Abstract
Purpose:
The goal of this paper is to characterize the economic and financial management (EFM) practices in Mexican micro-enterprises and determine their impact on business performance under the hypothesis that EFM practices focused on achieving the optimal level of liquidity and profitability positively affect the performance of micro-enterprises.
Design/methodology/approach:
The study applies factor analysis, including both exploratory and confirmatory techniques, as well as linear regression models.
Findings:
The econometric analysis shows that both economic and financial management are statistically significant in explaining micro-enterprise performance, although only the effect of the latter is positive, whereas that of the former is negative.
Originality/value:
The paper’s findings could guide training and microcredit programs focused on micro-enterprise owners in developing countries and help to improve decision-making processes.
Keywords:
micro-enterprises; economic management; financial management
