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Growth of micro and small scale enterprises and its driving factors: empirical evidence from entrepreneurs in emerging region of Ethiopia

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  • Hayelom Abrha Meressa

    (Assosa University)

Abstract

Purpose The purpose of this study was to examine micro and small scale enterprises’ growth determinants operating in Benishangul-Gumuz Regional State of Ethiopia as emerging region. Design/methodology/approach The study adopted an explanatory research design with arrangement of primary data collection via a cross-sectional survey questionnaire followed by mixed research approach. The sample of this study was 220 enterprises determined by Yamane’s formula and selected using proportional stratified random sampling technique. Findings The result of regression analysis revealed that initial investment, access to land, access to finance, location, sectoral engagement, market linkage, and business experience are significant in explaining growth in one hand. On the other side, however, gender, education, ownership, formal recording, and financial management practice are found to be insignificant variables in determining enterprises’ growth. Research limitations/implications More evidence is needed on micro and small scale enterprises’ growth determinants before any generalization of the results can be made. In addition, the empirical tests were conducted only on 220 entrepreneurs since 2018. Therefore, the results of the study cannot be assumed to extend beyond this group of entrepreneurs to different study periods. Practical implications The study might help the entrepreneurs in addressing the factors affecting growth to take actions toward developing their performance and in turn contribute to employment, export participation, poverty alleviation, and women empowerment. Originality/value This paper adds to the literature on the determinants of micro- and small-scale enterprises’ growth. In particular, it tests the impact of initial investment, access to land, access to finance, location, sectoral engagement, market linkage, business experience, education, ownership structure, and financial management practice on growth of enterprises.

Suggested Citation

  • Hayelom Abrha Meressa, 2020. "Growth of micro and small scale enterprises and its driving factors: empirical evidence from entrepreneurs in emerging region of Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-22, December.
    • Handle: RePEc:spr:joiaen:v:9:y:2020:i:1:d:10.1186_s13731-020-00121-9
    DOI: 10.1186/s13731-020-00121-9
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    References listed on IDEAS

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    1. Gerrit de Wit & Haibo Zhou, 2009. "Determinants and dimensions of firm growth," Scales Research Reports H200903, EIM Business and Policy Research.
    2. repec:cup:cbooks:9781107034662 is not listed on IDEAS
    3. Brooks,Chris, 2014. "Introductory Econometrics for Finance," Cambridge Books, Cambridge University Press, number 9781107661455, December.
    4. Onaolapo Adekunle Abdul-Rahamon & Adegbite Tajudeen Adejare, 2014. "The Analysis of the impact of Accounting Records Keeping on the Performance of the Small Scale Enterprises," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(1), pages 1-17, January.
    5. Woldeyohanes, H. T., 2014. "Dimensions and Determinants of Growth in Micro and Small Enterprises: Empirical Evidence from Mekelle City, Ethiopia," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(3), pages 1-12, September.
    6. Loewe, Markus & Al-Ayouty, Iman & Altpeter, Annegret & Borbein, Lisa & Chantelauze, Marc & Kern, Maximilian & Niendorf, Elisabeth & Reda, Malak, 2013. "Which factors determine the upgrading of small and medium-sized enterprises (SMEs)? The case of Egypt," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 76, number 76.
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    Citations

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    Cited by:

    1. Samuel Godadaw Ayinaddis, 2023. "Socio-economic factors affecting women’s entrepreneurial performance in MSEs in Bahir Dar City, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-21, December.
    2. Charles Mwatsika, 2021. "Reflecting on perceived failure of entrepreneurship development initiatives to help ignite economic development in Malawi," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-24, December.
    3. Endalew Terefe Alene, 2020. "Determinants that influence the performance of women entrepreneurs in micro and small enterprises in Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-20, December.
    4. Hayelom Abrha Meressa, 2022. "Micro- and small-scale enterprises’ financing preference in line with POH and access to credit: empirical evidence from entrepreneurs in Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-30, December.
    5. Saymon Ricardo Oliveira Sousa & Wesley Vieira Silva & Claudimar Pereira Veiga & Roselaine Ruviaro Zanini, 2020. "Theoretical background of innovation in services in small and medium-sized enterprises: literature mapping," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-26, December.
    6. Asem Alkahtani & Norfarah Nordin & Rizwan Ullah Khan, 2020. "Does government support enhance the relation between networking structure and sustainable competitive performance among SMEs?," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-16, December.
    7. Belay Mengstie, 2022. "Impact of microfinance on women’s economic empowerment," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-12, December.
    8. Beza Muche Teka, 2022. "Determinants of the sustainability and growth of micro and small enterprises (MSEs) in Ethiopia: literature review," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-16, December.
    9. Getachew Ayalu & Aradom Gebrekidan Abbay & Hossein Azadi, 2023. "The role of micro- and small-scale enterprises in enhancing sustainable community livelihood: Tigray, Ethiopia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 7561-7584, August.
    10. Obsa Ensermu Gudeta & Daniel Tadesse Tulu, 2022. "The role of market linkage in growth of micro and small scale enterprises: the case of Ambo town, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-14, December.

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