IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v13y2023i2p21582440231169632.html
   My bibliography  Save this article

Profitability of Agricultural Micro and Small-Scale Enterprise in North Wollo Zone, Amhara Regional State, Ethiopia

Author

Listed:
  • Ebrahim Endris
  • Andualem Kassegn

Abstract

The contribution of micro and small enterprises is limited as the majority are financially constrained and half of them exit from business in 2014/15, Amhara Region. Therefore, this study aimed to analyze the profitability of agricultural micro and small-scale enterprises in North Wollo Zone, Amhara Regional State, Ethiopia. Primary data was collected from 271 sample enterprises. The study employed descriptive and econometrics models for the data analysis. The financial ratio result shows that the return on asset, return on owner equity and net profit margin were 0.1601, 0.2768, and 0.1520 birr, respectively. The result of the probit model estimation shows that six variables, namely enterprise age, manager education level, credit use, input availability, owners’ aspiration, and frequency of extension contact significantly and positively influenced the probability of Micro and Small Enterprises (MSEs) being profitable. The second hurdle model, the truncation model showed that enterprise age, manager education level, record keeping, access to input, and frequency of extension contact significantly affected the extent of agricultural MSEs’ profitability. Therefore, enhancing the knowledge, skill, and aspirations of enterprise owners, improving financial access and outreach, providing financial bookkeeping training and practice, creating reliable integration with input producers, and frequent extension support to enhance the profitability and sustainability of enterprises.

