Modeling and Analysis of Business Failures: Application to Moroccan SMEs

Abstract

Business failure is undoubtedly one of the most raised issues in the field of business management. Small and medium-sized enterprises (SMEs) play an important economic role in many countries, especially in developing countries. In Morocco, for example, they make up more than 90% of Moroccan companies and contribute around 50% to job creation and considerably to value-added. But despite this, most of them are at risk of default and there is very little research and empirical research on this topic in Morocco, as in many developing countries. This work aims to contribute to the understanding of the determinants of business failure using the chi-square independence test. The goal is to explain but also to explain a methodology that can be applied to explain business failures by determining their internal factors. Our empirical results seem to support the claim that the main cause of such failures lies in the absence of a strategic vision and managerial knowledge and culture among SME managers.