The Effect of Market linkage on Growth of Micro and Small-Scale Enterprises: The Case of Botor Tolay Woreda, Oromia Regional State, Ethiopia
DOI:
https://doi.org/10.47604/ijepm.2092Keywords:
Botor Tolay Woreda, Market Linkage, Social Network and GrowthAbstract
Purpose: The aim of the study was to assess the effect of market linkage on growth of Micro and Small-Scale Enterprises: The Case of Botor Tolay Woreda, Oromia Regional State, Ethiopia.
Methodology: The study was adopted descriptive and explanatory research design and Use Both Quantitative and qualitative research approach. The primary and secondary data was used, the primary data was collected by using questionnaires and interviews. Since the total 369 MSE operators from 2010-2015 EC, 192 sample size were selected using stratified and simple random technique with Yemane Formula. The collected data was analyzed by using descriptive and inferential statistics. To ensure the relationship between independent and dependent variables the Pearson correlation and multiple linear regression was applied. The data was analyzed by using Statistical package for Social Science (SPSS) version 25. The study Result was presented through the using of table and figures.
Finding: The study focuses on the seven major factors that affect the growth of MSE that were Access to Market Information, Access to finance, Government support, Infrastructure, Entrepreneurial competency, Social Network, and types of business sectors. The findings of correlation and regression show that there was a positive and significant relationship between MSEs' growth and, Access to Market Information, Access to finance, Government Support, Infrastructure Entrepreneurial Competency, Social Network, and types of business sectors and also, lack of adequate market linkage.
Unique Contribution to Theory, Policy and Practice: Based on the finding the researcher recommended that the government body should facilitate market linkage to ensure the existing market linkage policy, develop infrastructure, and provide support for MSE. The Entrepreneurs Practice on their side to develop their Competency and Social Networks. In addition, sufficient market information should be collected continuously to increase the linkage to the market. The finding aligned with the theory of Resource base view, the institutional theory and social network theory.
Downloads
References
Abera, A., & Teshome, M. (2019). Challenges and Opportunities of Micro and Small-Scale Enterprises in Addis Ababa, Ethiopia. International Journal of Economics, Commerce and Management, 7(11), 20-38.
Addis, A., et al. (2019). Determinants of Growth of Micro and Small Enterprises in Ethiopia: Evidence from Debre Markos City. Journal of Economics, Business
Addis, M., Abebe, D. G., & Tariku, D. (2019). Market linkages and performance of small and medium-sized enterprises in Ethiopia: the mediating role of institutional support. Journal of Innovation and Entrepreneurship, 8(1), 1-23.
Addis, M., Asfaw, S., Gebeyehu, M., & Tadesse, B. (2019). Impact of market linkage and institutional support on the performance of small and medium-sized enterprises in Ethiopia: Evidence from dairy processing firms. Journal of Agribusiness in Developing and Emerging Economies, 9(2), 145-164.
Adena, L. (2017). Impact of market linkages on small and medium enterprises in northern Uganda. International Journal of Economics, Commerce, and Management, V (5), 1-15.
Adeokun, O. A. (2015). Infrastructure deficit and its impact on regional development in Ethiopia. Journal of Economics and Sustainable Development, 6(6), 45-52.
Adugna, M., et al. (2020). Market Linkage and SMEs' Growth in Ethiopia. Journal of Entrepreneurship and Innovation in Emerging Economies, 6(3), 409-428.
Alemayehu, D., & Gecho, Y. (2016). Determinants of micro and small enterprises growth: The case of Durame Town, Kembata Tembaro Zone, Southern Nations and Nationalities and Peoples Region, Ethiopia, 2016. International Journal of Business and Economics Research, 5(5), 161-175.
Alene, E. T. (2020). Determinants that influence the performance of women entrepreneurs in micro and small enterprises in Ethiopia. Journal of Innovation and Entrepreneurship, 9(1), 1-20. https:// doi. org/ 10. 1186/ s13731- 020- 00132-6
Al-Sayaad, J.,Rabea, A.,and Samraah, A. (2006). Statistics for economics and administration Studies. Dar Hafez
Ardic, O. P., Mylenko, N., Saltane, V., & Yeyati, E. L. (2011). Financial sector deepening and economic growth: A macroeconomic perspective. World Bank Policy Research Working Paper, (5799).
