Small Business Determinants of Performance in Mexico: An Empirical Study

Abstract

What determines performance among small businesses with five employees or less in Mexico? Based on a conceptual framework already used in Argentina and on previous research, a sample of 174 Mexican entrepreneurs from two different states (Jalisco and Nuevo León) was used to test a set of nine hypotheses. The dependent performance variables tested were an objective one, sales, and a subjective one, the personal assessment of performance (or success) of entrepreneurs. The independent variables considered included personal, sociological, and organizational characteristics. Results were obtained from two linear regression models on the two dependent variables. In terms of personal characteristics, variables that were positively related to sales included three Human Capital components (Education level, Business experience, and Weekly hours worked), having been pushed into self-employment by economic necessity, and belonging to the male gender. Regarding organizational variables, entrepreneurs with higher sales had obtained bank loans and had purchased their business (by opposition to starting it from scratch) and had economic necessity (extrinsic) reasons to be in business. Respondents who worked long hours and had obtained government support were more likely to be more satisfied of their own performance than others.

Full text

Small Business Determinants of Performance in Mexico: An Empirical Study
Yves Robichaud
Full Professor, Department of Accounting
Faculty of Management, Laurentian University
Ramsey Lake Road
Sudbury, Ontario, Canada, P3E 2C6
Tel.: (705) 675-1151 ext. 2145
yrobichaud@laurentienne.ca
Jean-Charles Cachon
Full Professor, Department of Marketing and Management
Faculty of Management, Laurentian University
jccachon@laurentian.ca
Egbert McGraw
Professeur titulaire, Département de comptabilité
Faculté d’administration
Université de Moncton
Moncton, N.-B., Canada, E1A 3E9
Tel.: (506) 858-4228
Mcgrawe@umoncton.ca
Cite as:
Robichaud, Yves, Cachon, Jean-Charles, and Egbert McGraw. 2021. Small Business
Determinants of Performance in Mexico: An Empirical Study. Iberoamerican Journal of
Entrepreneurship and Small Business. July 2021 https://doi.org/10.5281/zenodo.5069027
ABSTRACT
What determines performance among small businesses with five employees or less in Mexico? Based
on a conceptual framework already used in Argentina and on previous research, a sample of 174
Mexican entrepreneurs from two different states (Jalisco and Nuevo León) was used to test a set of
nine hypotheses. The dependent performance variables tested were an objective one, sales, and a
subjective one, the personal assessment of performance (or success) of entrepreneurs. The
independent variables considered included personal, sociological, and organizational characteristics.
Results were obtained from two linear regression models on the two dependent variables. In terms of
personal characteristics, variables that were positively related to sales included three Human Capital
components (Education level, Business experience, and Weekly hours worked), having been pushed
into self-employment by economic necessity, and belonging to the male gender. Regarding
organizational variables, entrepreneurs with higher sales had obtained bank loans and had purchased
their business (by opposition to starting it from scratch) and had economic necessity (extrinsic)
reasons to be in business. Respondents who worked long hours and had obtained government support
were more likely to be more satisfied of their own performance than others.
Keywords: Determinants of performance, Entrepreneurship, Economic necessity, Entrepreneurship
in Mexico, Urban entrepreneurs.

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1. INTRODUCTION
Small and medium-sized firms (SMEs) play a major role in Mexico’s economy, both in terms of job
creation and gross domestic product (GDP). As of 2017, there were about four million businesses
in the country, of which 99.8 percent were SMEs, and 95 percent small businesses with one to ten
employees. These SMEs’ sales represented 52 percent of the national GDP, and 72 percent of
employment (OECD, 2018). On a world scale, Mexico has had one of the highest total
entrepreneurial activity rates (TEA), equal to 25 percent in 2015 (Kelley, Singer and Herrington,
2016). There is also a strong interest in entrepreneurship among the youth, with almost 30 percent
of the country’s entrepreneurs being aged from 16 to 24, and the average age among all
entrepreneurs equal to 33.5 (Bosma et al., 2007). Mexico has generally been very dynamic in terms
of business creation.
Mexico’s economy is oriented towards exports to the United States and Canada, these two
countries representing 80 percent of total Mexican exports (CIA World Fact Book, 2020).
Mexico’s proximity to the United States and its participation in the USMCA (formerly NAFTA),
as well as to 12 free-trade agreements with 46 countries represent considerable opportunities for
90 percent of its exports (CIA, 2020; Shikher et al., 2019; Villarreal, 2017). Meanwhile, labor
costs increases combined with expected long-term consequences of the COVID-19 crisis started a
trend of relocations (reshoring) towards Mexico as part of recent supply chain de-risking efforts
(Price, Waterhouse, Coopers, 2020). In 2017, USMCA countries represented 14 percent of world
exports and 19 percent of imports. Notably, Mexico exported for $299 billion in goods to the
United States in 2017 (Shikher et al., 2019) and was the third exporter to that country after China
($505 billion) and Canada ($314 billion).
In general, Mexico has achieved significant progress in terms of entrepreneurship, resulting in part
from the determination of the federal government to foster self-employment following the 2007-
2009 financial crisis. New policies created the short-lived (2013-2018) National Institute for the
Entrepreneur (INADEM): this agency created support programs and platforms such as the
Entrepreneur Support Network, which included 870 000 entrepreneurs in 2018 (GEM, 2019).
SMEs contribution to Mexican economy have therefore increased in recent years. A national
program to formalize employment in order to reduce informal activity resulted in the creation of
1.9 million jobs between 2013 and 2016 (GEM, 2019). During the 2010 to 2016 period, the early-
stage entrepreneurial rate or TEA grew from 10.5 percent to 21 percent, the second-highest level
in Latin America, subsequently the TEA rate had decreased to 13 percent by 2019 (GEM, 2020).
At the same time, labor productivity is still an issue in Mexico (GEM 2019; INEGI 2019). Cusolito
and Maloney (2018) observed that, in emerging countries, a majority of the self-employed have lower
numeracy and literacy skills, as well as lower management and technological capabilities, as
compared to what is required to assess and seize opportunities, or respond to foreign competitors.
INADEM (2018) reported an average life expectancy of 7.8 years for SMEs in the country, with a
failure rate of 70 percent within the first five years (Banco BASE 2019). INEGI (2019) also reported
that only 4.5 percent of the total contribute to international supply chains through exporting, even
though total contribution of SMEs to the national economy represented 78 percent of employment in
1978 (INEGI 2019).

