FACTORS AFFECTING THE PERFORMANCE OF MICRO AND

SMALL ENTERPRISES (MSEs): THE CASE OF ADDIS ABABA CITY

ADMINISTRATION

BY: - SHIMELS ZELEKEW TACHIBELIE

ADVISOR:- LAKEW ALEMU (Ph.D.)

A THESIS SUBMITTED TO ADDIS ABABA UNIVERSITY COLLEGE OF

BUSINESS AND ECONOMICS SCHOOL OF GRADUATE STUDIES MBA
PROGRAM IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF MASTER BUSINESS ADMINISTRATION IN
MANAGEMENT

SEPTEMBER 2021

ADDIS ABABA, ETHIOPIA

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 Declaration

I Shimels Zelkew, have by declare that this thesis entitled; factors affecting the performance of
Micro and small enterprises (MSEs) the case of Addis Ababa City Administration based on my
original work except for quotations and citations which have been duly acknowledged. I also
declare that it has not been previously or concurrently submitted to Addis Ababa University or
any other institution.

Shimels Zelekew

Signature Date

2
 Statement of Certificate

This is to certify that his thesis entitled “Factors Affecting the Performance of Micro and Small
Enterprises (MSEs)”: The case of Addis Ababa City Administration was undertaken by Shimels
Zelekew for the partial fulfillment of Master of Business Administration in Addis Ababa
University, is an original work and not submitted for any degree either AAU or any other
University. Now, it is submitted with my approval as a thesis.

Lakew Alemu (Ph.D)

Name of Advisor Signature Date

3
 Statement of Certification of Originality and quality

This is to certify that the thesis prepared by Shimels Zelekew, entitled: “Factors Affecting the
Performance of Micro and Small Enterprises (MSEs)”, and submitted in partial fulfillment of the
requirements for the Degree of Masters of Business Administration complies with the regulations
of the University and meets the accepted standards concerning originality and quality.

Signed by the Examining Committee:

Advisor Signature Date

Internal Examiner Signature Date

External Examiner Signature Date

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 Acknowledgment

First, I am grateful to Almighty God for keeping his eyes on me, giving me health, strength, and
termers to continue and finish this study. I deeply grateful to my advisor, Lakew Alemu (Ph.D.),
for his endless support and assistance for the duration of this thesis, he has been a continual font
of ideas, stimulating suggestions, and pushing me to my limit all the time. I have learned a lot
from him about all aspects of carrying out research and writing a thesis.

I would like to take this opportunity to thank the respondent who has been given by my family,
there is no one else I would rather have in my corner.

Last but not last, I would like to express my deepest gratitude to all those who gave me the
possibility to complete this program.

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 Table of contents

Contents page
Acknowledgment..............................................................................................................................i
Table of contents.............................................................................................................................ii
List of tables...................................................................................................................................vi
List of figure..................................................................................................................................vii
Acronyms.....................................................................................................................................viii
Abstract...........................................................................................................................................ix
CHAPTER ONE..............................................................................................................................1
INTRODUCTION...........................................................................................................................1
1.1. Introduction...........................................................................................................................1
1.2. Background of the Study.......................................................................................................1
1.3. Statement of the problem......................................................................................................3
1.4. Research questions................................................................................................................6
1.5. Objectives of the study..........................................................................................................6
1.5.1 General objectives of the study.......................................................................................6
1.5.2. Specific objectives..........................................................................................................6
1.6. Hypothesis.............................................................................................................................7
1.7. Significance of the Study......................................................................................................7
1.8. Scope of the Study................................................................................................................8
1.9. Limitation of the study..........................................................................................................8
1.10. Organization of the Study...................................................................................................8
CHAPTER TWO.............................................................................................................................9
LITERATURE REVIEW................................................................................................................9
2.1. Introduction...........................................................................................................................9
2.2. Theoretical Literature............................................................................................................9
2.2.1. Definition of Micro and Small Enterprises (MSEs).....................................................9
2.2.2 Role of Micro and Small Enterprises (MSEs)...............................................................11

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 2.2.2.1 Contributions of MSEs for job creation..................................................................12
2.2.3 Micro and small enterprises in Ethiopia........................................................................12
2.2.4 Ethiopia‟s Micro and Small Enterprise Promotion police............................................13
2.3 Concepts of Business performance......................................................................................14
2.3.1. Measures of performance.............................................................................................15
2.4 Factors affecting business performance...............................................................................16
2.4.1 Financial Factors...........................................................................................................16
2.4.2 Infrastructure Factors....................................................................................................16
2.4.3 Institutional coordination problems...............................................................................17
2.4.4 Access to business information services problems.......................................................18
2.5. Empirical Review................................................................................................................19
2.6. Conceptual framework........................................................................................................21
2.7. MSEs Performance.............................................................................................................22
2.7.1. Financial Factors..........................................................................................................22
2.7.2. Infrastructural factors...................................................................................................23
2.7.3. Institutional coordination problems..............................................................................23
2.7.4 Access to business information services problems.......................................................24
CHAPTER THREE.......................................................................................................................25
THE RESEARCH METHODOLOGY AND DESIGN................................................................25
3.1. Introduction.........................................................................................................................25
3.2. Research design...................................................................................................................25
3.3. Research Approach.............................................................................................................25
3.4. Research Methods...............................................................................................................26
3.4.1 Methods of data collection and Instrument...................................................................26
3.4.2. Data sources.................................................................................................................26
3.4.2.1. Primary Sources.....................................................................................................26
3.4.2.2. Secondary Sources.................................................................................................26
3.5 Target population and Sample.............................................................................................27

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 3.5.1 Target population..........................................................................................................27
3.5.2. Sample Size..................................................................................................................27
3.6 Sampling Techniques...........................................................................................................28
3.7 Data analysis method.........................................................................................................28
3.8. Validity and Reliability tests...............................................................................................29
3.8.1 Validity..........................................................................................................................29
3.8.2 Reliability......................................................................................................................30
3.9. Ethical Consideration..........................................................................................................30
CHAPTER FOUR.........................................................................................................................31
4. DATA PRESENTATION, ANALYSIS, AND INTERPRETATION......................................31
4.1 Introduction..........................................................................................................................31
4.2 Demographic Characteristics of the respondents.................................................................31
4.3 Descriptive Statistics Analysis.............................................................................................35
4.3.1. Financial factors...........................................................................................................35
4.3.2. Infrastructural factors...................................................................................................37
4.3.3. Institutional coordination Problems.............................................................................38
4.3.4. Business information service Problems.......................................................................39
4.3.5. Performance of MSEs..................................................................................................41
4.4. Inferential Analysis.............................................................................................................42
4.4.1. Correlation analysis......................................................................................................42
4.5. Diagnostics tests / Assumption/..........................................................................................44
4.5.1. Assumption1: Linearity test........................................................................................44
4.5.2. Normality Test..............................................................................................................45
4.5.3. Assumption 3: Multicollinearity Test...........................................................................46
4.5.4. Homoscedasticity Test..................................................................................................47
4.5.5: Assumption Autocorrelation Test................................................................................48
4.6. Multiple Regression Analysis.............................................................................................49
4.7. Hypothesis tests...................................................................................................................51

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CHAPTER FIVE...........................................................................................................................54
5. CONCLUSION AND RECOMMENDATION.....................................................................54
5.1 Summary of findings............................................................................................................54
5.2 Conclusions..........................................................................................................................55
5.3 Recommendations................................................................................................................56
5.4. Future direction...................................................................................................................57
Reference.......................................................................................................................................58
Appendix........................................................................................................................................65

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 List of tables

Table 3.1 Number of Samples from each Sector...........................................................................28

Table 4.1: Gender of respondents..................................................................................................31

Table 4.2: Age composition of respondents.................................................................................32

Table 4.3: Marital status of respondents.......................................................................................32

Table 4.4. Educational status of respondents.................................................................................33

Table 4.5: Work experience of respondents.................................................................................33

Table 4.6 Reliability analysis (Cronbach's alpha).........................................................................34

Table 4.7: Descriptive Statistics Analyzing Financial factors of MSE‟s......................................35

Table 4.8: Descriptive Statistics Analyzing Infrastructural factors...............................................37

Table 4.9: Descriptive Statistics Analyzing Institutional coordination factor...............................38

Table 4.10: Descriptive Statistics Analyzing Access to business information service problems. 39

Table 4.11: Descriptive Statistics Analyzing Performance (Profitability, productivity and market
share) of MSEs..............................................................................................................41

Table 4.12: correlation between dependent and independent variables /N=365/..........................42

Table 4.13 Test of Multicollinearity..............................................................................................47

Table 4.14: ANOVA result............................................................................................................50

.................................................................................................................
Table 4.15 Coefficientsa 50

Table 4.16 Summary of hypothesis tests.......................................................................................53

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 List of figure

Figure 1:- The relationship between factors affecting MSEs performance...................................21

Figure 2: Test of linearity..............................................................................................................45

Figure 3: Normality Tests of Residuals.........................................................................................46

Figure 4: Homoscedasticity Test..................................................................................................47

Figure 5. Durbin-Watson test........................................................................................................48

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 Acronyms

CSA Central Statistics Agency/Authority/

FDRE Federal Democratic Republic of Ethiopia

ReMSEDA Regional micro and Small Enterprises Development Agency

ICTs Information and Communication Technologies

ILO International Labor Organization

MFIs Micro-Finance Institution

MoFED Minister of Finance and Development

MoTI Minister of Trade and Industry

MSEDA Micro and Small Enterprises Development Agency

MSEs Micro and Small Enterprises

SD Standard Deviation

SPSS Statistical Package for Social Science

UNIDO United Nation International Development Organizations

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 Abstract

The main objective of this study was to investigate factors that affect the business performance of
MSEs that currently working in Addis Ababa City Administration. This study was employed a
descriptive and explanatory research design and quantitative research approach. Both primary
and secondary data was employed. Questionnaire was that main data collection instrument.
Among 9795 MSE operators, 384 sample size were selected using stratified and simple random
technique. After the data has been collected, it was analyzed using simple statistical techniques.
The descriptive and inferential statistical tools were used, Pearson correlation and multiple
linear regression were used to analyze the relationship and difference between independent and
dependent variables. Statistical Package for Social Science (SPSS) version 26 was used to
analysis of quantitative data from questionnaire questions. Furthermore, the research finding
shows that among the independent variables financial factors, infrastructural factors, access to
business information service problems and institutional coordination problems were the major
factors that significantly affect the performance of MSEs. Based on the findings the study was
recommended that financial institutions such as banks and micro finance institutions should
improve access to finance problems of MSEs operators, all other governmental
institutions/bodies/ should give attention and should improve access to infrastructural, access to
business information service and institutional coordination problems in order to improve the
performance of MSEs in Addis Ababa.

Keywords: Micro and Small Enterprises (MSE), performance, factors affecting,

entrepreneurship, Kirkos and Arada sub-cities, Addis Ababa.

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 CHAPTER ONE

INTRODUCTION

1.1. Introduction

This chapter provided a brief explanation by introducing the key concepts in the background
section followed by problem statement, research questions, research objective, research
hypothesis, the significance of the research, scope of the study, limitations of the research as well
as the organization of the study.

1.2. Background of the Study

Micro and Small Enterprises (MSEs) are described and classified differently in different
countries, and also there was no widely agreed-upon definition (SHIFERAW, 2017). All country
gave their explanation based on the role of MSEs which were expected to play in the economic
growth and their strategies of assistance planned to achieve the goal. There is also different
meaning among countries that may arise from deference in their industrial organization at the
deferent level of economic growth in parts of the same country (Wangeci & Mathuva, n.d.).

According to the Ethiopian Micro and Small Enterprises Development Strategy (Seyoum et al.,
2014), MSEs are businesses with a paid-up capital of less than Birr 20,000 and excluding high-
tech consultancy firms and other high-tech establishments, whereas small businesses have a
paid-up capital of more than Birr 20,000 but less than Birr 500,000 and excluding high-tech
consultancy firms and other high-tech establishments.
Micro and Small Enterprises (MSEs) are described as a key driving force of economic and social
development all over the world. (Debela, 2014) stated that the MSEs are critical to a country‟s
economic and industrial growth. MSEs contribute significantly to a country's economic and
social growth by stimulating large scale-jobs, investment, the promotion of entrepreneurship and
innovativeness, increasing exports, and building an industrial base at different scales.

(Abera, 2012) stated that MSEs are widely acknowledged as an important component of
economic growth and a key component in the effort to left countries out of poverty. The dynamic
role of MSEs in developed countries as engines for achieving country growth objectives has long

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been recognized. MSEs employ 22 percent of the adult population in developing countries
according to an estimate of (Abdulmelike et al., 2018). This indicates that MSEs are significant
means to increase the country‟s economy, industrial growth, to overcome unemployment
problems, can facilitate the environment for new job seekers and self-employment and poverty
reduction.

MSEs are important sources of job and economic development in developed countries,
accounting for more than 50% of GDP and 60% of employment. However, in developing
countries, MSEs account for less than 30% of employment and 17% of GDP. According to ILO,
2002) study conducted in Africa, just 20% of the total population of working age in many
African countries were reported to have been working in the small enterprises' sectors.

Following agriculture, MSEs are Ethiopians second most important source of employment (CSA,
2005). According to (Statistical, 2012), the sector contributes 3.4% of GDP, 33% of the
contribution of the industrial sector, and 52% of the contribution of the manufacturing sector to
the GDP in 2001. Despite the importance of the micro and small enterprises (MSEs) sector to
Ethiopia‟s economy in terms of job creation and poverty alleviation, the sector is facing many
problems such as lack of access to finance, insufficient infrastructure, a small loan size, etc., that
have limited its ability to play a role in the economy (Ageba & Amha, 2006).

The MSE sector has also been a means in contributing to economic change by providing goods
and services, which are acceptable quality and are equitably priced, to a huge number of people,
and by successfully using the skills and capacities of a large number of people without asking
high-level training, a large amount of capital or sophisticated technology (ILO, 2002). Similarly,
(Asgedom, 2016) stated that in many countries, the MSE sector generates significant
employment and economic output. MSEs agree that overall employment is higher in developing
countries, which are primarily focused on small-scale production. Micro and small businesses
(MSEs) are undeniably important for economic development.
In contrast, both developing and developed countries are concerned about the high rate of failure
of micro and small enterprises businesses. According to many reports, for instance (Maow,
2021); 80-90% of MSEs fail within five to ten years.

