Why businesses succeed or fail: a study on small businesses in Pakistan

Abstract

Purpose – The aim of this paper is to examine the factors that lead to either success or failure of small firms in Pakistan. Design/methodology/approach – This study methodology is a survey research applying the Lussier Model of business success and failure with a sample of 143 small businesses to better understand the reasons of their success or failure using logistic regression statistical analysis. Findings – Results indicate that business planning, proper employee staffing, adequate capital inflows and partnerships are important for the viability and success of small businesses in Pakistan. Practical implications – Results provide further support for the validity of the Lussier Model in Pakistan and globally. Thus, small business owner/managers can use the model to help improve their chances of success and to avoid failure. Other stakeholders, including parties that assist and advise them, investors and institutions who/that provide them with capital and other resources and communities and society by and large, can also benefit from this model. The results and discussion also provide information to assist public policymakers in developing programs to support small business development. Originality/value – This is the first study on success and failure of small businesses in Pakistan. With the great discrepancy in the literature as to which variables, in fact, distinguish success from failure, there is no accepted theory. Thus, this study contributes to the literature to better understand why some businesses succeed and others fail, and it supports the use of the Lussier Model globally.