FACTORS AFFECTING THE SUSTAINABILITY OF

SMALL AND MEDIUM SCALE ENTERPRISES:

THE CASE OF HARAR TOWN

MBA THESIS

MUKTAR AHMED
ID NO; 044/09

FEBRUARY, 2021
HARAMAYA UNIVERSITY, HARAMAYA
Factors Affecting the Sustainability of Small and Medium Scale
Enterprises: The case of Harar Town

HARAMAYA UNIVERSITY
SCHOOL OF GRADUATE STUDIES

Thesis Submitted to the Department of Management in Partial Fulfillment of

the Requirements for Masters of Business Administration (MBA), Weekend
Program

By
Muktar Ahmed
Id no: 044/09

Advisor: Zelalem Bayisa (PhD)

February, 2021
Haramaya University, Haramaya
 DECLARATION

The researcher declare that the thesis entitled: Factors Affecting the Sustainability of Small and

Medium Scale Enterprises: The Case of Harar Town is own compilation. I have accomplished

this study with support of my advisor, Zelalem Bayisa (PhD). On top of that sources used for the

study have been acknowledged.

Muktar Ahmed ___________ ___________

Signature Date
 HARAMAYA UNIVERSITY
POSTGRADUATE PROGRAM DIRECTTORATE

As Thesis Research advisor, I hereby certify that I have read and evaluated this Thesis prepared,
under my guidance, by Muktar Ahmed Abdulahi entitled Factors Affecting the Sustainability of
Small and Medium Scale Enterprises: The Case of Harar Town.

Submitted by:
_____________________ _________________
The student Name signature Date
Approved by:
1. ____________________ ___________________
Name of Major Advisor Signature Date

As a member of Board of Examiners of the MBA in Business Administration Thesis Open De-
fense Examination, we certify that we have read and evaluated the Thesis prepared by Muktar
Ahmed and examined the candidate. We recommend that the thesis be accepted as fulfilling the
thesis requirements for the degree of masters of business administration.
3. ___________________________ _____________________________________
Chair Person Signature Date

4. _____________________ ______________________________________
Internal Examiner Signature Date

5._______________________ ____________________ ___________________

External Examiner Signature Date
Final approval and acceptance of the thesis is contingent up on the submission of its final copy to
the council of post graduate program (CPGP) through the candidate’s department or School
graduate committee (DGC or SGC).
 Acknowledgment

First of all, I would like to thank the un enumerable almighty of Allah and extend my apprecia-

tion to my Advisor, Zelalem Bayisa (PhD) for his constructive comments and encouragement

when undertaking my thesis.

Finally, it is my sincere gratitude and thanks to my family friends, all who provide me with en-

couragement.
 I

ACRONYMS

GDP Gross domestic product

MDGs Millennium Development Goals
MOT Ministry of Trade
MSE Micro and Small enterprises
MSME Micro, Small and Medium enterprises
MUDC Ministry of Urban Development and Construction
SME mall and Medium enterprises
SSA Sub-Saharan Africa
FSMMA Federal Small and Medium Manufacturing Industry Development Agency
SPSS Statistical Package for Social Sciences
 II

Table of Contents
Acknowledgment
Acronym I
Contents II
Tables IV
Figures V
Abstract VI
CHAPTER ONE
1 INTRODUCTION
Background of the Study 1
1.2 Statement of the Problem 3
1.3 Basic Research Question 4
1.4 Objectives of the Study 4
1.4.1 General Objective 5
1.4.2 Specific objective 5
1.5 Hypothesis of the Study 5
1.6 Significance of the Study 5
1.7 Scope of the Study 6
1.8 limitation of the Study 6
1.9 Organization of the pepper 6
1.10 Definition of Terms 7
CHAPTER TWO LITERATURE REVIEW
2.1 Introduction 8
2.2 Definitions of Small and Medium Enterprises 8
2.2.1 Definition of SMEs in Ethiopia 9
2.2.2 Definition of SMEs in Ethiopia 9
2.3 Concept of Business Sustainability 11
 III

2.4 Empirical Study 15

2.4.1 Factors Affecting Sustainability of Small and Medium Enterprises 16
2.5 Hypothesis of the Study 18
2.6 Conceptual Framework 19
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1. Introduction 21
3.2 Research Study Area 21
3.3. Research Approach 21
3.4 Sampling Design 22
3.4.1 Target population 22
3.4.2 Sampling and Sampling Technique 22
3.4.3 Sample Size 23
3.5 Method of Data Collection 24
3.6Measurement of variables 24
3.7 Method of Data Analysis 25
 IV

Continued…

3.7.1 Measures of dependent variable(Sustainability)

3.8 Nature of Research Instrument 26
3.9 Validity and Reliability 26
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.1 Introduction 27
4.2 Demographic Composition of Respondents 27
4.3 Reliability Test 30
4.4 Results of Measures of Mean and Standard Deviation 31
4.5 Comparison of Mean Scores by The Sample Enterprises 36
4.6 Multi collinearity 38
4.7 Normality Test 39
4.8 Hypothesis Testing Result 40
CHAPTER FIVE CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 44
5.2 Conclusions 44
5.3 Recommendation 46
5.4 Limitation of The Study 56
References
Appendix
 V

List of Tables

Table 2.1 International Definition of SME 9

Table 2.2 SMEs definition of Ethiopia 10
Table 3.1 Sample Distribution 23
Table 4.1 Gender 27
Table 4.2, Age of respondents 28
Table 4.3 Education level of the respondents 28
Table 4.4 Year of experience of participants 29
Table 4.5 Activities of the Enterprises 30
Table 4.6 Reliability Statistics 30
Table 4.7 Descriptive Statistics of Marketing Factors 31
Table 4.8 Descriptive Statistics of Financial Factors 32
Table 4.9 Descriptive Statistics of Management Factors 33
Table 4.10 Government Support Descriptive Statistics 34
Table 4.11 Sustainability of SMEs 35
Table 4.12 Comparisons between Manufacturing, Construction, Trade and service 37
Table 4.13 The relationship between independent variables: Correlations 38
Table 4.14 Multi Collinearity Model Test 39
Table 4.15 Normality Test 40
Table 4.16 ANOVA Results 40
Table 4.17 Regression Coefficients Result 41
Table 4.18 Hypothesis Summary 43
 VI

Figures

Figure 1.1 Conceptual Research Framework 20

 VII

Abstract
The study undertakes the Sustainability of small and medium scale enterprise through primary
data. This study contributes indispensable economic roles and taken as the engine of economic
diversification and poverty alleviation. It identifies the relevant factors affecting SME enable
them to maintain their business in spite of challenges in the business world. In Ethiopia, the
Government has been encouraging SMEs by designing and implementing Small and Medium En-
terprises development and the number of SMEs in the country is steadily growing, but most
SMEs are hibernating from growing and striving to pass from lower stage to higher stage due to
many underlying factors. This study used quantitative data that collected through stratified ran-
dom sampling method. The collected data was analyzed by appropriate descriptive statistics and
multinomial logistic regression model through SPSS V.20. among The Dependent Variable, the
age of Enterprise in the business was used as proxy or the Sustainability index of SME. The find-
ings show that the SMEs in manufacturing sector have more probability of sustainability com-
pared to trading, service and construction sectors. The findings further indicate SMEs that have
more financial related opportunity have more probability of sustainability in the long run. The
achievement of higher education is unrelated with the Sustainability of SME, because it may
provide more options to work opportunity. For further analysis, researchers may recommend
other indicators of the sustainability by using larger samples, and Advanced test of statistics jus-
tify findings of the factors affecting sustainability of SMEs in the case of Harari town.

