Firm Specific Determinants of Profitability of SSE in Bahir Dar, Ethiopia

Abstract

Poverty and unemployment are critical issues that Ethiopia is struggling to combat through the injection of Small Scale Enterprises (SSE). There has been a growing awareness that SSEs are important for economic growth for both developing and developed countries. They are seen as the engines of employment, alleviating poverty and improving equality. SSE development was identified as a priority in creating jobs with the intention of addressing unemployment and poverty thereby bringing economic growth. However, they are influenced by several factors. The fundamental objective of this study is critically analyzing determinates of profitability of SSE in Bahir Dar, Ethiopia. To achieve this objective the study followed a quantitative research approach, and used panel data sets comprising 24 SSE of 3 years (2004–2006) time series. Random effects model was identified to be the most appropriate model for this study. After all panel data were analyzed through the use of sata13 and discovered that size, liquidity and tangibility are the most determining factors for SSE profitability. The study also found that age of SSE and age of owners/managers are indeterminate of SSE profitability. On the basis of the finding the study recommended SSE to improve their resource management and avoid idleness. The study ends by implying directions for further researchers. Potential researchers can expand this research from three dimensions such as in terms of number of cross-sections, time and variable.Cite this Article Mengistu Nega. Firm Specific Determinants of Profitability of SSE In Bahir Dar, Ethiopia. Journal of Production Research and Management. 2017; 7(1): 26–35p.