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Examining the Effect of Corruption and Bureaucracy on SMEs Growth in the Kumasi Metropolis of Ghana

In: Universities, Entrepreneurship and Enterprise Development in Africa - Conference Proceedings 2017

Author

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  • Kwamena Minta Nyarku
  • Stephen Oduro

Abstract

Small and Medium Enterprises (SMEs) are considered a seed-bed of entrepreneurship and innovation in most emerging economies; nevertheless, SMEs sometimes lack an enabling business climate, which hinders their potential growth. This paper examines the effect of corruption and bureaucracy on SMEs growth in the Kumasi Metropolis of Ghana. The study was a quantitative research, and convenience sampling method was employed to select 373 owners/managers as respondents for the study. Employing questionnaire as its main data collection instrument, the study used Gretl version 3.0 Statistical Software for the analysis of data collected. The results of the study revealed that 1% increase in corruption in the SMEs sector leads to 36.12% decline in SMEs growth (sales and employment), and 1% increase in bureaucracy leads to 28.76% decrease in the growth of SMEs. An interesting outcome of the study was that the excessive bureaucratic bottlenecks in the SMEs sector are implied by corruption. We, therefore, conclude that there is a significant negative relationship between corruption and bureaucracy and SMEs growth. It is, therefore, recommended that the government takes a giant-step to fight corruption in the SMEs sector by ensuring transparency and accountability of public officials and also streamline its systems and activities in the sector to reduce the excessive administrative barriers. The present study adds substantial value to the body of research on SMEs as it is the first research to have considered the joint effect of corruption and bureaucracy on SMEs growth in an emerging economy like Ghana. Published In: Munyoki, Bode (Eds.): Universities, Entrepreneurship and Enterprise Development in Africa - Conference Proceedings 2017. Nairobi, Kenya, 19. July 2017

Suggested Citation

  • Kwamena Minta Nyarku & Stephen Oduro, 2017. "Examining the Effect of Corruption and Bureaucracy on SMEs Growth in the Kumasi Metropolis of Ghana," Proceedings Paper, in: Munyoki, Justus & Bode, Jürgen (ed.), Universities, Entrepreneurship and Enterprise Development in Africa - Conference Proceedings 2017, volume 6, pages 154-173, Universities Entrepreneurship and Enterprise Development in Africa International Conference.
    • Handle: RePEc:sau:ueedcc:06:154-173
    DOI: 10.18418/978-3-96043-060-5_154
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    References listed on IDEAS

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    1. Iddrisu Mohammed Awal & Abdelhak Senadjki & Au Yong Hui Nee, 2021. "Prospects and Impediments of Railway Infrastructure Development in Ghana: Impact of Standard Gauge Railway (SGR) Technology," Journal of Infrastructure Development, India Development Foundation, vol. 13(2), pages 87-106, December.

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    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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