Determinants of technology adoption by micro and small enterprises (MSEs) in Awi zone, Northwest Ethiopia

Abstract

Adoption of technology can enhance the development of micro and small enterprises (MSEs). But in Ethiopia, there is a very low adoption of broadband connections, mobile phones, computers, printers, scanners, copiers, and other technologies by MSEs. The main objective of this study was to identify the determinants of technology adoption by MSEs in Northwest Ethiopia. Cross-sectional data were collected from 327 MSEs selected using the stratified random sampling method and analyzed using the Heckman two-stage model. The first stage probit model estimation results showed that sex, educational level, source of start-up capital, size of the enterprise, and whether the owner of the enterprise has had technology related trainings were significant factors determining technology adoption decisions of MSEs. The second stage estimation results showed that sex, education level, experience, age, family size of the owner, and access to credit significantly influence the degree of technology adoption. The findings indicate that MSEs need more education (information) on technology, greater access to credit, and incentives provided by the government of Ethiopia and other agencies in order to increase their adoption of technology.