Beyond access to capital: exploring the effect of behavioral biases on the growth of micro, small, and medium enterprises (MSMEs)

Amare Abawa Esubalew ()
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Amare Abawa Esubalew: Addis Ababa University

SN Business & Economics, 2024, vol. 4, issue 12, 1-21

Abstract: Abstract Although the role of Micro, Small, and Medium Enterprises (MSMEs) in economic growth is widely recognized across the world, their impact on developing nations’ economies is limited by several factors. Despite the Ethiopian government’s emphasis on the creation of micro and small businesses, these businesses seldom grow into medium-sized or bigger ones. Enterprises that do manage to secure funding frequently still face challenges in achieving meaningful growth. This indicates that the root causes of stagnation in enterprise development remain unclear and necessitate further exploration. Thus, the purpose of this study was to explore factors, beyond access to finance, that affect the growth of MSMEs in the Ethiopian Context. To meet the objective of the study and provide appropriate suggestions, the researcher employed a survey method and collected data from owner-managers who run their business in Addis Ababa, Ethiopia. The result revealed that entrepreneurial competencies have significant effect on the growth of MSMEs. Moreover, the result revealed that behavioral factors need attention as they could hinder the tendency of utilizing accessed funds that would in turn result in a negative effect on the growth of enterprises. The result also revealed that government support has no effect on the growth of MSMEs that needs aligning supports and needs of enterprises. For respective factors, suggestions are forwarded to stakeholders that could be considered as a stepping stone for a breakthrough change and transform enterprises into the next level.

Keywords: Entrepreneurs competency; Behavioral biases; Growth of enterprises (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s43546-024-00759-7

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