Why MSMEs fail to grow? Internal failure factors in Namibia’s manufacturing sector

Abstract

This study investigated the internal failure factors that affect the growth of manufacturing Micro, Small and Medium Enterprises (MSMEs) in Namibia. Using a quantitative, cross-sectional research design, data were collected from 298 owner-managers of registered manufacturing MSMEs using a structured questionnaire. Internal failure factors were conceptualised in four dimensions: managerial and strategic failure, financial and performance-related failure, capability and innovation failure and relational and sustainability failure. Correlation and multiple regression analyses were used to determine the relationship between these internal failure factors and growth of MSMEs. The results showed significant negative relationships between the managerial and strategic failure, financial and performance-related failure, capability and innovation failure and MSME growth. Regulatory and sustainability failure had a negative correlation with growth but no significant predictive effect in the regression model. Overall, the findings indicated that internal deficiencies within the firm are critical to the growth constraints on MSMEs. The study recommends strengthened managerial skills, adoption of flexible financial practices, and promotion of incremental innovation aligned with firm capacity to improve growth outcomes. Implications highlight targeted MSME support policies; contribution advances internal failure theory; future research should explore longitudinal and sector-specific dynamics influencing MSME growth in developing economies.