Factors Influencing the Performance of Micro and Small Enterprises: The Case of Women Owned Enterprises in Two Sub Cities of Addis Ababa

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Addis Ababa University


This research aims to investigate factors affecting the performance of MSEs with a special emphasizes on women owned and operated MSEs, which are involved in construction, wholesale and retail trade, food processing and textile and garment sectors in Nifas-silk Lafto and Lideta sub-cities of Addis Ababa City Administration. For the sake of achieving the objectives of this study, data were collected using questionnaires and were analyzed using statistical analysis such as descriptive and inferential analyses. The information gleaned through questionnaire from a sample of 190 MSEs owners and face-to-face interviews were conducted with 20 managers of MSEs. The respondent was selected using random sampling technique. The study elicited nine major challenges which affect the performance of women owned MSEs in the target sub-cities which include: entrepreneurial skill, managerial capacity, accesses to finance, lack of working premises, technological factors, accesses to market, business networking, legal and regulatory frameworks including bureaucratic bottlenecks and accesses to training. According to the result obtained from the business profitability analysis 60 % of enterprises found in the study area had higher profitability whereas 40% had lower profitability(performance). In addition, a multiple regression model was used to identify the determinant factors that affected the performance of the enterprises. The results of the regression analysis showed that, there exists a linear and positive significant relation, ranging from substantial to strong, between the independent variables and the dependent variable. Moreover, the selected independent variables may significantly explain the variations in the dependent variable at 5% level of significance. Based on findings, recommendations emanating from the study are forwarded to build up the performance of women owned MSEs not only to survive in the business but also to transform into medium and higher level enterprises. Key Words: Profitability, Performance, MSEs, Determinant factors.



Profitability, Performance, MSEs, Determinant factors