Examining significant factors in micro and small enterprises performance: case study in Amhara region, Ethiopia

Abstract

Furniture manufacturing micro and small enterprises are confronted with several factors that affect their performance. Some enterprises fail to sustain, some others remain for long period of time without transforming, and most are producing similar and non-standard products. The main aim of this manuscript is on improving the performance and contribution of MSEs by analyzing impact of significant internal and external factors. Data was collected via a questionnaire, group discussion with experts and interviewing process. Randomly selected eight representative main cities of Amhara region with 120 furniture manufacturing enterprises are considered. Data analysis and presentation was made using SPSS tools (correlation, proximity, and <em>T</em> test) and impact-effort analysis matrix tool. The correlation analysis shows that politico-legal with infrastructure, leadership with entrepreneurship skills and finance and credit with marketing factors are those factors, which result in high correlation with Pearson correlation values of <em>r</em> = 0.988, 0.983, and 0.939, respectively. The study investigates that the most critical factors faced by MSEs are work premises, access to finance, infrastructure, entrepreneurship and business managerial problems. The impact of these factors is found to be high and is confirmed by the 50% drop-out rate in 2014/2015. Furthermore, more than 25% work time losses due to power interruption daily and around 65% work premises problems challenged MSEs. Further, an impact-effort matrix was developed to help the MSEs to prioritize the affecting factors.