A comparative study of problems encountered in the development of small businesses in the U.S. and Mexico

John P. Hayes, Sudhir K. Chawla and Yunus Kathawala ()
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Yunus Kathawala: Gulf University for Science & Technology, Kuwait

Journal of Developing Areas, 2015, vol. 49, issue 3, 395-406

Abstract: The U.S. economy depends on the health of small businesses, which represent 99.9 percent of total U.S. businesses. Similarly, the Mexican economy depends on the health of its small (and medium) businesses, which represent 99.8 percent of total Mexican businesses. Small business creation and success is important to developed and developing countries, but risky. Studies have examined problems and opportunities created by small businesses. This paper examines problems and challenges faced by small businesses in Mexico and the USA. While these problems and challenges are similar in both countries, some important distinctions need to be identified. This is an important topic because small businesses that do not recognize which problems to avoid may quickly fail. Researchers noted there is no simple pattern for success among small businesses; there’s no general theoretical framework for success. Certain issues impacting small businesses have been identified as critical success factors (CSFs). The literature review of CSFs was used to develop the instrument for this study. The methodology was identical for both the U.S. and Mexico studies and included focus groups with business owners in the United States and Mexico. The business owners represented different businesses and identified common problems faced by their businesses. Problems uncovered in the focus groups were included in a survey instrument, which ultimately identified 29 key business problems. The survey instrument examined small business owners’ perceptions of current key problem areas. The 29 items presented to the small business owners in Mexico were identical to the 29 items presented in the U.S. survey. Factor analysis was used in an exploratory manner to analyze the interrelations among the 29 key business problems. The study’s findings indicate that the small business owner is a key participant among a complex set of interrelated factors including the availability of capital, adequate human resources, governmental organization and relations, and strategic planning. The issues that impact small business development in the U.S. are very similar to the issues that impact small business development in Mexico, but there are some critical differences. The study revealed a significant difference between the factor structure of the problem areas as perceived by Mexican entrepreneurs and U.S. entrepreneurs. Small business owners, business advisors and government facilitators may benefit from this knowledge as they develop companies in these countries. The Mexican government may consider a special program to provide micro loans and also encourage formation of cooperatives according to business clusters.

Keywords: Small Business; Comparative Study; Business Problems and Opportunities; Critical Success Factors; Mexico; United States (search for similar items in EconPapers)
JEL-codes: L2 (search for similar items in EconPapers)
Date: 2015
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