Socio-economic influences on small business performance in Nepal–India open border: Evidence from cross-sectional analysis

Abstract

Small business performance in open border is uncertain. Nevertheless, understanding it helps to explore socio-economic factors affecting national and regional cross-border business activities. This study analyzes small business activities exploiting Psychic Distance Approach theory and econometric analysis with Logit model in 372 respondents involved in small business from Sunauli, Nepal-India border. The results indicate that the probability of influence of border side small business activities is higher with open border access, blockade and agitation in border area, communication access and homogeneity in customs, costumes and family management. Further, factors such as year(s) of business operation, family and business residing the other side of the border, annual income from the business, tax-evasion goods and use of agents to import goods substantially affect small business performance in open border region. Therefore, open border requires increase in cooperation, facilitation for cross border purchase, enhancement of appropriate market information and communication, proper regulation and monitoring at border point in strengthening and enhancing healthy cross-border small scale business performance.