Asfaw, E. M. (2016). Analysis of challenges and prospects of small-scale enterprise in rural areas of Ethiopia: A study on the role of microfinance institutions in building rural entrepreneurship. International Journal of Finance and Banking Research, 2(6), 78-84.
Ayele, L. (2013). Review of SME financing schemes in Ethiopia. International Journal of Economics, Commerce, and Management, I(2), 1-17.
Baldry, D., & Schmid, T. (2018). Financial Literacy, Financial Access, and Entrepreneurship. Journal of Developmental Entrepreneurship, 23(02), 1-19.
Baumol, W. J. (2010). The microtheory of innovative entrepreneurship. Princeton University Press.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
Bazillier, R., & Girard, A. (2016). Access to credit and export diversification in Ethiopia: Evidence from matched SMEs. Journal of African Economies, 25(1), 69-99.
Berhane, G. (2018). Determinants of growth for micro and small enterprises: Evidence from Ethiopia. African Journal of Economic and Management Studies, 9(4), 452-468.
Beza Muche Teka (2022). The role of micro and small enterprises recognized in Ethiopia as strategy and police level
Bigsten, A., Collier, P., Dercon, S., Fafchamps, M., Gauthier, B., Gunning, J., & Oduro, A. (2003). Credit constraints in manufacturing enterprises in Africa. Journal of African Economies, 12(1), 104-125.
British Council. (2017). Growing the Nigerian Economy through Micro, Small, and Medium Enterprises (MSMEs): A Policy Paper. Lagos, Nigeria: British Council.
Botor Tolay Woreda MSE Office. (2023). Annual performance report (unpublished).
Cherkos, T., et al. (2018). Examining significant factors in micro and small enterprises performance: case study in Amhara region, Ethiopia. Journal of Industrial Engineering International, 14, 227-239.
Coad, A., Rao, R., & Tamagni, F. (2016). Growth processes of Italian manufacturing firms. Small Business Economics, 47(1), 209-228.
Copestake, J. G., Dawson, P., Fanning, J. P., McKay, A., & Wright, R. E. (2010). Enhancing the effectiveness of enterprise agency support for small and medium-sized enterprises and entrepreneurship development in Africa. Enterprise Development and Microfinance, 21(2), 85-102.
Creswell, J (2009). Research Design: Qualitative, Quantitative, and mixed methods approach (3rd ed.) Thousand Oaks, CA: Sage
Cho, S. Y., Lee, H. J., & Poppo, L. (2019). How Social Ties Influence Micro and Small Enterprises: Evidence from Rural Indonesia. Journal of Small Business Management, 57(2), 537-559.
Dejene, M., et al. (2020). Role of Micro and Small Enterprises in Poverty Reduction: Evidence from Ethiopia. Journal of Economics and Sustainable Development, 11(6), 42-52
Eshetu, F. (2018). Promoting small and medium-sized enterprises: The impact of business development services in Ethiopia. Journal of African Business, 19(3), 313-330.
Eshetu, G., Assefa, T., & Tefera, A. (2017). Analysis of Ethiopia's small and medium enterprise development policy. International Journal of Business and Economics Research, III(4), 64-78.
Ethiopian Development Research Institute (EDRI). (2019). Ethiopia's Pathways to Prosperity: Baseline Report. Addis Ababa, Ethiopia: EDRI.
Ethiopian Ministry of Trade and Industry. (2019). Annual Report. Addis Ababa: Ethiopian Ministry of Trade and Industry.
Ethiopian Ministry of Industry. (2016). Small and Medium Manufacturing Industry Development in Ethiopia.
Ethiopia's MSED Strategy. (2011). Government of the Federal Democratic Republic of Ethiopia, Micro and Small Enterprise Development Strategy, provision framework and methods of Implementation.
Ethiopia's MSED Policy and Strategy. (2016). Federal Democratic Republic of Ethiopia (FDRE), Ministry of urban development and housing: Micro and Small Enterprise Development Policy & Strategy.
Eurostat. (2021). Structural Business Statistics. Retrieved from [https://ec.europa.eu/eurostat/statisticsexplained/index.php/Structural_business_statistics
FAO. (2018). Ethiopia: Seizing opportunities along the coffee value chain. Food and Agriculture Organization of the United Nations.
FDRE GTPII 2015/16-2019/20 (The Growth and Transformation Plan II for 2015/16-2019/20).
