work with greater
motivation. The introduction of the philosophy of continuous improvement has been a
major factor for improving firm performance. Companies are facing this philosophy in
practice to improve production processes, quality, productivity, taking the challenge further
to improve every time there is a breakthrough.
It is essential that companies develop information and communication systems that allow
them to properly manage their business. The developing of such systems becomes a key
success factor, while weakness in these systems undermines the good business
performance.
Some companies have advanced in the use of tools to evaluate performance, allowing
problems to be identified easily, and then taking corrective measures in a timely manner. It
uses some kind of indication of whether things are going well, according to expectations.
According to what an entrepreneur expressed.
The most basic practice, present in all companies, is planning, both strategic and
operational activities of daily living. This will present the necessary actions to advance the
best performance and effective program.
The diligence with which it organizes and plans the administrative management has
encouraged the consolidation of effective working methods, adaptable to the requirements
of the demand. Rigorous and practical procedures have provided continuous monitoring
and evaluation of performance and organizational developments.
5.5 Learning process.
For companies it is very useful to develop appropriate mechanisms for recruitment and
development of job skills of new workers, consequently, transfering knowledge from older
workers. It was mentioned, another set of mechanisms that facilitate the learning process as

24. ongoing training and openness to teamwork.
In many cases, recruitment is defined in in-group discussions, involving trusted personal
and line managers. The selection process has objective assessment mechanisms. Attitude is
a crucial part for the inclusion of new staff in the company. The candidate must be able to
work as a team, have knowledge of the position applied for (theoretical and practical
support) and open-mindedness, by means of availability and enthusiasm to grow
professionally regardless of the position to perform. Human skills translated into attitudes,
behaviors and actions are basic in the learning process.
Learning ability and reproduction of knowledge in search of synergies, in most cases, not
only are associated with hired staff skills, but also the mechanisms and methods adopted by
the organization.
Some of the most used are the training sessions conducted by the workers themselves.
Usually these are done when a person is delegated to receive a workshop (for example, in
sales techniques, effective inventory techniques) and they return with a commitment to pass
on to their colleagues the knowledge acquired. Another way is workshop of feedback
derived from a routine checkup or control, in which they are trying to solve or improve
situations.
One aspect attributable to conditions contributing to the learning process is job stability.
The return of the investment in staff training is secured by means of job stability (provided
by the contractor as per the contracted). This mutual engagement is the base of a strong and
enduring relationship.
Other relevant aspects are those related to access to resources (financial and time), and
information technology. The sources come from agreements with academic organizations,
affiliations and trade organization.
5.6 Differentiation of products and services
The business success is closely connected to the characteristics of products and services
offered. These features are part of the authenticity and rationale of the company, and are the
mechanisms for market differentiation and gain of customer preference. The fundamentals
are quality products and customer service.
In each of the branches is necessary to identify the critical features of the products that
become the elements that make the customers choosing to buy or not. In some divisions
features are raised such as texture, size, flavor, color, type of materials used, among others.
In other industries the characteristics of the products are associated to issues like health,
harmony with nature and social and economic welfare of the population.
That is why much of the business-driven activities appeal to the system of 'fair trade'. And
with marketing efforts are loaded the binomial of quality and service. It envisions a quality
product management pre and post sales. It is not enough to deliver the product and forget

25. about the customer, the product is as important as the relationship with the consumer, who
feeds the production management.
Some cases, such as AKA-Precision Developments, reveal the importance of product
process tailored to meet very specific needs of customers. On the other hand, horizontal
alliances with suppliers have been strong for some companies. The high quality of raw
material percentages adds significant value. Such is the case of making bread, craft items,
candles and fresh fruit.
Another instrument of differentiation is the process of selling, in which monitoring and
customer feedback is the transverse axis of the design of products and customized service.
Also integration of processes that minimize negative environmental impacts has been key
success factors and market linkages.
Network's vision is a label that is printed on the product. Companies that are part of groups,
associations and circles at the end, have access to schemes that improve the quality of life
for residents and promote local development. There is access to technology, updated
information and exchange of experiences.
Technology aims to improve the product, the techniques of genetic engineering, electronics
and metal engineering development, information tools for research (Internet), techniques
and materials for improving crops and soils, and access to equipment and machinery to
improve processes. These factors combine a stream of improvements in product quality and
business management.
The cases of genetic modification are most revealing in Crops and Seeds, Orchids,
Anthuriums, Cashew, Mango, Paste, Coffee, Blackberries, among others. They use
advanced science to improve the final product. In the case of the Paste is looking to be
bigger and colorful.
It is necessary to maintain some degree of research and development in new products and
new market niches. In the case of knowledge of food ingredients and raw materials, it
points to the excellence and product differentiation.
How to get to the final consumer also makes a difference, in association with product
quality, creativity and reliability maintain the presentation and product presence. Attending
Health Fairs to promote the product is another strategy, used by Nelia De León en Konig
Sabrosa, Costa Rica.
To add new component to the products many times can take it to be part of the 'star'
products portfolio. These are cases of companies dedicated to articles of ornaments, textiles
and hooks. Changes in color, size or any other aggregated value means being at the
forefront (be the first to bring the product to market) and competition. Placing the product
before the rest of the competition is the key because it allows differentiation. Being first is
interpreted as the introduction of a product or service to an untapped market, which
positions the company in the lead for a period of time.