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It is therefore important to understand how SMEs are founded and grow if the Mexican economy is
going to solidify, particularly in the post-COVID era. There are very few empirical studies reporting
on the factors influencing SMEs economic performance in Latin America. In this context, the aim of
this research was to answer the following question:
– Which variables could explain differences in economic performance observed among
SMEs in Mexico?
This research has been inspired to a large part by an exploratory model developed by Berrone et
al., (2014), and tested with a sample of 294 SMEs of five or less employees in Argentina. This
model integrates personal, sociological and organizational characteristics, as well as an
understanding of the critical importance of the entrepreneur in the creation process and the daily
decision-making. In turn, those decisions will be directly reflected in the firm’s performance. This
relationship is even more important given that our study is focussed on small firms with five or
less employees.
This study is contributing to knowledge in various ways : 1) It provides a conceptual framework
encompassing personal, sociological, and organizational variables to analyze the components of
small business performance in an emerging country; 2) Secondly, there is limited previous
knowledge about small business performance in emerging countries such as Mexico; 3) Finally,
results from this research will contribute to improving awareness about business performance
factors among practicing and future entrepreneurs, as well as among institutional decision-makers
such as capital risk investors, governments, and commercial banks. A sample of 174 Mexican
SMEs provided the empirical data for this project.
This article includes a presentation of the theoretical framework and research hypotheses, followed
by a description of the methodology applied during field work. Results are then reported as well
as conclusions, limits of this study, and possible policy and further research implications.
2. THEORETICAL FRAMEWORK AND HYPOTHESES
The research model is based on the principle that studying SME performance has to be focused on
its operator, i.e. the entrepreneur. This is justified by the core role of the entrepreneur in the daily
management of the firm. This observation brings theoretical support to the relevance of a direct
relation between the entrepreneur’s social and personal characteristics and the firm’s performance.
As mentioned in the introduction, variables under study were selected from Berrone et al., (2014),
with the addition of other organizational variables present in the literature. According to Barrett
and Rainnie (2002), it is important to consider variables relating to both the entrepreneur and the
organization in order to better understand business growth. Moreover, Cunningham and Maloney
(2001) mentioned that entrepreneurship research paid little attention to small business structure,
organization, and performance; This resulted in a limited understanding of the variables impacting
SMEs performance. The theoretical framework for this research is presented on figure 1. It
includes a mix of personal and social characteristics, as well as organizational variables.

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FIGURE 1
THORETICAL FRAMEWORK: PERFORMANCE FACTORS
*Variables added to the original model
Source: This model was derived in part from Berrone et al., 2014
The general idea of organizational performance refers to the fact that any organization strives to
achieve its goals by expending an acceptable level of resources while maintaining its long-term
viability. Other dimensions of performance relate to its ability to combine resources efficiently
while keeping its relevance as perceived by its stakeholders. That being said, the literature on
performance defines it as a more complex reality based on values and preferences that depend on
the organizational context: these contextual variables must be defined in order to allow a
measurement of performance (Nicholson, Schuller and Van de Ven, 1995). Due to the diversity of
organizational contexts and of the various viewpoints adopted by scholars from different
disciplines, performance issues are conceptualized in a variety of approaches. As a result, there is
no consensus about performance in terms of its scope, components, levels of analysis and the
conceptual underpinnings of its measurement (Ford and Schellenberg, 1982; Hubbard, 2009;
Franco-Santos, et al., 2007; García-Morales, Llorens-Montes, & Verdu-Jover 2007).
In fact, within a few decades the notion of performance has evolved from a strictly financial
perspective to a broader concept focused on achieving strategic goals in terms of improving the
‘cost-benefit’ ratio, including stakeholders’ interests taken into account in a long-term perspective
(Marchand and Raymond, 2008). Given SMEs’ specific characteristics, this situation is all the
more important as owner-managers, through their values, profile, goals, expectations, and the
social influences to which they are exposed, are necessarily influencing the definition and
measures of business performance (Raymond et al., 2013). For the purpose of this research, the
variables under study as well as the performance indicators selected are discussed in the following
sections.
Personal characteristics:
 Human capital
 Business creation by choice (pull) /
forced (push)
 Gender
Sociological characteristics:
 Family support / context
Performance
Organizational characteristics
 Access to funding
 Number of shareholders/partners*
 Government support
 Start up or acquisition*
 Rural versus urban

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2.1 Personal characteristics as determinants of performance
Human Capital
Human capital encompasses various dimensions as a concept, particularly professional training,
formal education, and prior knowledge and experience. These components of human capital can
contribute to higher salary incomes for professionals and to increased firm productivity (Becker,
1975). Investments in these areas increase employment productivity by fostering the development
of new skills and an improvement of existing practices. In order to reach an adequate level of
organizational performance, a firm must improve employees’ skills, by matching them with the
functions related to each position in accordance with the needs of the company and the
requirements of its customers. According to Gutiérrez-Diez, Sapién-Aguilar, & Piñón-Howlet
(2013), this requires well-defined goals and structured processes.
Human capital can also take more complex forms such as intergenerational skills transfers,
manifestations of entrepreneurial spirit, experience, reputation, assets, and other aspects
originating within the family, particularly through exposure to the business environment (Parker
and Robson, 2004). It has been argued that combinations of such transfers may be more impactful
on overall business performance than transfers of financial capital (Laferrère, 2001). These
perspectives give a prominent role to human capital as a determinant of business performance
regardless of size.
In Mexico, Ramirez-Urquidy, Texis, & Barceló (2014) analyzed the impact of human capital on
small business performance in Baja California State, in terms of formal education and experience.
They found that education levels had a strong relationship with the ability of a small firm to change
in terms of organization, equipment, and innovative products. A positive correlation was observed
between SME sales levels and education.
Mungaray and Ramirez-Urquidy (2007) observed a positive effect of formal education and
business management experience on SME productivity. Experience was also predominant in
relation to the long term longevity of the firm. Benefits from education materialize in particular
for technical education, while not being as wide-ranging as those gained from experience. Other
scholars reported that SMEs were more likely to survive when entrepreneurs have a higher level
of general formal education (Block and Wagner, 2010; Texis, Ramirez-Urquidy, & Barceló 2016).
However, tapping human capital potential in Mexican small firms is problematic. The inability of
business owners to pay competitive wages renders difficult the hiring of qualified skilled staff.
Research on graduates’ career choices revealed that many of them seemed to favour jobs within
large rather than small firms, the latter being perceived as unable to guarantee employment security
due to financial constraints (Moy and Lee 2002). Indeed, most small firms are not able to absorb
staff training costs, and those who do face the problem of the flight of qualified staff to large
employers offering higher compensation and better working conditions (Gutiérrez-Diez et al.,
2013; Ruiz-Conde, Ramirez Reyez, & Perez Dias 2012). The aforementioned literature led to the
following first hypothesis.
Hypothesis 1: Human capital has a positive impact on small business performance.

