DETERMINANT FACTORS AFFECTING THE PERFORMANCE OF MICRO AND SMALL SCALE ENTERPRISES THE CASE OF KOLFE KERANIO SUB-CITY, ADDIS ABABA

Abstract

This study was aimed at investigating determinant factors affecting the performance of MSEs with a special emphasis on Textile & Garment, Food Processing and Wood & Metal work sectors in Kolfe Keranio Sub-City, Addis Ababa. In order to meet the objectives of the study, data collected through questionnaires were analyzed using statistical analysis such as descriptive and inferential analyses. Mean and Standard deviation explained the descriptive statistics while Pearson Product Moment Correlation Coefficient and Multiple Regression coefficient applied for inferential statistics. Data were gathered using a five point Likert scale questionnaire from a sample of 197 micro and small scale operators and through secondary source of data. The sample operators were selected using stratified sampling and simple random sampling techniques; data from interview were analyzed using descriptive narrations through concurrent triangulation strategy. The empirical study three major independent variables which seem to affect performance of MSEs in Kolfe Keranio sub-city which include: Inadequate finance, Lack of working premises, and Marketing problem. The comparative influential intensity (effect) of the five hypnotized factors on the business performance of SMEs were determined by using their standardized coefficient (beta), and it was found that the financial factors were the most influencing predictor variable for SMEs business performance followed by working premises and marketing factors. The validity of the regression model was evaluated using residual plots and coefficient of determination and found that it was consistent with the multiple regression assumptions indicated that the model was valid and useful to predict the business performance of SMEs.