Abstract
PurposeThe purpose of this study was to examine micro and small scale enterprises’ growth determinants operating in Benishangul-Gumuz Regional State of Ethiopia as emerging region.Design/methodology/approachThe study adopted an explanatory research design with arrangement of primary data collection via a cross-sectional survey questionnaire followed by mixed research approach. The sample of this study was 220 enterprises determined by Yamane’s formula and selected using proportional stratified random sampling technique.FindingsThe result of regression analysis revealed that initial investment, access to land, access to finance, location, sectoral engagement, market linkage, and business experience are significant in explaining growth in one hand. On the other side, however, gender, education, ownership, formal recording, and financial management practice are found to be insignificant variables in determining enterprises’ growth.Research limitations/implicationsMore evidence is needed on micro and small scale enterprises’ growth determinants before any generalization of the results can be made. In addition, the empirical tests were conducted only on 220 entrepreneurs since 2018. Therefore, the results of the study cannot be assumed to extend beyond this group of entrepreneurs to different study periods.Practical implicationsThe study might help the entrepreneurs in addressing the factors affecting growth to take actions toward developing their performance and in turn contribute to employment, export participation, poverty alleviation, and women empowerment.Originality/valueThis paper adds to the literature on the determinants of micro- and small-scale enterprises’ growth. In particular, it tests the impact of initial investment, access to land, access to finance, location, sectoral engagement, market linkage, business experience, education, ownership structure, and financial management practice on growth of enterprises.
Highlights
To date, extensive evidence shows that growth of micro and small scale enterprises (MSSEs, hereafter) is a critical ingredient in sustainable development of developing economies (Mbugua et al 2013)
A research was made by Abara and Banti (2017) which analyzed the role of financial institutions on growth of only 57 sampled enterprises using percentage change in assets as proxy of growth
This paper provides new empirical evidence on micro and small scale enterprises’ growth influencing factors based on the data acquired from 206 entrepreneurs in Benishangul-Gumuz Regional State of Ethiopia using regression analysis
Summary
Extensive evidence shows that growth of micro and small scale enterprises (MSSEs, hereafter) is a critical ingredient in sustainable development of developing economies (Mbugua et al 2013). As to curb challenges of unemployment and identify growth determinants, a detailed and regular study at country, regional, and firm level is important to provide result-oriented and sustainable support to the sector (Woldeyohanes 2014; Abay et al 2014 ; Fissiha 2016). For this reason, quite a number of studies have been carried out in different parts of the country to identify growth determinants. This study incorporated only access to credit, firm size, and firm age to investigate growth influencing factors, ignoring more of growth constraint variables discussed in the literature
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