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Opportunity and Necessity Motives
The literature highlights a wide variety of entrepreneurial motives either economic (such as
providing an additional source of income) or non-economic (fulfilling a need to be independent).
A strong need for autonomy and independence among entrepreneurs is the most frequently
observed motive by scholars (Holmquist and Sundin, 1988; Carter and Cannon, 1992; Filion, 1997;
Statistics Canada, 2010; Adrien, Kirouac and Sliwinski, 1999). The desire to create one’s own job
in order to balance work and family has also been often cited by researchers on female
entrepreneurs as a reason for launching their own business (Birley, 1989; Brush, 1990; Holmquist
and Sundin, 1990; Duchéneaut and Orhan, 2000).
The Push and Pull categorization resulted from the observation that some people became
entrepreneurs out of necessity (lack of income due to job loss, frustration with their current job, or
need for more flexibility due to family reasons), while others were attracted into business venturing
by needs for autonomy, independence, self-actualization, challenge, and the chance to obtain better
financial gain. Scholars who studied this phenomenon suggest that business creation is a process
involving both types of motives. In emerging countries, recent research has shown that a majority
of entrepreneurs became self-employed by choice (Perry et al., 2007; Cachon et al., 2013; Falco
et al., 2015), even if recessions also caused unvoluntarily unemployed people to be pushed into
self-employment in Mexico and other economically similar countries (Fiess, Fugazza, and
Maloney, 2010).
As an example, a preliminary qualitative study by Hughes (2003) conducted among 61 female
entrepreneurs revealed that only 15.6 percent and 19.6 percent of the respondents respectively
cited a job loss and a lack of employment opportunity as the main reasons having motivated the
start-up of their company. The reasons most often cited were the search for a challenge, a positive
work environment, and the need for independence. However, during the interview, over one-third
of the respondents mentioned that economic constraints had played a role in their decision.
Caliendo and Kritikos (2009) studied the motives of 1850 unemployed male business founders
during the 2007-2008 financial crisis and found a third category who had been driven into
entrepreneurship by a mix of both push and pull factors. While they expected a large number of
entrepreneurs driven by push factors only, these scholars were surprised to find only 13 percent of
them in that category. While another 16 percent of the respondents had responded to pull factors
only, the vast majority (71 percent) had responded to have acted as a result of a combination of
both categories of motives.
The link between the push and pull start-up factors and performance has also captured scholars’
attention. While earlier studies among firms created by necessity entrepreneurs revealed their
smaller size and marginal market presence, as compared to companies formed by opportunity
entrepreneurs (Vivarelli and Audretsch, 1998), more recent research also stressed that a lower
capitalization resulted in limited performance (Santarelli and Vivarelli, 2007). Hughes (2003)
found that necessity entrepreneurs were less satisfied than opportunity owners, their sales levels
were lower, as well as their ability to save for retirement, while Hurst and Pugsley (2011) observed
that a majority of small businesses were not trying to grow or innovate. Businesses belonging to
necessity entrepreneurs also had shorter life spans (Caliendo & Kritikos, 2009) and would more
often be subject to ‘involuntary’ exits (Hessels & Zwan, 2013), while they included a higher
proportion of female owners (Hughes, 2006). Goetz et al. (2010) referred to necessity

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entrepreneurs as the result of a reaction to adversity, as such their owners would also keep their
business alive, even with minimal income (Thompson, 2011; Poschke, 2013b), as long as
necessary. They would close the business when employment opportunities arose again (Goetz et
al., 2010).
Conversely to necessity entrepreneurs, those pursuing opportunities had higher growth
expectations (Poschke, 2013a), more profitable ventures (Block & Wagner, 2010), and displayed
strong differences in terms of variables contributing to performance. Thurik et al. (2006) found
them more confident in their ability to secure funding, as they plan more in advance. Block and
Wagner (2010) noted that opportunity entrepreneurs have more time prior to start-up to gain
specific skills they see as necessary for business success, while necessity entrepreneurs had only
the time to educate themselves on a narrower scope. Block et al. (2015) also observed that
opportunistic entrepreneurs were predominantly adopting differentiation strategies against
competitors, which tend to be generally more profitable than the cost leadership strategies more
often privileged by necessity entrepreneurs. Finally, Schoar (2010) discovered that few
entrepreneurs were seen as crossing from one group into the other. To conclude this section of the
literature review, we can formulate a second hypothesis.
Hypothesis 2: Business creation by opportunity has a positive effect on small business
performance.
Gender
Gender issues have become widely studied with respect to entrepreneurship. Even if a majority of
reports suggest that female-owned businesses tend to be underperforming as compared to firms
owned by their male counterparts, results remain inconclusive as they depend on a variety of
factors difficult to assess and control. For example, in Kenya, Namusonge (2006) argued that
female-owned firms might generate lower sales and profits, and create less employment because
women get into business to pursue primarily intrinsic goals such as a desire for independence and
work-family balance instead of giving priority to financial goals.
Social feminist theory holds that men and women differ in terms of traits, behaviors, and
experiences and that these differences do not necessarily mean that female entrepreneurs are less
successful or less productive than males (Ahl, 2006; Fischer, Reuber & Dyke ,1993). Tancred
(1995) argued that excluding women’s work from research leads to ignore the changing
environment of men’s work. Ahl (2004) also observed that, by measuring performance with male
gendered norms, entrepreneurship research has been disconnected from family and gendered tasks.
As a result, Female entrepreneurship was interpreted as a lesser activity, as compared to Male
entrepreneurship (with its specific features, deemed as the only norm). For example, problems
related to childcare and elderly care are only addressed when women as entrepreneurs are being
researched. Similarly, those public sector organizations where most employees are women are
disregarded and discounted as potentially entrepreneurial work places. Social and institutional
issues, as well as power relations between genders, need to be investigated in order to understand
how entrepreneurial genderized behavior develops.
There is a need to understand how and in which circumstances male-owned businesses are still
described as performing better than their female-owned counterparts (Inmyxai and Takahashi,

