Performance of Micro and Small Enterprises and Its Determinants: The Case of Hadiya Zone, Ethiopia

Authors

  • Abraham Ababiya School of Agricultural Economics and Agribusiness Haramaya University, Ethiopia Author
  • Endrias Geta School of Agricultural Economics and Agribusiness Haramaya University, Ethiopia Author
  • Zemach Lemecha School of Agricultural Economics and Agribusiness Haramaya University, Ethiopia Author

Keywords:

Benefit cost ratio,, performance, determinant factors

Abstract

This study examined the benefit cost ratio of micro enterprise as related to financial flow and its management to
measure the performance and identified the factors that influence the performance of micro enterprise in
Hosanna town. All 174 micro enterprises from three sub-towns of Hosanna were included in the study and key
informants from relevant government office were interviewed to collect necessary data on enterprises
performance and determinant factors. Descriptive analyses of the data were computed to assess various
characteristics of micro enterprises in the study area. According to the result obtained from benefit cost ratio
analysis 71.8% of enterprises found in the study area survived whereas 28.2% failed. In addition, a regression
model was used to identify the determinant factors that affected the performance of the enterprises. The results
of the regression analysis showed that age of enterprises, age of operators, education level, number of
employees, amount of initial capital, entrepreneurial skill, experience of manager, access to training and access
to market were statistically significant at less than 1% significance level and had positive relationship with the
performance of enterprises. Recommendations emanating from the study are to build up the performance of
micro enterprises not only to survive in the business but also to transform into small, medium and higher level of
enterprises. To improve the performance of enterprises beyond the impact of challengeable constraints, all
concerned bodies should give high attention to update and initiate entrepreneurial skill by applying innovative
training, ensure experience and best practice sharing system, allocate sufficient capital, upgrade education level
attained and create alternative market demand, monitoring and evaluation of all benefit generated and costs
incurred as well as effective utilization of employees to ensure successful operational performance of the
enterprises.

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Published

2015-12-30

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Section

Articles

How to Cite

Ababiya, A. ., Geta, E. ., & Lemecha, Z. . (2015). Performance of Micro and Small Enterprises and Its Determinants: The Case of Hadiya Zone, Ethiopia. Bulletin of Business and Economics (BBE), 4(4), 214-222. https://bbejournal.com/index.php/BBE/article/view/239

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