Determinants of Micro and Small Enterprises Growth: The Case of Durame Town, Kembata Tembaro Zone, Southern Nations and Nationalities and Peoples Region, Ethiopia, 2016
International Journal of Business and Economics Research
Volume 5, Issue 5, October 2016, Pages: 161-175
Received: Aug. 16, 2016; Accepted: Aug. 31, 2016; Published: Oct. 14, 2016
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Authors
Dagmawit Alemayehu, Rural Development and Agricultural Extension Department, Wolaita Sodo Univeristy, Wolaita Sodo Ethiopia
Yishak Gecho, Rural Development and Agricultural Extension Department, Wolaita Sodo Univeristy, Wolaita Sodo Ethiopia
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Abstract
This study was conducted in Durame Town, KembataTemaro zone, Southern Ethiopia. The objective of the study is to find out factors that determine growth of Micro and Small Enterprises and to assess current status of Micro and Small Enterprises in terms of employment and capital growth. Out of 148 Micro and Small Enterprises in the study area, 100 Micro and Small Enterprises (MSEs) were selected as a sample using stratified and simple random sampling technique. They were stratified based on the sector they are operating. The data were analyzed using descriptive statistical tools including mean, percentage and standard deviation. The binary logit model was applied to identify determinants of MSEs growth. The study used employment and capital as growth indicators. Growth rate for the two indicators was computed by the change of natural logarithm of employment or capita over the life of enterprise. After calculating growth rate, Micro and Small Enterprises were grouped into two categories growing and non growing. Micro and Small Enterprises which had growth rate < 0 categorized into non growing and Micro and Small Enterprises which had growth rate ≥ 0.The finding of the study shows that out of the total sample 40% of Micro and Small Enterprises are growing and 60% of Micro and Small Enterprises are non growing in terms of employment. In terms of capital 69% of Micro and Small Enterprises are growing and 31% are non growing. The model result indicated that out of 19 explanatory variables, 10 variables were found to be significant in determining Micro and Small Enterprises growth. Factors found to be significant for employment growth were: entrepreneurship training, location of enterprise, motivation of owner, market linkage, access to finance, access to water. Factors found to be significantly influencing capital growth were: education level of owner, motivation of owner, number of owners, initial employment size, social network. Hence, government and non-government organizations that are concerned with the promotion and development of MSEs need to take these factors in to account to accomplish better result and increase the potential contribution of MSEs to the economic growth.
Keywords
Micro Enterprise, Small Enterprise, Employment, Capital, Binary Logit, Growth
To cite this article
Dagmawit Alemayehu, Yishak Gecho, Determinants of Micro and Small Enterprises Growth: The Case of Durame Town, Kembata Tembaro Zone, Southern Nations and Nationalities and Peoples Region, Ethiopia, 2016, International Journal of Business and Economics Research. Vol. 5, No. 5, 2016, pp. 161-175. doi: 10.11648/j.ijber.20160505.15
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Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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