Key words: Sustainability, SMEs

 1

CHAPTER ONE

INTRODUCTION

1.1 Background

The Sustainability of small and medium enterprise that can maintain its business operations with

profitability and growth (Surrender, Son and Geoffrey, 2019). (Stephen & Wasiu, 2018).

The majorities of firms in the world are SMEs and play a major role in the economy. According

to United Nations, relevant evidence suggests that SMEs are responsible for the success of econ-

omies all over the world. In United States of America (USA), small businesses provide more

than 70% of new jobs brought to the economy representing 99% of employers. There were close

to 23 million small businesses in 2002 in the US (Thomas, 2014).

In Ethiopia, like any other developing countries, SME has become an increasingly and widely

strategy for its labor intensiveness, suitability to produce more jobs with less capital per job cre-

ated, its utilization of locally available resources, fostering of linkage within and among various

sectors and its resilience to internal and external economic shocks (FMSEDA, 2012).

According to Ethiopian context, despite the potential contribution of the SMEs to poverty reduc-

tion and employment creation is widely recognized, the Government until very recently had not

extended adequate analysis to the factors affecting development and sustainability of the sector.

According to Fedahunsi (et al., 2015) based on the factor analysis, the results of the study

showed that the production factor and human resources such as raw materials, product innova-

tion, competence of employees, counseling and guidance, as well as education and training; mar-

keting and promotion factors; factor of production techniques and technologies; and access to
 2

credit and capital are factors that affect the sustainability of the MSE business. Therefore, the

problem that exists in these factors should be minimized in SMEs so that internal business sus-

tainability can be achieved. Then, SMEs will still be able to contribute substantially to the econ-

omy.

The study on constraint factors affects sustainability of SMEs by using descriptive method of

analysis need to understand the different approach by which to improve or minimize the prob-

lems of sustainability and the result of the study implies that most of the respondents, 65.6 per-

cent of the agreed that access to finance as the highest way of improving sustainability of enter-

prises while 19.5 percent of respondent agreed that work related factors and the remaining 14.9

percent suggested improved access to government support would improve the sustainability of

SMEs (Rahel et al., 2018).

According to (Gebreizgabeher & Ayenew, 2018) shows that in Ethiopia there has not been an

independent investigation about factors affecting the sustainability of the SME even under nor-

mal economic condition either at the federal or regional levels to date.

In Ethiopia, according to the Proclamation of MSEDSE of 2011, the previous definition was re-

vised medium scale Enterprise as that consists of the 31 up to 100 employees both for industry

and service sectors and total asset 500000 up to 7500000 Birr for both industry and service sec-

tor; while Small Scale Enterprise is an enterprise which has 6 up to 30 employees and total asset

100001 up to 1500000 Birr for industrial sector and 500001 up to 50000 ETB for service sector.

In many countries, nowadays the contribution of Small and medium Enterprises (SME) recog-

nized as a potential to economic growth, urban poverty reduction and employment.

 3

1.2 Statement of the Problem

Despite the role of the small and medium enterprises, studies reveal that most SMEs have no

success incentive and the majority stayed at their lower stage or prefer to shift to other unrelated

business due to threats to failure (Nuwagaba & Nzewi, 2016). While The role of small business-

es to development are well recognized, its failure rate also concerned globally.

According to FMSAD (2007), While the small size enterprises graduating in to medium size, the

other are also failing due to variety of factors. This situation leads to reduce the quantity of

SMEs actually operating in the town. Then, the biggest issue that needs investigation is the sus-

tainability of the stablished and operating SMEs in the town.

Currently in Ethiopia, more important than increase of the numbers, their existing status is insig-

nificant because SMEs are hibernated from sustaining the stage of expected performance and

faced with the threat of failure due to many factors. The results of the study in advanced coun-

tries identified that large enterprises have more chances of sustainability while small firms are

more chance of profitability (Blau, 1984).

According to Nicki and Bellamy, (2004) emphasized that education and training as success fac-

tors. There is a positive relation between the number of years in business and Sustainability (Car-

roll, 2013).

According to Salimzadeh et al (2013) the sustainability factors of developed countries highly dif-

ferent when compared with the factors affecting the Sustainability of SMEs in developing coun-

tries. It reveals that the problems that are faced by SMEs started from the difficulty of obtaining

raw materials, access to credit and capital, marketing, promotion, production engineering, man-

agement, technology, human resources, lack of guidance and coaching, limited cooperation and
 4

competition issues. On top of that the study revealed that factors that become obstacles to the

sustainability of SMEs are the low level of managerial skills, lack of access to market infor-

mation, the lack of capital resources and human resource capacity.

According to Utami (2007); Siriwan et al (2013) identified that the challenges of SMEs are man-

agement, education and development for businesses.

According to The study of Amissah, and Timothy et al., 2015) on small and medium Enterprise

shows a trend of failure in the first five years of business operation in Nigeria, due to the many

challenges such as lack of managerial leadership, and marketing skills, that provides them a

competitive benefit.

According to the Oyelola (2014) the study shows that lack of access to finance, poor implemen-

tation of policies, and corruption leads to business failure in Africa. Based on this empirics, the

Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) reported that 80

percent of SME unable to sustain the business above five years of its existence in the business

operation (Alsedi & Abdelrahim, 2016). Generally, the most study recognized the constrained

factors that affect the sustainability of SMEs. Despite challenges of the business world, there are

determinant factors constraining enterprises to maintain their business.

According to (Rahel, 2019), stress that within the last five years, majority of SMEs failed to sus-

tain their operation are small and medium enterprises due to challenging factors that are related

to market access, managerial, financial and bureaucracy of government that affect the sustaina-

bility of SMEs. Therefore, this study investigated the factors that affect the sustainability of

SMEs in with special focus to Harari town.

 5

1.3 Basic Research Question

1. How Does managerial factors affect the sustainability of SMEs in Harari Town?

2. How Does Marketing factors affect the sustainability of SMEs in Harari Town?

3. How Does government factors affect the sustainability of SMEs in Harari Town?

4. How Does financial factors affect the sustainability of SMEs in Harari Town?

1.4 Objective of the Study

1.4.1 General Objective

The general objective is to examine the factors that affect the sustainability of SME in the

case of Harar town.

1.4.2 Specific objective

 To examine the effects of managerial factors on the sustainability of SMEs.

 To assess the effects of marketing factors on the sustainability of SMEs.