Feyerherm, A., & Rube, B. (2017). Small and medium-scale enterprises' integration into global value chains in developing countries. International Journal of Economic Sciences and Applied Research, 10(1), 19-33.
Feyisa, B. D., & Tamene, K. A. (2019). The roles of micro and small enterprises in empowering women: the case of Jimma Town, Ethiopia. International Journal of Multicultural and Multi-Religious Understanding, 6, 139-151.
Gebreeyesus, M. (2015). The impact of standards on African SMEs: Evidence from Ethiopia. Journal of African Economies, XXIV(2), 211-234.
Geremew, K., & Toli, J. (2016). The relationship between market access and growth of micro and small enterprises: Evidence from Wolaita and Dawro zones of southern Ethiopia. Journal of Competitiveness, 8(2), 135-152.
Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481-510.
Gudeta, O. E., & Tulu, D. T. (2022). Determinants of the growth of micro and small enterprises in Ambo town, Ethiopia. Journal of Small Business and Entrepreneurship Development, 10(2), 40-58.
Federal Democratic Republic of Ethiopia/Ministry of Trade and Industry (FDRE/ MoTI). (1997). Micro and Small Enterprises Development Strategy, November 1997; Addis Abeba, Ethiopia.
Federal MSE Development Agent (FeMSEDA). (2011). Ethiopian cities job creation best experiences city day central committee Mekele, Ethiopia.
FeMSEDA. (2004). Survey on Micro and Small Enterprises (MSE) in selected major cities of Ethiopia. FeMSEDA.
FeMSEDA. (2015). Implementation, success, and challenges of Micro and Small Enterprises (MSE) development in Ethiopia. FeMSEDA.
Girma Hurgessa (2022) factors affecting the growth of MSEs in Kirkos sub city in Addis Ababa
Gebrehiwot, A. & Wolday, A. (2006). Micro and Small Enterprises (MSE) Development in Ethiopia: Strategy, Regulatory Changes and Remaining Constraints. https:// doi. org/ 10. 22004/ ag. econ. 249856.
Gebremariam, F. M. (2017). Factors affecting the growth of women-operated micro and small enterprises (MSEs) in Ethiopia. Üniversitepark Bülten, 6(1), 56-66. https:// doi. org/ 10. 22521/ unibu lletin. 2017. 61.5
Gemechu, A., & Teklemariam, F. (2016). Determinants of Micro and Small Enterprises Performance in South West Ethiopia: The Case of Manufacturing Enterprises in Bench Maji, Sheka, and Kefa Zones. Global Journal of Management and Business Research: Administration and Management., 16(10), 29-37.
Habtamu, T., Areagawi, G., & Nigusa, A. (2013). Growth determinants of micro and small enterprises: Evidence from northern Ethiopia. International Journal of Business and Economics Research, 2(6), 174-183.
Hessels, J., Rietveld, C. A., & van der Zwan, P. (2017). Unraveling supply"side and demand"side effects on entrepreneurial intentions. International Entrepreneurship and Management Journal, 13(4), 1113-1135.
IBM SPSS Statistics for windows, Version 25. Armonk, NY: IBM Corp.
International Food Policy Research Institute (IFPRI). (2015). Agricultural Transformation in Ethiopia: State Policy and Smallholder Farming. Washington, DC: IFPRI.
International Labor Organization (ILO). (2016). Promoting Decent Work in the Informal Economy. Geneva, Switzerland: ILO
Karanja, F. K., Bergman, T. J., & Karanja, N. M. (2013). Market knowledge dimensions and export success: Does firm size matter? International Business Review, 22(4), 694-708.
Kothari, C.R. (2004). Research Methodology: methods and techniques (second edition), New Age International (P) Ltd., Publishers Published by New Age International (P) Ltd.
Leyaro, V. C. (2018). The role of small and medium-sized enterprises (SMEs) in developing countries. Journal of Business and Management, 20(2), 64-70.
Lussier, R. N. (2015). Entrepreneurial orientation, network relationships, and E-commerce adoption in SMEs. Journal of Small Business and Enterprise Development, 22(2), 208-220.
MAG International. (2014). Small and Medium Enterprises Competitiveness Assessment in Ethiopia. MAG International.
Meressa, H. A. (2020). Growth of micro and small-scale enterprises and its driving factors: Empirical evidence from entrepreneurs in emerging region of Ethiopia. Journal of Innovation and Entrepreneurship, 9(1), 1-22.
