Households’ entry into non-farm entrepreneurship and the market exit of enterprises in rural Ethiopia

Melaku Abegaz and Pascal Ngoboka

International Journal of Social Economics, 2023, vol. 51, issue 8, 969-986

Abstract: Purpose - This paper examines household and community characteristics that influence the entry of rural households into non-farm entrepreneurship and investigates the various factors that influence the market exit of non-farm enterprises (NFEs). Design/methodology/approach - The authors use data from three rounds (2011/12, 2013/14 and 2015/16) of the World Bank’s Living Standards Measurement Study – Integrated Surveys on Agriculture (LSMS-ISA). The authors employ panel logit and multilevel logit models to examine the probability of opening one or more enterprises and the enterprise exit rates. Findings - Results indicate that the likelihood of starting a NFE is positively associated with primary education attainment, access to credit, experiencing idiosyncratic shocks and availability of formal financial institutions. Age, higher education attainment and rising farm input prices constrain entry into non-farm entrepreneurship. The enterprise exit rate is negatively associated with small-town residence, wealth, access to tar/gravel roads and cellphone communication. Practical implications - Policymakers and administrators should strive to address the challenges that communities face in transportation, communication and financial services. Policies aimed at stabilizing prices and increasing access to mobile communication, primary education and road infrastructure could help expand the rural non-farm sector. Originality/value - Previous studies primarily examined the determinants of participation in NFEs at a given time using cross-sectional data. The current study uses panel data to study the dynamics of NFE ownership by investigating households’ decisions to enter into or exit from the sector. Peer review - The peer review history for this article is available athttps://publons.com/publon/10.1108/IJSE-09-2022-0611

Keywords: Non-farm entrepreneurship; Welfare and livelihoods; Sub-Saharan Africa; Ethiopia; Rural development; Small business; Enterprise exit; J43; L26; M13; O13; O55; Q12 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:ijse-09-2022-0611

DOI: 10.1108/IJSE-09-2022-0611

Access Statistics for this article

International Journal of Social Economics is currently edited by Professor Terence Garrett

More articles in International Journal of Social Economics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().