 To investigate the effects of government, support related factors on the sustainability

of SMEs.

 To evaluate the effects of financially related factors on the sustainability of SMEs.

 To understand the status of SMEs in Harar Town

1.5 Hypothesis of the Study

Hayphotesis1.It is positive and significant relation between managerial factor and the sus-

tainability of small and medium scale enterprise in Harar Town.

Haypothesis2.There is positive and significant relation between marketing factor and the

sustainability of SMEs in Harar Town.

 6

Haypothesis3.There is positive and significant association between financial factor and the

sustainability of SMEs in Harar Town.

Haypothesis4.There is positive and significant association between government support and

the Sustainability of SMEs in Harar Town.

1.6 Significance of the Study

In Academics the study would apply to the future development of research, especially in a devel-

oping country like Ethiopia. More over methodologically, this study adds knowledge to devel-

opment of the sustainability model. Therefore, this study is of importance to both scholars and

owners/managers of SMEs. Provided that the role of small enterprises to a country's economic

success and in poverty alleviation, this study shows us a clear understanding of factors affecting

the sustainability of SMEs.

1.7 Scope of the Study

The study confined to business perspective factor affect the sustainability of SME in the case of

Harar town. The geographic area of the study is purposefully selected by the researcher that meet

academic purpose. The study will focus on (manufacturing, construction, trade, service an urban

agriculture) sectors of government organized SME in Harar town. However, the study excludes

various private SMEs. in addition to its scope the study also limited by absence of organized da-

ta about SMEs.
 7

1.8 Limitation of the Study

This data shares all common limitations of during surveys, among them lack of objective infor-

mation from the respondents. However, this method is appropriate in a place where there is no

formally recorded data about SMEs.

1.9 Definition of Terms

SMEs Sustainability: the most common definition of sustainability in relation to business is

meets the needs of its stakeholders without compromising its ability to meet their needs in future

(Hubbard, 2016). But in this paper sustainability defined as the ability of the enterprises to con-

tinuously sustain their expected stage of development in the business environment.

Enterprises: refers to one aspect of business organization or activity engaged in manufacturing,

construction, service and trade sectors.

Small Enterprise: Small Scale enterprise which has 6 up to 30 number of employees and total

asset between 100000 up to 1500000 Birr for manufacturing sector and 50000 up to 500000 Birr

for service sectors.

Medium enterprise: medium scale Enterprise with more than 31 up to 100 employees and total

asset of beyond 500000 Birr for service sector and 1.5 million up to 20 million Birr for manufac-

turing.

Factors: A factors such as management, market, finance, and Government support that affect the

sustainability of SMEs
 8

CHAPTER TWO
REVIEW OF LITARATURE
2.1 Backgrounds of Small and Medium Scale Enterprises

The SME has no universality accepted standard for definition. its definitions and measurements

are varying from country to country from sectors to sectors (Salimzadeh, Courvisanos & Nayak,

2013)

The common standards are the number of employees, total assets, sales and investment level,

number of annual working hours, annual turnover, annual balance sheet or production volume,

and independence of the company (Harjula, 2008).

According to Peacock (2004) The number of employees and annual turnover asset are the widely

used to define the small and medium scale enterprise. So Despite lack of universality of SME

terms, in common SME definitions related to Formality of registration, obligation to pay social

security tax and willing to participate in social contribution, provide their employees with sick

leave and other benefits and investing to capital.

2.2 Small and Medium Scale Enterprises Definitions in Deferent

Countries

According to (Ayyagari & Demirguc-Kunt, 2007) in reference to The World Bank SME ex-

plained as small enterprises as those with their employees between 10 up to 50 in numbers

and total assets and total sales of up to three million USA dollar. Medium enterprises means

those with their number of employees greater than 50 up to less or equal to 300 employees,

total assets and total sales of up to 15 million USA dollar.

 9

Table 2.1 different countries Defined SME in terms of employee’s number

Country EU USA Ghana Russia China South Af-

rica

Small Less than Less 6 up 29 15 up100 Less 300 50 up 99

50 than100

Medium Less 250 Less 500 30-99 101-250 300 up 000 100 up

200

(Source, Mahambe 2011)

Table 2.2 Different countries defined SME in terms of Turnover

Country EU Ghana Russia India China South Afri-

ca

Small $13m $100k 400 Million Rs50 up Less than R1m- R32m

Rub to 60m Y30

Medium $67m $1million 1Billion 60 Rs up 30-300Y R5M up to

Rub to 99 Rs Million R65M

(Source, Mahambe 2011)

 10

2.3 SMEs in Ethiopia context

Ethiopia has recognized small Enterprises as the Enterprises with a total asset of Birr 500,000

or less. In ithiopia, unlike international organizations they used is the total asset as the standard.

To align the concept with some international countries, they revised the concept of Small En-

terprises in 2011 (Esubalew and Raghurama, 2017).

According to working definifionf of ministry of trade published in 2011 the small and medium

scale enterprises was used capital and labor as base line. Medim enterprises defined The same

as micro and small based on capital and labour

Table 2.3 SMEs in Ethiopia context

Category of en-
terprises Types Labour Owned capital

1. Small Manufacturing 6 up 30
100001-1500,000 ETB

Service 6-30 50001-500000

2. Medium Industry 31-100

501000-7500000 ETB

31-100 501000-7500000 ETB

Service
 11

Today in Ethiopia manufacturing sector isolated from Other enterprises categorizing only small

and medium manufacturing sector and named as federal urban job creation and food security

agency. According to federal small and medium scale enterprises agency (FeSMMIA), Small

manufacturing means the enterprises with total capital not including building from 100000 up to

1500000 birr and engages 6 (six) workers whether the owner, family member and other types of

employee.

Ethiopian Current definition about small and medium scale enterprises has very explicit gap

when compared with international context. For instances, in Ethiopia the enterprises with less

than 50 employees and less than 1500000 categorized as small enterprises but it should be less

than 100000 birr for manufacturing enterprises to be categorized as small sector.

For example, if compared with European union small and medium enterprises its employees es-

timated as one and half times less of employees for both small and medium scale enterprises.in

addition to this its total asset or capital is many times less in Ethiopia. There was very significant

figure of variation that make comparison difficult between Ethiopian enterprises and internation-

al organization cited by European union.in order to reduce those gap regarding Enterprises cate-

gorization common standard the Ethiopian enterprise should move forward to catch up and meet

international standard there by on the same base line.

 12

2.4 The Sustainability Definition

The Sustainability is not the new vocabulary but the word is original used and automatically

wrongly only confined and limited to the environmentalism. It was used to implies judicious use

of energy and resources.

Therefore, it was initially applied by the environmentalist, Brundtland Commission in 1987 as

concerned with world environmental damage.

In 2005 millennium ecosystem assessment(MEA) that was organized by united nation world

bank and they indicated that environmental damage had occurred in highly destroy lives and

wellbeing (Probawali, 2013).

According to the report by the World Economic Development (WED) perspective the Sustaina-

bility means meeting the present needs without sacrificing the resource of future generations to

meet their own needs (Brundtlant Commission, 1987).

