Abstract:
Micro and Small Enterprise are driving forces for economic growth, job creation and poverty
reduction in developing countries. Cognizant of this fact, Ethiopia is one of the countries which
have taken measures to enhance the operation of Micro and Small Enterprises (MSEs).
However, there are MSE’s in the country that have shown deteriorating performance and
have been experiencing huge stumbling blocks with no significant graduation from one
enterprise level to the next. Therefore, this study aims to identify and examine factors affecting
the performance of micro and small enterprises in Addis Ababa, Bole Sub city. Both descriptive
and explanatory research designs were used for the study. Mixed research approaches
(qualitative and quantitative) were implemented. For primary data structured questionnaire was
used and for secondary data books, articles, journals and previous literatures were reviewed.
The target population for the study was 1127 MSEs which are registered in Bole Sub City MSE
office which are engaged in construction, manufacturing, merchandise and service sector. In this
study probability sampling technique and stratified random sampling were applied to sample
size of 295 micro and small enterprises in Bole Sub city. And data was analyzed by using
descriptive statistics and regression analysis. The empirical study elicited eight major
challenges which seem to affect performance of MSEs which include: marketing problems,
standardization and quality constraints, product diversification problems, poor management
practices, entrepreneurial, education level, firm age and technological problems. The findings
further indicate that, there exists linear and positive significant ranging from substantial to
strong relationship was found between independent variables and dependent variable.
Moreover, the selected independent variables may significantly explain the variations in the
dependent variable at 1% level of significance. In line with the findings obtained from this
study recommendations to respective governmental bodies and MSE’s owners/managers have
been forwarded.
