Growth Determinants of Micro and Small Enterprises (MSEs): Evidence from Entrepreneurs in the Eastern Region of Ethiopia

Wondmagegn Biru Mamo ()
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Wondmagegn Biru Mamo: Haramaya University

Journal of the Knowledge Economy, 2023, vol. 14, issue 1, No 7, 138-160

Abstract: Abstract For developing countries like Ethiopia, MSEs are engines of economic growth and places where employment opportunity is created. Albeit their economic and social significance, the growth determinants of these enterprises are not yet studied in Eastern Ethiopia. This study, therefore, was mainly aimed at studying the growth determinants of MSEs in Eastern Ethiopia, using capital accumulation as a proxy measure of growth. The study will help the government in general, and the enterprises development agency; in particular, improve the working environment for the growth of MSEs. A total of 354 questionnaires were collected using a cross-sectional survey. Both descriptive and econometric analyses were employed, with a linear regression model estimated using the OLS technique. To get the parameters to be estimated with higher precision and unbiasedness, we conducted standard tests of homoscedasticity, multicollinearity, normality, autocorrelation, and overall model significance. The researcher found out that initial capital, the export of products, the existence of formal accounting records, MSEs loan from the government, and the provision of training for MSEs are positive and statistically significant. On the contrary, prior experience, type of customer, and tax incentive by the government are negative and statistically significant.

Keywords: Eastern Ethiopia; Capital accumulation; Growth; MSEs; OLS (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-021-00859-x

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