Effect of entrepreneur, firm, and institutional characteristics on small-scale firm performance in Ghana

Bernard Kwamena Cobbina Essel,Faizal Adams,Kwadwo Amankwah

doi:10.1186/s40497-019-0178-y

Abstract

Small-scale firms are essential contributors to employment generation and growth of many economies. In recognition of their salient role, several policy interventions have been implemented to enhance job creation functions of small-scale firms. This study examined one of these interventions, that is, promotion of small-scale firms in Sunyani municipality of Ghana by analyzing the effect of entrepreneurs, firm, and institutional characteristics on the growth of small-scale firms. A cross-sectional survey was conducted involving 200 small-scale firm operators selected through multi-stage sampling. Both descriptive and inferential analytical tools were used to analyze the data. Descriptive techniques employed included means, frequencies, and cross-tabulations. The inferential analysis included the use of multivariate multiple regression techniques that estimate a single regression model with more than one dependent variable simultaneously. The findings show three types of small-scale enterprises viz. processing (dominated by females), artisans, and service sector (dominated by males) at Sunyani municipality of Ghana. The main findings show that demographic factors (sex of operator, completion of formal education at basic school level or junior high school), institutional variables (bank investment and training services), and firm characteristics (artisan and craft industry type) conjointly and significantly influence small-scale firm performance (number of employees and sales or monthly revenue). Consequent implications for developing economies (such as Ghana) include the need for the introduction of entrepreneurship education at basic level of education in addition to the current practice where entrepreneurship education is mostly limited to tertiary institutions or undergraduate levels, and linking provision of investment services with requisite skills training and backstopping in interventions targeting small-scale firms.

Highlights

The critical factors that influence small-scale business growth have extensively been explored empirically in extant literature (Coad, Segarra, & Teruel, 2016; Ilaboya & Ohiokha, 2016; Kristiansen, Furuholf, & Walid, 2003; Mohamad Radzi, Mohd Nor, & Mohezar Ali, 2017; Murphy, Trailer, & Hill, 1996; Reynolds, Camp, Bygrave, Autio, & Hay, 2001; and Storey, 1994)
We present empirical evidence using financial proxies to measure firm growth based on the resourcebased view theory (Barney, 1986; Wenerfelt 1984) to further improve understanding of antecedents of small-scale firm growth, in Ghana where issues of unemployment and poverty remain top priorities among government and nongovernmental organizations (Berkham, 1996)
Descriptive analysis The descriptive analysis shows that out of the 200 rural small-scale firms surveyed, 46% are into agro-processing and 37% are within the artisanal industry while 17% are from the service industry (Table 2)

Summary

Introduction

The critical factors that influence small-scale business growth have extensively been explored empirically in extant literature (Coad, Segarra, & Teruel, 2016; Ilaboya & Ohiokha, 2016; Kristiansen, Furuholf, & Walid, 2003; Mohamad Radzi, Mohd Nor, & Mohezar Ali, 2017; Murphy, Trailer, & Hill, 1996; Reynolds, Camp, Bygrave, Autio, & Hay, 2001; and Storey, 1994). Essel et al Journal of Global Entrepreneurship Research (2019) 9:55 on these factors have generally been inconclusive (Isaga, 2018) probably because operations of small businesses for developing economies are complicated by variety of factors, and as a result, no extensive surveys are conducted that comprehensively explain all the variables (Braidford, Drummond, & Stone, 2017) Perhaps, it may suggest, as we propose, that the dominant use of non-financial proxies such as customer satisfaction, corporate reputation, happiness, personal development, cultural, and social network (see Mohamad Radzi et al, 2017) to proxy firm performance or growth is fairly limited. We present empirical evidence using financial proxies to measure firm growth based on the resourcebased view theory (Barney, 1986; Wenerfelt 1984) to further improve understanding of antecedents of small-scale firm growth, in Ghana where issues of unemployment and poverty remain top priorities among government and nongovernmental organizations (Berkham, 1996)

Methods

Results

Conclusion