26. On the other hand, homogenize the product quality leads to sales success. Products such as
anthuriums flowers, mangos, seeds and fruits in general should be presented in a uniform
size, color, flavor, texture and smell.
Broadening the product portfolio is one of the most widely used practices: making candles,
handicrafts, items for decorations, exotic fruit, flavored breads, variety of foods for canning
and different types of coffee.
Searching schemes for certification of products is another way; it adds value to the product.
The good manufacturing practices, environmental labels and international standards are
part of the safety arguments provided by the product.
Although there have been several ways to reach the differentiation in the product and
service, the central concept is always preserved, which gives meaning to the existence of
the mission which is more than to accumulate wealth, is to contribute to the common good:
making healthy bread using organic products and inputs to protect the environment,
designing items to manage stress, entertainment, relaxation, and contributing to
employment generation in the communities.
5.7 Collaboration network
It is emphasized, in the interviews, the contribution of different actors linked to the activity,
in particular to resolve critical issues. This is associated with the quality of collaborative
networks to which the firms have been inserting into. Profound links mark the past, present
and future and significantly affect business success.
The relationship with different types of actors is thus a must for all companies. Those are
significant elements that are derived from the process of knowledge sharing, technology
transfer, support to improve ways of working, access to outsiders for the extension and
modification of patterns of thought and the encouragement of processes to increase access
to funding and to generate appropriate marketing channels.
5.8 Sources of knowledge and education
To stay ahead in the industry or any economic activity, essential nutrients are required to
improve the performance and especially for the performance expected and demanded in
competitive markets. Therefore, staying away from the sources of knowledge and its
transfers becomes lack and, in turn, competitive disadvantage.
In the case of Costa Rica, AKA-Precision Company maintains a continuing education
program in high technology aimed at all employees and Konig Sabrosa with best practice
programs in food, product demonstrations and distribution. Organizations that typically
offer this service are both from the government such as the National Apprenticeship
Institute (Instituto Nacional de Aprendizaje, INA by acronym in spanish) and other NGOs
such as CEGESTI. There has also been significant input from the Chamber of Industry. The
courses offered are focused on technical aspects such as Precision Mechanics and

27. Electronics and high Administrative and Management topics, Business strategy, among
others. Likewise, these organizations provide training in other areas such as trade and
international business rules implementation.
Formal educational institutions, meet the staffing needs of companies. In the technical area,
students graduated from Vocational Schools7 are received. Others graduated from INA and
other private and public universities such as El Tecnológico, Universidad Nacional and
Universidad de Costa Rica.
The role of universities and the demands of companies are very clear. For AKA-Precision
Development and Konig Pan, they have been the means for professional development in
academic careers in business management. In the case of AKA-Precision contribution has
been enhanced through technology programs developed by the National Institute of
Technology (commonly called the Technological). Agricultural Women's Association of
San Roque stated never having the support or link of national universities.
Also, courses are offered in relation to the topics of trade and government policy in the
sector. In the case of the Agroindustrial Women's Association of San Roque de Naranjo the
initial contact was made with the University of Puerto Rico West Vallo and PROCOMER,
which has contributed to courses in fields of commerce and trade and export assesment.
Another ways of knowledge transfer are associations and trade associations. Entrepreneur
women have access to current information and have the opportunity to participate in
domestic groups such as boards and committees. This participatory process provides them
with not only knowledge but also make room for the expression of positions and views on
the industry growth, reaching significant areas of decision-making institutions such as the
Legislative Assembly. It also facilitates their contact with companies, national and
international.
As mentioned above, knowledge transfer and feedback comes from various sources. Many
companies have turned to close relationships with their customers. These are meaningful
collaboration to define the paths to the satisfaction of needs and tastes of the customer;
guidelines that companies fail to capture accurate impressions by the aspirations of
promising markets.
In Costa Rica, the company AKA-Precision Development is one of the most revealing
examples of this relationship because the product is tailored to the customer‟s preferences
and the sales process beyond simplistic relations of buying and selling.
Suppliers are also agents of great importance for companies. These actors are important in
the training process, while, the company is responsible for providing the employee with
expertise on the proper management and maintenance of plant, tools and teamwork. Same
contact with different actors generates important information, which feed the decision-
7
Vocational schools are part of the formal structure of education system in Costa Rica. The program belongs
to the cycle of secondary education, called college. In this system the teenage boy have the opportunity to
aspire to a degree as a technical education, the cycle lasts six years.

