Enterprise development in an emerging economy: Survival, employment growth, and formalization in MSEs

Micro and small enterprises (MSEs) sustain employment and household income in emerging economies, yet survival, employment growth, and formalization are often studied separately. This study models all three outcomes within one framework, combining capability and institutional variables with qualitative evidence from an underrepresented secondary-city and growth-point ecosystem. An explanatory sequential mixed-methods design combined a survey of 460 enterprise owners from an accessible population of 2,158 with 30 semi-structured interviews. Firth-penalized logistic regression examined survival and formalization, OLS examined employment growth among 335 surviving enterprises, and Poisson and negative binomial models provided robustness checks. Digital adoption was the strongest correlate of survival (OR = 2.84, p < .001) and employment growth (b = 1.45, p <.001); prior experience was associated with survival (OR = 1.63, p = .030), and policy awareness with formalization (OR = 2.57, p < .001). Findings indicate that capabilities are more consistently associated with persistence and expansion, and institutional information with registration, suggesting complementary digital-capability support and registration outreach.