Factors Determining the Success of Micro and Small Enterprises at ArbaMinch Town of Gamo Gofa Zone

Abstract

The promotion and development of MSEs has recognized and paid due attention by the government of Ethiopia as they are important vehicles to address the challenges of unemployment, economic growth and equity in the country (FeDREMT& I, 1997).However, Growing number of researchers have suggested the performance of the sector is challenged by many factors. The basic objective of This study is to analyzes some key determinants of success among 189 sampled micro and small enterprises out of 280-targeted population at Arbaminch town. Proportions sampling formula were used and Questionnaire, interview, and document reading, were used to obtain the data. Two indicators, namely compound employment growth, and capital growth, represent success. Data analysis was carried out using descriptive statistics and multi regression model. The descriptive part presents the stages of growth of MSEs using graphs based on the sector type and years of operation. Number of employees who took training based on the types of training given were also presented in this section.Moreover, the mean compound employement and capital growths of the enterprises in relation to various independent variables were computed. The regression result showed that success of micro and small enterprises measured by employement and capital growth is affected by a variety of factors. From the compound employement growth, it was found that enterprise’s intial size and years of operation are inversely related with success providing evidence that firms with smaller intial size and year of operation grow faster than firms with higher intial size and year of operations. In addition, there is statisticaly positive link among service sector, preparation of business plan, access to marketing information and involvement in social network and compound employement growth. Measures of compound capital growth of the firm indicates that, success determinant factors such as firm age, training support, initial size and involvement in social were found statistically significant.Based on findings, recommendations to government bodies, to operators of MSEs and suggestions for future researchers are forwarded