The concept of the sustainability was based on two principles those are unlimited human need

and limited resources.it means in order to achieve the balance between the two condition human

needs should get priority and limited resource must be compensated by discovering technology

and social activity to meets the needs of present with regarding future needs (Brundtlant, 1987).

The definition of Brundtlant cannot allow broadness to the concept in concurrent world due to at

that time the concept was used for political strategy purpose that demonstrate agreement on

Vague concept is better than disagreement on very commonly explained one (Daly,2007).
 13

In Actual sense, The Brundtland, was not define the sustainability. It defines the sustainable de-

velopment.it is one of miss perception about the sustainability that many researcher redefined

sustainability as sustainable development. But sustainable development is a solution to sustaina-

bility problem(Maurice,200)

According to different scholar sustainability is expressed in different ways. As per, Forestry

commission of the Britain refers sustainability as the term with four targets. First is the concern

for social progress, the second is protecting environment, the third is fair use and distribution of

natural resource (Manan and Halem, 2008).

Researchers defined Enterprises with different perspective such as capital size number of em-

ployees, types of sectors rate of returns generated by industry, structure of the organization, work

force experiences (Lucky and Olusegun,2012). therefore, the sustainability concept is basically

related with business concept.

According to Weber and Stiz, (2006) the Sustainable industry is that achieves returns for its indi-

vidual owners along with securing and improving all lives interdependent to each other. Thus,

the business sustainability considering the balancing the needs of the owners with profit of the

business in accordance with environmental protection. More over the interpretation of Business

sustainability add additional concept of Environment, Customers and profit as the bottom line of

business operation at different level and size.

Despite the enormous contribution and recognition of SMEs in fostering competitive economy in

different business sectors and creating great opportunity of employment and innovation in gen-

eral, SMEs generally facing many problems around the globe and specifically in developing

countries (Benzazuaa et al.,2015).

 14

According to study in African countries like Algeria the challenges are categorized as internal

and external challenge. The result of the study shows that unequal distribution of resource among

informal sectors, complexity of procedure and administration cost, very tithed laws, policies and

regulation, unfair tax system, lack of access to industrial state, a lack of external financing, and

human resources capacities are external factors affecting SMEs in Algeria. On the other hand,

entrepreneurial characteristics, low managerial capacities, lack of marketing skills, and low tech-

nological capacities are the internal factors that affect the Sustainability of SMEs in Algeria

(Gumel, 2017).

The review of Financial times reviewed Business Sustainability as resiliency over time that relat-

ed to healthy economic social and environmental system. The types and nature of business that

build and play conducive healthy environment including communities there by develop The Sus-

tainability through engaging in life cycle analysis.

The Small and medium enterprises agency of Nigeria (SMEDAN) Success and failed business

mean by sustaining operation for equal to or more than five years and enterprises that are on

court procedural court or losses their creditors respectively (Lussier et al.,2015)

In Ethiopian context there is common understanding for success or failure of SMEs. Ethiopian

commercial registration and business licensing proclamation numbers 686/2010 and validity and

renew period license Art.36 of sub art 2 refers that expired license if not renewed within four

months of expired budget year so that business license should not put in use.Art.36 of sub art 5 if

the business license not renewed within provided period shall be cancelled after the time ex-

pired.to sum up those enterprises that cannot renew their trade license for estimated period of

time of twenty four months with penalty considered as failed Enterprises.

 15

2.5 Review of Empirical Study about Sustainability

According to Sustainability scholars recently mentioned the pressure to adopt the sustainability

has been identified by many studies about turnover of employee because of lack loyalty of firm

and conducive work place (Wilkson et al.,2001), Teamwork and Reward System (Dely and

Huang 2001), environmental change for higher managerial system (Dunphy et al.,2007) and

HRM and structure of the organization as internal factors affecting the sustainability of SMEs.

The opposite success side revealed that due to that reactive firefighting mentally limited re-

sources informality of the strategy, lack of flexibility in organizational structure, and lack strate-

gic planning at lower level of management played the role for the reason of failure (Gnizy, et

al.,2014)

According to Hall, (2015) found the two basic causes of small business failure becomes to be a

lack of proper administrative skill and lack of enough working capital (both at start-up and ma-

tured Enterprises).

Bekele and Worku (2018) undertake time series investigation to identify the effects of factors

that affect the overtime resiliency of SMEs and viability of small and medium enterprises by ap-

plying a probability sampling method stratified sampling 500 samples SMEs from five town of

Ethiopia.

Generally, challenges of the SMEs sectors are often confronted with problems that are no com-

mon to the larger industry and international companies. Several SME owners and manager have

the lack of managerial training and experience. They just lead the business with try and error

method of management style (Hill, 2016).

 16

2.6 Hypothesis of the Study

In order to examine the effect of this the following alternative hypothesis is developed: -

Hypothesis 1; there is significant relation between managerial related factors and the sustain-

ability of SMEs.

Marketing is one of the indispensable functional areas and it is a concept of connecting the prod-

uct and of a business to its customers leading to get the most competitive advantage Kotler and

Armstrong (2006). Sustainability of SMEs may have affected by poor customer handling and

lack of available information about the market. To examine this and other marketing issues the

following hypothesis is developed: -

Hypothesis 2; positive significant relation between marketing related factor and the sustaina-

bility of SMEs.

Financially related challenges have been identified as a basic problem of SMEs.the world bank

find s that small firms encounter the great challenges in findind formal financial system when

compared to large enterprises. Almost they have the chance to be rejected for loan and less

chance of getting external financial support (world bank 2015)

According to Nega and Husen, (2016) the problems of SMEs in Ethiopia identified as the enter-

prises mostly challenged by lack of access to land, tax rate and administration, labor and access

to finance issues.
 17

More over SMEs mostly constrained by higher interest rates, credit rationing due to shortage of

collateral. In order to investigate the effect of these variables on the sustainability of SMEs the

alternative hypothesis was developed.

Hypothesis3; there is positive significant relation between financial related factor and the sus-

tainability of SMEs.

Support issues by Governments considered to be a major challenges of SMEs because of the

problems comes from tight regulation of government (Harper,2004). therefore, the administra-

tion of government should investigate its policies and programs that hindering SMEs business.

Other similar observation that conducted by government have been identified as regulation about

wages and taxations licensing and including other are considered to be the reason to develop in-

formal business sectors (Mann et al.,2004).

To identify the effect of government related support on the sustainability of SMEs the following

alternative hypothesis is developed;

Hypothesis 4; significant positive relation between support provided by government and the

sustainability of SMEs.
 18

2.7 Conceptual Research Framework

The framework implies the relation between the variables. The business sustainability is affected

by both internal and external factors.so the enterprises should understand what factors hindering

the business to achieve expected performance. The internal factors include managerial, support

provided by government are the influencing factors that determine the success and failures. The

external factors are financial and marketing related factors (Admasu 2012).

