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Identifying dynamic and constrained entrepreneurs in low income countries: evidence from Ethiopia


  • Girum Abebe

    (Ethiopian Development Research Institute)

  • Berihu Assefa

    (Ethiopian Development Research Institute)

  • Mulu Gebre-eyesus

    (Ethiopian Development Research Institute)

  • Tigabu Degu

    (Ethiopian Development Research Institute)


The small enterprise economy is populated by highly heterogeneous enterprises. The diversity reflects the differences in entrepreneurial and enterprise characteristics with possible implications for the way enterprises are operated. Using a large scale survey of micro and small enterprises in Ethiopia, we employ two independent approaches to differentiate between dynamic, constrained and survivalist enterprises. We find that constrained and dynamic enterprises are operated by entrepreneurs who share similar characteristics, behavioral traits and enterprise structure, but vary substantially in terms of mode of business operations and business constraints that they face. We show that constrained enterprises enjoy high rates of capital returns and that limited capacity utilization rates, poor business practices as well as credit constraint preclude them from growing. On the other hand, survivalists enterprises are not only operated differently, they are also run by entrepreneurs with fundamentally different characteristics, enterprise structure and economic objectives. These results help us draw implications for enterprise support programs.

Suggested Citation

  • Girum Abebe & Berihu Assefa & Mulu Gebre-eyesus & Tigabu Degu, 2018. "Identifying dynamic and constrained entrepreneurs in low income countries: evidence from Ethiopia," Working Papers 022, Ethiopian Development Research Institute.
  • Handle: RePEc:etd:wpaper:023

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    Cited by:

    1. Jean-Philippe Berrou & Francois Combarnous & Thomas Eekhout & Kevin Mellet, 2020. "My mobile, my market: Mobile phone uses and economic performance in the informal sector in Dakar [Mon mobile, mon marché. Usages du téléphone mobile et performances économiques dans le secteur info," Post-Print hal-02506855, HAL.
    2. Jean-Philippe Berrou & Damien Girollet, 2019. "A la recherche des « gazelles » du secteur informel urbain africain. Entreprises et entrepreneurs à fort potentiel dans leur environnement socioéconomique et numérique," Working Papers hal-02507441, HAL.

    More about this item


    enterprise; dynamic; constrained; capital; business practice;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis


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