Nowadays, the contribution of micro-enterprises in employment creation, poverty reduction and hence economic growth is getting widespread acknowledgement.
However, their performance is usually constrained by various factors.
Thus, this research is basically aimed at investigating key determinants of performance among micro-enterprise businesses in Dodola town of Oromia region.
It examines the extent to which performance of micro-enterprises is associated with characteristics of the owner and business constraints.
To this end, primary data were gathered using interview schedule from a sample of 112 micro-enterprises selected using stratified random sampling.
Besides, two Focus Group Discussions were held with fourteen randomly selected micro-entrepreneurs.
To further triangulate the data Key informant interviews were held with three MSE office heads.
Then after primary data was analyzed using both descriptive and inferential statistics.
Characteristics of the enterprises and their entrepreneurs were analyzed using percentage, mean, median and standard deviation.
On the other hand, Pearson’s chi-square(x2), paired sample t-test and multinomial logistic regression were used to make inferences about the subject under investigation.
In this study, performance of micro-enterprises was measured in terms of two main indicators namely profit and employment growth.
The results of paired t-test indicated statistically significant mean difference in socio-economic status of entrepreneurs before and after starting micro-enterprise business.
The multinomial logistic regression analysis revealed that education, experience, location and access to formal credit source are significant predictors of profit growth.
However, only education was found as a significant predictor of employment growth.
Key Words: Micro-enterprise; Performance; Multinomial Logistic Regression; Performance Determinants.
Table of Contents
CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
1.2. Statement of the Problem
1.3. General Objective of the Study
1.4. Specific Objectives of the Study
1.5. Hypothesis
1.6. Significance of the Study
1.7. Delimitation of the Study
1.8. Limitation of the Study
1.9. Organization of the Study
CHAPTER TWO
REVIEW OF LITERATURE
2.1. Theoretical Literature
2.2. Conceptual Framework
2.3. Definition and Concept of Micro and Small Enterprises
2.4. Empirical Literature
2.4.1. Personal attributes
2.4.2. Demographic characteristics
2.4.3. Socio-cultural variables
2.4.4. Business Characteristics of the Enterprise
2.4.5. Infrastructure
2.4.6. Business Development Services
2.4.7. Legal and regulatory environment
2.4.8. Access to finance
2.4.9. Lack of Linkage or Business Cooperation amongst Enterprises
2.4.10. Access to market
2.5. Micro-enterprises in Ethiopia
CHAPTER THREE
METHODOLOGY
3.1. Description of the study area
3.2. Research Design
3.3. Sample Size Determination
3.4. Sampling Methods
3.5. Methods of Data collection
3.6. Data analysis techniques
3.6.1. Model specification
3.7. Description of Variables
3.7.1. Independent variables
3.7.2. Dependent variables
CHAPTER FOUR
RESULTS AND DISCUSSION
4.1. Demographic Information of respondents
4.2. Basic Characteristics of the Micro-enterprises
4.3. Source of initial capital
4.4. Characteristics of micro-enterprises in Dodola town
4.5. Reason for starting business
4.6. Financial Management
4.7. Use of Business Development Services
4.8. Performance of micro-enterprises
4.9. Socio-economic characteristics of micro-entrepreneurs
4.12. Multinomial logistic regression results of annual profit and selected explanatory variables
4.13. Regression results of employment growth and selected explanatory variables
4.2. Discussion
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1. Summary and conclusion
5.2 Recommendation
Research Objectives and Themes
This study aims to investigate the performance determinants of micro-enterprises in the Dodola district of Ethiopia. The primary research goal is to analyze how demographic attributes of entrepreneurs and firm-related factors influence the performance and growth of these micro-enterprises, measured by annual profit and employment growth.
- The impact of entrepreneurial demographics (age, gender, education, experience) on business success.
- The role of firm-related factors such as infrastructure, business development services, and operating location.
- The significance of access to formal credit and financial management practices.
- The influence of business characteristics (e.g., sector, ownership type) on enterprise performance.