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Owners of small and medium-sized businesses face challenges such as changing markets, a wide
range of technologies, skills, and resource shortages (Gummesson, 1997). As a result, there are
many additional problems in MSE, such as political instability, a lack of human capital and
infrastructure, mistrust of authority, and the vulnerability of government police forces, which are
all issues that small and medium-sized businesses face. Micro and Small Enterprises (MSEs)
businesses need all stakeholders' participation and managerial talent to overcome their depressive
condition and achieve a higher degree of competence to compete globally and for accelerated
growth (Al-Haddad et al., 2019).

Therefore, this study was aimed to investigate factors that affect the performance of micro and
small enterprises (MSEs) concerning financial, infrastructural, institutional coordination and
access to business information problems (factors) in the study area.

1.3. Statement of the problem

Micro and small enterprises (MSEs) are crucial and a key for sustainable growth and
development in almost all economies around the world, especially in developing countries such
as Africa and Ethiopia. According to (Etumeahu, Henry Emeka, Chinedu Christian Okekeke,
Kingsley, 2009) MSEs are widely regarded as the driving force behind economic development,
job creation, and poverty reduction in developing countries. They have been a vehicle for
achieving accelerated economic growth and rapid industrialization. According to the Ethiopian
government's strategy, Growth and Transformation Plan (EPA, 2012). Micro and small
businesses are the bridge to achieving the government's goals in Ethiopia. Despite these
contributions, MSEs continue to face significant challenges in terms of growth and development,
including a lack of both equity and debt financing, insufficient infrastructure, technological, lack
of managerial and expertise supports, etc., factors.

For example, infrastructural factors affect the MSEs' business performance. If there is adequate
access to infrastructure such as road access, electricity, water, transportation access, etc., the
MSEs owner can access reliable and quality products and services to their customers. If
customers can get reliable and quality products and services, they can be satisfied and increases
their loyalty to the MSEs. The same is true if there is access to finance, access to adequate

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technology and good institutional coordination, etc. If not their business performance can be
faced with different kinds of challenges.

Many studies have been undertaken on factors that affecting the performance of the micro and
small enterprise. For instance, the studies done by (Mezgebe, 2012) study suggested various
solutions for different aspects of the problem such as working premises, infrastructure,
marketing information, the poor management system of MSEs, unfavorable and low economic
conditions, inadequate financial accesses, political instabilities, and so on. For instance, the study
done by (Batisa, 2019), on MSEs operating in Nigeria reports that the absence of management
experience of the small business owners is the main reason for small business failure in Nigeria.
The result of the study indicates that most business owners who do not have management
experience and adequate training and skills to operate a business faces a problem of collapse of
their businesses.

(Bowen, 2007) found that there is fierce competition in the small business sector which leads to
price competition and a small margin of profit. (Olawale & Garwe, 2010) also, show that high
competition is among the major factors that hinder the development of micro and small
enterprises. This is due to the reason that most of MSEs tend to assemble in dense markets and
overcrowded cities.

The study done by Ethiopia CSA explained that the contribution of small enterprises in job-
creating opportunities and the development of our economy is important (Abdissa & Fitwi,
2016). However, their contribution is very low in comparison with that of other countries due to
financial problems, lack of qualified employees, lack of proper financial records, marketing
opportunities, lack of working premises, and raw materials. This problem fails these businesses
to expand the effect of preventing almost from the beginning of their operations. This means that
if the MSEs cannot get support from governments, effective and skill training, financial and non-
financial support, working premises, and raw materials, MSEs business cannot play a very
significant role in the economic development.

While the influences of micro and small enterprise (MSEs) business to expansion are generally
recognized, entrepreneurs in this sector face many problems that affect their continuing survival
and growth. MSEs are anticipated to play a very important role in Ethiopia‟s economy towards

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becoming a middle-income country in the next decades; however, these infant MSEs are facing
different kinds of challenges, which enormously affect their performance (ILO, 2005).
As a study conducted by (Ageba & Amha, 2006), the problem of MSEs is access to working
capital, insufficient infrastructure, and high cost restricted managerial and technical experts and
market problems.

Even though several authors have agreed that MSEs have the problems mentioned above, they
are still disagreeing on each idea. For instance (Wattanapruttipaisan, 2003), a major problem for
MSEs in developing countries is a lack of access to capital. In contrast, (Matfobhi & Ruffing,
2002) argued that the major constraint to MSE development, expansion, diversification, and
promotion is the loan word, or medium and long-term credit, rather than a lack of access to
finance. So, according to the Wattanaprutipaisan (2003) and Riba (1999) argument above, there
are still inconsistencies /a gap/ regarding the factors affecting the performance of MSEs in access
to capital. Therefore, this study will identify the gap to investigate the existing problems in terms
of financial or access to capital.

On the other hand, various studies have been conducted in Ethiopia and particularly in Addis
Ababa. For instance, a study carried out by (Shantiko et al., 2013) has focused on the
Socioeconomic role's challenges of MSEs. Here, he has not assessed the factors affecting the
performance of MSEs in their businesses. Another study carried by (Abel, 2014) has conducted
about challenges of MSEs only in the service and manufacturing sectors. In this case, the
researcher has not touched these issues in the other three sectors namely, trade, construction, and
urban agriculture sectors. In addition, unlike the above studies, (Micro et al., 2018) have
conducted research deals with the factors affecting the development of MSEs and factors
affecting the capital growth of MSEs respectively. Here, the two researchers were only
concentrated on factors affecting the development of MSEs and capital growth of MSEs, and
also they tried to investigate different factors related to the development and capital growth of
MSEs respectively. Therefore, the researcher did not touch on the issues in the business
performance of MSEs in the study area.

In addition, the studies were conducted several years ago, and there have been economic,
political, and socio-cultural changes since then. Any good policies and strategies need to rely on

5
timely information if they are to promote micro and small-scale enterprises with the view to
increasing their contribution to poverty reduction and economic growth.

Therefore, this study focused on investigating factors affecting the performance of MSEs
regarding the four independent variables which are financial factors, infrastructural, institutional
coordination, and access to business information service factors in the study area. In doing so,
this study addressed the factors affecting the performance of MSEs in four sectors namely;
manufacturing, service, trade, and construction sectors.

1.4. Research questions

The study addressed the following research questions;

1. How does access to finance affect the performance of MSEs in the study area?
2. To what extent does infrastructure affect the performance of MSEs in the study area?
3. How does the institutional coordination problem can affect the performance of MSEs in
the study area?
4. How does access to business information service can affect the performance of MSEs in
the study area?
1.5. Objectives of the study

1.5.1 General objectives of the study

The general objective of this study is to investigate the factors affecting the performance of
Micro and Small Enterprises (MSEs) in the study area.

1.5.2. Specific objectives

The specific objectives are;

- To investigate the extent to which access to Finance by MSEs affects their business
performance in the study area.
- To examine the level to which Infrastructure /Electricity, water, road, buildings/affect the
business performance of MSEs in the study area.

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 - To investigate the level of Institutional coordination problems that affect the business
performance of MSEs in the study area.
- To investigate the level of access to business information service problems that affect the
business performance of MSEs in the study area.
1.6. Hypothesis

H1: Access to finances has positive influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.
H2: Access to infrastructure has positive influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.
H3: An institutional coordination has positive influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.
H4: Access to business information service has positive influences on the performance of Micro
and Small Enterprises (MSEs) in the study area.

1.7. Significance of the Study

This study was supposed to give the following significance;

Understanding the factors affecting the performance of MSEs business can enable to
management, solve the problems and the owners of the MSEs business may improve their
performance to reach their business objective.

The finding of this study also helps MSEs in the study area and others, within insight into the
benefits of using different factors studied in this research to predict the factors that affect the
performance of SMEs. Moreover, the finding of this study serves as input for planning and
policy formulation, academicians in a related area, consultants, and government agencies, and
also can consider as important additions to the existing knowledge and literature in the area for
the public at large.

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1.8. Scope of the Study

In Addis Ababa city, there are many micro and small enterprises operating, each of them faces
many challenges, which affect them from growing and contributing to the economy effectively.
However, due to many constraints like time, cost/budget, and other resources, it is difficult to
study including all micro and small enterprises found in country. Therefore, this study delimited
only to investigate factors affecting MSEs' business performance in Addis Ababa city
administration MSE, and also the study delimited on members of the MSEs engaged in
manufacturing, service, trade, and construction sectors.

1.9. Limitation of the study

Similar to all other researches, this study has limitations. Firstly, the limitation of this study was
that it was only conducted with four independent variables and only in Addis Ababa City
Administration. The sample chosen does not represent the sample frame of all MSEs out of
Addis Ababa. Secondly, the other limitation of this study was data collection instrument was
only a questionnaire.

Lastly, some of the respondents did not voluntarily return the distributed questionnaire. It affects
the paper quality to some extent. Even if the above limitation has happened, the researcher can
face the limitations and tries to investigate the objectives of the research.

1.10. Organization of the Study

The study is organized into five major chapters. The first chapter is comprised of the information
concerning the background of the study, statement of the problem, objectives of the study,
significance of the study, scope, and limitation of the study, hypothesis, and organization of the
study. The second Chapter focused on reviewing related literature. It includes a brief description
of the literature review such as theoretical reviews and empirical findings, the conceptual
framework of the study which served as subsequently related to the study. The third chapter is
divided into sub-sections such as research design and methods (data sources, target population,
sampling techniques, data collection methods, reliability and validity, and ethical consideration,
and analysis of the study. The fourth chapter presented Data Presentation, Analysis and
Interpretation and the last chapter five presented a summary of findings, major conclusions, and
sets recommendations on how to enhance small and micro-enterprise challenges.

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 CHAPTER TWO

LITERATURE REVIEW

2.1. Introduction

This chapter has explained the review of literature on the research title “Factors Affecting the
Performance of MSEs in Addis Ababa city Administration”, and also this chapter was discuss a
review of different theoretical and empirical studies in the concept of MSEs business
performance and influences that challenge the performance of the MSEs operating which is
known as independent variables. In this chapter, the study was also include the concept of MSEs,
the role of the MSEs, the concept of performance and its measurements, and the conceptual
framework.

2.2. Theoretical Literature

2.2.1. Definition of Micro and Small Enterprises (MSEs)

There are no generally agreed-upon concepts of Micro and Small Enterprises (MSEs) business.
MSEs are described differently in different countries, by multilateral organizations such as the
World Bank and the United Nation Development Program (UNDP), and by their scale, scope,
and geographical location. Different countries define their definition based on the importance of
MSEs in economic growth and develop their strategies to achieve the objective. Deference in
their industrial organization at the deferent level of economic growth in different parts of the
same country may also result in different meanings among countries (Oladejo, 2011).

(Oladejo, 2011) stated that there are no single criteria for categorizing business enterprises as
small or medium size globally. Over fifty meanings were found in 75 countries in a survey
conducted by the International Labor Organization(ILO, 2006). Small and medium-sized
businesses are often referred to as SMEs, but there is no general agreement about what that word
means.

According to (Joshua Alabi, 2007), the basic metrics used in the definitions could include a
variety of factors such as the number of employees, financial profitability, net revenue,
comparative scale, initial capital outlay, and industrial categories.

9
The number of employees, total net assets, revenue and expenditure levels, number of annual
working hours, annual turnover, annual balance sheet or amount of output, and freedom from the
dependency of the organization is some of the commonly used requirements for MSE
classification in different countries (Ginbite, 2017). The number of employees and the yearly
benefit seems to be the best criteria used to define MSEs (Peaacock, 2004), and (Broom, 1983)
argues that although the number of employees is the most commonly used criteria, the best
criterion in each case is determined by the users intent.

According to the Ethiopian Micro and Small Agency (FMaSE,2011), MSEs are classified as
small and medium enterprises with 6 to 30 employees or a total asset value of birr 100,000 to 1.5
million birr in the industrial sector and 50,00 to 500,000 birr in the service sector. Medium
enterprises are business enterprises in Ethiopia‟s manufacturing and service sectors with a total
asset of more than birr 500,000 and a sum asset of more than 1.5 million birrs respectively
(Addis Ababa 14 MSEs development agency bureau, 2011 as cited on Addis Ababa
communication office bureau). However, in terms of size, capital, and several workers, there is
still no strong distinction between medium and large businesses.

According to Kayanula and Quartey (2000), the official concept of enterprise size in Malawi is
based on three criteria: investment capital, employee count, and turnover:-

If an organization meets two of the three requirements, it is classified as small scale: it has a
capital investment of USD 2,000 to USD 55,000, employs 5-20 employees, and has a turnover of
up to USD 110,000 (using 1992 official exchange rate). Some of the main characteristics of
small enterprises, according to the same scholars, are mobilizing funds that would otherwise be
idle, being a seed-bed for indigenous entrepreneurship, their labor intensiveness, employing
more labor per unit of capital than large enterprises, fostering indigenous technical know-how,
and using mostly local resources, requiring a less foreign exchange.

As a result, as we can see from the various definitions above, there is no generally accepted
definition of MSEs. Different scholars use their criteria to describe MSEs based on the degree of
development of the topic.

1
 2.2.2 Role of Micro and Small Enterprises (MSEs)

Micro and small businesses (MSEs) have played a larger role in a variety of socio-economic
benefits, including stimulating entrepreneurial overall growth, contributing to the transformation
of the traditional sector into a new one, creating jobs, reducing rural-urban migration, and
serving as a training ground for managerial skill acquisition (Asaolu 2001 and 2004, Parker
2004; Van Stel, Storey and Thurik 2007). Micro and small enterprises are critical for long-term
growth in almost all economies.

A high failure rate in SMEs is extremely unfavorable for an economy, especially one that is
developing and lacking in the capital (Okpara and Wynn 2007). It has also been suggested that
the main challenges facing the poor in developing countries are access to resources, knowledge,
and state markets, such as the fragility of local community markets coupled with environmental
degradation(Alhaji & Muharram, 2019).

