Growth determinants of manufacturing micro- and small enterprises in Ethiopia: an empirical study of Tigray Province

Abstract

This paper examines the growth determinants of manufacturing micro- and small enterprises operating in Tigray Province, Ethiopia. The study draws on the ordinary least squares (OLS) regression model and firm growth equation. Data was collected from a sample of 339 firm owners using a structured questionnaire. The study finds a positive and significant relationship between firm growth and policy related factors such as, access to credit, working spaces, and marketing premises as well as human capital factors including entrepreneur’s education, business skills, and training. The finding supports the research hypotheses, which posit that these factors have a direct linkage with firm growth. Conversely, findings reveal that firm growth and firm age are initially inversely related but that this negative relationship stays only for some time since as age increases, firms start to grow and the relationship becomes positive towards the end. Next, the t-test shows that the mean annual growth rate of men-owned firms (7.58 per cent) is higher than that of women-owned firms (3.75 per cent), indicating evidence of a gender gap in the growth capability of male and female entrepreneurs. Descriptive statistics also reveal that overall women business operators have lower education, skills, and training relative to men operators. This equality gap calls for useful initiatives that resolve gender inequalities and thereby enhance expanded opportunities for women’s empowerment in the region.