Explaining the survival of Small and Medium Enterprises in Morocco by context variables: Structural equation modeling

Abstract

Business failures in an African context were reported to have affected more than 14,200 companies in Morocco in 2023, representing a 15% increase compared to 2022, according to the daily Le Matin du Sahara et du Maghreb in its October 19 edition. This annual figure marks a record high for Morocco. The number of business failures is expected to rise due to payment difficulties, particularly encountered by small and medium-sized enterprises (SMEs), as noted by the credit insurer. To understand the mechanisms that either support or hinder the sustainability of SMEs, it is crucial to investigate the impact of development context variables on their survival. SMEs are recognized for their vital role in innovation, job creation, and economic growth, positioning them as an essential component of the global economy. However, their long-term viability remains uncertain, especially in volatile or rapidly changing economic environments. In this study, the effectiveness and impact of contextual variables on the survival of Moroccan SMEs are analyzed, with a focus on presenting a directory of government support programs, including subsidies, loans, guarantees, equity investments, land access, tax support, and public procurement initiatives. Data were collected through a questionnaire administered to 98 SMEs and analyzed using structural equation modeling. The analysis reveals that specific variables (such as human and non-human resources, and the management of negotiating power regarding payment terms), as well as external environmental factors (notably the country’s legislative and regulatory framework), positively affect the survival of SMEs in Morocco. However, no significant impact was found between general environmental variables (such as the flexibility of trade regulations and technological vigilance) and SME survival. These findings contribute to the existing literature on SME failures, offering valuable insights to SMEs about the range of available support programs and providing socio-economic stakeholders with prospects for better managing the phenomenon of SME failure.