28. making processes and establishes policies and standards in the industries and trade.
In Honduras, Zamorano University has been promoting organizational processes in the
pretense of private enterprise and cooperatives. It has been determined to be a link between
staff and communities. Some NGOs have also contributed to the issue of knowledge
transfer.
5.9 Integrator Programs: Horizontal chains of trade and production
One program that draws more attention is running the China-Taiwan Mission, FIAL and
MAG8 in Costa Rica. The process of promoting support networks and service circuits is
achieved with the participation of twenty-six projects consisting of seventy women
associations covered by the Union of agribusiness women's organizations in the country.
The central activity is to promote women's organization pushing for a strong program based
on production and trade relations. The projects are within a comprehensive structure of
chain of processes: the development of the orchid plant, for example, is made by a women's
association called AMASAR located at Rosario de Naranjo, where there are plants that
produce genetically improved climate being a natural ally for the development of the
production. TROJAS in Greece and Sarchí, AMASIA in Athens, AMASAR in El Rosario
and Conception of Naranjo, and the Association are organizations binding for both the
various stages of production of the plant to commercialization. There is a permanent
storage facility for marketing "The Fair" sponsored by the government through the MAG.
The circuit of trade encourages the rotation of cash flows in the partnerships.
Providers have been important partners in the development of corporations. A clear
example is Konig Pan in Costa Rica. Providers supplement the company's financial needs
through programs of service and customer credit, bills with broad time frames for recovery,
provision of equipment and machinery on credit, procurement of high quality raw materials
under health standards, as well as being part of the crossover quality control of products
and supplies handled through the technical sheet. This control provides oversight in the
store.
Companies like De La Selva and La Sureñita have maintained relationships with suppliers
and customers in a seamless manner. The chain in the improvement and modification of the
product begins with information that clients provide on successes or failures of the
products. These are transmitted to the respective production centers. For example: De La
Selva in which the product comes from the communities, groups or families of small
producers, the message of improvement and change is the responsibility of the company. In
The Sureñita the owners of properties that are generally spouses or neighbors supply the
raw material. In both cases the customer feedback plays an important role: recommended
style, size, color, labeling, packaging, among others. Aromatic candles Pilandros of
Guatemala and FRUTESA have been supported by the entity responsible for the country's
exports.
8
Ministry of Agriculture and Farming (Ministerio de de Agricultura y Ganadería, MAG, by acronym in
Spanish), Governement of Costa Rica.

29. The opportunities offered by the cooperative sytem have been welcomed by COMUCAP.
This has grown associative networks of women in various countries in which they have ties
of solidarity. This encourages the values embedded in Fair Trade. It also ensures some form
of sales for a given time.
The Sureñita –from Honduras- has also developed links with suppliers, which in many
cases are the same couple of associates of the cooperative members, intertwining
relationships with family. This has contributed to the strength and feedback processes and
relationships.
5.10 Other sources of collaboration
Family support has been very important, mainly in the final stages of maturation of the
companies, with financial loans, property and even labor input, experience and knowledge.
Another source of collaboration is the support by programs run by agencies of international
cooperation aimed at developing productive and social-environmental organizations. These
programas often have been promoters of successful processes.
5.11 Relevance of government involvement
The government support to encourage industry growth has been manifested in various
forms. In some cases the Government, represented by the institutions of trade, has played a
role in promoting non-traditional exports and in some cases has led to programs to support
small and medium enterprises. However, in many cases, government involvement has been
very poor.
Some cases of very specific government support, but that makes the difference, is the
experience of the company Agribusiness Association of Women of San Roque de Naranjo
in Costa Rica. With the growing demand for expertise in growing Anthurium, MAG is
obliged to provide training to rural organizations applicants. The government's contribution
has been through payments of travel to other countries.
The Salvadoran government has specific programs to promote and support exports of small
and medium enterprises. The company Shuchil of natural products has benefited from a
promotion program. By contrast, in Guatemala, women entrepreneurs manifest lack of
interest of the government to encourage exports.
The Ministry of Natural Resources of the Government of Honduras has served as a
promoter of alternative production systems, such as the industrialization of Paste. The
stimulation of exports in Nicaragua has been channeled through government programs.
Joint efforts haven taken place such as organizing international exhibitions and training.
They also coordinated a website to support the marketing of the firms.

