Abstract:
The paper investigates firms’ growth status, firms’ growth factors, employees’ salary levels, and
employees’ salary growth factors in medium and large manufacturing firms in Kolfe Keranio sub
city, Addis Ababa. The study includes 18 manufacturing firms and a sample of 252 employees
engaged in 9 sectors was taken for the study using stratified and simple random sampling. After
the data has been collected, it was analyzed using descriptive statistics (graphs, mean and
standard deviations) to analyze the firm’s growth status and employees salary level, whereas
inferential statistics (multiple linear regression) was used to determine the firm and salary
growth determinant factors. The results indicate that, the growth rate performance of sub sectors
were weak compared to other developing countries. Firm and salary growth rates run in
parallel, although the growth rate of an employees’ salary is often higher than that of the firm’s
growth rate. The relationship between the age of a firm and its growth is found to be inverted Ushaped. Moreover, the growth rate of large firm’s is higher than of medium firms. Finally, the
results indicate that large firms pay a higher salary than that of medium firms; and also the
employees’ salary growth rate of large firms’ is higher than that of medium firms. The empirical
analyses using the multiple regression model, shows that, factors like a firm’s age, firm size,
level of education and the experience of firm leaders are the major determinant factors for the
growth of firms, whereas employees level of education, business related experience and sex of
employee were factors that influence income growth. A number of factors are identified that can
be used to improve the firm and salary growth rates of employees. Improving the skill of
entrepreneur and employee helps to have a better firm’s and employee income growth.
