Strategic Approaches to Enhancing Growth and Sustainability of Micro, Cottage, and Small Enterprises in Nepal

Abstract

Micro, cottage, and small-scale enterprises (MCSEs) play a vital role in Nepal’s socio-economic development by generating employment, reducing poverty, and supporting local economies. However, their growth is constrained by structural challenges, including limited access to finance, weak market linkages, inadequate managerial capacity, inconsistent policy implementation, and low levels of innovation. This study examines strategic approaches to enhance the competitiveness and sustainability of Nepali MCSEs using a mixed-methods design, incorporating purposive sampling of 24 enterprises across seven provinces. The findings indicate a moderate positive relationship (r=0.487*) between access to financial resources and business growth, although 82% of enterprises depend on informal financing, revealing significant credit access gaps. Only 38% of entrepreneurs reported receiving managerial training, and strategic decisions are often intuitive rather than data-driven. Market expansion shows a strong association with improved performance (r = 0.821**), but logistical constraints and competition continue to hinder progress. Government support exhibits a significant positive relationship with perceived effectiveness (r = 0.925**), yet uneven implementation reduces its overall impact. Workforce skill shortages, employee turnover, and limited investment in innovation further restrict scalability. The study recommends policy reforms promoting financial inclusion, infrastructure development, skill enhancement, and digital adoption, alongside stronger public–private collaboration to foster sustainable and inclusive economic growth.