Micro and small scale enterprises growth and ownership structure in Hawassa city, Sidama region, Ethiopia

Abstract

The general objective of the study is to examine the nexus between micro and small enterprise growth and ownership structure in Hawassa city, Sidama regional state, Ethiopia. The study used a 4-year dynamic panel data from 2017 to 2020, obtained from Hawassa city trade and industry bureau. Both descriptive statistics and econometric methods have been used to analyze the nexus between growth of micro and small enterprises and ownership structure and other driving factors. System GMM estimation technique was employed to analyze a dynamic panel data model. The result of the study reveals that ownership structure, previous year enterprise growth (persistence of growth) and numbers of permanent employees enhance the growth of micro and small enterprises, while age of enterprises, wage and profit of enterprises appear to be a binding constraint to their growth. This study suggests that enterprises should increase their business partners to enhance their financial capacity and to share managerial skill each other and increase the number of permanent employees.

Keywords:

• micro and small enterprises
• ownership structure
• system GMM
• Hawassa

PUBLIC INTEREST STATEMENT

Growth of micro and small enterprises indicate that the sector is an engine for economic development and creation of job opportunities. This paper examines the nexus between micro and small enterprise growth and ownership structure in Hawassa city, Sidama region, Ethiopia. The study result reveals that persistence of growth, ownership, age, employment, labor quality and profit are determinants of micro and small enterprises in Hawassa city.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Aschale Mekuria Shitaye

Aschale Mekuria is a lecturer at Hawassa University, Ethiopia. His current research interests are industry development issue like manufacturing, construction development, industrial economics and labor economics.