Barriers and potential solutions for MSMEs in developing economies: Evidence from India

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Micro, small and medium enterprises (MSMEs) have emerged as an accelerator of economic growth with a sizeable contribution in job creation, innovation development, and reduction of regional disparities in most world economies. This paper investigates the influence of external and internal factors affecting the growth of MSMEs in poor-performing Bihar state, India. The objective of the study is to identify the major deep-rooted causes for the inability of MSMEs to compete in developing states and identify potential solutions. The study is based on an empirical database; it tested various dimensions of MSMEs barriers in their potential growth. The target group included MSMEs of Bihar state, India, using a sample of 450 entrepreneurs. The paper adopted a multistage stage sampling and multivariate analysis technique. The results showed that there are twelve major potential barriers, both endogenous and exogenous, faced by MSMEs, such as availability of raw materials, financial issues, labor force challenges, technology inefficiency, power/electricity scarcity, poor marketing, competition, knowledge-related challenges, government and administration problems, infrastructure inefficiency, etc. The findings show that these barriers affect the promotion and growth of MSMEs in developing regions. In future, it is suggested to focus on the implementation of good governance that helps to remove effectively the major barriers of MSMEs in underdeveloped states, such as Bihar, India.

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    • Table 1. Conceptual literature review
    • Table 2. Demographic characteristics
    • Table 3. Raw material challenges
    • Table 4. Financial challenges
    • Table 5. Human resource challenges
    • Table 6. Technology challenges
    • Table 7. Power supply challenges
    • Table 8. Marketing challenges
    • Table 9. Road and transportation challenges
    • Table 10. Competition challenges
    • Table 11. Knowledge-related challenges
    • Table 12. Government and administrative challenges
    • Table 13. Management-related challenges
    • Table 14. Other related challenges
    • Table 15. Rank of major challenges
    • Table 16. Multivariate ANOVA test results
    • Conceptualization
      Bishwajeet Prakash
    • Data curation
      Bishwajeet Prakash
    • Formal Analysis
      Bishwajeet Prakash
    • Investigation
      Bishwajeet Prakash
    • Methodology
      Bishwajeet Prakash
    • Software
      Bishwajeet Prakash
    • Writing – original draft
      Bishwajeet Prakash
    • Project administration
      Indrajit Kumar
    • Resources
      Indrajit Kumar, Jainendra Kumar Verma
    • Validation
      Indrajit Kumar, Jainendra Kumar Verma
    • Visualization
      Indrajit Kumar, Jainendra Kumar Verma
    • Supervision
      Jainendra Kumar Verma
    • Writing – review & editing
      Jainendra Kumar Verma