Entrepreneurial failure in new MSMEs: A qualitative approach to explore the different dimensions of the phenomenon

Abstract

In Morocco, as elsewhere, it is clear that the creation of new businesses has become an effective alternative in the fight against unemployment and insecurity.  According to the High Commission for Planning (HCP), 93% of the economic fabric is made up of SMEs (HCP, 2019).

Despite the efforts made by successive governments to support young entrepreneurs, the survival rate of newly created businesses remains low. Barely 73% make it past the first year, 48% make it past 3 years, 32% make it past 5 years, and barely 6% of businesses are still active 10 years after their creation (CRI de Casablanca-Settat, 2018).

The first years of the existence of a new firm were studied very early by theorists of firm development (Thierry & Bertrand, 2006), who saw them as a preliminary stage leading to later phases marked by entrepreneurial success or failure. Studying why some entrepreneurs in newly created firms succeed and others do not be one of the fundamental questions of entrepreneurship research.

In this article, we have tried to elucidate the factors, both endogenous and exogenous, that explain entrepreneurial failure in newly created SMEs. To do so, we conducted a qualitative exploration in articulation with the theoretical corpus. This qualitative exploration is based on individual semi-directive interviews, with 20 entrepreneurs, articulated around three dimensions: the entrepreneurial context, the resources mobilized by the entrepreneur and the entrepreneur himself.

The results obtained showed that entrepreneurial failure is the result of the interaction of several factors from the three dimensions, with the predominance of one dimension over the others. Indeed, the environmental constraints inherent to the entrepreneurial context remain as the most dominant dimension in the explanation of failure, followed by the lack of resources in terms of skills, training, experience, financial capital and network. On the other hand, the predominance of the "motivation and entrepreneurial commitment" dimension remains to be qualified in the explanation of business failure.

JEL Classification : M13

Paper type: Empirical research.