Small Firm Death in Developing Countries

McKenzie, David; Paffhausen, Anna Luisa

doi:10.1596/1813-9450-8236

Cited by 14 publications

(10 citation statements)

References 3 publications

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“…Developing countries, for example, design programs to finance micro‐enterprises to ensure that the enterprises reach their goals and become successful ventures (Berrone et al., 2014). McKenzie and Paffhausen (2019) agree with the notion that small firms are an important source of income, especially for developing countries. Their significance is seen in the way micro‐firms add value to a country's economy through job creation, enhancing citizens' income, strengthening the citizens' purchasing power, and adding business convenience.…”

Section: Micro‐enterprises Market Orientation and Business Performancementioning

confidence: 88%

Enhancing the performance of micro‐enterprises through market orientation: Evidence from Harare, Zimbabwe

Chikerema¹,

Makanyeza²

2021

Glob Bus Org Exc

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In most developing economies, micro‐enterprises provide an important source of jobs and make a major contribution to economic growth. However, many of these businesses struggle and often fail within a short space of time. This study was conducted to understand the extent to which micro‐enterprises have implemented market orientation, the effect of market orientation and its associated dimensions on performance, and the influence of a manager's individual characteristics on the relationship between market orientation and performance. Data were collected from a cross‐section of 342 managers of micro‐enterprises, which were randomly selected from local industries in Harare, the capital of Zimbabwe. The results show that competitor orientation, inter‐functional coordination, and market orientation each had a significant positive effect on performance. However, it was also found that managers' characteristics—gender, age, and education—did not moderate the effect of market orientation on performance. The results indicate that micro‐enterprises should embrace market orientation to improve their performance.

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Section: Micro‐enterprises Market Orientation and Business Performancementioning

confidence: 88%

Enhancing the performance of micro‐enterprises through market orientation: Evidence from Harare, Zimbabwe

Chikerema¹,

Makanyeza²

2021

Glob Bus Org Exc

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“…But this incomplete take-up of the training lowers statistical power, making it harder to detect training impacts. Second, small firms in developing countries die at an average rate of 8.2 percent per year, so that half of the firms operating at a given point in time will die within the next six years (McKenzie and Paffhausen, 2019). Some researchers code firms that die as having zero profits, while others report results conditional on survival, which can introduce the potential for bias if training changes how many or which firms survive.…”

Section: ) What Does the Experimental Evidence Of The Impacts Of Business Training Showmentioning

confidence: 99%

Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work’

McKenzie

2021

Oxford Review of Economic Policy

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Despite the popularity of business training among policy-makers, its use has faced increasing scepticism. Most of the first randomized experiments could not detect statistically significant impacts of training on firm profits or sales. I reassess the evidence for whether small business training works, incorporating more recent results. A meta-analysis of these estimates shows that training increases profits and sales on average by 5–10 per cent. This is in line with what is optimistic to expect, but impacts of this magnitude are too small for most experiments to detect. I then discuss five approaches for improving the effectiveness of traditional training by incorporating gender, kaizen methods, localization and mentoring, heuristics, and psychology. The challenge is then how to deliver a quality programme on a cost-effective basis at a much larger scale. Three possible approaches to scaling up training are discussed: using the market, using technology, or targeting and funnelling firms.

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“…Finally, the high exit rate of young entrepreneurs is well documented in the existing literature (McKenzie and Paffhausen, 2018). This paper helps explain this fact using the perspective of management human capital: if young firms, on average, have inexperienced managers then they are unlikely to perform well in the face of changing risks and opportunities.…”

Section: Introductionmentioning

confidence: 77%

Terrorism Risk and the Mediating Role of Manager Experience: Empirical Evidence*

Mazhar

2021

Asian Economic Journal

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Firms in developing countries face security risks and suffer from weak institutional support. In theory, managerial talent is pivotal in firms' assessment of external risks and implementing operational changes in response. Using managers' experience as a proxy for managerial talent, this study estimates its mediating role in determining firms' security costs in a threatened environment. The study uses survey data from 1700 formal firms covering 13 sectors and 17 locations in Pakistan. The nonlinear effects are estimated at different percentiles of the distribution of managerial experience. The main finding is a positive effect of the risk of terrorism on firm security costs, which is decreasing in managerial experience. This effect is robust against alternative specifications. The issue of endogeneity of the variables of interest is tackled using the instrumental variables approach. The implications and limitations of the findings are noted.

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Small Firm Death in Developing Countries

Cited by 14 publications

References 3 publications

Enhancing the performance of micro‐enterprises through market orientation: Evidence from Harare, Zimbabwe

Enhancing the performance of micro‐enterprises through market orientation: Evidence from Harare, Zimbabwe

Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work’

Terrorism Risk and the Mediating Role of Manager Experience: Empirical Evidence*

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