Determinantes of Growth: The case in Micro and Small Scale Enterprise, in Jimma Town

Abstract

In Ethiopia, Micro and small scale enterprises (MSEs) are recognized as important vehicles of economic growth, employment creation, and income generation. As a result, MSEs occupy a prominent position in the development agenda of Ethiopia. The aim of this study is to examine the determinants of Micro and Small Scale (MSEs) growth in Oromia region Jimma zone specifically Jimma Town .In this study, mixed research methods were used. Stratified sampling with simple random sampling and purposive sampling techniques were used to select proportional number of samples from the study area. Both primary and secondary source of data were used. To obtain the primary data, questionnaires were distributed for 340 micro and small Scale enterprises owners and managers to access the growth status of their enterprises and also to examine factors affecting their growth. Secondary data were collected from books, journals, past research works, official documents and the Internet. To see the impact of governmental, organizational, individual, financial, environmental and technological factor on growth of MSEs in Jimma town, descriptive and inferential statistics were employed. Pearson correlation analysis is also used to see the relationship that exists between the variables. The findings of the study show that there exists substantial strong relationship between independent and dependent variable. Moreover, the selected independent variables were significantly explaining the variations in the dependent variable at 5% level of significance. Based on findings, the factors studied in this study affect growth of MSEs in Jimma town up to 86.2% as indicated by the regression result. Finally the study suggests that small scale and micro enterprise managers, directors, and all stakeholders should not only be concerned about internal structures and policies, but also must consider the external environment together to improve their growth.