An exploring analysis of the causes of msmes failure

Abstract

This paper investigates the factors contributing to the failure of MSMEs (Micro, Small, and Medium Enterprises) in Argentina. A framework based on a fuzzy model of business diagnosis is proposed to assess through experts´ opinions the impact of these factors and to identify the most significant causes of business failure. The causes are categorized using OWA operators into critical monitoring areas, allowing for comprehensive diagnosis and early detection of firm issues. As a result, the source of the problems faced by MSMEs, which are often invisible to experts, can be identified for the design of public policy programs to preventing insolvency situations and bankruptcies. The results confirm the importance attributed by experts to limited resources, financial issues and logistical and marketing skills as internal strengths to avoid failure. Additionally, the prevalence of external causes in comparison to internal ones in the context of the study emphasizes the significance of exogenous factors in firms' trajectories. These results show that in period of global shocks, quick government assistance measures are important for the survival of small businesses.