FACTORS INFLUENCING THE PERFORMANCE OF MICRO AND SMALL ENTERPRISES IN ADDIS ABABA: A STUDY OF SELECTED MSE IN BOLE SUB CITY

Abstract

Micro and Small Enterprises (MSEs) play an important economic role in many countries and recognized as an important vehicles of economic diversification, employment creation, income generation and distribution, and poverty alleviation. MSEs occupy a prominent position in the development agenda of many developing countries like Ethiopia. Currently, In Ethiopia, the Government has been promoting the development of MSEs through the formulation and implementation of Micro and Small Enterprises Development Strategy and the number of MSEs in the country is steadily growing. But, much more important than increase in their numbers, their current status, stage and pace of development is significant because most MSEs are hibernated from growing and faced with the threat of failure due to many factors. Little research exists that examines these factors influencing performance of MSEs in developing countries, especially in Ethiopia. The purpose of the thesis is therefore to describe the relationship between performance and personal related factors and business related factors on MSEs in Bole sub city of Addis Ababa. Primary data were collected from a sample of 82 randomly selected MSEs engaged in industry and service sector, through structured questionnaire by using stratified random sampling techniques. Data were analyzed using descriptive and inferential statistics with using a Statistical Package for Social Science (SPSS VERSION-20). Specifically, analysis of variance was carried out to examine the variation in the performance of enterprises related to the variation in each of the independent variables of the study. In terms of the result, descriptive statistics shows higher performance for enterprises owned by individuals with better education level, prior management experience, marketing skill and planning and record keeping. However, results from analysis of variance show no significance variation on the performance of MSEs in relation to the variations to each of the independent variables considered. But based on descriptive statistics result, MSEs should start using plan to their business activities and adopt a formal record keeping and financial control system in their internal practice. And also stake holders of the sector should work on preparing training programs on management issues and creating experience sharing opportunities especially to those enter into the sector without any management experience.