In many developed countries, micro and small businesses are involved and dominate the
economy. Many African countries have prioritized them in their development plans. According
to Eke (2007), small businesses account for more than 93% of all entrepreneurs in developing
countries. Small businesses in Japan accounted for 99.4% of all business institutions, hiring
81.1% of the labor force and contributing 51.8% of total exports (Cowdhury and Kazuh).

The MSEs sector is regarded as an important component of economic growth and a key
component in efforts to lift countries out of poverty (Wolfenson, 2001). Small-scale enterprises
are the root of economic growth, job creation, and poverty alleviation in developing countries.
Furthermore, small businesses have been viewed as a source of supply for larger-scale industries
(Fabayo, 2009). In this regard, Ethiopia's MSE Development Program has received attention
from the government since 2004/2005.

The national strategy was implemented by the Federal MSEs Development Agency, which was
only coordinated at the national level until 2004/2005. Due to this reason, it was difficult to put
the strategy into practice, especially in terms of providing outbound business development
services to MSE operators. As a result of observing the sector's critical position and the problems
faced by MSE operators since 2004/2005, Ethiopia's government has decided to create a regional
MSE coordinating body.

1
 2.2.2.1 Contributions of MSEs for job creation

In most advanced economies, Micro and Small Enterprises (MSEs) are seen as solutions for
economic development, modernization, employment creation, income generation, and
technological advancement (Acs & Audretsch, 1990; Bhutta, Rana & Asad, 2008). As Kadiri
(2012) pointed out, the phrase “Micro and Small Enterprises” is widely used in the business
world because this sector is essential for job creation, national development, poverty reduction,
and economic development. Employments perspective are greater for small-sized enterprises
than for large corporations and multinational corporations. Micro and small enterprises
businesses are critical to poverty reduction, social progress, and economic growth. Economic
growth will be accomplished by establishing prosperous industrial enterprises, which will create
employment opportunities for the general population in the community in which they work. Job
opportunities will increase people‟s disposable income, resulting in increased demand for goods
and services, as well as on-demand purchases. This will also help to improve living conditions
and poverty (AlHadded et al., 2019). MSEs increased their contribution to job growth in the EU
by an average of 1.1 million jobs a year, or 0.9% a year, from 20002 to 2010. MSEs generated
0.9 million jobs per year, accounting for 85% of the overall rise (De Kok et al., 2011).

2.2.3 Micro and small enterprises in Ethiopia

In Ethiopia, the government has established a National MSE Development and dissemination
strategy in 1997, which was explained in a systematic approach to minimize the constraints and
promote the growth of MSEs. The overall objective of the strategy is to create a conducive
environment for MSEs, with specific objectives to facilitate economic growth; bring equitable
development; create long-term jobs; strengthen cooperation between MSEs; promote export;
equal preferential treatment between MSEs & larger business enterprises. The strategy focuses
on contingency measures and beneficiaries such as small manufacturers in food, textiles, leather,
clothing, metal works, and crafts, self-employment, beginning and expanding firms (focus on
women-owned), small enterprises in nomadic and disaster areas; agro-business and small scale
farming and fishing, small and sub-contractors; small exporters; as well as small-scale tourism
operators (FDRE MoTI, 1997). Similarly, Addis Ababa City Administration MSE Development
Agency has developed different strategic manuals and policy directives concerning capacity
building, financial management, service cluster, level of transition of MSES, scaling up best

1
practices, etc. In the year 2011/2012 for the productive implementation of MSE followed by
dissemination of documents and massive training. According to research carried out by
Commission on Legal Empowerment of the Poor in 2006 the private sector in Ethiopia is
characterized by high domination of MSEs of low-income groups accounting for the large of
nonagricultural economic activities and particularly, concentrated in the production and
consumption of textiles, food and beverage processing. Furthermore, according to (Commission
on Legal Empowerment of the poor, 2006) the research report revealed that most MSEs are
characterized by simplicity of access and account for the majority of the population and that the
majority of them are located in rural areas.

2.2.4 Ethiopia’s Micro and Small Enterprise Promotion police

The function of the micro and small enterprise (MSEs) is important in the mitigation of poverty
by the means of employment generation. In 1997, a national MSE development strategy was
developed as a result of this knowledge. Ethiopia's MSE policies were created to decrease
poverty in urban areas while also encouraging entrepreneurship and playing a role in industrial
growth. The strategy was reviewed in 2010/2011 with regenerate interests and more aspiring
focuses on employment and number of entrepreneurs and the process of change from small to
medium size level (Addis ReMSEDA 2009).
MSE development is one of the most important concentrated areas of the country‟s development
strategy, receives significant support from the government in the form of access to finance,
market, technology, training, and also working premises/area/. The government hardly believes
that MSEs are the basic solution to mitigate urban unemployment and also reduce poverty.

Ethiopia formulated a stratum policy support in which MSEs are categorized into three stages
namely; start-ups, growing-meddle, and maturity stages. Start-up stage enterprises refer to those
enterprises found at their establishment stage and comprise a group or individual aspiring
entrepreneurs that want various supports to make their enterprise operates. At this stage, the
basic challenges are lack of initial and working capital, poor knowledge of business management
and entrepreneurship, and lack of know-how about the different government policies and
directives related to the sector. To minimize the above problems, FEMSEDA has developed a
strategy that focuses on facilitating access to capital, assisting MSEs in the formalization and

1
legalization process, and providing training in company management, entrepreneurship, and
manufacturing techniques.

The growing phase of enterprises refers to those enterprises that are competent in the market in
terms of price and quality and successfully implementation of the different government
supporting packages and they are also profitable in their business. At this stage, enterprises are
challenged by different problems such as financial challenges, technical skill, absence of
sufficient working and sales premises, loan accesses and bureaucracy of the institution, lack of
knowledge the way how they can use technology, and low accesses to international standards
and better production technology. To reduce these problems, FEMSEDA has formulated a
national strategy that focuses on access to financial support, training, and technological
development program. The last stage is the maturity stage which refers to enterprises that are
considered to have arrived fully profitable and engaged in another expansion and investments in
the sector. FEMSEDA now has a strategy in place to help businesses improve their efficiency
and product quality. Moreover, at this stage, enterprises have knowledge of international
standards and better production technology than from start-ups and middle-growing stage
enterprises.

2.3 Concepts of Business performance

Performance is doing something in the right way or doing something successfully using
knowledge as distinguished from merely possessing it (Global Entrepreneurship monitor 2004).
However, performance seems to understand and evaluated in different mechanisms thus making
cross-comparison difficult. According to Martin (2010:67), performance is characterized simply
in terms of production, such as qualified objective or profitability. In small business literature,
performance has been the focus of comprehensive and increasing analytical and philosophical
investigations (Bidzakin K.J., 2009:31).

According to Rami and Ahmed (2007:6-13), the most widely accepted concept of performance
or success is financial strength with ample income. Other concepts of achievement, such as good
results, apply equally to both work satisfaction and financial development as a result of increased
earning. For example, some entrepreneurs consider the good result to be job satisfaction they get
from achieving standard target or goal. Most researchers and practitioners, on the other hand,

1
have widely embraced financial growth as a result of rising profits in market performance
models.

2.3.1. Measures of performance

A business firm could measure its performance using financial and non-financial measures. The
financial measures aggregate profit before tax and turnover whereas, the non-financial measures
included issues deserving to customers‟ satisfaction and customers‟ referral rates, delivery time,
waiting for time, and employees‟ turnover.

Performance measuring is commonly carried out by subjective evaluation of the business firm
themselves, either by evaluating their satisfaction with the achieved descriptors of effectiveness
and efficiency (meeting expectations, i.e. Plans), or by initiating themselves against their
competition (Dess, et al. 1984) Lebans & Euske (2006) as it was cited in Corina, G. et al. (2011)
provide a set of definitions to clarify the meaning of organizational performance:

Lebans & Euske (2006); Kaplan & Norton (1992) states that performance is determined in terms
of financial and non-financial indicators which offer information on the level of achievement of
objectives and results. Performance is conditional, requiring judgment and interpretation.
Performance may be clarified by using a causal model that explains how current actions may
affect future results. Business performance is the most common metric used to evaluate a
company's performance.
According to WalkerandBrown (2004), small business performance can be measured by
financial and nonfinancial criteria although the former has been given the most attention in the
literature. Non-financial measures of performance used by business owners, such as autonomy,
job satisfaction, or the ability to balance job and family responsibilities (WalkerandBrown, 2004,
Mohan-Neill 2009) are subjective and As a result, they are more difficult to quantify because
they are defined by the individual. Non-financial measures are based on criteria that are
personally determined by the individual business owner although commonalities within the
partners of small business owners occur.

Alasadiand Abdelrahim (2007) stated that, due to the problem of universally accepted standard
performance measures, each business organizations decide and choose its performance measure
that might not truly reflect its performance. This type of performance measures includes but are

1
not limited to market share, sales volume, company reputation, return-on-investment (ROI),
profitability, and established corporate identity. While some may argue that the majority of these
performance measurements are suited for large firms, they are not always ideal for small
enterprises. The financial measure of success, which is the growth of total capital of the firms, is
employed in this study since it is better than non-financial measures in terms of lowering the
subjectivity of measurement outcomes.

2.4 Factors affecting business performance

Micro and Small Enterprises (MSEs) are challenged by many constraints/or factors that affect
their business performance and they are well competitive enough in the market in which they
operate. Factors that affect the business performance of MSEs are; financial factors,
infrastructural factors, and institutional coordination problems are explained as follows.

2.4.1 Financial Factors

Finance is one of the most important components for a company‟s efficient and long-term
development. Since financial access is critical to gaining access to capital and necessary markets.
According to various studies, small and medium-sized businesses begin with their investments,
which are supplemented by borrowing from friends and relatives. Because of this, many
operators/ owners are poor and start their businesses with little money. The majority of them
developed their financial access through informal credit mechanisms that exist within their
society, but they only receive and stare from formal sector institutions on rare occasions
(Sethuraman, 1997). Borrowers from formal businesses are not only managing by government
control, but they often also manage by public sector dominance and are often regulated by a
bureaucracy that is generally hostile to the poor, uneducated, and semi-educated in the small
business sector.

2.4.2 Infrastructure Factors

The majority of small businesses face difficulties due to a lack of suitable location for their
operations, and many of these businesses are situated in areas with insufficient supply and
economic infrastructures, such as roads, water and electricity, telecommunications, working
spaces, transportation system, and technology. Small businesses that have access to these

1
facilities have a comparatively high cost per unit of service as compared to middle or high-
income populations. Furthermore, small businesses are unable to invest in private-public goods
(Reinikka and Svensson, 2002) or obtain services from private vendors at service raise small
business operating cost, restrict their ability to meet quality requirements (hygiene standards at a
lower cost than obtaining services from government providers (Ishengoma, 2004). Inadequate
economic infrastructure and limited access to public services raise small businesses' operating
costs, restrict their ability to meet quality requirements/standards/ and prevent them from
participating in linkage relationships (Collier, 2000).

Generally, poor road conditions, inaccessibility to property, workspace, electricity, and utilities
are all part of the infrastructure issue. In most urban and rural areas, a lack of suitable land for
MSEs is a major impediment to growth and development. According to Ombura (1997),
infrastructural networks are valuable tools in network economies. Infrastructure and related
services enable things to happen; they feed and are fed by trade, drive foreign direct investment,
support the growth and sustainability of industrial clusters, and reduce costs and improve
productivity. It becomes an ongoing, long-term process of managing change by a variety of
actors for the sake of long-term growth (Tewdwr, 2004).

2.4.3 Institutional coordination problems

According to Viinamaki (2004), If there is more linked coordination in all levels of

administration, the common outcome, solidarity, will be arrived at the most relevant way,
because coordination is a tool for bringing different components together. To solve complexities
and unintentional losses, any operation in enterprises requires coordination of various types of
functions within and between firms (Enright, 1992).

In several ways, coordination is linked to confidence and success. It also produces results
because it establishes the requisite confidence for achieving results through networking. As a
result of the internal and external challenges that come with running a company, teamwork
becomes an important factor. Because of its focus on interdependence, collaboration, confidence,
efficiency, and competition, coordination is a part of networking research. It is possible to
improve MSEs' overall performance by establishing relationships with other internal and external

1
relevant organizations, having well-designed plans, functional systems, strong knowledge
supports and providing financial and other facilities.

The main goal of this study will emphasize the internal and external importance of coordination,
as well as address the questions of how coordination can lead to improved organizational
performance and how coordination can assist in improving organizational performance.

2.4.4 Access to business information services problems

If the MSE sector in developing nations is to attain sustainable levels of growth and
development, governments and business service providers must pay attention to access to
business information services. Due to a lack of effective business support services and
insufficient information technical infrastructures, many African businesses operate in an
information-poor environment (Oshikoya & Hussain, 2007). Access to information has however
not been given the same attention as other constraints to the growth of MSEs like access to
finance, infrastructure, markets, technology, or training.

With the development of various information and communication technologies, access to

corporate information services has dramatically improved over time. Because of well-established
information and communication technologies (ICTs) infrastructure and easy access to computer
hardware and software, MSEs in industrialized countries have easy access to business
information services.
There are numerous issues in developing economies when it comes to ICT infrastructure and the
cost of IT gear and software. This has resulted in a slew of issues in the field of MSEs' access to
business information services. As governments and business service providers work to address
the many difficulties facing the MSE sector, it's also critical to understand how people are now
using ICTs to get business information services so that more development assistance may be
provided (Levy, 2000).

1
2.5. Empirical Review

The key factors affecting the success of micro and small enterprises (MSEs) in developing
countries, according to (Mead & Liedholm, 1998) and (Islam, 2016), are not their small size but
their isolation, which prevents access to markets, knowledge, finance, and institutional support.
The argument that small businesses in Africa are crucial in the role they play in employment
creation and general contribution to economic growth is not new. Even while this is true, the
great majority of new businesses are one-person operations (Abera, 2012). This has tended to
ensure that the path of the micro and small business entrepreneur is always short-lived, with the
failure rate of micro and small businesses in Africa estimated at 99 percent (Katwalo, 2010).
A study conducted by (Kinyua, 2013), on factors affecting the performance of micro and small
enterprises (MSEs); the study stated that MSEs' access to finance could positively influence the
achievements of MSEs in Jua Kali sector. According to Muiruri (2014), Jua Kali entrepreneurs
have financial social demands that conflict with commercial capital, causing capital to be
diverted away from company needs. According to Kinyua (2014), several businesses believed it
was difficult to obtain loans since they had to provide credit records and did not completely
comprehend the procedures for obtaining and repaying loans. Generally, he revealed that MSEs'
access to finance could positively influence MSEs in Jua Kali sector. Access to finance, on the
other hand, has not yet been effectively utilized to the benefit of the MSEs in the study area.

