International journal of research in commerce it & management

Abstract

The government of Ethiopia has paid due attention for the promotion and development of micro and small enterprises as they are important vehicle to enhance employment, economic growth and equity in the country. The purpose of the study is to analyze the growth determinants of MSEs growth in Jimma town. In line with the objective, the role of initial investments on the firm, location and sector in which the firm operate, marketing access and business development service as main determinants of growth of an enterprise was analyzed. The binary model which is logistic regression was used to see the effects of identified determinant on growth of MSEs using change in employment size as proxy of growth. The binary choice result shows as location different has a significant effect on the growth of MSEs with accessible/town centre growing faster than those inaccessible/out of town. In addition, the initial investment on the firm and the sector in which the MSEs operates matter a lot for the growth of these enterprises. Hence, government and non-government organizations need to take these factors in to account to accomplish better result and increase the potential contribution of MSEs to the economic growth of the country.