Driving Model of Determinant Factors Affecting the Performance of Small and Micro Enterprises: Empirical Evidence from Amhara Region, Ethiopia

Abstract

The purpose of this study is to examine the driving model of determinant factors that affects the performance of small and micro enterprises empirical evidence from Amhara Region, Ethiopia. The study used primary and secondary data from manufacturing, construction, urban agriculture, trade, and service entrepreneurs found in Bahirdar, Dessie & Gonder Cities using a purposive sampling technique. It also used the descriptive research design with a self-administered survey questionnaire. The Statistical analysis tools, SPSS and Stata tool, software were applied to analyze the data. Multiple regression model results revealed that access to credit, initial capital, working premises (location), industry category, market linkage, ICT adoption have a positive relationship and a major impact on the Amhara region's enterprise performance determinant. Hence, the outcome variable, enterprise performance, is highly affected by all predicted variables. As the study finding shows, a lack of access to credit, inflation, market linkage, working premises (location), Initial capital, Information communication Technology problems are critical challenges of SMEs. The Regional Government, including Technique and Vocational Enterprise Development Bureau, Micro Finance Institutions, Entrepreneurs, should take corrective action to provide sufficient credit and long-term loans to protect inflation. Government facilitates enterprise integration training about financial management and record-keeping. Moreover, this study proposed a sustainable cluster management approach that solves their challenges in an integrated way. Furthermore, other research should be conducted in this area.