MECHANISMS FOR POVERTY REDUCTION THROUGH THE DEVELOPMENT OF SMALL BUSINESS AND FAMILY ENTREPRENEURSHIP IN THE SERVICE SECTOR

Abstract

This study examines mechanisms for reducing poverty through the development of small businesses and
family entrepreneurship in the service sector. The service sector plays an important role in increasing household incomes,
creating employment opportunities, and promoting inclusive economic growth due to its relatively low capital requirements
and high labor intensity. Based on theoretical analysis and empirical observations, the study develops a conceptual
model explaining the relationship between access to resources, entrepreneurial activity, employment generation, income
formation, social welfare improvement, and poverty reduction.
The study identifies six interrelated stages of the poverty reduction mechanism: expanding access to resources,
establishing entrepreneurial activities, increasing employment, generating and stabilizing incomes, improving social
welfare, and reducing poverty levels. Furthermore, the research highlights the importance of institutional support,
digitalization, human capital development, and market infrastructure as external factors influencing the effectiveness of
the proposed model.
The findings indicate that strengthening small businesses and family entrepreneurship in the service sector can serve
as an effective instrument for sustainable poverty reduction and regional socio-economic development. The proposed
model may be applied in designing regional development policies and poverty alleviation programs, particularly in
developing economies.