Assessing the Cause of Failure of SMM Construction Companies in Addis Ababa
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Date
2019-05-17
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Addis Ababa University
Abstract
The importance of small, medium and micro enterprise contractors in Ethiopia has been
recognized by many researchers and policymakers. The contribution of small contractors to the
creation of jobs and to the alleviation of poverty has also been recognized by many developing
countries including Ethiopia. However, these enterprises have got many problems which are
causing failure in their business, especially in the construction industry.
The main objective of this thesis is to assess the cause of failures that are facing on Small,
Medium and Micro Enterprise (SMME) construction companies in Addis Ababa. The research
used a questionnaire survey on 162 SMME construction companies and case studies to achieve
the study objectives.
The research was focused on organizational and economic- environmental related factors which
were the cause of failure of these enterprises. The managerial, financial, expansion and
information technology related factors were classified as organizational challenges while
marketing, payment, regulation and policy related factors were studied as economic-
environmental related factors.
The research established that marketing factor is the most challenging factor which becomes the
cause of failure of SMME construction companies in Addis Ababa. Next to marketing factor,
another challenge which usually happens in SMME construction companies in Addis Ababa is a
financial problem. This occurred due to late payment from the client and lack of working capital
from an enterprise. According to research results, managerial, ethical, information- technology
and government policy and regulation related factors were other challenges which has faced on
SMME construction companies.
The research has also suggested some recommendations for the concerning bodies, as they need
to have an appropriate understanding about these factors in order to solve marketing, financial,
managerial, ethical and government policy and regulation problems. These will assist SMME‘s
to flourish and achieve their objectives of profit, growth and employment opportunities and also
reduce poverty. Therefore, it is important for the government and nongovernmental
organizations together to formulate their policies and strategies which makes easy to meet the
goal of these enterprises.
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Keywords
Factors, Failure, SMME