Determinants of Micro and Small Enterprises Transformation in to Medium Level Industry in Addis Ababa, Ethiopia

Abstract

Micro and small enterprises are means for most countries economy by creating employment opportunity and supporting large manufacturing companies in the economy. The results of most research studies revealed that most micro and small enterprises in developing countries especially in Ethiopia have several problems for transformation and growth due to diverse factors. Thus, this research assesses determinants of micro and small enterprises transformation in to medium level industry in Addis Ababa. 74 transformed micro and small enterprises in 10 sub cities were taken as sample size. The objective of this study was to identify causes of micro and small enterprises transformation in to medium level industry in Addis Ababa, Ethiopia. The study employed explanatory research design more of quantitative in nature and Data were collected pre designed person assisted questionnaire. The study was used micro and small enterprises transformation measured by the enterprises employment growth and capital growth as dependent variables. Independent variables are Finance access, Management know-how, Market access for their product, Poor infrastructure, Technology, Support micro and small enterprises get, Adequate accounting and record keeping and government rules and regulations. The results provided evidence with correlation coefficients of finance (37.7%), management know-how (27.6%), market access (32.9%), infrastructure (15.2%), technology (40.3%) and accounting and recordkeeping (28.1%) in respect to average capital growth. This indicated that relatively there were strong association of finance access, market access and technology with average capital growth in contrast with management know-how, infrastructure, and accounting and record keeping.