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The hazards of small firms in Southern Africa

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  • Michael McPherson

Abstract

Small enterprises are a ubiquitous feature of the economies of many developing countries. This study is the first to examine the duration of their survival using economic theory and modern econometric techniques. Using data sets from surveys conducted in four southern African countries, I estimate a proportional hazards model describing the closure rates of a sample of approximately 21,000 firms. There is an inverse relationship between enterprise growth rates and the closure hazard. The sector where it operates influences the hazard, as does its location. In some countries female‐headed firms are at a survival disadvantage compared to their male counterparts.

Suggested Citation

  • Michael McPherson, 1995. "The hazards of small firms in Southern Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 32(1), pages 31-54.
    • Handle: RePEc:taf:jdevst:v:32:y:1995:i:1:p:31-54
    DOI: 10.1080/00220389508422400
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    1. Liedholm, Carl & Mead, Donald C., 1987. "Small Scale Industries in Developing Countries: Empirical Evidence and Policy Implications," Food Security International Development Papers 54062, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Liedholm, Carl & Parker, Joan Chamberlin, 1989. "Small Scale Manufacturing Growth in Africa: Initial Evidence," Food Security International Development Working Papers 54738, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Mead, Donald C., 1994. "The contribution of small enterprises to employment growth in southern and eastern Africa," World Development, Elsevier, vol. 22(12), pages 1881-1894, December.
    4. Parker, Joan Chamberlin, 1989. "Exploring Firm Dynamics: The Case Of Small-Scale Manufacturing In Africa," Graduate Research Master's Degree Plan B Papers 11055, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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    1. Marcelo Resende & Vicente Cardoso & Luis Otávio Façanha, 2016. "Determinants of survival of newly created SMEs in the Brazilian manufacturing industry: an econometric study," Empirical Economics, Springer, vol. 50(4), pages 1255-1274, June.
    2. David McKenzie & Anna Luisa Paffhausen, 2019. "Small Firm Death in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 645-657, October.
    3. Homi Katrak, 1999. "Small-scale enterprise policy in developing countries: an analysis of India's reservation policy," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(5), pages 701-715.
    4. Taye Mengistae, 2006. "Competition and entrepreneurs' human capital in small business longevity and growth," Journal of Development Studies, Taylor & Francis Journals, vol. 42(5), pages 812-836.
    5. Getahun Fenta Kebede, 2018. "Social Capital and Entrepreneurial Outcomes: Evidence from Informal Sector Entrepreneurs in Ethiopia," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 27(2), pages 209-242, September.
    6. Inessa Love & Boris Nikolaev & Chandra Dhakal, 2024. "The well-being of women entrepreneurs: the role of gender inequality and gender roles," Small Business Economics, Springer, vol. 62(1), pages 325-352, January.
    7. Vijverberg, WimP. M. & Haughton, Jonathan, 2002. "Household enterprises in Vietnam : survival, growth, and living standards," Policy Research Working Paper Series 2773, The World Bank.
    8. Getahun Fenta Kebede, 2020. "Network Locations or Embedded Resources? The Effects of Entrepreneurs’ Social Networks on Informal Enterprise Performance in Ethiopia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(2), pages 630-659, June.
    9. Janvier D. Nkurunziza, 2005. "Credit Can Precipitate Firm Failure: Evidence from Kenyan Manufacturing in the 1990s," Economics Series Working Papers WPS/2005-04, University of Oxford, Department of Economics.
    10. Gebregziabher, Kidanemariam & Hadush, Muuz & Gebremichae, Meaza, 2022. "How Long Micro and Small Enterprises Do Wait to Graduate? Empirical Evidence from Duration Analysis in Ethiopia," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(2), pages 39-65, June.
    11. Talat Mahmood, 1998. "Survival of Newly Founded Businesses: The Post-Entry Performance," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 577-594.
    12. Joseph Andrew Kuzilwa, 2005. "The Role of Credit for Small Business Success," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 14(2), pages 131-161, September.
    13. Nagler,Paula & Naude, Wim & Nagler,Paula & Naude, Wim, 2014. "Non-farm enterprises in rural Africa : new empirical evidence," Policy Research Working Paper Series 7066, The World Bank.
    14. Riadh Ben Jelili, "undated". "Firm Heterogeneity and Productivity: The Contribution of Microdata," API-Working Paper Series 1013, Arab Planning Institute - Kuwait, Information Center.
    15. Fardous Alom & Moha Asri Abdullah & Abdul Rashid Moten & S. M. Ferdous Azam, 2016. "Success factors of overall improvement of microenterprises in Malaysia: an empirical study," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 6(1), pages 1-13, December.
    16. Nagler, Paula & Naudé, Wim, 2017. "Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence," Food Policy, Elsevier, vol. 67(C), pages 175-191.
    17. Monibo A. Sam, 2007. "Surviving the years of infancy: longevity among small firms in Nigeria, 1971-1997," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1023-1042.
    18. Burki, Abid A. & Terrell, Dek, 1998. "Measuring production efficiency of small firms in Pakistan," World Development, Elsevier, vol. 26(1), pages 155-169, January.
    19. Sonali Deraniyagala & Ben Fine, 2000. "New Trade Theory Versus Old Trade Policy: A Continuing Enigma," Working Papers 102, Department of Economics, SOAS University of London, UK.
    20. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.

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