Suggested Citation

  • Ebrahim Endris & Andualem Kassegn, 2023. "Profitability of Agricultural Micro and Small-Scale Enterprise in North Wollo Zone, Amhara Regional State, Ethiopia," SAGE Open, , vol. 13(2), pages 21582440231, May.
    • Handle: RePEc:sae:sagope:v:13:y:2023:i:2:p:21582440231169632
    DOI: 10.1177/21582440231169632
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440231169632
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440231169632?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ebrahim Endris & Andualem Kassegn, 2022. "The role of micro, small and medium enterprises (MSMEs) to the sustainable development of sub-Saharan Africa and its challenges: a systematic review of evidence from Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-18, December.
    2. John I. Agburu & Nyianshima Calvin Anza & Akuraun Shadrach Iyortsuun, 2017. "Effect of outsourcing strategies on the performance of small and medium scale enterprises (SMEs)," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 7(1), pages 1-34, December.
    3. Alhassan Musah & Erasmus Dodzi Gakpetor & Portia Pomaa, 2018. "Financial Management Practices, Firm Growth and Profitability of Small and Medium Scale Enterprises (SMEs)," Information Management and Business Review, AMH International, vol. 10(3), pages 25-37.
    4. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Working Papers of the African Governance and Development Institute. 21/084, African Governance and Development Institute..
    5. 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.
    6. Gemechu Abdissa & Abebe Ayalew & Anna Dunay & Csaba Bálint Illés, 2022. "Determinants of Sustainable Growth of SMEs in Developing Countries: The Case of Ethiopia," Economies, MDPI, vol. 10(8), pages 1-16, August.
    7. Issam Laguir & Matthijs Den Besten, 2016. "The influence of entrepreneur’s personal characteristics on MSEs growth through innovation," Applied Economics, Taylor & Francis Journals, vol. 48(44), pages 4183-4200, September.
    8. Sumon Kumar Bhaumik & Saul Estrin & Tomasz Mickiewicz, 2017. "Ownership identity, strategy and performance: Business group affiliates versus independent firms in India," Asia Pacific Journal of Management, Springer, vol. 34(2), pages 281-311, June.
    9. Claudio Cozza & Franco Malerba & Maria Luisa Mancusi & Giulio Perani & Andrea Vezzulli, 2012. "Innovation, profitability and growth in medium and high-tech manufacturing industries: evidence from Italy," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1963-1976, May.
    10. Hamed M. S. Ahmed & Yimer Ayalew Ahmed, 2021. "Constraints of youth entrepreneurs in Ethiopia," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 11(1), pages 337-346, December.
    11. Samuel Afriyie & Jianguo Du & Abdul-Aziz Musah, 2019. "Innovation and marketing performance of SME in an emerging economy: the moderating effect of transformational leadership," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-25, December.
    12. Gao, Xiaoming & Wailes, Eric J. & Cramer, Gail L., 1995. "Double-Hurdle Model With Bivariate Normal Errors: An Application To U.S. Rice Demand," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(2), pages 1-14, December.
    13. Martin Mabunda Baluku & Julius Fred Kikooma & Edward Bantu & Kathleen Otto, 2018. "Psychological capital and entrepreneurial outcomes: the moderating role of social competences of owners of micro-enterprises in East Africa," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 8(1), pages 1-23, December.
    14. John Kuada, 2021. "Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda," Research Africa Network Working Papers 21/084, Research Africa Network (RAN).
    15. Fuzhong Chen & Haifeng Li & Huini Wei & Wani Nelson, 2022. "The Ownership, Innovation, and Sustainable Development of Micro and Small Enterprises: Evidence of China," SAGE Open, , vol. 12(4), pages 21582440221, November.
    16. Csaba Bálint Illés & Hilda Hurta & Anna Dunay, 2015. "Efficiency and profitability along the lifecycle stages of small enterprises," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 14(1), pages 56-69.
    17. Aschale Mekuria Shitaye, 2022. "Micro and small scale enterprises growth and ownership structure in Hawassa city, Sidama region, Ethiopia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2071012-207, December.
    18. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    19. Abel Tewolde Mehari & Christian Feleke Belay, 2017. "Challenges and prospects of entrepreneurship development and job creation for youth unemployed: evidence from Addis Ababa and Dire Dawa city administrations, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 6(1), pages 1-22, December.
    20. Abriham Ebabu Engidaw, 2021. "The effect of external factors on industry performance: the case of Lalibela City micro and small enterprises, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-14, December.
    21. Franziska Sohns & Javier Revilla Diez, 2019. "Explaining micro-enterprise survival in rural Vietnam: a multilevel analysis," Spatial Economic Analysis, Taylor & Francis Journals, vol. 14(1), pages 5-25, January.
    22. Abiot Animaw Semegn & Narendra Kumar Bishnoi, 2021. "Analysis of Effect of Microfinance on the Performance of MSEs in Amhara National Regional State, Ethiopia," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 30(1), pages 153-178, March.
    23. Daniel Agyapong & Albert Bampo Attram, 2019. "Effect of owner-manager’s financial literacy on the performance of SMEs in the Cape Coast Metropolis in Ghana," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-13, December.
    24. John Kuada, 2021. "Financial inclusion and small enterprise growth in Africa: emerging perspectives and research agenda," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 13(3), pages 402-417, December.
    25. Mohammed Ziaul Hoque, 2017. "Mental budgeting and the financial management of small and medium entrepreneurs," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1291474-129, January.