Age/Experience

Types of sec-
tors

Schooling

Management
SMEs Sustain-
Government
ability

Marketing

Financial

Figure 1.1 Research Framework

Source, Admasu et al., 2012

 19

CHAPTER THREE
METHODOLOGY

3.1 Introductory
This chapters includes the overall research methodology applied in the pepper.it also includes

research design, data collection, method, data analysis method, presentation of result.

3.2 Study Area

Harar city an ancient city of Ethiopia geographically located on 231 miles away to the east from

the Addis Abeba.it is total land covers 48 hectares according to 2012 Wikipedia report. The total

population of the region is 151977.it is the administration region in Ethiopia where all of its pop-

ulation is urban inhabitants (Harari BoFED,2006)

3.3. Research Methods

The analytical research method was used to assess the factors affecting the sustainability of small
and medium scale enterprises the case of Harar town.
This pepper used quantitative research method especially descriptive sample for the proper cross
section of the study.
In addition to that the mixed types of questioner used to collected data. The sample unit in the
study were the owners or managers of the SMEs enterprises. The pepper also used both primary
and secondary data. Quantitative data was applied due to include more wide scope of infor-
mation across large numbers of cases.
 20

3.4 Sampling method

3.4.1 target population

In this pepper SMEs in Harar town was selected as the target population for the study. According
2019 data of Harari trade and industry office has shown that 949 total numbers of SMEs had le-
gally registered and actively operating. More over SME categorized in to different sector such as
Construction, manufacturing, service urban agriculture and trade.
The town was selected based up on SMEs concentration and convenience during data collection.

3.4.2 Sampling Technique

First of two select sample from the target population of SMEs, the pupation was randomly strati-
fied to homogenies nature to keep variation among the samples. SMEs was categorized into dif-
ferent sectors and levels particularly based up on income levels, budget and nature of sectors un-
der supervision. The sectors were classified according to the different trade areas such as con-
struction, manufacturing, service and trade.
Generally, in order to identify the representative of population the study used simple stratified
random sampling method.

3.4.3 Sampling Size

In this study the representative samples were the owners or the managers of SMEs that respond-

ing to each prepared the questionnaires. Samples was selected as representative of the total popu-

lation was distributed randomly to total of SMEs stratified according to their homogeneity the

sectors are categorizing in different sectors.

Accordingly, from formally registered SMEs total population of 949 enterprises the its size was

estimated by using the following Sample size determination formula provided by Yamane (1967)

by using 95% confidence level with the 5% precision.

The following equations applied

 21

n= N _

1+N*(e 2)

n=949/1+949(0.05)2 =281

table 3.1 Sample Distribution

Major Activi- Targeted Popula-

ties tion Sampling Percentage Sample Size
Construction 317 33.41% 106

Manufacturing 183 19.28% 35

Service 213 22.44% 48

Trade 236 24.87% 59

TOTAL 949 100% 281

Source: Harari Trade and Industry Bureau (2019)

3.5 Data Collecting Method

According to cooper (2014) method of data collection is gathering data and facilitate it for analy-
sis to make inferences from collected data
The study used both source of data collection such as primary and secondary sources. The prima-
ry data was collected and obtained through preparing and distributing structured questionnaires.
The secondary data also collected from different books, literature, office manuals and others.
 22

3.6 Data Analysis Method

The questionnaire used during the study first edited for clarification in case of any inconsisten-

cies. The response was then coded, and scores from the questionnaire summarized.

To analysis data the study used both descriptive and inferential method of data analysis. frequen-

cy distribution, standard deviation, percentage were used as descriptive analysis while corn Bach

alpha test used as inferential statistic for analysis of data. The study also used SPSS V20 as tools

to analysis data.

3.7 Specification of The Variables and Analysis Unit

According to Dolma (2010) described a unit of analysis is the entity that is going to be analyzed

in formal research so determining the unit analysis is central part in doing any research.

Here in this study the owner of SMEs used as a unit of analysis in the study. They are those peo-

ple responsible for all management function of the SMEs.

3.7.1 Measure of dependent variable (SMEs Sustainability)

The study used age of business as dependent variable and proxy measure of the sustainability of

the SMEs. the enterprises year of operation is measured from time between floating business

idea and actually running the business.

There is a positive relation between the enterprises year of operation and the sustainability. Sturt

up enterprises highly suffer from liabilities of infantine including both internal and external pro-

cess like trust and loyalty supplies and customer relation (Stinchcombe, 2015)
 23

3.8 Validity and Reliability

3.8.1 Validity

According to Creswell, (2009) Validity is the degree to which measure the accuracy and mean-

ing fullness of the research result. It is the degree to which results obtained from the data analy-

sis. To identify the validity of data collected through questionaries’ the researcher used the ap-

propriateness of the way of data collection and the respondent’s willingness to provide the re-

quested information.

In this study questionnaires were tested based on the requirement of instruments to objective,
relevant, reliable and suitable to the problem under investigation.in addition to that quite detec-
tion made by advisors to verify the validity of the instruments. Finally, improved version of the
questionnaires Were printed and distributed to collect data about factors affecting the sustainabil-
ity of SMEs.

3.8.2 Reliability

Reliability means the instruments which measures the consistency of instruments.it also consid-

ers the reliability and degree of consistency that demonstrate procedure.

In this pepper to test the reliability of the instruments the researcher used Likert scale measure

through Cronbach alpha test measure. When the coefficient of Cronbach alpha is greater than or

equal to 0.7 the instrument was considered to be adequate.

 24

CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION

4.1 Introduction

The pepper was concentrated on the factors that affect SMEs sustainability in Harari town and

guided by research questions to establish some major factors that affecting the SMEs sustainabil-

ity. The finding results will be imperative because, we able to come up with recommendations on

the key factors to be considered for an SME sustainability. This chapter provides the results and

findings of the primary data which was obtained through questionnaire as sated out in the re-

search methodology. On top of that analysis of the obtained data with the aim to respond to stat-

ed problem of the study.

The study targeted 281 small and medium business enterprises and 259 are responded properly.

The classification of SMEs was based on the working capitals and Initial number of employees.

Thus, among 259 completed questionnaires 218 or 84 percent of the target population were the

small enterprises. the rest 41 in numbers or 16 percent of the target population were medium en-

terprises.

This chapter includes descriptive way of analysis such as mean, median and standard deviation.

The regression analysis was also used to test the relation between dependent and independent

variables.
 25

4.2 Demography of the Respondents

Table 4.1 Gender
Frequency Percentage Cumulative Per-
cent

Female 88 34.0 34.0

Valid Male 171 66.0 100.0

Total 259 100.0

Source, SPSS output (2021)

As its shown in table 4.1 majority of the target 171 or 66 percent of the samples were Male rep-

resentatives while 88 or 34 percent of the target were female.

This may have revealed that The Male have significant proportion of the small and medium en-

terprises.

