Predicting MSME Survival in Emerging Economies: A Logistic Regression Analysis of Technological and Managerial Frameworks

Abstract

This study examined the prediction of Micro, Small and Medium Enterprises (MSME) survival using Artificial Intelligence, digital accounting systems, and succession planning within selected commercial hubs in Nigeria. The study was motivated by the high rate of MSME failure and the need to identify key technological and managerial factors that enhance business sustainability. A quantitative cross-sectional survey design was adopted. Data were collected from a sample of 400 respondents drawn from MSMEs in Lagos State, Kano State, and Oyo State using a structured questionnaire. MSME survival was measured as a binary outcome, where enterprises exhibiting financial stability, adaptability to market changes, sustained growth, effective financial control, and a high likelihood of continued operation were classified as having high survival (1), while those with lower performance on these indicators were classified as having low survival (0). Descriptive analysis showed that respondents generally agreed on all variables, with mean scores of 4.10 for Artificial Intelligence, 4.18 for digital accounting systems, and 4.02 for succession planning, indicating a high level of adoption and perceived relevance. Logistic regression analysis was employed to predict MSME survival. The model produced a Nagelkerke R² of 0.68, indicating that 68 percent of the variation in MSME survival was explained by the independent variables. The model also achieved an overall classification accuracy of 82 percent, confirming its predictive strength. The regression results revealed that all variables had positive and statistically significant effects on MSME survival: Artificial Intelligence (B = 0.88, Exp(B) = 2.41, p < 0.05), digital accounting (B = 1.25, Exp(B) = 3.49, p < 0.05), and succession planning (B = 0.70, Exp(B) = 2.01, p < 0.05). Digital accounting emerged as the strongest predictor of survival. The study concluded that MSMEs that adopt Artificial Intelligence, implement digital accounting systems, and establish structured succession planning frameworks are significantly more likely to survive. It recommended increased investment in digital technologies, adoption of modern accounting systems, and development of formal succession plans. The study contributed to knowledge by providing a predictive model for MSME survival using logistic regression and integrating key technological and managerial variables.