Abstract:
The purpose of this study is analyzing the growth determinant factors in MSEs business
focusing on the enterprises in Jimma town particularly those stayed in the industry five years
and above by taking simple random sampling of 113 MSEs as sample enterprise out of 308;
applying explanatory research and the binary logistic regression analysis of the external and
internal factors affecting employment growth. Entrepreneurial/managerial training before
starting the business, ownership type, sector type of enterprise and amount of initial capital
are the internal independent variables. Likewise the external independent variables are
existence of external financial/credit source and access to business services. The descriptive
analysis indicated better growth by Cooperative (23.9%) from the total ownership under
investigation, service sector as the best growing sector with 78.3% within the service sector
and 16.5% within the growing enterprise from the five sectors. MSEs given prior training and
special practical training on the work as well as those possess credit source showed better
growth. The result of Pearson correlation shows positive correlation between the dependent
variable and independents with the correlation strength weak to moderate. Basic logistic
regression assumptions and goodness of fit check conducted. Logistic regression analysis
shows ownership type, amount of initial capital and existence of external financial/credit
source are significantly contributed to the employment growth at 5 percent significance level.
The greater the amount of initial capital, the more is employment growth. Similarly MSEs
those have credit source and those engaged in cooperative type showed more growth than
those with no credit source and engaged in sole proprietorship and partnership respectively.
So, as this study it is better to make easy and flexible the access to credit source with
providing the appropriate capital amount according to the environmental context for all
either sole proprietorship, partnership or cooperative.