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2010; Hsu, Kuo, & Chang, 2013). Fairlie and Robb (2009) explained that female-owned businesses
are operated under circumstances hindering success: generally lesser start-up capital and less
human capital acquired through work experience in the sector or through professional experience
in a family firm. They also found that female business owners put less hours into the business and
might have other goals than males for their company, which could impact financial outcomes.
More recent research supports the expectation that female-owned businesses can perform at the
same level or above male-owned firms when major performance factors are equivalent: i.e. having
relevant education and experience without discrimination. A study by Neneh, Van Zyl, & Van
Noordwyk (2016) among South African SMEs revealed that female-owned firms were
outperforming male-owned ones, while other research by Watson (2003) and Marlow et al. (2013)
made similar observations when individual and business variables were controlled. Individual
variables included age, income, and formal education, while business characteristics included firm
size, sector, and the number of years of operation. In South Africa, a 2014 survey of SMEs
determined that over 78 percent of those female-owned were profitable, as compared to 70 percent
of male-owned firms (Neneh et al., 2016). As such results are still relatively less frequent, it was
decided to test Hypothesis 3 in the most common direction, as follows.
Hypothesis 3: Male-owned SMEs are likely to outperform female-owned ones.
2.2 Sociological Characteristics as Determinants of Performance
Family Support
Among small business, numerous studies have confirmed the importance of spousal involvement
and family networks towards success (Nikina, Shelton, and LeLoarne, 2015; Maisel and Gable,
2009; Mirchandani, 1999; Morokovasic, 1991). In Colombia, Bianco, Lombe, and Bolis (2017)
observed the presence of structural gender barriers resulting from established social roles which
reinforced beliefs about what women were supposed to do or not to do. However, Bianco, Lombe,
and Bolis (2017) also found that Colombian women, by creating businesses, had been able to
develop strategies to resist against their social dependence. Entrepreneurship changed the
economic landscape by opening female-owned spaces where accommodation strategies could be
developed by women for themselves. In this manner, entrepreneurship was associated with greater
gender equality, even if respondents reported some adverse repercussions.
Mirchandani (1999) and Anderson (1996) observed that gender differences are influenced by
factors such as social class, racialization, and age. Stewart (2003) observed that conflict between
work and family responsibilities result in part from the discrepancy between the short-term
expectations of the business world as compared to family long-term reciprocity expectations.
Studying a sample of 68 entrepreneurs, Kirkwood (2009) found spousal support to be more
important for women than for men, given that none of them would have launched their business
without their husband’s approval. In that study, many women had started the business jointly with
their spouse.
Liang and Dunn (2002) as well as Ferguson and Durup (1997) identified factors that were sources
of conflict. These include a lack of family support, a volatile and unstable income, the risk of
financial losses, long work hours, and a high level of stress. Business women also bear, on top of

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those, added pressure from their family environment to balance work and family responsibilities.
As a consequence, female entrepreneurs lack time to engage into the web of business networks
necessary to connect more efficiently with stakeholders, mentors, potential clients, and others in
order to reflect on financial and strategic issues and bounce off new projects and test priorities.
Conversely, Jennings, Jennings and Sharifian (2016) observed situations where spousal support
was provided by the fact that many male entrepreneurs had a spouse at home, or who had sacrificed
a career to give them as many hours as needed with the business.
Another body of research also found that while business people need both a wide range of weak
ties with social networks, they also need a restricted number of strong advisors (Stewart, 1990).
As entrepreneurial families tend to network through extended family members (Lomnitz & Pérez-
Lizaur, 1987) their weak ties networks can be extensive. In terms of planning, family businesses
also have been more successfully adapting both to rapid change and to the necessities of long-term
planning (Pérez-Lizaur, 1997) by identifying opportunities (Steier, Chua, and Chrisman, 2009).
Of course, marriage and kinship (i.e. genealogical relations) ties also involve costs for the family
business, and create constraints such as answering the needs of dependents (Khayesi, George, and
Antonakis, 2014). Hypothesis 4 has therefore been derived from the above observations.
Hypothesis 4: Spousal or family support has a positive impact on SMEs performance
2.3 Organizational characteristics as determinants of performance
Access to external financing
For SMEs, access to external financing often is a way to acquire resources leading to economies
of scale and better performance in term of net income. Sources of external financing tend to be
family members, business partners, and less often commercial lenders including suppliers as well
as financial institutions and government programs. Scholars generally observed that limited access
to credit tends to be a major constraint to small business growth. There is evidence that bank credit
has a positive influence on SMEs performance in emerging economies (Jõeveer, Pissarides and
Svejnar, 2006). Access to funding has been identified as a key element for SMEs to create jobs,
reinforce their capacity of production, their competitiveness, and contribute to reduce poverty in
developing countries (Nyakado and Okello, 2016). This implies that access to capital could allow
SMEs to acquire new technologies, skilled staff, and grow in order to fully supply their potential
markets, or even partner with larger firms.
Many field studies report that external funds, especially commercial loans, are used by SMEs to
finance commercial operations. For example, Klapper (2005) found that factoring was an
important source of funding for Mexican SMEs, and improved their financial outcomes due to
costs lower than the resulting net added benefits. Similarly, Osoro and Muturti (2013) observed
that access to credit had a positive effect on financial performance among SMEs in Kisii, Kenya
in terms of increased sales and workforce (jobs). In the Lurambi sub-county of Western Kenya, it
was found that commercial loans were related to sales growth, higher net income and assets
(Chimaleni, Muganda and Musiega, 2015). Indeed, correlation analyses yielded a linear relation
between commercial loans and financial performance. This result confirms previous research,
where a significant positive correlation was observed between the long-term debt ratio and the net
margin ratio (Munyuny, 2013). Hypothesis 5 is based on this literature.

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Hypothesis 5: Access to external financing has a positive impact on SMEs performance
Ownership and Social Capital
Research has shown that single-owned firms had a higher failure rate than those started by a team
of two or more people (Marom and Lussier, 2014; Guzman and Lussier, 2015). The positive
influence of the number of founders-owners and managers on performance is more widely
recognized, even if a large team is not a guarantee of better performance. Bringing into the firm
people with complementary skills expands the accumulation of entrepreneurial talent resulting in
improved cognitive capacity to assist a business founder (Santos da Silva, 2016). Teams also
acquire and develop more in-depth and wider-ranging knowledge, functional capabilities and skills
(Beckman and Burton, 2008), and therefore perform better. In the best situations, they adopt
complementary roles by acting either as brokers procuring physical, human and financial resources
(Aven and Hillman, 2018) or as networks’ participants able to fix problems and address, in
emerging economies, the deficiencies of regulatory institutions (Marquis and Raynard, 2015).
The positive effect of the number of partners on the firm’s performance is even more evident when
analyzed through the lens of social capital. Social capital is both an individual and a collective
resource imbedded in a social structure (Roos, 2019). Entrepreneurial actors mobilize these
resources by bringing their social environment into the pursuit of their business goals through their
network of relationships (Korsgaard, Ferguson and Gaddefors, 2015; Jack and Anderson, 2002;
Lin, 2001). This imbeddedness process may be both at the individual and group (family or other)
level from a cognitive, cultural, social, and political perspective (Welter and Smallbone, 2010).
For the individual entrepreneur, social capital is an essential and multifaceted source of human and
financial resources, as explained by various scholars (McGowan et al., 2015; Neergard, Shaw, and
Carter, 2005; Audretsch and Keilbach, 2004; Davidsson and Honig, 2003; Lin, 1999). The degree
of influence of the number of partners on performance depends on the range of resources accessible
to each of them, as well as the variety, the quality, and the components of these resources and
personal contacts or networks. Individuals might also access new resources over time through their
position within long term networks (Granovetter, 1985; Bourdieu, 1983; Burt, 1992). If we accept
the notion that social capital derives from one’s position within the social system as a whole, we
can assume that a team-owned firm’ social capital has a wider range than an entity under single
ownership. To paraphrase Burt (1992), team-owned firms therefore can access more social capital
as they are linked to more social networks. From this viewpoint, partners’ degree of influence on
the firm’s performance will depend both on their central position, or their access to it, and on the
strength of their linkages within their networks: links between networks, proximity to contacts,
intensity and frequency of relationships, interactions and reciprocities.
Collectively, social capital compounds those economic and social resources (including cultural
and political) collectively valued by co-owners interacting within their networks. These resources
may represent significant levers for the group to support the achievement of collective goals
necessary to the firm’s survival and viability (Coleman, 1988; Putnam, 1995). Thus, collective
assets such as trust, community norms and institutions, are components allowing for better access
to and mobilization of social capital. Firms with such levers might have better access to business
opportunities, to various sources and forms of capital, and enjoy better recognition, all factors