A study conducted by (Kinyua, 2014) on factors affecting the performance of micro and small
enterprises (MSEs) in Limuru town market of Kiambu country, Kenya, in financial and
infrastructural aspects, the study stated that access to finance and infrastructure are the basic
socio-economic factors that challenge the growth of businesses in Limuru town market.

A study conducted by (Hadis & Ali, 2018) on MSEs in Ethiopia; linkage and implications:
evidence from Kombolcha town, in attitudinal and coordination aspects, study stated that MSEs
linkage with the financial institution is weak caused by inefficient managerial and policy-related
barriers. In addition, entrepreneur‟s perception of local government support as unimportant and
gaps in quality produces and technical skills are the factors affecting the business performance of
MSEs.

1
Berger et al. (1998) researched the financial and infrastructural factors that influence MSE
performance. According to the findings of the study, finance plays an important role in the
performance of micro and small enterprises (MSEs) businesses. Their research has revealed the
lack of financial and infrastructure resources accessible to smaller businesses compared to big
businesses, as well as the impact on their performance and development.

Lack of physical infrastructure is a major cause of low levels of investment and the dis-
satisfactory performance of micro and small enterprises (MSEs). (Bank, 2012) has identified
poor infrastructure as a critical factor that constrains business performance in Ethiopia. Poor road
conditions, inaccessibility to land, workspace, energy, and utility services are all part of the
infrastructural challenge. Lack of the availability of land resources to MSEs in most urban and
rural areas is a major challenge to growth and development. Low accesses to land and lack of
property rights affect access to infrastructure and utilities by line MSEs (Ginbite, 2017). A study
conducted by (Ebabu Engidaw, 2021) a study on factors affecting the performance of small and
medium-sized enterprises founded that a critical factor affecting performance is infrastructure
with a significant level of 0.000, it shows that with the absence of suitable infrastructures like;
power, good road network, effective communication system and functional available of the
market that can absorb the finishing products business may not survive.

A study was done by (Konso & Mitiku Mekonnen, 2018) on factors affecting the performance of
MSEs shortage of access to external financing is considered MSE expansion has been hampered
by this issue, which has resulted in a high percentage of failure among those businesses. In
another study (Mirza, 2013) finance and performance in MSEs are significantly related with
0.000 at a 5% significant level. This emphasizes that finance has a determinant effect on business
performance. (Atalel Fetene(2017), also found that finance has a significant effect on business
performance.

2
2.6. Conceptual framework

The emphasis of this study‟s conceptual framework is one of the factors affecting micro and
small enterprises' (MSEs) business performance. To define the relationship between variables,
the variables in the conceptual framework tested the hypothesis. The financial factors,
infrastructural factors, institutional coordination factors and access to business information
service problems are all independent variables and MSEs business performance is the dependent
variables. Profitability, sales growth, and Increase in market share are the measurement of MSEs
business performance. The conceptual framework for the relationship between variables is
shown in figure 1.

Independent variables Dependent variable

Financial factors Performance of MSEs

(Profitability, productivity, Increase
in market share) are measurements
of performance of MSEs.
Infrastructural
factors

Institutional
coordination factors

Access to business information services problems

Figure 1:- The relationship between factors affecting MSEs performance

Source: - Adapted from International Journal of Science and Research publication, volume 4,

Issue 12, December 2014.

2
 2.7. MSEs Performance

Performance was considered to be the dependent variable measured in terms of indicators such
as; profitability, sales growth, market share, product reliability, customer loyalty achievement,
daily revenues generated by the business; and production output. (Abdul Aziz & Abdul Razak et
al., 2018) conclude that firm performance can be measured in both objective and subjective
ways. Objective measures represent the unlimited financial gain in terms of sales and
profitability whereas subjective measures also represent the owner‟s satisfaction with both
financial concerns such as Profitability, sales growth, and market share, as well as non-financial
factors like career advancement, customer happiness, employee contentment, customer feedback,
workplace communication, owner satisfaction, and work-life balance, are all important. (Abdul
Aziz & Abdul Razak, 2018) on the other hand, the independent variable is considered to be
which are assesses through the various elements of factors affecting MSEs Performance like;
financial factors, infrastructural factors, and institutional coordination problems. They have an
overall influence on the performance of MSEs and the independent variables (IV) have a direct
relationship with the DV which is the performance of Micro and Small Enterprises /MSEs/.

Therefore, this conceptual framework linked the problem of the factors that affect the
performance of MSEs to investigate factors that affect the performance of MSESs based on the
three objectives of the research. The independent variables were analyzed with indicators that
studied to answer the research questions and those caused a change in the performance of MSEs
as follows:

2.7.1. Financial Factors

This study conceptualized that when there is sufficient financial access, the performance of
MSEs increases but when there is a lack of financial resources, their performance decreases.
According to (Ayele, 2018), adequate financing has a major positive impact on small business
survival and growth, and without it, small businesses would struggle to survive. One of the major
challenges that hindering the performance MSEs in our country is access to finance and financial
institutions credit processing has become more complex, and the institutions have become more
cautious because of the financial crises, making it difficult for MSEs to understand the
procedures and decisions when it becomes to be loan and also Banks do not provide MSEs with

2
adequate capital. As a result, the goal of this research is to provide an immediate answer and
uncover smooth and long-term financing sources that will help MSEs pursue their growth
potential.

2.7.2. Infrastructural factors

Infrastructure is one of the most important factors that affect economic development because it
plays a crucial role for the economic development through the production processes and changes
increases in the quality of accessible production infrastructure will have a significant impact on
an organization's output, income, profits, and job creation in the economy. The gap in the
availability of infrastructure in our country has greatly influenced the production processes in the
manufacturing sector, especially the ability of MSEs to compete in the global market. Because of
inadequate infrastructure, the performance of micro and small enterprises is affected. If there is
the availability of adequate infrastructures, the enterprise will have market accesses, accesses to
electricity, technology, portable water, road, and other infrastructures, and also it helps to
increase their business performance. Therefore, this study will try to investigate and answer the
infrastructural gaps (problems that affect the performance of MSEs.

2.7.3. Institutional coordination problems

According to(Van Der Lecq, 1996), If there is more linked coordination in all levels of
administration, the common outcome, solidarity, will be arrived at the most relevant way,
because coordination is a tool of bringing different components together. To solve complexities
and unintentional losses, any operation in an enterprise requires the coordination of various types
of functions within and between firms.

In several ways, coordination is linked to confidence and success. It also produces results
because it establishes the requisite confidence for achieving results through networking. As a
result of the internal and external challenges that come with running a company, teamwork
becomes an important factor. Because of its focus on interdependence, collaboration, confidence,
efficiency, and competition, coordination is a part of networking research. It is possible to
improve MSEs' overall performance by establishing relationships with other internal and external
relevant organizations, having well-designed plans, functional systems, strong knowledge
supports and providing financial and other facilities.

2
The main goal of this study was to emphasize the internal and external importance of
coordination, as well as to address the questions of how coordination can lead to improving
organizational performance and how coordination can assist in improving organizational
performance.

2.7.4 Access to business information services problems

If the MSE sector in developing nations is to attain sustainable levels of growth and
development, governments and business service providers must pay attention to access to
business information services. Due to a lack of effective business support services and
insufficient information technical infrastructures, many African businesses operate in an
information-poor environment (Tekele, 2019). Access to information, on the other hand, has not
received the same level of attention as other barriers to MSEs' growth, such as access to capital,
markets, technology, or training.

With the development of various information and communication technologies, access to

corporate information services has dramatically improved over time. Because of well-established
information and communication technologies (ICTs) infrastructure and easy access to computer
hardware and software, MSEs in industrialized countries have easy access to business
information services.
There are numerous issues in developing economies when it comes to ICT infrastructure and the
cost of IT gear and software. This has resulted in a slew of issues in the field of MSEs' access to
business information services. As governments and business service providers work to address
the many difficulties facing the MSE sector, it's also critical to understand how people are now
using ICTs to get business information services so that more development assistance may be
provided (Kamunge et al., 2014).

2
 CHAPTER THREE

THE RESEARCH METHODOLOGY AND DESIGN

3.1. Introduction

Under this chapter, the study tried to discuss the research methodology which includes the
research design, research approach, research methods, data sources, sampling design and
techniques, research instruments as well as data processing, and methods of data analysis.

3.2. Research design

Research design is the blueprint for fulfilling research objectives and answering the research
questions. According to (Kothari, 2004) research design is the arrangement and structure used to
regulate the study to attain the research objectives and answer the research questions. It ensured
that the study was relevant to the problem and that it uses economical procedures.

The research design employed under this study was descriptive and explanatory. The reason for
using descriptive research design was; to describe the state of affairs as it exists at present and
explanatory research design was better to connect ideas to understand the cause and effect of the
variables(Kothari, 2004).

3.3. Research Approach

To answer the proposed research questions, the study was employed a quantitative research
design. It was tried to address the descriptive and explanatory research approaches.

According to (Kothari, 2004) a quantitative research approach was used to describe the
numerical aspects and quantitative data was collected and analyzed in an integrated manner. The
basic reason for choosing the quantitative research approach for this particular study lies in the
fact that it was allowed to come through the respondent‟s objective. This was in turn contributes
much to the inferences of the study results.

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3.4. Research Methods

3.4.1 Methods of data collection and Instrument

To achieve the objectives of the study, the researcher used quantitative research methods through
a questionnaire to cover larger target groups of MSEs. The adopted questionnaires were prepared
using Close Ended or Structure questionnaires and 5 Point Likert-scale approaches. It was
prepared in the English language and translated into Amharic to facilitate the response. A letter
of verification was provided for the respondents to maintain the confidentiality of the
information as an attachment to the questionnaire.

3.4.2. Data sources

To achieve the research objective, both primary and secondary data sources were used in the
study.

3.4.2.1. Primary Sources

Primary data was collected through a structured closed-ended questionnaire from the
representative of the total population of MSEs owners in Kirkos and Arada sub-cities. The
survey questionnaire in this study contained a five-scale pointing rating from (1) strongly
disagree to strongly agree (5). These continuous scales are the scales that are used to weigh the
objects/measurement on the instrument.

3.4.2.2. Secondary Sources

Secondary data was collected from both published and unpublished materials includes SME
reports, reviewed literature, research papers, circulars, and policy papers to provide additional
information where appropriate.

2
3.5 Target population and Sample

3.5.1 Target population

Population refers to all elements (individuals, objects, and events) that meet the sample criterion
for inclusion in a report. The target population for this study comprised MSEs owners of the
Kirkos and Arada sub-city administration. As indicate by Kirkos and Arada sub-city
administration MSEs Office, both administrations have a total population of 9795 MSEs owners
or 5,533 and 4,262 MSEs owners respectively in the following four sectors which are
Manufacturing, Service, Trade and Construction sectors. Because of the low number of business
owners in the statistics of the sub-cities, I excluded the urban agricultural sector.

3.5.2. Sample Size

The optimal sample size in a study is determined by the characteristics of the population and the
study's goal, according to (Dawson, 2013). Although there are no hard and fast standards, the
sample size is usually determined by the population being sampled. There are several methods to
determining sample size. Given the total population, the number is known; Yamane‟s (1967)
formula is used to calculate a sample size that could accurately represent the total 9795 MSEs
owners in the Kirkos and Arada sub-city administration in the following four sectors which are,
Manufacturing, Service, Trade and Construction sectors. The formula in the figure was used to
calculate the sample size. 95% confidence level and p = .05 were assumed to be appropriate for
this equation.

n=

The formula used to calculate the sample size of the study (Yamane, 1967)
Where n = the sample size, N= population size, and e = level of precision.

=384
The sample size for the study was 384 MSEs.

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Table 3.1 Number of Samples from each Sector

No. Selected sub- Kirkos sub-city Arada sub-city MSEs Total

cities MSEs ( K and A)
Total Sample Total Sample Total Sample
population population population

1 Manufacturing 671 26 733 29 1,404 55

2 Service 3255 128 862 34 4,117 162

3 Trade 1034 41 1925 75 2,959 116

4 Construction 573 22 742 29 1,315 51

5 Total 5,533 217 4,262 167 9795 384

3.6 Sampling Techniques

To get information from different sizes of the MSEs, the researcher was applied stratified and
simple random sampling techniques. This technique was preferred because it assisted in
minimizing bias that may come because of the high cost and the long time it needs when dealing
with the population. Before picking items for the sample, the sampling frame can be arranged
into generally homogeneous groups (strata) using this procedure. According to (Dawson, 2013),
this step increases the probability that the final sample would be represented in terms of the
stratified groups. The strata„s are sectors including manufacturing, service, trade, and
construction sectors.

3.7 Data analysis method

The method the researcher used to analyze the data is quantitative analysis, such as percentage,
tabulation representation, and description method. The collected data was organized, analyzed,
interpreted, and discussed using a Statistical Package for Social Science (SPSS) version 26. All
collected quantitative data was analyzed using descriptive statistics like frequency, percentage,
mean and standard deviation. Whereas, statistics (Pearson correlation and multiple linear
regression) Pearson correlation was applied to observe the relationship between independent and

2
dependent variables. Multiple linear regression is also applied to show the effect of independent
variables on the dependent variables.

The study adopted the following functional specification and a linear regression model to
determine the relationship between variables;

Y = β0+β1x+β2x+β3x+ β4x +Ԑ0

Where; Y(x) is MSEs performance.

β0 is the constant term,

β1 is the correlation coefficient of financial factors,

β2 is the correlation coefficient of technological factors

β3 is the correlation coefficient of infrastructural factors,

β4 is the correlation coefficient of institutional coordination factors, and

Ԑ0 is a marginal error.

This coefficient shows that the units in the independent variables make variation independent
variables by units of coefficients.

