From Survival to Resilience: Determinants of MSE Innovation and Growth under External Crises

Abstract This study examines micro and small enterprises (MSEs) in Egypt, Jordan, and Morocco, focusing on their role in regional development and resilience under external crises. While MSEs contribute significantly to employment and poverty reduction, their transition into growth-oriented, innovative, and internationally competitive firms remains constrained, particularly in crisis-affected contexts where structural vulnerabilities are intensified. This study shows that MSE transformation is not driven by isolated factors, but by the interaction and alignment of governance, human capital, and financial resources. Drawing on cross-country quantitative analysis of secondary data, the study finds that MSEs account for 48–55% of employment but only 15–19% of GDP, highlighting persistent productivity gaps and weak integration into higher-value economic activities. The results further indicate that financial access is the strongest individual driver of transformation, while governance and human capital play enabling roles whose effects are significantly amplified through interaction. The findings challenge fragmented policy approaches and highlight the need for systemic alignment to enable MSE transformation under crisis conditions.