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likely to have a positive contribution to their performance. The above discussion led to formulate
Hypothesis 6.
Hypothesis 6: The number of owners/partners has a positive impact on SMEs performance.
Government funding
Mobilizing financial support from any kind of institution is a challenge in emerging economies
(Marquis and Raynard, 2015), this is why personal funds remain the most important source of
financing (Porter and Spriggs, 2013). In India, Manimala (2002) reported that 68 percent of the
new firms had depended on their owner’s savings to start up. A limited access to bank credit is one
of the most frequently mentioned barriers to SMEs development, at the same time, entrepreneurs
fear losing control or not being able to meet payment deadlines (Manimala and Wasdani, 2015).
Providing public funding is one strategy able to solve the problem of bank financing and enable
SMEs to improve their performances.
This situation led governments, international financial institutions and non-government
organisations to set up programs providing short, medium and long-term credit to SMEs through
financial intermediaries. In this perspective, Jõeveer, Pissarides, & Svejnar (2006) analyzed the
effects of institutional credit on SMEs performance in Bulgaria, Georgia and Ukraine. The
performance indicators that were measured included: survival, capital growth (fixed assets), sales,
salaries, net income, jobs, and market share. On average, a loan from the European Bank for
Reconstruction and Development (EBRD) resulted in a 10.5 percent increase in fixed assets
growth, while a non-EBRD loan would foster a 14 percent increase. Both credit schemes had a
positive effect on capital growth among the three types of firms under study.
Similarly, it was noted that an EBRD loan would generate 4 percent of additional sales growth,
while a non-EBRD loan to SMEs would trigger a 6 percent addition to previous sales increase.
Other findings revealed that EBRD loans had no statistically significant impact on sales among
smaller firms of less than six employees, while companies with six or more staff obtained
significant benefits. Conversely, non-EBRD loans would have a significant impact on firms with
up to ten employees, but not on larger firms. These findings indicate that both categories of public
funding had a positive result on job growth, and that public funding had a positive effect on SMEs
performance in those three transition economies. This conclusion lead to Hypothesis 7 below.
Hypothesis 7: Access to government funding has a positive impact on SMEs performance.
Start-up process categorization
Several considerations tend to reinforce the hypothesis that, all things being equal, a recently
created small firm might be performing at a lesser level than a firm that has been inherited or
purchased. For example, if we consider the analysis in Gimeno et al. (1997), we find that someone
starting a venture faces uncertainties related to whether the firm adequately satisfies not only
expected financial returns, but also provides more satisfactory psychological rewards than any
employment alternative. These uncertainties can be expected to be much lower, given that past
financial data are available, and that all the required mechanisms necessary to bring performance
to its optimal level are already deployed. Furthermore, the early years of any business are
characterized by a gap between the key resources crucial for long-term viability and the basic

12
resources needed by the company on a daily basis, not to mention the lack of business ties and
relationships. In addition, the company created must build its brand image or reputation, which are
often practically non-existent (Lohrke, Bird, and Gordon, 2010). Sometimes, new firms suffer
from a negative image due to the novelty of the products or services offered, as well as the firm’s
youth, or « liability of newness » (Aldrich and Auster, 1986).
Conversely, inherited or acquired firms have already established prior relationships with key
stakeholders and other conditions favorable to their performance. Over time, relations with clients
have stabilized, as well as with creditors, suppliers, and other organizations. As a consequence,
access to resources such as further funding, new market channels, or business partnerships may be
easier to establish than for a new business. Hypothesis 8 derives from this section.
Hypothesis 8: Firms that have been founded by their current owner will perform less successfully
than those that have been acquired or inherited
Rural versus urban contexts
According to Scott and Anderson (1992), rural entrepreneurship has resulted from a profound
change in the rural landscape of regions formerly entirely devoted to agriculture. This change is
characterized by the economic diversification of rural regions, whereby the experience of rurality
has become, at least in part, a consumption space (Marsden, 1999). In industrialized countries of
Western Europe such as Scotland, the flight from large urban centres to rural areas became a reality
in the late 1970s and 1980s (Scott and Anderson, 1992) when employers large and small found it
more economical to move to smaller centres. This allowed some larger firms to cut costs while
keeping production domestic.
In Canada, rural economies diversified early, when tourism from the United States started to
develop during the early 20th century, a trend which continued through the turn of the 21st century
(Cachon and Cotton, 1997; Cachon and Lagrandeur, 2016). More recently, similar phenomena
have been observed in emerging countries such as Ecuador (Kordel and Pohle, 2018). In Sweden,
Roos (2019) has examined how a network of female entrepreneurs had been able to help its
members develop small firms in a rural area through social embeddedness processes as part of
their entrepreneurial process. In a way, this was an opportunity for these business women to create
an entrepreneurial climate or ecological system focused on their social context within a rural
community. Generally speaking, reported income levels were lower among the population living
in rural areas as compared to urban incomes, where small firms tended to obtain lower sales
(Phillipson et al., 2019). In various countries, access to physical and digital networks is more
difficult in rural areas (Bosworth and Newbery, 2015; Cachon et al., 2019), which hampers access
to markets, but also to information such as the availability of government programs. Roberts et al.
(2017) noted that digital exclusion disadvantages everyone working in the affected regions and
restrain cultural, social, and economic growth in those areas. This body of literature led to the
formulation of Hypothesis 9.
Hypothesis 9: Businesses located in rural communities are expected to have a lower sales
performance than those located in urban settings