3.8. Validity and Reliability tests

3.8.1 Validity

The degree to which a test measures what it claims to measure is known as validity (Creswell,
2003). Validity is defined as the accuracy and usefulness of inferences drawn from study
findings. To make sure the research‟s validity, the researcher used reliable source such as
published researches, books, and recent articles which were written on the factors affecting the
business performance of MSEs. Based on the respondent‟s response addition, omission, and
modification of questions were undertaken. To further refine the accuracy of the instrument, a
questionnaire was administered and prepared with standardized questions from different sources
and the research advisor also provided valuable comments on the prepared questionnaire.

2
 3.8.2 Reliability

A measuring device is dependable, according to (Kothari, 2004), if it produces consistent results.

A reliability test was also performed to check the internal consistency and accuracy of the
measurement scale. For testing the reliability of the data instrument, Cronbach‟s alpha was used.
It is a popular measure of internal consistency or reliability test score for a group of examinees.
The measures between 0.8 and 0.95 are considered to have very well reliability. Scales with
coefficient alpha between 0.7 and 0.8 are considered to have good reliability and coefficient
alpha between 0.6 and 0.7 indicates fair reliability (Kothari, 2004).

3.9. Ethical Consideration

The objective of ethics is to ensure that no one is harmed or suffers adverse consequences from
the research activities. All relevant data for this study was collected by issuing an official letter
to the concerned organizations. The researcher explained and informed the respondents about the
importance of the study and their willingness and consent commitment before distributing
questionnaires. The respondents also had the right to refuse or terminate at any point in the data
collecting process. Regarding the right to anonymity and confidentiality, the participants were
not forced to write their names on the questionnaire and confirmed that their responses were not
in any way linked to them.

3
 CHAPTER FOUR

4. DATA PRESENTATION, ANALYSIS, AND INTERPRETATION

4.1 Introduction

This chapter focuses on the presentation, analysis, and interpretation of questionnaire data and
contains the reliability analysis, respondents profile, correlation analysis, overall MSE s
performance analysis, and multiple regression analysis. A total of 384 questionnaires were
distributed and were collected from Kirkos and Arada sub-cities MSE owners. Only 365 of the
total 384 questionnaires were properly filled out and collected. This represents 95.05% of the
total number of people who responded. Since this is sufficient enough to make the analysis and
all the discussions below are made on these groups of respondents. The collected data were
analyzed by using the statistical package for social science (SPSS) version 26 to answer the
research questions.

4.2 Demographic Characteristics of the respondents

The following table generalizes the demographic characteristics of respondents by gender, age,
marital status, and educational status.

Table 4.1: Gender of respondents

Measurement Frequency Percent Valid Percent Cumulative
Percent
Valid Male 190 52.1 52.1 52.1
Female 175 47.9 47.9 47.9
Total 365 100.0 100.0 100.0
Source: own survey, 2021

As shown in the above table 190 (52.1%) respondents fall into the category of male. This is
followed by 175 (47.9%) of the respondents are in the category of Female. It indicates that there
is a relatively equal gender ratio of responders but, to some extent, the numbers of male MSE
owners who work in the firm were greater than female owners.

3
Table 4.2: Age composition of respondents
Measurement Frequency Percent Valid Percent

Valid under 20 years 31 8.5 8.5

21-30 years 140 38.4 38.4

31-40 years 69 18.9 18.9
41-50 years 107 29.3 29.3
over 50 years 18 5.0 5.0
Total 365 100.0 100.0
Source: own survey, 2021

As can be seen from the above table, the majority of the respondents are within the age category
of 21-30 years (38.4%). The remaining percentages of the age of less than 20, 31-40, 41-50, and
51and above years were about 8.5%, 18.9%, 29.3%, and 5.0% respectively. It indicates that the
greatest number of respondents was young enough since the age of the respondents was
important to get relevant data from them and they can challenge in operating their businesses and
they can work effectively their business activities in the competitive market.

Table 4.3: Marital status of respondents

Measurement Frequency Percent Valid Cumulative
Percent Percent
Valid Single 50 13.7 13.7 13.7
Married 205 56.2 56.2 69.9
Divorced 14 3.8 3.8 73.7
Widowed 96 26.3 26.3 100.0
Source: own survey, 2021

Regarding marital status, the above table shows that majority of the respondents are married 205
(56.2%) followed by widowed 96 (26.3%). the remaining 50 (13.7%), and 14 (3.8%) of the
respondents are single and divorced respectively. From the finding, most of the respondents were
married. Since they are responsible to fill in relevant data concerning the distributed questions.

3
Table 4.4. Educational status of respondents
Measurement Frequency Percent Valid Cumulative
Percent Percent
Vali Read and write 105 28.8 28.8 28.8
d Elementary complete 197 54.0 54.0 82.7
High school complete 33 9.0 9.0 91.8
Certificate 26 7.1 7.1 98.9
Diploma 2 .5 .5 99.5
Degree and above 2 .5 .5 .5
Total 365 100.0 100.0 100.0
Source: own survey, 2021

As it can be viewed in the above table, the majority of the respondents are within the grade level
of elementary complete 197 (54.0%) followed by those who can read and write 105 (28.8%),
high school complete 33(9.0%), certificate 26 (7.1%), and 2 (0.5%) diploma and degree and
above respectively. The above finding indicates that most of the respondents had attained a
different level of education. Since they are literate, they can understand and fill the
questionnaires.

Table 4.5: Work experience of respondents

Cumulative
Frequency Percent Valid Percent Percent
Valid 0-5 15 4.1 4.1 4.1
6-10 162 44.4 44.4 48.5
11-20 187 51.2 51.2 99.7
21 and above 1 .3 .3 .3
Total 365 100.0 100.0 100.0
Source: own survey, 2021

As shown in the above table the work experience of the respondents, majority of the respondents
187(51.2%) have 11-20 years of experience in their business work. While, 162(44.4%),
15(4.1%), and 1(0.3%) of them were in the category of 6-10 years, 0-5 years, and 21 and above
years respectively. This shows that majority of the respondents had operated in the market for a
different period. Hence, they are more informed on the factors affecting MSE‟s performance and
business operating activities. Therefore, they can give relevant data to the researcher.

3
4. Reliability Test

A measuring device is dependable, according to Kothari (2004), if it produces consistent results.

A reliability test was also performed to check the internal consistency and accuracy of the
measurement scale. For testing the reliability of the data instrument, Cronbach‟s alpha was used.
(Hamid et al., 2011) suggested that the rule of thumb for good reliability estimated is 0.7 a high
reliability estimated of between 0.6 and 0.7 may be acceptable if other indicators of the model
construct validity are good. The study has used a questionnaire to investigate factors that affect
the performance of MSEs. Then there assess the model fit reliability and validity of the
questionnaire to get confidence in comparing the sample with the help of SPSS V-26 the most
frequently used Cronbach's alpha. The reliability of the item is presented in the table below.

Table 4.6 Reliability analysis (Cronbach's alpha)

Variables of the study Number of Cronbach’s

items Alpha
Financial factors 9 0.722
Infrastructural factors 9 0.759
Institutional coronation factors 6 0.691
Access to business information service problem 5 0 .726
Performance of MSES 11 0.725

Source own survey: 2021

As indicated in the table, Cronbach‟s alpha values for financial factors, infrastructural factors
institutional coordination, problems access to business information, and performance of MSE‟s
is 0.722, 0.759, 0.691, 0.726, and 0.725 respectively. Hence, the reliability of the measurement
used in this study can be considered as good and acceptable. Therefore, the Cronbach‟s alpha
coefficient of each item is over 0.691.

(Haur, 2017) suggested that the rule of thumb for a good reliability estimate is 0.7 A high-
reliability estimate of between 0.6 and 0.7 may be acceptable. If other indicators of the model
construct validity are good. Hence, the above table shows that the Cronbach‟s alpha from 0.691

3
to 0.759 categories indicating that the survey instrument was generally accepted as good and
acceptable.

4.3 Descriptive Statistics Analysis

4.3.1. Financial factors

Table 4.7: Descriptive Statistics Analyzing Financial factors of MSE‟s

Item Statistics Mean Std. N

Deviation
1. The interest rate charged by banks or other lending 1.80 .635 365
institutions is reasonable.
2. There is a high collateral requirement from banks and 1.91 .596 365
other lending institutions.
3. There are complicated loan application procedures of 1.81 .635 365
micro finances and other lending institutions.
4. Most microfinance and other lending institutions are 1.84 .648 365
reluctant to provide long-term credit to MSE‟s.
5. There are governmental funds to support MSE‟s 1.78 .610 365
6. I have my own enough source of finance to run my 1.80 .657 365
business.
7. I am satisfied with the financial access given by 1.79 .693 365
microfinance and other lending institutions.
8. There are non-governmental organizations (NGOs) 1.73 .655 365
funds to support my business.
9. Access to finance is a major challenge that affects the 2.30 1.128 365
growth of my business.
Grand Mean = 1.86 .532 365
Source: From researcher Owen survey data, 2021.
From the above Table, indicating descriptive statistics analyzing financial factors of MSE‟s,
which is the interest rate charged by banks or other lending institutions is reasonably indicated in
which is indicating in a mean difference of 1.80 described in the standard deviation of 0.635. It
indicates that the interest rate charged by banks or other lending institutions is not reasonable or
poor. Concerning collateral requirements from banks and other lending institutions, the finding
indicated that the mean score was 1.91 and the standard deviation depicted 0.596. This implies
that the collateral requirement asking from banks and other lending institutions was not good. As
indicated from the above table, the mean score of loan application procedures of micro finances

3
and other lending institutions is 1.81, while the Standard Deviation is 0.635. This result indicates
that the loan application procedures were low.

On the other hand, the mean score of most microfinance and other lending institutions that are
voluntary to provide long-term credit to MSE‟s is 1.84, while the Standard Deviation is 0.648.
This indicating that they are not volunteering to give long-term credit to MSEs or low. The mean
score of governmental funds to support MSE‟s business is 1.78 and depicted in Standard
Deviation of 0.610. This result indicates that government funding support was low to MSEs. The
mean score of the source of finance to run their business is indicating 1.80 and in Standard
Deviation shown 0.657. This result shows that most of the MSEs owners don‟t have enough
sources of finance.

It was asked if they were satisfied with the financial access given by microfinance and other
lending institutions which is indicating in a mean difference of 1.79 while the standard deviation
is 0.693. This implies that the access to finance given by microfinance and other institutions was
not satisfactory. The mean score of non-governmental organizations (NGOs) funds to support
my business is 1.73 while the standard deviation was 0.655. This indicates the non-governmental
organization support was low. The mean score of difference of access to finance is a major
challenge that affects the growth of MSEs business performance is indicating a mean difference
of 2.30 and standard deviation of 1.128. It means that MSEs were highly faced by financial
factors.

Finally, the total mean scores of financial factors were 1.86 while the standard deviation was
0.532. It implies that MSEs owners were faced financial constraints both at start-up phases and
after their establishment indicated in an average mean difference of related problems found full
of disagreements among members of operators. The research was done by (Abera, 2012) which
factors affecting the performance of Micro and Small Enterprises in Arada and Lideta Sub-
Cities, Addis Ababa, has similar conclusions on financial factors of business performance of
MSEs. In Africa, for example, the failure rate of MSEs is 85% out of 100 enterprises due to a
lack of access to capital (Lakew & Azadi, 2020).

3
4.3.2. Infrastructural factors

Table 4.8: Descriptive Statistics Analyzing Infrastructural factors

Item Statistics Mean Std. N

Deviation
1) There is adequate road access in my business area. 1.81 .642 365
2) There is sufficient and quick access to transport in my 1.91 .609 365
business area.
3) I have got technology support from the micro and small 1.81 .644 365
institute.
4) I have enough money to access new technology. 1.84 .680 365
5) There is sufficient water supply in my business area. 1.78 .645 365
6) There is sufficient electricity supply in my business area. 1.80 .668 365
7) The cost of electricity is affordable to my business. 1.77 .713 365
8) I have enough and appropriate working materials such as 1.72 .648 365
machinery and other equipment for my business.
9) I have got raw material supports from MSE‟s Institute. 2.27 1.124 365
Grand Mean = 1.82 .530 365

Source: From researcher Owen survey data, 2021.

As indicated in the above table, descriptive statistics analyzing MSE‟s owners of respondents in
the study area indicated that the mean score and standard deviation concerning nine items these
are the road access, access to transport, technological support from MSEs institution, sources of
money to access new technology, sufficient water supply, access to electricity, affordability of
electricity cost, having enough and appropriate working materials, and raw material supports
from MSE institute were, grand mean score of 1.82 and standard deviation of 0.530 respectively.

This result indicates that infrastructure factors are the main factors that affected their business
performance. In general, the finding of the study shows that there is a higher problem of physical
infrastructure facilities that are not adequately established and expanded in the study area to meet
the growing demand for MSEs activities.

Conferring to a similar survey (Mezgebe, 2012), most MSEs face issues with their business
premises, such as rising housing rents and a lack of basic amenities like telephone lines, power,
sewerage, and water. According to the Commission on Legal Empowerment of the (Mulugeta,
2014), though not directly linked, the inadequacy of infrastructure (road, banking service,

3
electricity, telecommunication, and other services in facilitating the smooth operation of private
investment are serious impediments.

4.3.3. Institutional coordination Problems

Table 4.9: Descriptive Statistics Analyzing Institutional coordination factor

Item Statistics Mea Std. N

n Deviatio
1. There is a strong relationship with organizations such as 1.84 .595 365
financial sectors, banks, microfinance, and others to
facilitate the market access of MSEs.
2. There is effective communication within organizations 1.84 .638 365
to support MSEs' business.
3. There is a clear division of duties and responsibilities 1.79 .649 365
within organizations to support MSEs' business.
4. There are not questions of bureaucracy within the 1.92 .741 365
company during the registration and licensing of MSEs.
5. There is an institutional follow-up while in MSEs in a 1.87 .709 365
working place.
6. There is good governance within organizations that 1.75 .662
have a direct relationship with MSEs.
Grand Mean = 1.835 .598 365
Source: From researcher Owen survey data, 2021.

According to the above-stated table, institutional coordination problems that measure about six
items were provided as follows. Concerning the result of the respondents, whether there is a
strong relationship or not within the organizations such as financial sectors, banks, and
microfinance offices to facilitate the market access of MSEs, the mean score is 1.84 and standard
deviation of 0.595. This indicates that their no strong relationship with the organizations such as
financial sectors, banks, and microfinance offices to facilitate the MSE owners‟ business
performances.