Excerpt from the Book
2.4.2. Demographic characteristics
The demographic components such as age, sex, educational status, marital status and family size of the entrepreneur are worth considering while assessing the performance of their enterprises. Age, sex and marital status are important determinants of the entrepreneur’s ability and aggressiveness (Kiggundu, 2002). Many enterprises in Ethiopia are headed by men due to social and cultural factors which block women from income generating activities. This is evidenced by many studies conducted on micro and small enterprises. For example, a study conducted by Haftu et al. (2010), indicated more male are engaged in the micro enterprise than female accounting for 56% compared to 44% respectively. The same study revealed the predominance of male operators over female operators in small scale business activities with male operators constituting 74%. Another finding by Mulu (2007) showed immense proportion of businesses are men-owned comprising 74% while their female counterparts owned only 22% of the firms. A bulk of women-owned businesses focused on activities such as, retail trading, beauty salon, bars and restaurants, and local drink brewing (ibid).
Education plays crucial role in identifying niche market and making sound investment decision. Efficient management of enterprises demands entrepreneurs’ understanding of the business environment and other particulars. King and McGrath (2002) stated that education is one of the variables which positively affect firm growth. Entrepreneurs with better educated and (or)
Summary of Chapters
CHAPTER ONE: INTRODUCTION: Outlines the importance of micro-enterprises for employment and poverty reduction in Ethiopia and defines the research problem, objectives, and hypotheses for the study in Dodola town.
CHAPTER TWO: REVIEW OF LITERATURE: Provides a comprehensive overview of existing theories and empirical findings regarding micro-enterprise performance, including factors like gender, age, human capital, and institutional support.
CHAPTER THREE: METHODOLOGY: Details the research design, including the mixed-methods approach, sampling techniques for the 112 surveyed enterprises, and the statistical models used for data analysis.
CHAPTER FOUR: RESULTS AND DISCUSSION: Presents the findings from the survey, including demographic data of entrepreneurs, business characteristics, and the results of chi-square and logistic regression analysis on performance.
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION: Concludes the study by summarizing the key findings and providing specific policy and practical recommendations to enhance micro-enterprise performance.
Keywords
Micro-enterprise, Performance, Determinants, Dodola, Multinomial Logistic Regression, Entrepreneurship, Employment Growth, Annual Profit, Human Capital, Business Development Services, Access to Finance, Ethiopia, Gender, Demographic Characteristics, Infrastructure.
Frequently Asked Questions
What is the core focus of this research?
The study investigates the factors that determine the performance of micro-enterprises in the Dodola district, focusing specifically on their contribution to employment growth and profitability.
What are the central thematic areas of the research?
The research focuses on the impact of owner characteristics (age, gender, education, experience) and firm characteristics (infrastructure, location, and access to finance) on business success.
What is the primary objective of this work?
The main objective is to identify and analyze demographic and firm-related factors that drive the growth and performance of micro-enterprises to inform policy and support strategies.
Which scientific methods were employed for this analysis?
The study uses a mixed-methods approach, utilizing descriptive statistics and inferential techniques such as Chi-square tests, paired sample t-tests, and multinomial logistic regression.
What topics are discussed in the main body of the work?
The main body covers the theoretical background, the socio-economic status of entrepreneurs, financial management practices, and the statistical analysis of business performance drivers.
Which keywords best describe this academic work?
Key terms include micro-enterprise performance, multinomial logistic regression, entrepreneurship, human capital, and financial determinants in the context of Ethiopian small towns.
How do male-owned and female-owned enterprises compare in this study?
The findings indicate a predominance of male-headed enterprises (68.8%), with the study revealing significant associations between gender and business performance metrics like profit and employment growth.
What role does access to formal credit play in the success of these businesses?
The study identifies access to formal credit as a critical predictor, showing that enterprises with such access have a significantly higher likelihood of increasing both their annual profits and their workforce size.
- Quote paper
- Alemayehu Habte (Author), 2012, Analysis of Performance Determinants in Micro-Enterprises. The Case of Dodola District, Oromia Region, Munich, GRIN Verlag, https://www.grin.com/document/306207