Table 4.2, Age of Enterpreneuar

Age of Entrepreneur
Frequency Percent Valid Percent Cumulative Per-
cent

between 18 to 25 39 15.1 15.1 15.1

between 26 to 30 89 34.4 34.4 49.4

Valid between 31 to 40 102 39.4 39.4 88.8

between 51 to 60 29 11.2 11.2 100.0

Total 259 100.0 100.0

Source SPSS output (2021)
 26

Table 4.2 shows that the researcher divided the age of respondent in to four categories ranging

from 18 up to 60 years. Accordingly, 39 or 15.1 percent of respondents represent between 18 up

to 25 years old, whereas 89 or 34.4 percent of total respondents represent 26 up 30 age. The third

categories of age of respondent found between 31 up 40 represent 102 or 39.4 percent. The last

category of the respondents found between 51 up 60 shares 29 or 11.2 percent of respondents.

Therefore, it confirms that all respondents were young and the researcher assumed that they

could understand the purpose of the study.

Table 4.3 Education level of the respondents/schooling

SCHOOLING

Frequency Percent Valid Percent Cumulative Per-

cent

1 -8 GRADE 15 5.8 5.8 5.8

9-12 GRADE 88 34.0 34.0 39.8

Valid
First degree and Above 156 60.2 60.2 100.0

Total 259 100.0 100.0

As Table 4.3 indicates educational qualification, 15(5.8%) of the Respondents’ education is at

primary school, 88(34%) respondents had completed secondary and preparatory school,

156(60.2%) had graduated in first degree and above.

Therefore, data collection procedures used in this study were based on the response that the re-

spondents were literate and exhibited basic know how of the purpose and the importance of the

study.
 27

Table 4.4 Year of experience of participants

Year of enterprise

Frequency Percent Valid Percent Cumulative

Percent

startup(1 up 3 years) 100 38.6 38.6 38.6

ramp up(4-7 years) 111 42.9 42.9 81.5

Valid
Mature(Above 8 years) 48 18.5 18.5 100.0

Total 259 100.0 100.0

Source SPSS output (2021)

Table 4.4 revealed that most of the respondents of the target population 111 or 42.9 percent have

4 up to 7 years of expriance,100 or 38.6 percent of the respondents have 1 up 3 years of experi-

ence, 48 or 18.5 percent have more than eight year of experiences in the small and medium scale

enterprises.

The individuals can learn from their experience that can help them to predict and plan according

to the opportunities, can learn more from colleagues in creating relation with customers consum-

ing their product.so most respondents of experienced SMEs owners have found to be between 4

up 7 year of experiences that shows the relation between Owners experiences and The sustaina-

bility of SMEs.
 28

Table 4.5 Activities of the Enterprises

Activities
Frequency Percent Valid Percent Cumulative Per-
cent

service sector 27 10.4 10.4 10.4

Manufacturing 112 43.2 43.2 53.7

Valid Trade 58 22.4 22.4 76.1

Construction 62 23.9 23.9 100.0

Total 259 100.0 100.0

Source SPSS output (2021)

The study revealed that business activities of the respondents in the city was established that

most of the respondents 112 or 43.2 percent were engaged in manufacturing sector followed by

62 or 23.9 percent of the respondents who engaged in construction and then 58 or 22.4 percent of

the respondents were engaged in trade sector and the rest of 27 percent the respondents are en-

gaged in service sector.

4.3 Reliability Test

Table 4.6 Reliability Test Statistics

S/N dimension Items Alpha Value

1 Marketing 9 .764

2 Financial 3 .856

3 Management 4 .836

4 Government support 3 .995

5 Sustainability 4 .979

Source: Researcher’s own Survey (2021)

 29

In this test, internal consistence between items in scale was assessed using Cronbach’s α; it is the

most commonly used test to determine the internal consistency of an instrument. Based on Rob-

erta and Alison the Cronbach’s α result is a number between 0 and 1. An acceptable reliability

score is one that is 0.7 and higher. The validity and reliability of the instruments found in this

research can confirm that these survey questionnaires can be used in their intact form in the

town. in this study, each statement rated on a 5 point Likert response scale which includes

strongly agree, agree, neutral, disagree and strongly disagree.

The Questionnaires were the tools selected and used throughout the analysis of the data using

SPSS version 20. To collect the data through questionnaire, 281 questionnaires were distributed

to SMEs owners/managers in Harari town and 259 questionnaires were returned back with com-

pletely filled and significant response. The returned questionnaires have excellent response rates

and hoped sufficient to analyze the data with it. The data was analyzed using descriptive statis-

tics with tables using frequency, percentage, mean and standard deviation and Regression analy-

sis.
 30

4.4 Results of Descriptive Analysis

Descriptive statistics were used to describe and present the basic feature/nature of data collected
to be analyzed.

Table 4.7 Descriptive Statistics of Marketing Factors

Items Responses

Stro Agree Ne Disagree Strongly Total

ngly ut Disagree
agre ral
e
F % F % F %F % F % F %

There are market infor-

mation and demand
forecasting practices. 55 21.2 57 22 104 40.2 43 16.6 259 100
Searching new market
for my products is easy. 55 21.2 104 40.2 57 22 43 16.6 259 100
Lack of setting clear and
competitive price for
products. 79 30.5 59 22.8 70 27 51 19.7 259 100

There is good creating

awareness for customers
about the product. 50 19.3 109 42.1 57 22 42 17 259 100
Lack of promotion to
attract potential custom-
ers. 55 21.2 104 40.2 57 22 43 18 259 100

Lack of continuous im-

provement of product 4 1.5 172 66.4 24 9.3 59 22.8 259 100

There is good relation-

ship with an organization
that conduct marketing
research 43 16.6 57 22 104 40.2 55 21.2 259 100
 31

The society’s attitude

towards my Products
services is positive. 65 25.1 191 73.7 3 1.2 259 100

Market potential of my
products is promising. 55 22.2 57 22 104 40.2 55 21.2 259 100

Responses to items shows the respondents agreement concerning marketing factors that affect

Sustainability of SMEs in case of Harar town.

Market information were positively stated items was negatively responded by more than 56.2%

of the total respondent and 43.2% was positively responded. Majority, of the respondents had

indicated their agreement to negatively stated items related with marketing.

Generally, as per the respondent’s response indicated in the above there is a potential gap be-

tween Sustainability and marketing factor of SMEs at Harar town.

As mentioned above constraining factors of the sustainability of the firm were taken using the

group mean value as stepping stone and marketing constraint which its mean value is lower than

the group mean value was categorized as low effect on the sustainability, and which its mean

value is equal or greater but not far from group mean are categorized moderate. The marketing

constraints having mean value of greater than group mean were taken as the major marketing

constraints affecting the SME. Generally, variables with low mean value indicates low effect in

constraining the firm’s sustainability, moderate value was medium effects and variables with

high value have high effect in constraining the firms’ sustainability.

The findings suggest that Marketing factor is a major challenge on the sustainability of small and

medium Enterprises in the study area.