From the above table item two, the mean score of effective communication within an
organization to support MSE business is 1.84 and a standard deviation of .638. This shows that
the communication between the organizations is low.

Concerning to clear division of duties and responsibilities within the organization to support the
MSE business performance, the mean score and standard deviation results were 1.79 and .649

3
respectively. This indicates that there is no clear division of duties and responsibilities between
the organizations.

On the other hand, whether concerning to bureaucracy of the company during registrations and
licensing, and institutional follow up while in MSEs in a working place and governance system
within organizations that have a direct relationship with MSEs the mean score and standard
deviation was 1.92, 1,87,1,75 and .741, .709, and .662 respectively. Therefore, the above result
implies that there are bureaucratic issues and the follow-up and good governance system of the
organization was low.

To sum up the above table result, the grand mean score and standard deviation of institutional
coordination factors result responded by the respondents was 1.835 and .598 respectively. This
implies that institutional coordination within the organization that has a direct relationship was
low.

The study was done by (Mulugeta, 2014), identifying the range of institutions as well as
government and non-government actors is also critical in supporting MSE‟s in Addis Ababa. It
is important to take stock of major national and sector development policies that are relevant for
the implementation of the MSE‟s performance and to identify challenges to better articulate their
actions on the ground to solve analyzing institutional coordination factors.

4.3.4. Business information service Problems

Table 4.10: Descriptive Statistics Analyzing Access to business information service problems

Item Statistics Mean Std. N

Deviation
1. There is access to business information that helps to facilitate 1.98 .804 365
my business.
2. Business information is readily available in this market. 1.79 .849 365
3. There is available and relevant information in my business 1.88 .864 365
area.
4. The information available informs us of the changes in the 2.34 1.195 365
business environment.
5. The information necessary for the business is availed on time. 1.72 .861 365
Grand Mean = 1.942 .891 365
Source: From researcher Owen survey data, 2021.

3
The above table indicates that the mean score of access to business information that helps to
facilitate their business was 1.98 and the standard deviation was 0.805. This shows that the mean
and standard deviation of access to business information that helps to facilitate their business was
low. Regarding the information that was readily available to the enterprises on time issues, the
mean score and standard deviation were 1.79 and 0.729 respectively. This indicates that the
business information was not available on time in their market.

On the other hand, whether the information available was relevant for their business or not
issues, the mean score result was 1.88 and the standard deviation was 0.866. The result implies
that the mean level was low and the majority of the respondents disagreed.

Concerning the information available informs them about the market change in the business
environment, the mean score was 2.34 and the standard deviation was 1.193. The result indicates
that the mean score and standard deviation were low and they were dissatisfied with the
information availability that informs them on the market change in their environment. Regarding
the information necessary for the business is availed on time which is indicating in the mean
score of 1.72 and standard deviation of 0.864. The result shows that the value of on-time
information was not and the mean score value was low.

Lastly, the grand mean of access to business information service problem was 1.942 and the
standard deviation was 0. 891. The result of the grand mean score was low and the MSEs owners
did not get available and relevant information that helps to facilitate their business performance.

Many firms in Africa operate in an information-poor environment due to a lack of adequate

business support services and poor information technological infrastructures (Kinyua, 2014).
According to (Ngetich & Kithae, 2020), many reasons have led to the increases in the failure rate
of start-up businesses, including lack of sufficient working capital, poor market selection and
quickly changing market conditions.

4
4.3.5. Performance of MSEs

Table 4.11: Descriptive Statistics Analyzing Performance (Profitability, productivity and

market share) of MSEs

Item Statistics Mean Std. N

Deviation
1. My business profit is in a good position. 1.88 .666 365
2. My business profit is increased from time to time. 1.71 .657 365
3. My business has the potential to grow/expand. 1.80 .719 365
4. I have sustainable profit since I started my business. 1.71 .679 365
5. I am satisfied with the growth in sales of my products 1.81 .725 365
and/or services.
6. The level of my business productivity is increased from 1.79 .721 365
time to time.
7. I am satisfied with the growth of my business 1.76 .692 365
productivity.
8. My business can provide verities of product/ service to 1.79 .685 365
care for the need of all types of customers.
9. Our company is more effective in opening up a new 1.67 .618 365
market or expanding existing markets than our
competitors.
10. Our business market share is highly increased within 1.704 .663 365
the last three years.
11. Our company can change the market or lead 1.87 .597 365
customers‟ needs in new directions.
Grand Mean = 1.774 .675 365
Source: From researcher Owen survey data, 2021.
From the study result Table descriptive statistics analyzing the performance of MSE‟s Kirkos
and Arada sub-cities which their Profitability, productivity, and market share found lower
indicated in a mean difference of 1.774 depicted in standard deviations of 0.675. The result
shows that the mean score was low and their business profitability, productivity, and market
share were poor. This was mainly due to many reasons such as financial factors, infrastructural
factors, institutional coordination problems, and access to business information service problems
that hamper performance and growth of MSEs and are affected by multiple factors that inhibited
the sector. Due to these reasons, the performance of MSE in Sub-Saharan Africa (SSA) is far

4
 below that of the other developing countries in comparison. The study by (AmareHabtemeskel.,
2019) confirmed that the failure rate of MSEs in SSA was high.

4.4. Inferential Analysis

4.4.1. Correlation analysis

Correlation analysis determines to explore the strength as well as the direction of the relationship
between the study variables specifically, financial factors, infrastructural factors, institutional
coordination factors, access to business information service problems (independent variables),
and performance of Micro and Small Enterprises (MSEs) which is the dependent variable.

The researcher was used Pearson‟s production movement correlation coefficient- Pearson‟s r.
According to (Chee & Queen, 2016) Pearson‟s r is a measure of the linear relationship between
two interval or ratio variables and can have a value between -1 and 1. The benefit of using
Pearson‟s r is, it is a simple way to assess the association between two variables. Whether they
share valiance, if the relationship is positive or negative, and the degree to which they correlate.
In this study, Pearson‟s product-moment correlation coefficient- Person‟s r was used to
determine the independent and dependent variables.

Table 4.12: correlation between dependent and independent variables /N=365/

Variables
No. 1 2 3 4 5
1. Performance of Micro and Small Enterprises
(PMSEs) 1
2.
Financial Factors (FF) .775** 1

3. Infrastructural Factors (IF) .721**

.678** 1
4. Institutional Coordination Factors (ICF)
.590** .489** .569** 1
5. Access to Business Information Service Problems
(ABISP) .655** .720** .386** .528** 1
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Source: own survey 2021

4
The above table shows the correlation between independent variables and dependent variables.
The correlate matrix indicated that there is a positive relationship between financial factors,
infrastructure factors, institutional factors, access to business information service problems, and
performance of MSEs which is β= 0.775**, 0.721**, 0.590**, and 0.655** and (P= 0.00)
respectively.

The result from the above table shown that the correlation analyses among all constructs for the
performance of MSE‟s. The result tells that there are significant positive correlations between
financial factors of MSE‟s and Performance of MSE‟s (r=0.775, p<0.01), the result tells that
there are significant positive correlations between infrastructural factors and performance of
MSE‟s (r=0.721, p<0.01).

On other hand, there is a positive correlation between institutional coordination and the

performance of MSE‟s (r=0.590, p<0.01). The correlation coefficient demonstrates that there is a

positive relationship between problems with access to business information service and

performance of MSE‟s score 0.655 which shows medium strength of MSEs in performance of

MSE‟s. This means that the more problems were access to business information service in the

MSE‟s were lead to better way associated with the performance of MSE‟s in Addis Ababa City

Administration.

According to Hutcheson (2011) and Daniel (2014), if r is close to 1, the two variables have a
strong association. This indicates whether changes in one variable are strongly correlated with
changes in the other variable or whether the problem of Multicollinearity exists.
As we have seen from the above table, the highest financial factors of MSE‟s found correlated
with the performance of MSE‟s in the study area numerically by (r=0.775, p<0.01). This number
is very close to 1, or there is a strong relationship between an independent variable and
dependent variables. Therefore, we can conclude that there is a strong relationship between
financial factors and the performance of MSE‟s.
On the other hand, When r is near to 0, on the other hand, there is no or a weak association
between the independent and dependent variables. This indicates that changes in one variable are
unrelated to changes in the other. If r were 0.01, it could conclude that the variables were not

4
strongly correlated which MSEs' determinate performances factor in the study area does have
respondent accepts to be related to it is distributed equally.
4.5. Diagnostics tests / Assumption/

According to (Field, 2013), to run linear regression, checking critical assumptions is essential
and it is helpful to conclude the population under study. In this regard, the following preliminary
analysis (Regression diagnostics) was conducted to verify the assumptions & CLRM like
linearity, normality, Multicollinearity, and homoscedasticity test or assumptions.

4.5.1. Assumption1: Linearity test

According to (Hayes et al., 2012) the relationship between the independent and dependent
variable needs to be a linear function to conduct linear regression analysis. As a result, the
linearity of the relationship between independent and dependent variables was tested using SPSS
V26 software and scatter plots showing the relationship between the two variables (IV and DV).
The scatter plot of residuals indicates that the points lied in a reasonably straight line from
bottom left to top right. Therefore, it shows linearity. An underlining assumption of regression
analysis is that the relationship between the variables is linear which means the points in the
straight-line plot must form a pattern that can be approximated with a straight line.

4
Figure 2: Test of linearity

Source: own survey, 2021

4.5.2. Normality Test

As (Ghasemi & Zahediasl, 2012), noted that the assumption of normality is important in research
while using repression and helpful to generalize the results of the analysis beyond the sample
collected. Normality test refers to the linear regression analysis requires all variable.

Normality tests can be seen in the data distributed when the curve does not pass through either
the lift or the right (Ghasemi & Zahediasl, 2012) It shows that the data output was normally
distributed. To test the normality of the data, kurtosis and skewness value was checked using
SPSS 26. Skewness measures the degree to which cases are clustered towards one end of an
asymmetry distribution. In general, the further the value of skewness is from zero, the more
likely it is that the data are not normally distributed (Field, 2016). Kurtosis measure the level of
peak in a histogram. The high peak has positive kurtosis, while the flatter distribution has
negative kurtosis. A histogram is simply a graph that plots a frequency distribution of data for a
variable. The variable's values are represented on the X-axis, while the frequency (the number of
data points with that value) is represented on the Y-axis. Histograms are an excellent tool to see
if your data is regularly distributed. A normal distribution is a distribution of data that clusters
around the mean.

4
Figure 3: Normality Tests of Residuals

Source: own survey, 2021

4.5.3. Assumption 3: Multicollinearity Test

According to (McClelland et al., 2017), most regression programs can compute variance
inflations factor (VIF) for each variable, and as a rule of thumb; VIF above 5.0 shows problems
with the Multicollinearity test.

Erik Mool (2014), also underline that values for “Tolerance” below 0.1 indicate serious
problems, although several statisticians suggest that value for “Tolerance” below 0.2 are worthy
of concern. Multi co-linearity of the regression analysis refers to how strongly interrelated the
independent variables in a model are. As we can see from the following table, the tolerance
values are 0.287, 0.411, 0.552, and 0.389 for each independent variables (FF, IF, ICF, and
ABISP) which are above 0.10 and the variance inflations factors (VIF) values are also 3.479,
2.430, 1.812, and 2.569 respectively. Therefore, in this study, the table below shows that the
Variance Inflation Factors (VIF) and tolerance fall within the acceptance range (VIF = 1 - 10,
tolerance = 0.1 – 1.0).

4
Table 4.13 Test of Multicollinearity

Model Constant Collinearly Statistics

Tolerance VIF
FF 0.287 3.479
IC 0.411 2.430
ICF 0.552 1.812
ABISP 0.389 2.569
a. Dependent variable: performance of

MSEs. Source: own survey, 2021

4.5.4. Homoscedasticity Test

Homoscedasticity is the extent to which the data values for the dependent and independent
variables have equal variances (Olvera & Zumbo, 2019). At each level of the predictor variables,
the variance of the residual terms should be constant. It means that the residuals at each level of
the predictors should have the same variance, therefore, checking for this assumption is helpful
for the fitness of the regression model. In this regard, to plot the homoscedasticity test, as
supported by Erik (2014), the researcher plot the standardized residuals, or error (ZRESID) on
the Y-axis and the standardized predicted value of the dependent variable based on the model
(ZPRED) on the X-axis and the result is presented as follows.

Figure 4: Homoscedasticity Test

Source: own survey, 2021

4
Thus, the scatter plot shows that the majority of the point are concentrated around zero (0) which
shows that no violation of homoscedasticity.
4.5.5 : Assumption Autocorrelation Test

Autocorrelation is an assumption that the errors are linearly independent of one another
(uncorrelated with one another). The value of Durbin-Watson statistics ranges from 0 to 4. The
residuals are considered independent (not correlated) if the Durbin-Watson statistic is around 2,
with a range of 1.50-2.50 acceptable (Babatunde, 2014). The errors are said to be auto-correlated
if they are correlated with one another. The popular Durbin- Watson test was used to determine
whether or not autocorrelation existed. The rejection / non-rejection rule would be given by
selecting the appropriate region from the following figure:

Figure 5. Durbin-Watson test

The regression output of this test indicates

Table 4.14 Durbin-Waston test of autocorrelation

Std. Error
R Adjusted of the
Model R Square R Square Estimate Durbin-Watson
a
1 .874 .717 .714 1.83427 1.525
a. Predictors: (Constant), ABISP, IF, ICF, FF
b. Dependent Variable: PMSE
Source: own survey, 2021

4
4.6. Multiple Regression Analysis

Model 2: total regressions analysis of demographic and independent variables on PMSEs.

Table 4.15 Model Summaryb

Change Statistics
Adjuste Std. Error R Sig. F
R d R of the Square Change Durbin
Model R Square Square Estimate Change F Change df1 df2 Watson
1 .847a .717 .714 1.83427 .717 227.869 4 360 .000 1.525

a. Predictors: (Constant), FF: IF, ICF, and ABISP

b. Dependent Variable: PMSE
Source: Owen survey data, 2021.
In this study, a multiple regression analysis was conducted to test the relationship among
independent variables and dependent variable. The analysis was done to establish how the
specific Performance of MSE‟s in the study area. A regression analysis results are presented in
the Model Summary table.

