Factors that influence the survival of micro and small enterprises in Brazil

Abstract

Purpose: This article studies which sets of variables, besides credit and profitability, influence the survival of micro and small enterprises (MSE) over time. Originality/value: This study innovates in presenting independent variables related to a common objective, contributing to the literature by identifying factors, including financial ones, that can influence MSE survival in a single model, which has not yet been identified in the literature. Therefore, acquiring knowledge that stimulates changes in the behavior of entrepreneurs, public authorities, stakeholders, and private institutions related to the subject is expected to promote the creation of new management tools, which can decrease the closure of several MSEs within a short time of operation. Design/methodology/approach: Secondary data from the 26 Brazilian states and the Federal District relative to the period between 2008 and 2012 were used. Reduced equation models with estimation utilizing a Tobit were used, as the dependent variable is censored, in addition to the OLS method with fixed effects panel and robust error, with equivalent results. The factor analysis by the principal component method (FA-PCM) was used in the data analysis. Findings: The results showed significant factors for MSE survival, such as the need for employment and income, investments in health, access to financing, and, mostly, the importance of education, among others. Moreover, the study demystifies that the leading cause of MSE death is the lack of credit, as there is too much credit on the market, either through banks or investors.