Factors Affecting the Business Performance of Micro and Smal Enterprises: In Case of Hossana Town, Hadiya Zone

Abstract

The micro and small enterprises has special importance in the economy that it is responsible for the major contribution of employment and income generation. However, their contribution is very low since the growth of MSEs is affected by a number of factors. Therefore, this study is intended to fill this gap by analyzing factors affecting the business performance of MSEs in Hadiya Zone, Hosanna town. The study mainly deployed explanatory research design with implementation of both quantitative and qualitative research approaches. Out of 287 MSEs, 167samples were selected using a stratified proportional random sampling technique, from which the required data were generated and analyzed through employing inferential analyses method. Pearson Correlation Coefficient and multiple linear regressions model were applied for inferential analyses. The findings indicate that; access to market, finance, working premises, management skill, technology, infrastructure and entrepreneur skill influence positively and significantly the business performance of MSEs with beta value 0.420, 0.203, 0.157, 0.156, 0.125, 0.110 and 0.107 respectively in the study area. To conclude the study results; access to market, finance and working premises were largely influenced factors of MSEs success. Based on the research findings the government has recommended to establish a centrally managed marketing site that will equally give access to market; Banks and Micro finances institutions have responsibilities to improve access to finance through offering a better lending terms and conditions in collaboration with government in order to advance performance of MSEs in Hosanna Town.Keywords: MSEs, Business Performance, Factors, Hosanna Town.DOI: 10.7176/EJBM/12-13-03Publication date:May 31st 2020