Factor Affecting the Growth of Construction Companies: In the Case of Addis Ababa
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Date
2024-02-21
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AAU
Abstract
This research focused on examining the factors that influence the growth of construction
companies in Addis Ababa. Unfortunately, the recent growth of construction companies in Addis
Ababa has been unsatisfactory. Some struggle to remain active in the industry, while others remain
inactive for extended periods or are forced to exit the market. The study utilized both descriptive
and explanatory research methods. Primary data was collected through questionnaires
administered to contractors ranging from grade 1 to grade 10. A representative sample of 250
valid respondents was selected to represent a total of 1,638 construction companies, using a
stratified random sampling technique. The collected data was analyzed using descriptive statistics
and inferential statistics. The findings of the study revealed robust correlations between the six
independent variables (human resources, leadership, organizational culture, governmental
policies and regulations, corruption, and political instability) and the dependent variable of
growth, with a 95% confidence interval. Furthermore, these six independent variables explained
79% of the observed growth. Regression analysis results indicated that four of the independent
variables (human resources, leadership, organizational culture, and governmental policies and
regulations) had a positive and statistically significant effect at a 5% significance level.
Conversely, the remaining two factors had a negative effect but remained statistically significant
at a 95% confidence interval. Based on these findings, it is recommended that construction
companies prioritize the development of their human resources to cultivate a skilled workforce.
Additionally, fostering strong leadership is crucial for driving innovation and success within the
industry. Furthermore, companies should strive to create an organizational culture that values
efficiency and collaboration, as this promotes sustained growth. On the governmental level, it is
important to implement and enforce transparent construction policies, actively combat corruption
through rigorous measures, and streamline permitting processes to facilitate the growth of
construction companies. By addressing these factors, construction companies in Addis Ababa can
position themselves for improved growth and success in the industry