30. 6. Conclusions: CAFTA, Challenges and opportunities for the
strengthening of innovation systems
6.1 General conclusions
The challenges and opportunities since CAFTA differ for different companies studied. For
the majority did not foresee significant changes from current conditions. For others,
however, the conditions acquired by Central America in the USA market open up new
opportunities. Another group of products will face more competition to improve the
conditions that USA companies receive.
Many of the women interviewed have uncertainty of the outcome of the CAFTA, they
worry that they were given some adverse conditions that are not easy to identify. Some say
that, in the commercial sense, significant changes are not seen as to identify opportunities
or challenges clearly marked, but still believe that the USA will be benefited. Nonetheless
in general, given the uncertainty or specific threats, women entrepreneurs raise the need to
promote innovations in different ways.
In Guatemala, the risk of significantly increasing imports is not very pronounced for the
cases of strawberries and snow peas, at least in short term, given that the country is a net
exporter of those goods and has only made very small imports, and because the opening is
given to five and ten years respectively. In the case of mangoes, which comes in an
inmediate opening, it seems not to present a high risk of massive imports because the
country is an established exporter. In any case, we must keep in mind that exports from
other Central American countries could increase. As is clear from the words of one of the
respondents, the greatest risk is not given by changes in business conditions, since in fact
the market in both directions has been quite open, but under other conditions, especially
non-tariff barriers that the United States could continue to apply.
In the case of candles, for Guatemala there is greater risk of increased imports from the
USA in the middle term. Already there has been a flood of imports from that country, and
the gradual opening would open up space for higher imports. However, it is also very likely
that the Guatemalan companies could consolidate competitively, because the country has
demonstrated competitive advantages to export the product.
For the sector that produces shampoo, which can be expected with the opening lines that
introduce the CAFTA in Central America, is that exporters Salvadoran firms see a much
higher level of competition in the middle term, especially from USA companies. Also face
greater competition in the local market, both of Guatemalan companies as USA companies.
No additional benefits are displayed for exports to Central America, because tariff changes
will be parallel to all the countries of the region. The priority is then to face the challenge of
benefits acquired by USA companies. Salvadoran firms exporters of soap also will be faced
with increased competition level in the middle term, especially from USA companies.
Additionally, they will face greater competition in the local market, both of Guatemalan
companies and companies in Honduras and the USA Entrepreneur women who were
interviewed are aware of these new challenges, but are clear that survival in the market will

31. depend on the competitive capabilities that established by the companies, especially in the
differentiation of products by ecological and social characteristics.
In the case of green coffee is not expected that exporters Honduran firms see a much higher
level of competition in the middle term, because the USA is not a producer of that item.
What it is fearaed is that increased competition of more elaborated coffees come to compete
in the domestic market. But strictly for green coffee, other international market conditions
give rise to opportunities and challenges, and not exactly the changes since CAFTA. In this
sense, FTA seems very neutral.
The greater openness that CAFTA will imply for Honduran companies that produce cashew
nuts will be facing a greater level of competition, especially from USA companies. It also
appears that they will have to face greater competition in the local market, companies both
Guatemalan and Honduran as well as the USA Entrepreneur women that were interviewed,
in reality do not see these threats and, conversely, which arises as barriers are the high costs
provided by their suppliers and the high costs that means not having all the technological
advances necessary.
In the case of hooks produced in Nicaragua, the opening in the USA does not seem very
significant to drastically change the situation. However, some advantages open since
CAFTA, because tariffs for other countries with which that country has no trade
agreements, are maintained at 4%. The business of export hooks sees it as a great
opportunity to merge.
Nicaraguan firms exporting cotton fabrics will be faced with increased competition level in
the short term in their target markets in other Central American countries. Also face greater
competition in the local market, both USA companies and other Central American
countries. It is expected favorable conditions in the markets of other countries in the region,
because the tariff changes will be greater in those countries compared to those who must
make Nicaragua. Imports from the USA have been in itself very high, and with a greater
degree of openness in the middle term, it creates the challenge of facing the advantages
acquired by USA companies. However, this item is widely used as feedstock for other
items that are subsequently exported to the USA, so it can also be a chance to place a
greater proportion of goods in the domestic market.
Costa Rica is not an importer of anthuriums, so it is difficult to predict, even with market
liberalization, that there will be dramatic changes of the local market in order to be
attractive to foreign companies to locate their production. We can predict that the total
opening in the USA generates more opportunities, although the reduction of tariffs is just
4%. In the case of orchids, it is difficult that with market liberalization drastical changes
take place. However, it is clear that will face higher level of competition, and indeed USA
companies gain more advantage to export to Costa Rica. However, local market size is not
large, and most of the produce is exported, it seems that FTA rather opens up new
opportunities. The producers of anthuriums and orchids have been able to compete in the
current conditions, so the possibility of continuing exporting is improved, and still depends
on the competitive capabilities of enterprises, focussing primarily on producing quality and
efficiently. This is what opinion prevails as to the women interviewed.