The result as shown in the model summary indicates financial factors, infrastructural factors,
institutional coordination, and access to business information service problems, of MSE‟s
explained (71.7 %) of change determining the Performance of MSE‟s in the study area.

Coefficient of determination - R2 is the measure of the proportion of the variance of a dependent

variable about its mean that is explained by the independent or predictor variables (Hair et al.,
2014). A higher value of R2 represents the greater explanatory power of the regression equation.
The above table shows the R 2 value of 0.717. This result shows that independent variables
(financial factors, infrastructural factors, institutional coordination, and access to business
information service problems) accounted for 71.7% of the variance in the performance of MSEs.
This means 71.7% of the variation in performance of MSEs was explained by the demographic
factors and independent variables. Whereas, the remaining 28.3% of the variation is explained by
other factors which are not included in this study.

4
Table 4.14: ANOVA result

ANOVAa
Sum of
Model Squares Df Mean Square F Sig.
1 3066.720 4 766.680 227.869 .000b
Regression
Residual 1211.243 360 3.365
Total 4277.963 364
a. Dependent Variable: PMSE: Performance of MSE‟s
b. Predictors: (Constant), FF, IF, ICF, and
ABISP. Source: Owen survey data, 2021
The Above table, regarding the coefficient of determination, explains the extent to which
changes in the dependent variable can be explained by the change in the independent variables or
the percentage of variation in the dependent variable (performance of MSE‟s) that is explained
by all the four independent variables. The F-ratio found in the ANOVA table measures the
probability of chance departure from a straight line.

The significance value is 0.00 which is less than 0.05 thus the model is statistically significant in
predicting how; - Problems Financial factors, Infrastructural factors, Institutional coordination,
and access to business information service of MSE‟s show a significant change in the
Performance of MSE‟s in the study area. The F critical at 5% level of significance was 0.00.
Since F calculated is greater than the F critical (value = 227.869), this shows that the overall
model was significant.

Table 4.15 Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) 3.372 .553 6.100 .000
Financial factors of MSE‟s .323 .055 .309 5.916 .000
Infrastructural factors .349 .043 .356 8.153 .000
Institutional coordination .243 .082 .112 2.954 .003
Problems Access to business .282 .054 .236 5.243 .000
information service

a. Dependent Variable: Performance of MSE‟s

Source: Owen survey data, 2021.

5
The coefficients table sought to identify which predictors are significant contributors to the
71.7% of explained variance in Y (i.e., R2=0.717) and which have the significant ones help
strongly to explain Y-intercept established regression equation was:

Y=3.372β0 +0.323β1 + 0.349β2 + 0.243β3 + 0.282β4.......................................+∑

The regression equation above has established that holding all influence indicator variable
(factors financial factors, Infrastructural factors, Institutional coordination, and Access to
business information service of MSE‟s) but, constant show to l performance of MSE‟s
determined by negative 71.7% shows the coefficient probability of indications starts from the
scratch. The unstandardized coefficients of the determination under the B column in the above
table were used to substitute the unknown beta values of the regression model. The beta values
indicated the direction of the relationship. A positive or negative sign indicates the nature of the
relationship. The significant values (p-value) under the significance column indicate the
statistical significance of the relationship of the probability of the model giving a wrong
prediction. A p-value of less than 0.05 is recommended as it signifies a high degree of
confidence. In other word, these variables can explain the change in performances of MSE‟s
which is independent variables are found to be very significant and supportive to the hypotheses
of regression analysis financial factors, Infrastructural factors, Institutional coordination, and
access to business information service problems of MSE‟s are statistically significant and it does
support the hypotheses.

4.7. Hypothesis tests

Correlation analysis is the most important method for identifying the relationship between
independent and dependent variables in a research study, but it does not assess the effect of the
two variables. In regression analysis most common to evaluate the cause of independent
variables (FF, IF, ICF, AND ABISP) on the dependent variable which is the performance of
MSEs. Each hypothesis was tested based on unstandardized coefficient beta and P-value (the
hypothesis rejected or accepted). According to (Asuero et al., 2006) correlation coefficient
ranges from 0.00 to 0.29 weak, 0.30 to 0.49 low, 0.50 to 0.69 moderate, and above 0.70 is highly
correlated.

H1: Access to finances has positive influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.

5
There is a positive relationship between financial factors and the performance of SMEs. As
shown from the unstandardized coefficient beta and P-value result, the financial factor is .323
and significant level at a level of 0.01(P= 0.01). The analysis shows that P-value is 0.000 which
is less than o.o5. Since the hypothesis test is accepted and there is a positive relationship between
financial factors and the performance of SMEs.

H2: Access to infrastructure has positive influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.

As indicated in the unstandardized coefficient beta and P-value table result, the infrastructural
factor is .349 and a significant level of 0.01. The P-value is 0.000, which is less than o.o1
according to the analysis. As a result, the hypothesis is accepted, and the independent and
dependent variables have a positive relationship.

H3: An institutional coordination has positive influences on the performance of Micro and
Small Enterprises (MSEs) in the study area.
As shown in the unstandardized coefficient beta and P-value table, the result of institutional
coordination factors (ICF) was .243 and a significant level of 0.003. It indicates that there is a
positive relationship between ICF and the performance of MSE. Since the hypothesis is
accepted.
H4: An access to business information service problems has significantly affect the
performance of Micro and Small Enterprises (MSEs) in the study area.

Lastly, variable access to business information service problems (ABISP) unstandardized

coefficient beta and P-value result is .282 and significant level of P-value 0.000.which is less
than 0.05. Therefore, the hypothesis is accepted and also there is a positive relationship between
independent and dependent variables.

5
Table 4.16 Summary of hypothesis tests

Hypothesis Unstandardize P- Decision

d Coefficients value

H1: Access to finances has positive influences on the .323 .000 Accepted
performance of Micro and Small Enterprises (MSEs) in the
study area.
H2: Access to infrastructure has positive influences on the .349 .000 Accepted
performance of Micro and Small Enterprises (MSEs) in the
study area.
H3: An institutional coordination has positive influences on .243 .003 Accepted
the performance of Micro and Small Enterprises (MSEs) in
the study area.
H4: Access to business information service has positive .282 .000 Accepted
influences on the performance of Micro and Small
Enterprises (MSEs) in the study area.

Source: Owen survey, 2021.

5
 CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1 Summary of findings

Concerning the financial factors, this study confirms that the availability of access to finance to
MSEs owners has a vital role for their business as it helps the enterprises to change their business
performance. These findings are supported by (Ayele, 2018), adequate financing access of a
major positive impact on MSE, and if there is not enough access to finance, micro and small
enterprises would struggle to survive. Similarly, Admasu Abera (2012) argument also supported
the finding of this study, that access to finance plays a vital role in employment creation, and
general contribution to economic growth.

On the other hand, concerning infrastructural factors, this study indicates that the availability of
infrastructure to micro and small enterprises (MSEs) owners was relevant to their business
performance. Having enough access to infrastructure helps them to change their profitability,
productivity and to be competitive in the market.

The finding of this study is supported by Burger et al., (1998). According to his finding,
infrastructure plays an important role in the performance of micro and small enterprise (MSEs)
businesses.

The finding of this research concerning institutional coordination indicates that it has a positive
effect on MSEs performance which is aligned with the research of van Der Lecq (1996), that
says if there is more linked coordination in all level of administrations, the common outcome has
arrived at the most relevant way because coordination is a tool for bringing different components
together.

The research also confirmed that access to business information has a positive effect on MSEs
performance. The finding is supported by Takele (2019), and Kamunge et.al (2014) that who
confirmed lack of effective business information influences MSEs' performance, understanding,
and using of ICT by MSE owners to get business information service is a critical factor.

5
5.2 Conclusions

According to the finding of this study, it is concluded that access to finance affects the
performance of MSEs. Financial factors affect the performance of MSEs to a great extent by
limiting the entrepreneurs' ability to take advantage of opportunities as the source ranges from
own source of finance, bank lands, donations from NGOs and other sources, the performance of
the entrepreneur‟s in the market were found not to have enough budget to operate their business.

The other finding of this study confirms that infrastructures such as access to road,
transportations, technology, water, electricity, and other infrastructures /equipment/affect the
performance of MSEs. These factors also have a critical and integrated effect on the
entrepreneur‟s business performance and hinder them from the business competition in the
market.

Concerning institutional coordination, the business performance of MSEs is also challenged by

the different stakeholders each stakeholder in one or another way has an integrated and
cooperative approach to the entrepreneurs to make them profitable and productive. Effective
communication between financial sectors, microfinance offices, and other institutions good
governance ease of bureaucracy, and clear division of duties and responsibilities have a positive
and supportive effect on the performance of MSEs in the area of their business.

The entrepreneurs' business performance is also affected by the access to the business
information service. Accessibility to business information services must include its relevancy,
readiness, timely, and quality. Since, if there is a gap in these information access parameters,
there is an effect on the performance of the MSEs that information service to business is
necessary for the market to have a positive performance or growth.

5
5.3 Recommendations

Based on the major findings of the study, the following recommendations are forwarded with the
view to improve the contributions of MSEs to the country in general and the study area in
particular.

Concerning financial factors, the research recommends that Addis Ababa City Administration
MSE‟s office should facilitate and support the MSEs owners (entrepreneurs) by giving attention
to financial funds, adequate loan facility, and training about financial issues. Therefore, Addis
Ababa City Administration MSE‟s office in cooperation with other government bodies should
develop sufficient sources of finance for MSEs by organizing and supporting the performance of
micro and small enterprises finance and other sources.

This study also recommends that access to infrastructure to business information and effective
institutional coordination within the organization must be necessary to all the entrepreneurs who
are working in the city in their market. Therefore, the government bodies of Addis Ababa City
Administration should be work hard and support the MSEs operators to ensure their business
performance.

Generally, investigating different factors based on the right information is vital for the
performance of MSEs owners. Therefore, the researcher recommends that Addis Ababa City
Administration MSEs office stakeholders should give attention to the MSE business
entrepreneurs, and especially the government should work hard in the areas of accurate access of
business information to micro and small enterprise business sectors.

5
5.4. Future direction

This study was limited to only four variables which are financial factors, infrastructural factors,
institutional coordination problems, and access to business information service problems are
taken as independent variables to investigate the performance of MSEs in Addis Ababa City
Administration. However, the result of the study cannot be generalized to other MSEs'
performance out of Addis Ababa City Administration and other areas. Therefore, further research
will be done on a greater scale with large MSEs sizes to determine the factor that affects the
performance of MSEs in the remaining towns and also in another area.

Finally, in this study, it was observed that the transformation /graduation/ period of MSEs was 5
years. But this period was not effectively implemented. Therefore, further research will be done
by taking the duration of the period as an independent variable.

5
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 Appendix

Addis Ababa University

College of Business and economics

Department of MBA

I. Introduction
I am a graduate student in the department of MBA in management at Addis Ababa University.
Currently, I am undertaking research entitled factors affecting the performance of Micro and
Small Enterprises in Kirkos and Arada sub-cities of Addis Ababa City Administration. The
main purpose of this questionnaire is to gather information about the performance of micro and
small enterprises and also the outcome of this study will be used for academic purposes only.
Therefore your genuine response to the questions is vital for the quality and successful
completion of the study. The accuracy of the information you provide highly determines the
reliability of the study.

Thank you in advance for your unreserved cooperation!!!

Part I: Demographic profile of respondents. Please tick (√) in the appropriate box.

1. Gender
Male Female
2. Age under 20 years 21-30 years 31-40
years 41-50 years over 50 years
3. Marital status
Single Married Divorced Widowed

4. Educational Status
Read and write Elementary complete High school complete
Certificate Diploma Degree and above

5. Work experience
0-5 6-10 11-20 21 and above

6
 Part II

The following are some states with regards to the factors of performance to business information,
financial factors, institutional coordination problems, infrastructural factors, attitudinal
challenges, and awareness/capacity building/ on the performance of micro and small enterprises
on scale 1 up to 5 where;

1= strongly disagree (SD) 3= Neutral (N) 5= Strongly Agree (SA)

2= disagree (D) 4. Agree (A)

Please tick (√) in the appropriate number to indicate your level of agreement with the questions
asked below.

I .Financial factors

No Items Agreement scale

1(SD) 2 3 4 5
(D) (N) (A) (SA)
1 The interest rate charged by banks or other lending
institutions is reasonable.
2 There is a high collateral requirement from banks and other
lending institutions.
3 There are complicated loan application procedures of
micro finances and other lending institutions
4 Most microfinance and other lending institutions are
reluctant to provide long-term credit to MSEs.
5 There are governmental funds to support MSEs businesses.
6 I have my own enough source of finance to run my
business.
7 I am satisfied with the financial access given by
microfinance and other lending institutions
8 There are non-governmental organizations (NGOs) funds
to support my business
9 Access to finance is a major challenge that affects the
growth of my business

6
 II. Infrastructure factors
Agreement scale
No. Items 1(SD) 2 3 4 5
(D) (N) (A) (SA)
1 There is adequate road access in my business area.
2 There is sufficient and quick access to transport in my business
area
3 I have got technology support from a micro and small institute
4 I have enough money to access new technology
5 There is sufficient water supply in my business area
6 There is sufficient electricity supply in my business area
7 The cost of electricity is affordable to my business.
8 I have enough and appropriate working materials such as types
of machinery, and other types of equipment for my business.
9 I have got raw material supports from MSEs institute
III.Institutional coordination factors
No. Items Agreement scale
1 2 3 4 5
(SD) (D) (N) (A) (SA)
1 There is a strong relationship within organizations such as
financial sectors, banks, microfinance, and others to facilitate the
market access of MSEs.
2 There is effective communication within organizations to support
MSEs' business.
3 There is a clear division of duties and responsibilities within
organizations to support MSEs' business.
4 There is strong bureaucracy within the company during the
registration and licensing of MSEs.
5 There is an institutional follow-up while in MSEs in a working
place.
6 There is good governance within organizations that have a direct
relationship with MSEs.
IV. Access to business information service problems
Items Agreement scale
No. 1 2 3 4 5
(SD) (D) (N) (A) (SA)
1 Access to business information affects the performance of my
business.
2 Business information is readily available in this market.
3 The information available is relevant to our business.
4 The information available informs us of the changes in the
business environment.
5 The information necessary for the business is availed on time.

