Factors That Matter For The Growth Performance Of Enterprises In Western Ethiopia: A Study Of Micro And Small Enterprises In Kellem Wollega Zone Of Oromia Region

Abstract

Micro and Small Enterprises (MSEs) become dominant activities in developing countries and are the priority concerns of all  for reducing unemployment and enhancing economic growth. This study, therefore, aimed to measure the performance of MSEs and identify the factors that matter for growth performance of such enterprises in the Kellem  Wollega Wollo zone of  Oromia region by taking randomly sampled 384 enterprises. The study has equally used descriptive and econometric techiniques and data were  analysed  using stata16. The summary statistics in the descriptive analysis showed the business opportunities were skewed towards  those respodents who are low educated, low experienced and aged younger and male group . Moreover, the capital-labor ratio comparison between initial  and final shows that capital gows faster than employment and hence the enterprises became more of capital deepining.The results of different methods of employment growth measures by size-group show that micro enterprises growth performance is relatively better than small enterprises’ growth  achievement However, in terms of annual jobs contributed, the small enterprises   growth measure exceeds that of micro enterprises. The regression results of the econometric analysis certified that enterprises performance measured in terms of compounded average growth in employment is positively affected by  owners education, gender and  the  enterprise age, size and employment of factors ,that is; by both initial  and final labor , capital and the capital labor ratio. Other investment choices by MSEs managers' is   found inversely affecting the growth of the enterprises. Therefore, the findings imply that the MSEs studied need both short term and long terms supports from all stakeholders on the concern of the increasing employment in the sector.