13
3. METHOD
3.1 Small Business Definition
There is neither a standard definition of a small business nor a definition of an SME. The basic idea
is to establish a boundary, a threshold beyond which a firm is no longer an SME but a larger business.
However, this threshold varies significantly depending on the literature consulted. For example,
Morris (1998), using the term of micro-enterprise for very small firms, defines it as having four
employees or less: this corresponds to the definition of a micro business by Industry Canada, the
official agency for the dissemination of business information in that country. Morris (1998) adds that
this threshold is seven paid employees in China, and ten in European countries. Other scholars put the
limit at five paid employees and less to define a small business (Roberts and Wood, 2002; Freedman
and Godmin, 1993).
This large discrepancy in defining a very small business remains, even nowadays, problematic. In our
research, we considered firms with five or fewer employees to be small businesses. Based on this
definition, our sample consisted of 174 small businesses.
To be included in the sample, entrepreneurs had to satisfy our definition: « an entrepreneur is an
individual who contributes to the company's capital and participates in its day-to-day operations ».
This definition is derived from Gasse and d’Amboise (1980) and excludes non-profit and government
organizations.
3.2 Sampling
In Mexico, samples of entrepreneurs can be derived from chambers of commerce listings, given
that registration is mandatory for all formally established firms throughout the nation. The
importance of SMEs in the second and third largest cities in the country justified the selection of
both regions of Guadalajara (state of Jalisco) and Monterrey (state of Nuevo León) for this
research. Monterrey’s area had a population of 4.1 million according to the 2010 census, and could
have grown to over 4.5 million by 2020 (Gonzalez, 2019; STPS, 2020). The labor force was equal
to 2.61 million in the first quarter of 2020 (SET, 2020), up from 2.45 million in 2017 and 2.3
million in 2015 (STPS, 2017).
3.3 Settings
With a per capita income of USD 17,800 in 2018 for a national average of USD 9,900, the state of
Nuevo León is the second of Mexico’s economic engines after the Mexico City Distrito Federal
(Secretaria de Economia y Trabajo (SET), 2020). Over 136 000 SMEs employed 75 percent of the
workforce in 2018 (INEGI, 2019). In 2018, while GDP growth was 2.1 percent for Mexico as a
whole, it was 3.8 percent for Nuevo Leon (SET, 2020). That same year, while the state is home to
4 percent of the total population, Nuevo Leon produced 7.6 percent of the country’s GDP (up from
7.5 percent in 2014, INEGI 2016) and 11.2 percent of the manufacturing output. Moreover, foreign
investment increased significantly in 2020 as compared to 2019, with Nuevo Leon’s share growing
from 9.6 to 11 percent of total foreign investments (SET, 2020) from the United States, Europe,
and Asia. Exports also represented an increase at 9.3 percent of total Mexican exports in Q1 2020,
reflecting manufacturers’ nearshoring moves.

14
While the population increased by 20 percent to 5.5 million over ten years (Gonzalez, 2019), in
the first quarter of 2020, Nuevo León’s informal economy represented 36.5 percent of the total,
still the lowest in the country, while the national average was 56.1 percent (SET, 2020). Poverty
levels were nationally at 41.9 percent in Mexico when defined as the percentage of the population
with an income inferior to the income poverty line. According to Coneval (2020b), Nuevo León
had a poverty level of 21.1 percent in 2018, down from 28.6 percent in 2008. For the state of
Jalisco, where Guadalajara is located, the poverty level also decreased from 42.0 percent in 2008
to 36.1 percent in 2018 (Coneval, 2020).
Five municipalities form the city of Guadalajara, with a population over 5.1 million in July 2018
and a labour force equal to 61 percent of the adult population (IIEG, 2018). Known as Mexico’s
Silicon Valley, Guadalajara and its surroundings form the second-largest urban centre in the
country after Mexico City (Webber, 2015). Beyond the mariachi and the tequila folk lore for which
the state of Jalisco is known, Guadalajara is also the third industrial region (after the capital and
Monterrey), with an economic base focused on wholesale and retail trade. In terms of business
logistics, it is strategically located on the road from Mexico City to the United States border.
The state of Jalisco has been credited in the past with the highest proportion of self-employment
in the country, with eleven formally declared companies per thousand people, as compared to ten
in Mexico City, and six in Nuevo León (Informador, 2015). Foreign investments in Jalisco were
almost 70 percent higher in the first quarter of 2020 as compared to 2019 (Velazco, 2020), reaching
USD 881 million, as compared to 518 million the previous year. Jalisco was in third position
behind Mexico City and Nuevo León as a foreign investment destination. From 2010 to 2019, the
total number of economic units in Jalisco grew from almost 300 000 to 372 000, a 24 percent
growth (Almaraz, 2020). Data (Almaraz, 2020) reveal that, while all sectors grew, with a
domination of the retail and wholesale sectors (about 168 000 units in 2019), and manufacturing
sector (over 36 000 units), the fastest growing sectors in terms of economic entities were
transportation services (250 percent growth from 1097 to 2753 units) and financial services (1703
to 7070 units, a 415 percent growth).
3.4 Data Collection and Measure of Hypothesized Variables
The population of interest being defined, data were collected with an instrument developed by
Hung M. Chu (Chu and Katsioloudes, 2001), which has been used in various countries, such as
Romania, Vietnam, India, and several African countries. Telephone calls were placed in order to
secure entrepreneurs’ cooperation, and all those who had accepted were interviewed. A total of
174 questionnaires were collected in the two states of Nuevo León and Jalisco, 150 in the
Monterrey region, and 24 in the Guadalajara area.
All dependent and independent variables were measured through the aforementioned
questionnaire. Table 1 presents the instrument variables retained for each corresponding
independent variable. Regarding dependent variables, we chose variables able to inform objective
elements of performance as measured by accurate and reliable indicators such as sales. We also
assessed the subjective aspect of performance through the personal assessment of success or
performance provided by each respondent.

15
Table 1 – Independent Variables’ Description
Independent variables
Corresponding variables in the instrument
Human capital
Education (high school versus postsecondary),
number of years of business experience,
number of weekly working hours
Creation by choice
Extrinsic motives
Family support
Spousal support
Access to capital funding
Proportion of capital obtained from financial
institutions
Gender
Male - Female
Number of owners/partners
Number of business owners /partners
Government support
Government financial support received or not
Business start-up process
Creation versus acquisition /inheritance
Rural versus urban
Population of the community where the firm
operates
3.5 Data processing and analysis
Data were processed with the SPSS software package. The choice of data processing statistical
tests depended on the type of analysis (univariate, bivariate or multivariate), on the variables’
measurement level (metric or non metric), and also depended on the reason for the analysis
(description, association or explanation). More precisely, the following analysis and statistical
tests were performed to describe the respondents’ profile: univariate statistical analysis
(descriptive statistics such as the mean and frequency).
A linear regression was performed as a next step, as this type of regression allows the observation
of the dependency relationship of each of the performance indicators on each of the independent
variables. For this purpose, a linear regression analysis was performed with sales and personal
evaluation of success as dependent variables and the variables retained in the hypotheses as
independent variables. The literature reveals an extensive use of sales and number of employees
as measures of business performance (Brush and Vanderwerf 1992; Lerner, Brush and Hisrich
1997; Cliff 1998). A correlation analysis indicated a low relation between these two variables
(0.2), thus justifying their use.
Regarding incomplete data, using the mean was not deemed appropriate because of the nominal
nature of the variables. It was therefore decided to remove incomplete data from the analysis. A
correlation analysis was performed on all variables in the study before proceeding with the
regression analysis. There were no highly correlated associations (beyond the acceptable threshold
of 0.30), suggesting an absence of multicollinearity in our data.
Finally, the sample size (over 15 data for each explanatory variable) makes it possible to analyze
all variables simultaneously (forced analysis) and to derive a synthetic model. A stepwise analysis
adding explanatory variables one at a time would have been more adequate with a smaller sample.

