IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v14y2023i1d10.1007_s13132-021-00859-x.html
   My bibliography  Save this article

Growth Determinants of Micro and Small Enterprises (MSEs): Evidence from Entrepreneurs in the Eastern Region of Ethiopia

Author

Listed:
  • Wondmagegn Biru Mamo

    (Haramaya University)

Abstract

For developing countries like Ethiopia, MSEs are engines of economic growth and places where employment opportunity is created. Albeit their economic and social significance, the growth determinants of these enterprises are not yet studied in Eastern Ethiopia. This study, therefore, was mainly aimed at studying the growth determinants of MSEs in Eastern Ethiopia, using capital accumulation as a proxy measure of growth. The study will help the government in general, and the enterprises development agency; in particular, improve the working environment for the growth of MSEs. A total of 354 questionnaires were collected using a cross-sectional survey. Both descriptive and econometric analyses were employed, with a linear regression model estimated using the OLS technique. To get the parameters to be estimated with higher precision and unbiasedness, we conducted standard tests of homoscedasticity, multicollinearity, normality, autocorrelation, and overall model significance. The researcher found out that initial capital, the export of products, the existence of formal accounting records, MSEs loan from the government, and the provision of training for MSEs are positive and statistically significant. On the contrary, prior experience, type of customer, and tax incentive by the government are negative and statistically significant.

Suggested Citation

  • Wondmagegn Biru Mamo, 2023. "Growth Determinants of Micro and Small Enterprises (MSEs): Evidence from Entrepreneurs in the Eastern Region of Ethiopia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 138-160, March.
    • Handle: RePEc:spr:jknowl:v:14:y:2023:i:1:d:10.1007_s13132-021-00859-x
    DOI: 10.1007/s13132-021-00859-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-021-00859-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-021-00859-x?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gebrehiwot, Ageba & Wolday, Amha, 2006. "Micro and Small Enterprises (MSE) Development in Ethiopia: strategy, Regulatory Changes and Remaining Constraints," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 10(2), pages 103-103, April.
    2. Akoten, John E & Sawada, Yasuyuki & Otsuka, Keijiro, 2006. "The Determinants of Credit Access and Its Impacts on Micro and Small Enterprises: The Case of Garment Producers in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 927-944, July.
    3. Erstu Tarko Kassa, 2021. "Socioeconomic determinants of micro and small enterprise growth in North Wollo and Waghimira Zone selected towns," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-14, December.
    4. Mano, Yukichi & Iddrisu, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2012. "How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive? The Impacts of Experimental Basic Managerial Training," World Development, Elsevier, vol. 40(3), pages 458-468.
    5. 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.
    6. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
    7. McPherson, Michael A., 1996. "Growth of micro and small enterprises in southern Africa," Journal of Development Economics, Elsevier, vol. 48(2), pages 253-277, March.
    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. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    2. Girum Abebe, 2015. "State-inducement Versus Self-initiation: A Comparative Study of Micro and Small Enterprises in Ethiopia," Working Papers 013, Policy Studies Institute.
    3. Dodlova, Marina & Göbel, Kristin & Grimm, Michael & Lay, Jann, 2015. "Constrained firms, not subsistence activities: Evidence on capital returns and accumulation in Peruvian microenterprises," Labour Economics, Elsevier, vol. 33(C), pages 94-110.
    4. Girum Abebe, 2012. "Ownership, Management Practices, Upgrading, and Productivity in the Metalworking sector: Evidence from Ethiopia," Working Papers 009, Policy Studies Institute.
    5. 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.
    6. Masakure, Oliver & Cranfield, John & Henson, Spencer, 2008. "The Financial Performance of Non-farm Microenterprises in Ghana," World Development, Elsevier, vol. 36(12), pages 2733-2762, December.
    7. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    8. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    9. Blessing Atwine & Ibrahim Mike Okumu & John Bosco Nnyanzi, 2023. "What drives the dynamics of employment growth in firms? Evidence from East Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-25, December.
    10. Girum Abebe & Tetsushi Sonobe, 2012. "Management Practices, Self-Selection into Management Training Participation, and Training Effects in the Garment Industry in Ethiopia," GRIPS Discussion Papers 11-23, National Graduate Institute for Policy Studies.
    11. Brixiová, Zuzana & Ncube, Mthuli & Bicaba, Zorobabel, 2015. "Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland," World Development, Elsevier, vol. 67(C), pages 11-26.
    12. Keijiro Otsuka, 2020. "Strategy for Cluster-Based Industrial Development in Developing Countries," Discussion Papers 2019, Graduate School of Economics, Kobe University.
    13. Fardous Alom & Moha Asri Abdullah & Abdul Rashid Moten & S. M. Ferdous Azam, 2016. "Success factors of overall improvement of microenterprises in Malaysia: an empirical study," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 6(1), pages 1-13, December.
    14. Tidiane Kinda & Josef Loening, 2010. "Small Enterprise Growth and the Rural Investment Climate: Evidence from Tanzania," African Development Review, African Development Bank, vol. 22(1), pages 173-207.
    15. Wolday Amha, 2016. "Growth of Youth-owned MSEs in Ethiopia: Characteristics, Determinants and Challenges," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 24(2), August.
    16. Imelda T. Angeles & Ma. Socorro P. Calara & Allan B. Guzman, 2019. "The mediating effect of microfinancing on access to finance and growth of microenterprises: evidence from the Philippines," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-16, December.
    17. Faisal Buyinza & John Mutenyo & Anthony Tibaingana, 2018. "Factors Affecting Access to Formal Credit by Micro and Small Enterprises in Uganda," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 4(4), pages 405-424, October.
    18. Reeg, Caroline, 2015. "Micro and small enterprises as drivers for job creation and decent work," IDOS Discussion Papers 10/2015, German Institute of Development and Sustainability (IDOS).
    19. Charles Ackah & Richard Osei Bofah & Derek Asuman, 2017. "Who Are Africa’S Entrepreneurs? Comparative Evidence From Ghana And Uganda," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-23, December.
    20. Loening, Josef & Lane, William Leeds, 2007. "Tanzania: Pilot Rural Investment Climate Assessment. Stimulating Nonfarm Microenterprise Growth," MPRA Paper 24824, University Library of Munich, Germany.

    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:spr:jknowl:v:14:y:2023:i:1:d:10.1007_s13132-021-00859-x. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.