Inderscience Publishers

Influences on the survival and failure of small firms in Malaysia

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Courtesy of Inderscience Publishers

Logit regression is employed on 320 recipients of loans from the Malaysian Youth Economic Trust Fund to identify factors associated with whether they 'survived', defined as fully repaid their loans or 'failed', defined as being rendered involuntarily insolvent as a result of non-repayment. Explanatory variables are measures of human and social capital, motivation, location and types of strategy. Firm age and size are employed as controls. All variables have the expected sign except age and all have a high level of statistical significance, except level of education. Product differentiation appears the most important factor for survival.

Keywords: small firms, business survival, business failure, firm performance, Malaysia, globalisation, loans repayment, involuntary insolvency, human capital, social capital, motivation, location, strategy, product differentiation

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