6
 V. Performance of MSEs
Agreement scale
No. Items 1 2 3 4 5
(SD) (D) (N) (A) (SA)
Profitability
1 My business profit is in a good position
2 My business profit is increased from time to time
3 My business has the potential to grow/expand
4 I have sustainable profit since I started my business
5 I am satisfied with the growth in sales of my products and/or
services
Productivity
1 The level of my business productivity is increased from time to
time.
2 I am satisfied with the growth of my business productivity.
3 My business can provide verities of product/ service to care for
the need of all types of customers.
Market share
1 Our company is more effective in opening up a new market or
expanding existing markets than our competitors.
2 Our business market share is highly increased in the last three
years.
3 Our company can change the market or lead customers‟ needs in
new directions.
The end.

Thank you very much!!!

6
 አዱስ አበባ ዩኒቨርሲቲ የቢዝነስና
ኢኮኖሚክስ ዩኒቨርሲቲ
የማኔጅመንት ትምህርት ክፌሌ ድህረ ምረቃ መርሃ ግብር በአነስተኛና
ጥቃቅን ኢንተርፕራዝ ባሇሀብቶች የሚሞሊ መጠይቅ

መግቢያ

ዉድ የጥናቱ ተሣታፉዎች፡-

እኔ በአዱስ አበባ ዩኒቨርሲቲ የማኔጅመንት ትምህርት ክፌሌ የቢዝነስ አስተዲር የድህረ ምረቃ ተመራቂ ተማሪ ስሆን
በአሁኑ ሠዓት የመመረቂያ ፅሁፋን በማዘጋጀት ሊይ እገኛሇሁ፡፡የጥናቴ ርዕስም “በቂርቆስና አራዲ ክፌሇ ከተማ
የሚገኙ የጥቃቅንና አነስተኛ ተቋማት አፇፃፀም ሊይ ተፅዕኖ የሚያድሩ ተግዲሮቶችን” ይመከታሌ፡፡
እርስዎም በዚህ ጥናት እንዱሣተፈ ተመርጠዋሌ፡፡ እርስዎ የሚሠጡትን ትክክኛ መረጃ ጥናቱ ዉጤታማነት
በጣም አስፇሊጊ መሆኑን በመገንዘብ መጠይቁን በጥንቃቄ እንዱሞለ እጠይቃሇሁ፡፡ ሁለም መረጃዎች
ሇትምህርታዊ ዓሊማ ብቻ ይዉሊለ፡፡ ጊዜዎን ሰዉተዉ ስሇሚያዯርጉሌኝ ትብብር በቅድሚያ
አመሠግናሇሁ፡፡

ሽመሌስ ዘሇቀው 09

20 85 43 47

ማሣሠቢያ፡- በመጠይቁ ሊይ ስም አይፃፌም፡፡

መሌስዎን በሣጥኑ ዉስጥ የእርማት ምሌክት ( ) ያስቀምጡ፡፡

ክፌሌ አንድ፡ አነስተኛ የንግድ ኢንተርፕራዝ ባሇቤቱ የግሌ መረጃዎችና አጠቃሊይ መረጃዎች

1. ፆታ፡- 1. ወንድ 2. ሴት
2. እድሜ፡- 1. ከ 20 ዓመት በታች 2. ከ 21–30 ዓመት
3. ከ 31- 40 ዓመት 4. ከ 41–50 ዓመት
5. ከ 50 ዓመት በሊይ
3. የጋብቻ ሁኔታ፡- 1. ያሊገባ 2.ያገባ 3.የፇታ/ች/ 4.በሞትየተሇየባት/ችበት
የትምህርት ረጃ፡-
1.ማንበብ መፃፌ የሚችሌ 2.ከ 1-4 ኛ ክፌሌ 3. ከ 5-8 ኛ ክፌሌ
4. ከ 9 – 12 ክፌሌ 5.ሰርተፌኬት 6.ዱፕልማ 7. ዱግሪ

6
 5. የሥራ ሌምድ
0-5 6-10 11-20 21 በሊይ

ክፌሌ ሁሇት፡ በጥቃቅንና አነስተኛ ተቋማት የስራ እንቅስቃሴ ሊይ ተፅዕኖ የሚያሣድሩ ጉዲዮች

ከዚህ በታች ጥቃቅንና አነስተኛ ተቋማት የአፇፃፀም ችግር ሉሆኑ የሚችለ ነገሮች ተዘርዝረዋሌ፡፡
ከተዘረዘሩት የዕርስዎን የችርስዎን የስራ ዘርፌ ይበሌጥ ተፅዕኖ የሚያሣድሩትን በዯረጃ ያመክቱ ሇእያንዲንደ

ጥያቄ ከአማራጮቹ አንደ ጊዜ ብቻ የ( ) ምሌክት በማድረግ ምሊሽ ይስጡ፡፡

1. ከገንዘብ ጋር የተያያዙ ችግሮች

1= በጣም
1 አሌስማማም 2= አሌስማማም 3=መወሠን እቸገራሇሁ
4= እስማመሇሁ
5= በጣም እ ስማማሁ

ተ.ቁ ከገንዘብ ጋር ተያያዥ ችግሮች የስምምነት ዯረጃ (መጠን)

1 2 3 4 5
1 በባንኮች ወይም በላልች አበዲሪ ተቋማት የሚከፌለት የወሇድ መጠን ምክንያታዊ ነው ፡፡

2 ባንኮችና ላልች አበዲሪ ተቋማት ብድር ሇማበዯር የሚጠይቁት ማስያዣ ከፌተኛ ነው፡፡
3 የማይክሮ ፊይናንስ እና ላልች የብድር ተቋማት ገንዘብ ሇማበዯር የሚከተለት ውስብስብ
አሰራር አሰሌች ስሇሆነ ብድር በወቅቱ እንዲናገኝ አድርጎናሌ፡፡
4 አብዛኛዎቹ ማይክሮ ፊይናንስ እና ላልች የብድር ተቋማት ሇጥቃቅንና አነስተኛ ተቋማት
የረጅም ጊዜ ብድር ሇመስጠት ቃኞች አይዯለም ፡፡
5 የጥቃቅንና አነስተኛ ንግድ ስራን ሇመዯገፌ የሚረዲ ከመንግስት የገንዘብ ድጋፌ አግኝቻሇሁ
6 የንግድ ሥራዬን ሇማከናወን የሚያስችሌ የራሴ የሆነ በቂ የገንዘብ ምንጭ አሇኝ ፡፡

7 በማይክሮ ፊይናንስ እና በላልች አበዲሪ ተቋማት በሚሰጠው የገንዘብ ድጋፌ አቅርቦት

ረክቻሇሁ ፡፡

8 መንግስታዊ ካሌሆኑ ድርጅቶች/መያድ/ የንግድ ስራዬን ሇመዯገፌ የሚያስችሌ የገንዘብ

ድጋፌ ተዯርጎሌኛሌ፡፡
9 በቂ የሆነ የገንዘብ አቅርቦት አሇመኖር የንግድ ሥራዬን እድገት የሚነካ ዋና ተግዲሮት ነው
፡፡

7
 2. ከመሠረተ ሌማት ጋር የተያያዙ ችግሮች

ተ.ቁ ከመሠረተ ሌማት ጋር የተያያዙ ችግሮች የስምምነት ዯረጃ (መጠን)

1 2 3 4 5
1 በንግድ ስራዬ አካባቢ በቂና ጥራቱን የጠበቀ የመንገድ ተዯራሽነት አሇ ፡፡
2 በንግድ ስራዬ አካባቢዬ ፇጣንና በቂ የሆነ የትራንሰፖርት አገሌግልት ማግኘት ችያሇሁ፡፡
3 ከጥቃቅንና አነስተኛ ተቋም የቴክኖልጂ ድጋፌ አግኝቻሇሁ ፡፡
4 አዲዱስ የቴክኖልጂ ግብዓቶችን ሇመግዛትና ሇመጠቀም የሚያስችሌ በቂ ገንዘብ አሇኝ ፡፡
5 በንግድ ስራዬ አካባቢ በቂ የሆነ የውሃ አቅርቦት አሇ ፡፡
6 በንግድ ስራዬ አካባቢ በቂ የሆነ የኤላክትሪክ አቅርቦት አሇ ፡፡
7 ሇንግድ ስራዬ የተጠቀምኩትን የኤላክትሪክ ፌጆታ የምከፌሇው ዋጋ ተመጣጣኝ ነው ፡፡
8 ሇንግድ ስራዬ የሚስፇሌጉ ቁሳቁሶች እን ማሽነሪ እና የመሳሰለት ላልች መሣሪያዎች
በቂ እና ተገቢ ቁሳቁሶች አለኝ ፡፡

9 ከጥቃቅንና አነስተኛ ተቋማት የቁሳቁስ ድጋፍችን አግኝቻሇሁ ፡፡

3. ከተቋማት ቅንጅት ጋር የተያያዙ ችግሮች

ተ.ቁ ከተቋማት ቅንጅት ጋር የተያያዙ ችግሮች የስምምነት ዯረጃ (መጠን)
1 2 3 4 5
1 የጥቃቅንና አነስተኛን የገበያ ተዯራሽነት ሇማመቻቸት እንዯ ፊይናንስ፣ ባንኮች፣ ማይክሮ
ፊይናንስ እና ላልች ድርጅቶች መካክሌ ጠንካራ ግንኙነት አሇ ፡፡
2 የጥቃቅንና አነስተኛ ተቋማትን ንግድ ሇመዯገፌ በድርጅቶች መካከሌ ውጤታማ ግንኙነትና
መሌካም መግባባት አሇ ፡፡
3 የጥቃቅንና አነስተኛን ንግድ ሇመዯገፌ በድርጅቶች መካከሌ ግሌጽ የሥራ እና የኃሊፉነት
ክፌፌሌ አሇ ፡፡
4 የጥቃቅንና አነስተኛ ምዝገባ እና ፇቃድ በሚሰጥበት ጊዜ ከተቋማት በኩሌ ውጣ-ውረድ
የሚያበዛ አሰራር አሇ ፡፡
5 የጥቃቅንና አነስተኛ ተቋማት በስራ ቦታችን በመገኘት ተገቢውን ድጋፌና ክትትሌ
ያዯርጉሌናሌ፡፡
6 ከጥቃቅንና አነስተኛ ተቋማት ጋር ቀጥተኛ ግንኙነት ባሊቸው ድርጅቶች ውስጥ መሌካም
አስተዲዯር አሇ ፡፡

4. ከንግድ ስራ መረጃ የአገሌግልት ተራሽነት ጋር የተያያዙ ችግሮች

ተ.ቁ ከንግድ ስራ መረጃ የአገሌግልት ተዯራሽነት ጋር የተያያዙ ችግሮች 1 2 3 4 5

1 የንግድ ሥራ መረጃ ማግኘቴ የንግድ ሥራዬን አፇፃፀም ያሳድግሌኛሌ ፡፡
2 የንግድ መረጃ በዚህ ገበያ /በጥቃቅንና አነስተኛ የንግድ ተቋም/ ውስጥ በቀሊለ ይገኛሌ ፡፡
3 አግባብነት ያሇውና ወቅታዊ የመረጃ አቅርቦት ማግነት ሇንግዲችን ስራ ከፌተኛ የሆነ
ጠቀሜታ አሇው።
4 በአካባቢያችን አግባብነት ያሇው መረጃ ማግኘታችን በንግደ ስራ ውስጥ ስሊሇው ሇውጥ
እንድናውቅ ይረዲናሌ ፡፡
5 ሇንግደ ስራ ያገኝነውን አስፇሊጊው መረጃ በሰዓቱ ጥቅም ሊይ እናውሊሇን ፡፡

7
 5. የጥ/አ/ኢንትረፕራይዝ አፃፀም በተመሇክተ
ተ.ቁ 1. ከትርፊማነት አንጻር የስምምነት ዯረጃ (መጠን)
1 2 3 4 5
1 የምሰራው የንግድ ሥራ ትርፌ አፇጻጸም በጥሩ አቋም ሊይ ነው ፡፡
2 የንግድ ሥራዬ ትርፌ ከጊዜ ወዯ ጊዜ እየጨመረ ነው ፡፡
3 የንግድ ስራዬ የማዯግ/የማስፊት/ አቅም አሇው ፡፡
4 ሥራዬን ከጀመርኩ ጀምሮ ዘሊቂ ትርፌ አገኛሇሁ ፡፡
5 በንግድ ስራዬ ምርቶቼ ውጤታማነት አና በአገሌግልቶቼ ሽያጭ ማዯግ ረክቻሇሁ ፡፡
ተ.ቁ 2. ከምርታማነት አንጻር
1 2 3 4 5
1 የእኔ የንግድ ምርታማነት ዯረጃ ከጊዜ ወዯ ጊዜ እየጨመረ ነው ፡፡
2 በንግድ ስራዬ የምርታማነት እድገት ረክቻሇሁ ፡፡
3 የእኔ የንግድ ሥራ ሁለንም ዓይነት የዯንበኞችን ፌሊጎት ሇመንከባከብ የምርት /
የአገሌግልት እውነታዎችን መስጠት ይችሊሌ ፡፡
3. ከገበያ ድርሻ አንጻር
1 2 3 4 5
1 ከተፍካካሪዎቻችን የበሇጠ አዱስ ገበያ ሇመክፇት ወይም ነባር ገበያዎች ሇማስፊፊት የንግድ
ድርጅታችን የበሇጠ ውጤታማ ነው ፡፡
2 ባሇፈት ሶስት ዓመታት ውስጥ የእኛ የንግድ ገበያ ድርሻ በከፌተኛ ሁኔታ ጨምሯሌ ፡፡
3 የንግድ ድርጅታችን ገበያን መሇወጥ ወይም የዯንበኞችን ፌሊጎት በአዱስ አቅጣጫዎች
መምራት ይችሊሌ ፡፡

በፇቃዯኝነት ምሊሽዎን ስሇሰጡ ከሌብ አመሰግናሇሁ!!!