Structural relationships among critical failure factors of microbusinesses

Abstract

Purpose The premature closure of microbusinesses has become a prevalent issue that demands to be seriously addressed due to the major economic contribution it provides particularly to developing countries. The purpose of this paper is to establish and further analyze a set of critical failure factors (CFFs) that aid in the systematic decision-making and strategic management of stakeholders. Design/methodology/approach A comprehensive literature review is conducted to gather CFFs and an interpretative structural modeling with Matriced’ Impacts Croise’s Multiplication Appliquée a UN Classement (ISM-MICMAC) analysis is applied to investigate the structural relationships among CFFs by extracting its inherent characteristics according to its driving power and dependence power. In order to illustrate the methodology, a case study is conducted in Cebu, the Philippines. Findings It is interesting to note that inadequate government programs information is deemed the most crucial for stakeholders to tackle as its impact on the premature closure of microbusinesses is highly significant. Drawing from this key result, directions for potential strategies for getting evidence-based research into policy and practice in the micro-business sector in the Philippines, and other developing countries, are provided. Originality/value Lastly, the contribution of this work is two-fold and is aimed at policymakers and managers. For one, this study is the first to establish a set of CFFs specifically aimed at the level of microbusinesses, a seriously under-researched business sector, which can aid and influence domestic policymakers. For another, a framework that will facilitate business managers in carrying out organization’s strategy development process have been provided.