    26. Monika Mühlböck & Julia-Rita Warmuth & Marian Holienka & Bernhard Kittel, 2018. "Desperate entrepreneurs: no opportunities, no skills," International Entrepreneurship and Management Journal, Springer, vol. 14(4), pages 975-997, December.
    27. Marus Eton & Fabian Mwosi & Constant Okello-Obura & Abanis Turyehebwa & Gilbert Uwonda, 2021. "Financial inclusion and the growth of small medium enterprises in Uganda: empirical evidence from selected districts in Lango sub-region," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-23, December.
    28. Uzochukwu Amakom & Francis Ibeawuchi Amagwu, 2020. "Informal Sources of Microfinance and Profitability of Micro and Small Enterprises Clusters in South-East Nigeria," Business Perspectives and Research, , vol. 8(2), pages 173-185, July.
    29. Wondemhunegn Ezezew Melesse, 2019. "Change in employment level and financial constraint: evidence from Ethiopian manufacturing SMEs," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(2), pages 329-352, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francis Lwesya & Adam Beni Swebe Mwakalobo, 2023. "Frontiers in microfinance research for small and medium enterprises (SMEs) and microfinance institutions (MFIs): a bibliometric analysis," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    2. Kaliba, Aloyce R. & Mushi, Richard J. & Gongwe, Anne G. & Mazvimavi, Kizito, 2020. "A typology of adopters and nonadopters of improved sorghum seeds in Tanzania: A deep learning neural network approach," World Development, Elsevier, vol. 127(C).
    3. Egemen İPEK, 2019. "An Empirical Study on Alcohol Participation and Consumption Decision in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    4. Miftha Beshir & Menfese Tadesse & Fantaw Yimer & Nicolas Brüggemann, 2022. "Factors Affecting Adoption and Intensity of Use of Tef- Acacia decurrens -Charcoal Production Agroforestry System in Northwestern Ethiopia," Sustainability, MDPI, vol. 14(8), pages 1-15, April.
    5. Kanbiro Orkaido Deyganto, 2022. "The effect of tax incentives practices on the sustainability of micro, small and medium enterprises in Ethiopia during the outbreak of corona virus pandemic," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-22, December.
    6. James Carroll & Siobhan McCarthy & Carol Newman, 2005. "An Econometric Analysis of Charitable Donations in the Republic of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 36(3), pages 229-249.
    7. Castro N. Gichuki & Jiqin Han & Tim Njagi, 2020. "The Impact of Household Wealth on Adoption and Compliance to GLOBAL GAP Production Standards: Evidence from Smallholder farmers in Kenya," Agriculture, MDPI, vol. 10(2), pages 1-15, February.
    8. Chung-Wei Kuo & Rong-Chang Jou & Yi-Chun Chiu, 2023. "The factors affecting people’s willingness in participating in and paying for upgrading their seats from the economy class to the premium class," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    9. Muhammad Yaseen & Neha Thapa & Supawan Visetnoi & Shoukat Ali & Shahab E. Saqib, 2023. "Factors Determining the Farmers’ Decision for Adoption and Non-Adoption of Oil Palm Cultivation in Northeast Thailand," Sustainability, MDPI, vol. 15(2), pages 1-19, January.
    10. Cornelia Lawson, 2013. "Academic Inventions Outside the University: Investigating Patent Ownership in the UK," Industry and Innovation, Taylor & Francis Journals, vol. 20(5), pages 385-398, July.
    11. Jensen, Kimberly L., 1995. "Fluid Milk Purchase Patterns In The South: Effects Of Use Of Nutrition Information And Household Characteristics," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(2), pages 1-14, December.
    12. Marcén, Miriam & Molina, José Alberto & Morales, Marina, 2018. "The effect of culture on the fertility decisions of immigrant women in the United States," Economic Modelling, Elsevier, vol. 70(C), pages 15-28.
    13. Samuel Sebsibie & Workineh Asmare & Tessema Endalkachew, 2015. "Agricultural Technology Adoption and Rural Poverty: a Study on Smallholders in Amhara Regional State, Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 23(2), December.
    14. Langyintuo, Augustine S. & Mungoma, Catherine, 2008. "The effect of household wealth on the adoption of improved maize varieties in Zambia," Food Policy, Elsevier, vol. 33(6), pages 550-559, December.
    15. Dorotic, Matilda & Verhoef, Peter C. & Fok, Dennis & Bijmolt, Tammo H.A., 2014. "Reward redemption effects in a loyalty program when customers choose how much and when to redeem," International Journal of Research in Marketing, Elsevier, vol. 31(4), pages 339-355.
    16. Bradfield, Tracy & Butler, Robert & Dillon, Emma J. & Hennessy, Thia & Loughrey, Jason, 2023. "The impact of long-term land leases on farm investment: Evidence from the Irish dairy sector," Land Use Policy, Elsevier, vol. 126(C).
    17. Lucian Belascu & Alexandra Horobet & Georgiana Vrinceanu & Consuela Popescu, 2021. "Performance Dissimilarities in European Union Manufacturing: The Effect of Ownership and Technological Intensity," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    18. repec:zbw:rwirep:0200 is not listed on IDEAS
    19. Ronelle Burger & Canh Thien Dang & Trudy Owens, 2017. "Better performing NGOs do report more accurately: Evidence from investigating Ugandan NGO financial accounts," Discussion Papers 2017-10, University of Nottingham, CREDIT.
    20. Niclas Hagelin, 2003. "Why firms hedge with currency derivatives: an examination of transaction and translation exposure," Applied Financial Economics, Taylor & Francis Journals, vol. 13(1), pages 55-69.
    21. Subir K. Chakrabarti & Srikant Devaraj & Pankaj C. Patel, 2021. "Minimum wage and restaurant hygiene violations: Evidence from Seattle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 85-99, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:13:y:2023:i:2:p:21582440231169632. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.