Why do micro-businesses hesitate to grow up?

Purpose This study analyzes the factors that affect the decisions of micro-businesses to switch to enterprises in Thanh Hoa, Vietnam. Design/methodology/approach In order to explain the behavior of micro-businesses in switching to enterprises, the authors designed a questionnaire and collected survey data from 404 micro-businesses. The generalized structural equation modeling was applied to analyze the structured model with the dichotomous dependent variable. Findings First, the behavior of micro-businesses to switch was indirectly affected by needs and directly affected by attitudes, perceived behavioral control, subject norm and institutional quality. Second, the subject norms exerted the most influence on the behavior of the micro-businesses in switching. This finding implies that (1) the behavior of the micro-businesses depended on the assessments, perceptions and views of their friends, relatives and colleagues, and (2) the behavior to switch stems mainly from the desire to improve the businesses' position in society. Finally, both formal and informal institutions play an essential role in the behavior of the micro-businesses to switch to enterprises. Originality/value There have been no previous studies that have applied structured models to test the behavior of micro-businesses to switch to enterprises. Furthermore, previous studies had mainly addressed the psychological factors or needs of micro-businesses. In this study, apart from the above factors, the authors discuss the impact of institutions on the behavior of micro-businesses to switch.

Automated summary

First, the behavior of micro-business to switch is indirectly affected by needs and directly influenced by attitudes, perceived behavioral control, subject norm, and institutional quality. Second, subject norm has the most significant influence on the behavior of micro-businesses in switching. This suggests that the behavior depends on the assessments, perceptions, and views of friends, relatives, and colleagues, and the desire to improve the businesses' social position. Finally, both formal and informal institutions play a crucial role in the behavior of micro-businesses in switching to enterprises.