 32

Table 4.8 Descriptive Statistics of Financial Factors

Items Responses
Strongly Agree Neu- Disa- Strongly Total
agree tral gree disagree

F % F % F % F % F % F %
6 16 90 25 100
3 9
The Credit institutions
are sufficient to access
loans easily
9 17 75 25 100
The interest rate 5 9
charged by banks and
other lending institu-
tions are reasonable
7 12 125 25 100
Lack of cash manage- 7 9
ment skills.
5 23 23 25 100
The Loan application 1 9
procedures of banks
and other lending insti-
tutions are not compli-
cated.
1 23 22 25 100
Lack of sufficient 6 9
working capital.
2 11 246 25 100
Collateral requirement 9
from banks and other
lending institutions are
reasonable for my
business
 33

According to table 4.8 descriptive results, Responses to items shows the respondents agreement

concerning financial items that affect Sustainability of SMEs in case of Harar town.

Positively stated items was negatively responded by most of the total respondent and that was

negatively stated questions are positively responded. Majority of the respondents had indicated

their responded as disagreed and strongly disagreed the items related with financial factors af-

fecting sustainability of SMEs in Harar town.

Generally, as per the respondent’s response indicated in the above there is a potential gap be-

tween Sustainability and Financial factor of SMEs at Harar town.

As mentioned above constraining factors of the sustainability of the firm were taken using the

group mean value financial constraint which its mean value is lower than the group mean value

was categorized as low effect on the growth, and which its mean value is equal or greater but

not far from group mean are categorized moderate. The financial constraints having mean value

of greater than group mean were taken as the major financial constraints affecting the SMEs.

Generally, variables with low mean value indicates low effect in constraining the firm’s sustain-

ability, moderate value was medium with effects and variables with high value have high effect

in constraining the firms’ sustainability

 34

Table 4.9 Descriptive Statistics of Management Factors

Items Responses
Strongly Agree Neutral Disagree Strong- Total
agree ly disa-
gree
F % F % F % F % F % F %
There are clear division 8 3 50 198 259 100
of duties and responsi-
bility among employees
in the firm.
Lack of well trained 84 65 50 60 259 100
and experienced em-
ployees.
We are satisfied with 3 8 55 193 259 100
the Growth in sales of
products and/or ser-
vices.
Lack of management 8 10 209 32 259 100
ability in creating ex-
ternal relationship
51 59 70 79 259 100
The communication in
the firm is effective.
Source: Researcher’s own survey (2021)
 35

There are clear division of duties and responsibility among employees in the firm. Positively

stated items was negatively responded by most of the total respondent and that was negatively

stated questions are positively responded. Majority of the respondents had indicated their re-

sponse as disagreed and strongly disagreed for the items related with management related factors

affecting sustainability of SMEs in Harar town.

Generally, as per the respondent’s response indicated in the above there is a potential gap be-

tween Sustainability and Management factor of SMEs at Harar town.

 36

Table 4.10 Government Support Factors Descriptive Statistics

Items

Responses

SA A N D SD Total

F % F % F % F % F % F %

There are well of business 193 8 50 8 259 100

development services

(supporting institutions).

There is bureaucracy in 58 201 259 100

company registration and

licensing

There is adequate ar- 195 3 51 9 259 100

rangement of required in-

frastructures.

Lack of providing right 8 10 209 32 259 100

business location

Adequate government's 10 3 48 193 259 100

effort in changing public

attitude.

Lack of providing training 60 61 58 80 259 100

and skill up grading for

SME manager or owner.

Source: Researcher’s own survey (2021)

 37

According to table 4.10 respondent’s agreement there is utilized well business development due

public attitude toward enterprises and the respondents are highly agreed on that there is bureau-

cracy in company registration and licensing.

Even though the mean values of government’s procurement and training and skill upgrading

have high mean value compared with other variables used in this study, they are relatively lower

than the two variables indicated in this government support related constraints.

Generally, as per the respondent’s response indicated in the above there is a potential gap be-

tween Sustainability and Management factor of SMEs at Harar town

Table 4.11 Perceived Sustainability measures of SMEs

Items Responses
Strongly Agree Neutral Disagree Strongly Total
agree disagree

F % F % F % F % F % F %

The growth of our 60 61 59 79 259 100

business profit is satis-
factory
Our capital is growing 60 50 65 84 259 100
well as we expect.
Enterprises are main- 52 69 58 80 259 100
taining production
We are satisfied in our 58 63 59 79 259 100
operational efficiency.

Source: Researcher’s own survey (2021)

 38

According to table 4.11 shows, the respondents’ response summarized in frequency value of sus-

tainability the respondents are strongly disagreed and disagreed that most of positively stated

items related with perceived measures of sustainability of SMEs.

Generally, as per the respondent’s agreement indicates in the above there is a potential gap of

Sustainability issues in the case of SMEs at Harar town.

 39

4.6 Results Inferential Analysis

Table 4.13 The relationship between independent variables:

4.6.1 Coefficient Correlations between independent variables

Model GOV AGE CO AGE FI- Trad Ram- MAR AGE MA Start Man-
ERN 2 NIST NAN e pup KETI 3C NAG up ufuc
MEN R CE NG EME
T NT
GOV-
1.000 .043 -.056 .135 .003 -.129 .059 -.263 -.028 -.601 .150 -.115
ERNMENT
1.00
AGE2 .043 -.159 .667 -.057 -.064 .059 -.217 .596 .102 -.025 -.222
0
1.00
CONISTR -.056 -.159 -.169 .196 .552 -.040 -.326 -.027 .027 -.003 .596
0
1.00
AGE .135 .667 -.169 .056 -.110 .072 -.054 .594 -.015 .106 -.251
0
1.00
FINANCE .003 -.057 .196 .056 .004 .242 -.363 .057 -.234 .276 .095
0
1.00
Corre- Trade -.129 -.064 .552 -.110 .004
0
.335 -.061 -.052 .099 .182 .523
1
lations
Rampup .059 .059 -.040 .072 .242 .335 1.000 -.283 .119 -.095 .552 .079
MARKET-
-.263 -.217 -.326 -.054 -.363 -.061 -.283 1.000 .078 .087 -.081 -.122
ING

AGE3C -.028 .596 -.027 .594 .057 -.052 .119 .078 1.000 -.017 .114 -.003

MAN-
-.601 .102 .027 -.015 -.234 .099 -.095 .087 -.017 1.000 .013 .098
AGEMENT

Startup .150 -.025 -.003 .106 .276 .182 .552 -.081 .114 .013 1.000 -.376

Manufuc -.115 -.222 .596 -.251 .095 .523 .079 -.122 -.003 .098 -.376 1.000

a. dependent variable: SUSTANBLITY

Source: Researcher own survey (2021)
 40

4.6.2 Multi Collinearity Test

For this study the researcher was checked this assumption with tolerance and VIF statistics.
Andy (2006) suggests that a tolerance value less than 0.1 almost certainly indicates a serious col-
linearity problem. Liu (2010) also suggests that a VIF value greater than 10 because for concern
and in these research data the values are below10 for all predictors.
Table 4.14 Multi Collinearity Test

Coefficientsa

Model Collinearity Statistics

Tolerance VIF

AGE .435 2.299

AGE2 .291 3.436

AGE3C .244 2.906

Manufuc .166 6.040

Trade .345 2.903

CONISTR .295 3.391

1
Rampup .296 3.378

Startup .272 5.802

MARKETING .396 2.524

FINANCE .491 2.037

MANAGEMENT .322 3.102

GOVERNMENT .327 3.059

a. Dependent Variable: SUSTANBLITY
Source: - Own survey result (2021)
For the current model the VIF values are all well below 10 and the tolerance statistics all well
above 0.2; therefore, we can safely conclude that there is no severe collinearity between varia-
bles.
 41

4.6.3 Normality Test

Table 4.15 Normality Test

Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig.

