FACTORS AFFECTING THE DEVELOPMENT OF MICRO AND SMALL SCALE BUSINESS ENTERPRISES: THE CASE OF ADDISS ABABA CITY ADMINISTRATION, GULELE SUB CITY

Abstract

The study presented in this paper analyzes the factors influencing the development of micro and small sized enterprises (MSEs ):the case of Addis Ababa city administration, Gulele sub city. And it explores the extent to which their success or failure depends on the wider business climate. The overall purpose of the paper is to identify the factors affecting the development of micro and small scale enterprises in Addis Ababa, Gulele subcity. This study examines different internal factors that may be responsible for the unstable and limited growth of MSEs. the research used explanatory design because it emphasizes on identifying the factors that affect the development of MSE in Addis Ababa, Gulele sub city. Certain research problems call for combining both quantitative and qualitative methodologies. Researcher might adopt therefore, mixed methods approach where both quantitative and qualitative data collection techniques and analytical procedures are used in same research design (Saunders, Lewis, and Thornhill, 2009).The research reveals that the growth of MSEs in Addis Ababa, Gulele sub city is hampered by several interrelated factors, which include business environmental factors that are beyond the MSEs controland internal factors of the MSEs. The external factors include the legal and regulatory framework, access to external financing, and human resources capacities. The internal factors comprise entrepreneurial characteristics, management capacities, marketing skills,and technological capacities. The results explains that the internal factors are affecting the development of the business positively. But the external factors need more commitment and practical work. The respondents say that there are problems to be solved by the government side. Though the owners of MSEs in Gulele sub city are motivated enough for their jobs and have risk taking retention. The government should work on easing loan policies and collateral requirements and access to external financing.Based on the correlation analysis, technological capacities have a positive and significant relationship with development of business performance of MSEs.MSEs in Gulele sub city are affected by the spread of Corona virus (Covid 19) and the political unrest of the country. Because those two things are limiting their overall work environment, their business performance and income also affected.