16
4. RESULTS
4.1 Sample Characteristics: Respondents’ Profiles
The entrepreneurs’ and businesses profiles are summarized in table 2. Results about the personal
characteristics of entrepreneurs indicate that 51 percent are between 30 and 49 years of age, that
they are educated (71 percent have a college or university education) and that they have little
experience in management and in their business sector (71 percent have a maximum of 5 years of
management experience, compared to 73 percent in their sector). A majority of respondents are men
(63 percent, while 37 percent were women), 60 percent of them are married or living with a spouse,
and a majority of them founded their business (84 percent). In addition, 44 percent have a spouse
involved in the business; within this category, 56 percent receive substantial or very substantial
spousal support. Finally, a majority of respondents are in business for necessity reasons (55 percent),
and 40 percent of them work for at least 41 hours per week.
In terms of organizational variables, we observe that businesses are mostly concentrated in retail
and services (92 percent of the total), they are relatively recent (50 percent started les than five
years before), and are mostly located in larger cities (70 percent of the firms are in cities of over
250,000). A majority of respondents are sole owners (55 percent), with sales under US$ 100,000
(50 percent of the total), who assess their level of debt as low (56 percent), while 10 percent
received financial support from government.
Table 2: Entrepreneurs' and Businesses Profiles (N=174)
Personal Characteristics
Organizational Characteristics
%
%
Age
20 to 29 years
30 to 49 years
50 +
29
51
20
Population
Under 25,000
25,001 to 100,000
100,000 to 250,000
Over 250,000
9
11
10
70
Education
High School
College/university degree
29
71
Government Financial Support
Yes
No
10
90
Start-up process
Created by owner
Bought
Inherited/Franchised
84
9
7
Sales
Under $100,000
$100,001- $500,000
$500,001 and +
50
30
20
Married
Spouse involved in business
Started for necessity reasons
60
44
55
Economic sector
Retail
Services
Manufacturing
50
42
8

17
Personal Characteristics
Organizational Characteristics
Spousal support
Very low - low
Medium
Substantial – very substantial
24
20
56
Age of the firm
1-5 years
6-10 years
11-20 years
21 years and +
50
23
20
7
Past experience in current
business sector
None
1-5 years
6-10 years
11+ years
32
41
14
13
Number of owners
1 owner
2 owners
3 owners and +
55
33
12
Past management experience
None
1-5 years
6-10 years
11+ years
31
40
19
10
Importance of debt
Low/very low
Medium
Important/very important
56
21
23
Gender
Male
Female
63
37
Weekly hours worked in firm
0-20 hours
21-40 hours
41 hours and +
29
31
40
4.2 Regression Analysis Results
Two linear regression analyses were performed. Model 1 had Sales Performance as the dependent
variable, while Model 2 had Personal Evaluation of Success /Performance as a dependent variable.
While this approach can reveal which variables are associated to entrepreneurial performance, it
also allows a comparison of the differences between dependent variables of different nature, one
of an objective nature, the other of a subjective nature.
Results from the regression analysis are presented in Table 3. As indicated by the F statistics at
the bottom of table 3, both regression models were statistically significant (p<0.001). The first
model (Sales Performance) explained 38.1 percent of the variance, while the second model
(Personal Evaluation of Success /Performance) explained 20.9 percent of the variance.
Results from model 1 reveal a statistically significant (p<0.01) positive relation between Sales
Performance and the three Human Capital component variables (Education level, Business
experience, and Weekly hours worked). This finding confirms Hypothesis 1. The same finding
also applies to the following variables: Extrinsic Motives, Gender, Start-up Process, and Access
to Financing, where statistically significant positive relations with Sales Performance were
observed. These results confirm Hypotheses 2, 3, 5 and 8. Thus, small firms that were purchased

18
(instead of started) by males pursuing extrinsic motives and more often financed by bank loans
have a more positively impacted sales performance than their counterparts.
To the opposite, hypotheses 4, 6, 7 and 9 were not confirmed by model 1. There was no significant
relation found between Sales Performance and these independent variables: spousal support,
number of owners, government support, and population. The direction of the relation was negative
for government support and population relative to sales performance.
Results from model 2 show a statistically significant positive relation between the dependent
variable Personal Evaluation of Success/Performance and only three variables: extrinsic motives,
weekly hours worked and government support. These results confirm Hypotheses 2, 7, and
partially confirm Hypothesis 1. It is interesting to mention that extrinsic motives and weekly hours
worked are the only statistically significant variables in both models.
Table 3
Regression results
Note 1: *p<0.10; **p<0.05; ***p<0.01; ****p<0.001
Note 2: t-statistics are in parentheses
Sales Performance
Personal Evaluation of
Success/Performance
Independent Variables
Model 1
Independent Variables
Model 2
Extrinsic Motives
Gender
Education
Business experience
Weekly hours worked
Government support
Spousal support
Start-up process
Population (rural/urban)
Number of owners
Access to financing
R2
F-Statistic
Df
0.157**
(2.106)
0.200***
(2.483)
0.207***
(2.581)
0.232***
(2.867)
0.229***
(3.004)
-0.037
(-0.469)
0.029
(0.397)
0.157**
(2.061)
-0.054
(-0.678)
0.024
(0.307)
0.262***
(3.355)
0.381
6.493****
11
Extrinsic Motives
Gender
Education
Business experience
Weekly hours worked
Government support
Spousal support
Start-up process
Population (rural/urban)
Number of owners
Access to financing
R2
F-Statistic
Df
0.182**
(2.188)
0.120
(1.342)
-0.013
(-0.149)
0.074
(0.831)
0.244***
(2.845)
0.249***
(2.898)
0.013
(0.162)
0.099
(1.172)
-0.060
(-0.672)
0.126
(1.475)
-0.095
(-1.108)
0.209
2.884***
11