Ministry of Trade and Industry. (2012). Small and medium enterprises development strategy. Addis Ababa: Government of Ethiopia.
Minten, B., & Kyle, S. (2019). Agricultural contracts and agricultural development: Evidence from a field experiment in Madagascar. Journal of Development Economics, 140, 72-83.
Njuguna, A. V. (2010). The effect of access to formal credit on the performance of small and medium enterprises in Ethiopia: A case study of Oromia regional state. Journal of Development and Agricultural Economics, 2(3), 73-86.
Ojanen, V., & Beshir, M. (2017). Promoting local economic development in Ethiopia: A case study of the role of the Productive Safety Net Programme. Journal of Eastern African Studies, 11(2), 238-256.
Okoth, E., Membe, I., & Muturi, W. (2014). An analysis of the effects of market linkages on small and medium enterprises in Kenya. International Journal of Social Sciences and Entrepreneurship, I(5), 20-34.
Omondi, S. M., & Wanyoike, D. M. (2014). Factors affecting SMEs market linkages in Nairobi, Kenya. International Journal of Social Sciences and Entrepreneurship, 1(10), 1-12.
Oromia Regional market police and regulation of MSE 003/2004 E.C.
Orraca, J. L., Alvarado, H. A. M., & Prez, J. C. C. (2018). Growth Determinants of Micro and Small Enterprises in Mexico: Evidence from the National Survey of Micro and Small Enterprises. Journal of Economics, Finance and Administrative Science, 23(45), 98-109.
Rahel Derbew. (2020). The Role of Micro and Small Enterprises in the Economy of Ethiopia. International Journal of Advanced Research in Business, 4(8), 27-36
Rehman, C. A. (2020). Exploring the influence of market linkages on the performance of small and medium enterprises in Pakistan. Journal of Small Business and Enterprise Development, XXVII(5), 877-890.
Report of MSE office of Botor Tolay Woreda, 2015 E.C.
Scott, W. R. (1995). Institutions and organizations. Thousand Oaks, CA: Sage Publications.
Shimeles, A., & Abdulai, A. (2014). Agricultural market access and poverty in Southwestern Ethiopia: A gender-sensitive stochastic dominance approach. Food Policy, 49(1), 389-398.
Sutandar, L., & Panjaitan, N. A. (2019). Factors Influencing the Performance of Small and Medium Enterprises in Indonesia. Journal of Entrepreneurship Education, 22(1), 1-10.
Tesfaye, Y. G. (2017). Labor market intermediation and its impact on employment outcomes in Ethiopia. Journal of International Development, 29(6), 780-795.
Tesfaye, Y., Duguma, D., & Borago, M. (2019). The impact of cooperative membership on rural smallholder farmer income: Evidence from Ethiopia. World Development, 124, 104640.
UNIDO. (2019). Market linkage program for small and medium enterprises in Ethiopia. Vienna: United Nations Industrial Development Organization.
United Nations Industrial Development Organization (UNIDO). (2013). Ethiopia: Industrialization without Integration: A Study of the SME sector. UNU-WIDER Research Paper No. 2013/097.
Woldie, A. (2016). Value chain analysis of edible oil production: A case study of selected SMEs in Ethiopia. Journal of International Business Research and Marketing, 1(4), 1-18
Woldie, A., Admasu, Y., & Asfaw, M. (2018). Market linkages and growth of small and medium enterprises in the textile and garment industry: Evidence from Ethiopia. African Development Review, 30(4), 396-409.
World Bank. (2019). Ethiopia Jobs Diagnostic: Job Creation and Spatial Transformation. Washington, DC: World Bank.
World Bank. (2019). World Development Report 2019: The Changing Nature of Work. Washington, DC: World Bank.
Yamane, Tora.1967. Statistics, An Introductory Analysis,2nd Ed., New York: Harper and Row
Yemenu, M. K., Belay, S. A., & Tadesse, Z. B. (2018). Market linkage and its impact on the growth of small and medium enterprises in the Ethiopian leather industry. Journal of Economics and Sustainable Development, 9(10), 48-61.
Yemenu, S., et al. (2018). Determinants of Micro and Small Enterprises Growth in Ethiopia: Evidence from Adama City. Journal of Economics and Sustainable Development, 9(13), 63-77.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Elias Susi
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
