International Journal of Economic Research 09/2011; 2(5):82-89.


The study seeks to establish the major causes of Small and Medium Enterprises (SMEs) failure in Zimbabwe. Basing on a case study for Bindura, Ordinary Least Squares (OLS) estimation criteria was employed to estimate the change in return on investment function which was used as proxy for SME failure. Data were gathered through formal and informal interviews, questionnaires and focus group discussions with SMEs which were randomly selected from different clusters representing different industries. Results showed that lack of general knowledge on business management, unavailability of credit, import competition and high cost of raw materials are the major causes of SME failure in Zimbabwe.

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    • "Causes of failure of new SMEs Mudavanhu et al. (2011) "
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    ABSTRACT: New small and medium enterprises (SMEs) are an important vehicle to address the challenges of job creation, sustainable economic growth, equitable distribution of income and the overall stimulation of economic development. New SMEs suffer from a high failure rate in South Africa. The high failure rate of new SME paints a bleak picture of the SME sector’s potential to contribute meaningfully to job creation, economic growth and poverty reduction. The primary objective of this study was to determine the causes of the failure of new SMEs. The review of the literature revealed that the causes of the failure of new SMEs are both internal and external. Internal factors include lack of management experience, lack of functional skills and poor staff training and development and poor attitudes towards customers. External factors include non-availability of a logistics chain and a high cost of distribution, competition, rising costs of doing business, lack of finance and crime. © MCSER-Mediterranean Center of Social and Educational Research.
    Mediterranean Journal of Social Sciences 09/2014; 5(20). DOI:10.5901/mjss.2014.v5n20p922