19
5 DISCUSSION AND CONCLUSION
The aim of this research was to better understand the factors influencing SMEs performance in
Mexico. To that effect, we were mainly inspired by the exploratory model in Berrone et al. (2014)
tested on a sample of SMEs in Argentina. This model focuses on studying small firms’
performance emphasizing those factors likely to contribute to the differences observed in the
performance of SMEs in emerging countries. This approach led to conceive nine research
hypotheses that we tried to validate on a sample of 174 Mexican firms from the Guadalajara and
Monterrey areas. Through the validation of the research model, it was established that a majority of
the selected variables had a determinant role on Mexican SMEs performance when the dependent
variable is the firm size as measured by sales.
Firstly, it is interesting to note that the independent variables of the conceptual research model
explained 38 percent of the sales variance and 21 percent of the personal evaluation of performance
dependent variable. It is worth noting that both regression models were statistically significant (Sales
Performance: F = 6.493, p = .000 and Personal Evaluation of Performance: F = 2.884, p = .000).
Secondly, the analysis of model 1 showed that Sales Performance is the dependent variable most
associated with the independent variables in the model. Indeed, out of a total of 11 variables, seven
were found statistically significant in explaining the variance of firm size in terms of Sales
Performance. As mentioned above, together, these variables accounted for 38 percent of this
variation.
Results from the regression analysis on personal characteristics have revealed that business
performance in model 1 is positively associated to human capital as measured by Education level,
Business experience and Weekly hours worked and statistically significant (p < 0.01). This result
confirms Hypothesis 1. Pursuing extrinsic motives also had a statistically significant positive
association with Sales Performance (p < 0.05), confirming the Hypothesis 2 suggestion that
business creation or acquisition by choice has a positive impact on performance. At the same time,
Hypothesis 3 stating that male ownership was positively related to Sales Performance was also
confirmed by a statistically significant (p < 0.05) positive relation. Consequently, male-owned
firms having extrinsicly motivated owners with high levels of education, business experience and
working longer weekly hours reflect, in our sample, important factors explaining the variance in
size expressed in terms of sales.
These results show that the prior acquisition of certain personal characteristics (Education level,
Business experience, Extrinsic motives) enables entrepreneurs to be better prepared to operate a
business and to perform better economically.
Similar results were obtained in the Berrone et al. (2014) model, with the exception of our
Hypothesis 3 on Gender, which could not be confirmed. The results obtained on the human capital
component suggest that the variables selected to measure this dimension are relevant since Berrone
et al. (2014) used the same variables.
The other statistically significant variables in model 1 are Access to capital and the firm’s Start-
up mode (creation/acquisition), confirming Hypotheses 5 and 8. Hypothesis 4 about Spousal

20
support (sociological characteristics) could not be confirmed in this study, a result consistent with
Berrone et al. (2014). In terms of Organizational characteristics, Hypotheses 6 (Number of
owners), 7 (Government support) and 9 (Rural versus urban) were not verified either, while the
latter (7 and 9) were confirmed in the Berrone study. It is worth noting that only ten percent or less
of the respondents in this study had used Government support or were located in Rural
communities: this could explain explain the inconclusive results for both Hypotheses 7 and 9, and
prevents any comparison with the Berrone et al. results.
Results related to model 2 indicated that only three statistically significant variables were
positively associated with the dependent variable Personal Evaluation of Performance: Extrinsic
motives, Weekly hours worked and Government support. As the dependent variable is a subjective
measure of the extent to which the entrepreneur is satisfied with his/her firm’s sales performance,
it appears consistent to find that having put significant hours into the business, having obtained
financial public support, as well as endeavouring to obtain substantial financial success in terms
of goals, respondents would normally associate a high level of satisfaction about their business
sales performance in return for their efforts.
The opposite result on the Government support variable, a negative but insignificant relationship
in Model 1 and a positively associated and statistically significant relationship in Model 2, may
indicate that programs conceived by the Mexican government are perceived as positive by
entrepreneurs who are using them.
In conclusion, two performance variables scored statistically significant in both models, Weekly
Hours Worked and Extrinsic Motives. Therefore, the more time the entrepreneur devotes to his
business and the more monetary motivations (extrinsic) are pursued, the higher the firm’s sales as
well as the positive evaluation of his success or performance by the entrepreneur. Table 4 presents
a summary of the results.
Table 4
Summary of Hypotheses and Results
Hypotheses
Model 1 – Sales
Performance
Model 2 – Personal
Evaluation of Performance
H1 – Human Capital
Confirmed
Partly confirmed
H2 - Creation by choice/forced
Confirmed
Confirmed
H3 - Gender
Confirmed
Not Confirmed
H4 – Spousal support
Not Confirmed
Not Confirmed
H5 - Access to financing
Confirmed
Not Confirmed
H6 – Number of owners
Not Confirmed
Not Confirmed
H7 – Government support
Not Confirmed
Confirmed
H8 - Creation/acquisition
Confirmed
Not Confirmed
H9 – Rural vs urban
Not Confirmed
Not Confirmed

21
5.1 Limits of this Study
This study has been conducted in two of the most prosperous states of an emerging country and
cannot be representative of the whole nation. Given that the proximity to a large urban centre
modifies considerably the business environment of suburban areas, respondents deemed to be
located in rural towns for this study do not live in those rural conditions usually described in the
literature. This prevents any generalization to remote rural areas located in other regions. This
study is also limited by the type of instrument chosen, as some relevant questions could have been
omitted. Also, some questions relative to gender issues cannot be answered completely through a
standardized instrument and would require further investigations through a more qualitative
research method. This is particularly true when specific social circumstances are taken into
consideration: for example, in Mexico like elsewhere in Latin America most of the elderly are
taken care of by their adult children and rarely institutionalized in retirement homes. In general, in
most families, women end up taking care of the elderly, which adds a burden on female
entrepreneurs.
This study is also limited by the fact that, in replicating other research using an instrument
standardized internationally, some country-specific issues are ignored. In doing so, some critical
variables and considerations might have been omitted. Sample selection through chambers of
commerce in Mexico might have conducted researchers to ignore some informal businesses who
are no complying with mandatory registration requirements for various reasons.
5.2 Implications for Further Research
The main conclusion of this study is that extrinsic, monetary motives, still play an important role
among entrepreneurs in Mexico, even within two of the most industrialized cities in the country.
It would be interesting to find out how entrepreneurs with intrinsic motives differ from this group
in terms of performance and other characteristics in the conceptual model that was derived from
the literature.
More generally, it would be useful to replicate this study on a larger scale in other areas of Mexico
as well as in other emerging economies in order to infirm or confirm the results reported above.
For example, it would be interesting to find out if the same personal and organizational significant
variables in this study and in Berrone et al. (2014) would also be relevant in other emerging
countries. The issue of rurality and entrepreneurship is of interest and warrants more research in
order to identify how self-employment might help in the fight against poverty and deprivation.
Rural entrepreneurship, as a field of research, has also much to do about researching how to
improve the economic situation of Indigenous communities and regions across the Americas and
elsewhere. There are strong interactions between research in rural entrepreneurship, and other
specific issues, including most of the variables addressed in this paper.
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