Factors Determining the Success of Micro and Small Enterprises in Ethiopia (The Case of Arbaminch Town)

Micro and small enterprises sector is recognized as growth and development engines long ago and countries are benefiting from it by designing various development strategies for this sector. This sector contributes to unemployment reduction at a remarkable level. This study will attempt to assess and analyze factors resulted in success of micro and small enterprises in Arbaminch town, Ethiopia. The intention of this study is to provide the understanding on how people should start their business by looking at all the factors affecting business success/failure and hence help reducing the risk of failure and increase chances of success. In terms of theoretical significance, these studies help to fill the gap in the body of knowledge in the success of micro and small enterprises. Therefore, the study has examined five proxy factors that influence the micro and small enterprises. These factors are Entrepreneurial characteristics, marketing factors, government regulation, and social network. Based on the objective of the study, in the study primary data was employed and five hypotheses developed were tested with SPSS version 16 using bivariate logistic regression and multivariate logistic regression. As per the results of the regression excluding the hypothesis was found to support the researcher priori expectation and meaning that firms initial size, firms year of operation, market information, usage of business plan and involvement in social networking has a statistically significant impact on firm success. While no statistically significant association was found with owners/managers entrepreneurial trait and access to training.