Macro-environmental factors and their impact on startups from the perspective of developing countries

Abstract

In a global context, the development of new technologies and becomes an entrepreneurial challenge for the near future. One of the most promising phenomena of this new way are startups. This phenomenon is also emerging in developing countries like Pakistan. However, the success rate of startups is prone to several micro and macro environmental challenges and if these challenges not addressed properly, cause failure of startups. This study intends to contribute to research by proposing a methodological approach to find out the macro-environmental factors and their impact on startups from the perspective of developing countries. Firstly, the PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis is conducted to identify macro-environmental factors displayed in the Cause and effect diagram. Secondly, the Fuzzy Failure Mode and Effect Analysis (FFMEA) is applied to prioritize the risks to devise strategies. Thirdly, to formulate a risk mitigation strategies and policies to support startup ecosystem. The results show that inflation rates, currency depreciation, and corruption are significant challenges for startups. Therefore, this paper aims to help policy makers, entrepreneurs and business schools to work in join collaboration to devise risk mitigation strategies for startups in emerging economies.

Keywords

• pestel
• fmea
• startups
• political instability