FACTORS AFFECTING SUSTAINABILITY OF SMALL AND MEDIUM-SCALE ENTERPRISES: THE CASE OF ADDIS ABABA, ETHIOPIA

Abstract

Small and Medium enterprises (SMEs) play an essential role in the sustainable development of a country. They help in employment generation, job creation, self-independence, industrial production increase, and export. The study examines factors that determine sustainability of small and medium enterprises in Addis Ababa, Ethiopia. The general purpose of the study was to identify the major internal & external factors that influencing sustainability of small and medium scale enterprises. And Primary and secondary data were used for this study. The target population was small and medium Government organized enterprises in Addis Ababa, Ethiopia. The choice of the study areas in ten sub cities was based on size and concentration of SMEs. Data were collected using questionnaires from 277 SMEs. The selection of respondents was done using census for closed SMEs respectively. The data collected were analyzed by using appropriate descriptive statistics and logistic regression techniques. The data have been analyzed with the help of Statistical package for social science (SPSS). According to the participants’ perception, the study revealed that the most important internal and external factors that determine SMEs sustainability are work-related factor, marketing, financial, political-legal factors, management factor and Business Development are major factors that affecting SMEs sustainability. The major implication of the study is that improving financial and work-related problems is critical in guaranteeing the survival of the SMEs. The study realized that 97.9 percent of the variation in sustainability can be explained by the independent variables. The standardized beta value shows that, the contribution of an individual variable to the model or the dependent variable. As it can be compare them, the largest influence on the sustainability of SMEs is from the MGMTF (0.993), WORF (0.992), FINF, MARF, POLF (0.990) and BUDF (0.982). Therefore, as we compared with the Predicted sustainability value of the variables, all the independent variables are the largest influence on the sustainability of SMEs. Based on the finding there is no strong pair-wise correlation between Independent Variables.