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Research Paper | Business Management | India | Volume 6 Issue 3, March 2017

The Impact of Environmental Factors on the Performance of Micro & Small-Scale Enterprises in East Gojjam Zone, Ethiopia

Mulugeta Kebede | Getaendale Simesh

Abstract: This study aims at investigating the impact of the internal and external environmental factors on the performance of Micro and Small-scale Enterprises in East Gojjam Zone Ethiopia.362 Micro and Small Scale Enterprises found in eight purposively selected Woredas were considered for the study purpose. Accordingly, primary data was collected from the owner/managers of Micro and Small scale Enterprises found in the selected Woredas using structured questionnaires. Multiple regression analysis was employed to see if the identified environmental variables would explain the variance in firms profitability i. e. gross profit. Results from the descriptive statistics indicated that inadequate power supply, inadequate water supply, unavailability of dry waste and sewerage system, unavailability of Business Development Service, unavailability of suitable market place, collateral requirements to get loan, shortage of working capital and unavailability of own working premise were reported to be serious problems resulting in low performance of micro and small sized enterprises. The findings of the regression analysis show that infrastructure and financial environment, technological environment and factors associated with entrepreneurial commitment have a clear significant relationship with performances of MSEs. Furthermore, based on the sign of the slope coefficients researchers found that infrastructure and finance had positive impacts on the performance of MSEs, while the rest has negative roles.

Keywords: Micro and Small Scale Enterprises, Environmental Factors, Financial Performance

Edition: Volume 6 Issue 3, March 2017,

Pages: 1619 - 1629