Ease of doing business in MSMEs: evidence from scale development and validation
Saransh Royal, Kamaljit SinghPurpose
The study aims to develop a sound, reliable and authorised survey instrument to measure the ease of doing business from the small business perspective.
Design/methodology/approach
For this purpose, literature was explored and statements were generated, amended and validated. For factor identification and confirmation, 489 survey responses have been analysed.
Findings
Exploratory factor analysis outcomes have identified 11 dimensions such as starting a business, getting electricity connections, getting credit, tax reforms, labour reforms, enforcing contracts, inspection reforms, resolving insolvency, availability of information, transportation and logistics and getting construction permissions.
Practical implications
The study presents the perspective of small businesses on the ease of doing business by reporting a comprehensive and relevant scale for measuring doing business, which is absolutely in contrast to the distance-to-frontier methodology of the World Bank. The scale is easy to understand and aims at capturing the multiple dimensions determining business ease. The scale can be used by policymakers to recognise the aspects they should work on to improve India’s standing on ease of doing business.
Originality/value
The Ease of Doing Business methodology used by the World Bank was criticised because of the limited survey size and distance-to-frontier framework. Also, there were limited studies with practical implications, as most studies were abstract. The present study aims to address this concern and report a methodology that is understandable and valid for measuring business ease.