.259 88 .000 .741 88 .000

SUSTAINABIL-
ITY
.232 171 .000 .834 171 .000

The table 4.15 shows that the data were not perfectly normal. Thus this data needs non paramet-
ric test statistics and other statistical model rather than multiple linear regression model due to
that the statistical Significance value of the Kolmogrov-SmirnoTest is less than 0.05, therefore,
there is failed to reject the null hypothesis.

4.6.4 Auto correlation test

Model Summaryb
Model Durbin-Watson
1 2.042
a. Predictors: (Constant), GOVERNMENT, AGE2, CONISTR, AGE, FI-
NANCE, Trade, Rampup, MARKETING, AGE3C, MANAGEMENT, Startup,
Manufuc
b. Dependent Variable: SUSTAINABILITY

Model Summary

Model R R Square Adjusted R Square Std. Error of the Es-

timate

1 .707a .500 .476 1.08990

Predictors: (Constant), GOVERNMENT, AGE2, CONISTR, AGE, FI-

NANCE, Trade, Rampup, MARKETING, AGE3C, MANAGEMENT,
Startup, Manufuc
 42

Model Sum of Df Mean Square F Sig.

Squares

Regression 292.213 12 24.351 20.500 .000b

1 Residual 292.219 246 1.188

Total 584.431 258

a. Dependent Variable: SUSTANBLITY

b. Predictors: (Constant), GOVERNMENT, AGE2, CONISTR, AGE, FINANCE,
Trade, Rampup, MARKETING, AGE3C, MANAGEMENT, Startup, Manufuc

The result shows that the significance value, is P=0.005 which is less than 0.05. the model im-

plies it is sufficiently explanatory power to be predicted by independent variables. Therefore, we

can conclude by saying that there is evidence to reject the null hypothesis that the model has no

explanatory power. This means that the independent variables identified can affect the Sustaina-

bility.

As indicated in table 4.16 there is statistically significant effect between independent variable

and dependent variable (Sustainability) where, R2 is at 50% which states that there is significant

variation of sustainability explained by independent variables than intercept only model.

4.7 Multinomial logistic regression

In this study multinomial logistic regression was used to describe the probability of SMEs sus-

tainability as it explains the level of experiences, age, Education, gender, types of business ac-

tivities, finance, marketing, government and management related factors.

 43

Its probability was expressed as the odds which are transformed in to log odds or logit. This

transformation of in to log of the odds help to limit the weakness associated with the ordinary

least square regression model while applied to data its dependent variable is binary or categorical

variables (Madan and Goel, 2018).

Table 4.17 Description of Variables Used in the Multinomial Logistic Regression Analysis

Case Processing Summary

N Marginal Per-
centage
sturt up(1-3 years) 100 38.6%
year of Enterprise ramp up(4-7 years) 111 42.9%
Mature(Above 8 years) 48 18.5%
Female 88 34.0%
GENDER
Male 171 66.0%
1 -8 GRADE 70 27.0%
9-12 GRADE 75 29.0%
SCHOOLING
First deegre and Above 83 32.0%
31 12.0%
less than 20 years 47 18.1%
between 21 up to 30 69 26.6%
Expriance of Enterprener
between 31 to 40 97 37.5%
beween 41 up to 50 46 17.8%
service sector 27 10.4%
Manufucturing 112 43.2%
Types of Activities
Trade 58 22.4%
Conistraction 62 23.9%
Valid 259 100.0%
Missing 0
Total 259
Subpopulation 228a
 44

a. The dependent variable has only one value observed in 226 (99.1%) subpopu-
lations.

Model Fitting Information

Model Model Fitting Likelihood Ratio Tests
Criteria
-2 Log Likeli- Chi-Square Df Sig.
hood
Intercept On-
536.668
ly
Final 189.493 347.175 28 .000

The model fitness was assed using chi-square statistics. The chi-square value was 347.175 and
the p-value was less than 0.05. this proves that there is significant relationship between sustaina-
bility of SMEs and predictors in the final model.
Goodness-of-Fit

Chi-Square df Sig.

Pearson 358.406 426 .992

Deviance 186.485 426 1.000

The deviance (186.485) and Pearson (358.406) statistic test proves that the model is fit. Since the
test are not statistically significant, that is the p-value is greater than 0.05.

Pseudo R-Square

Cox and Snell .738

Nagelkerke .843

McFadden .643
 45

Pseudo R-Squares are cox and Snell, Negelkerke and McFadden. the model accounts for Pseudo
R-Squares that predicts 84.3 per cent variation (R2 N = 0.843) in defining the sustainability of
SMEs enterprises. This indicates that predictors of the model have been found as important fac-
tors to predict the sustainability of SMEs.

Likelihood Ratio Tests

Effect Model Fitting Cri- Likelihood Ratio Tests
teria
-2 Log Likelihood Chi-Square df Sig.
of Reduced Model
Intercept 189.493a .000 0 .
FINANCE 197.073 7.580 2 .023
MARKETING 205.904 16.411 2 .000
MANAGEMENT 194.300 4.806 2 .010
GOVERNMENT 191.332 1.839 2 .399
Gender 196.826 7.332 2 .026
Education 191.553 2.060 6 .914
Age 192.376 2.883 6 .823
EnterprisesActivities 290.939 101.446 6 .000

The chi-square statistic is the difference in -2 log-likelihoods between the final model and
a reduced model. The reduced model is formed by omitting an effect from the final model.
The null hypothesis is that all parameters of that effect are 0.
a. This reduced model is equivalent to the final model because omitting the effect does
not increase the degrees of freedom.
According to the table of likelihood ratio test, it proves that the predictors or independent varia-
bles such as finance, marketing, management, gender, and types of business activities was signif-
icant, which proves that these predictors contribute significantly to the sustainability of SMEs.
 46

Table 4.18a Parameter Estimate of Logistic Regression Model (First Part of Multinomial Table)

Parameter Estimates
Year of Enterprise B Std. Error Wald df Sig. Exp(B)

Intercept -11.782 5.464 4.650 1 .031

FINANCE 1.310 2.234 .344 1 .008 3.707
MARKETING .804 .591 1.852 1 .004 2.234
MANAGEMENT 1.680 .973 2.979 1 .034 5.366
GOVERNMENT .878 .870 1.018 1 .313 2.405
[Gender=1] -1.673 .645 6.721 1 .010 .188
[Gender=2] 0b . . 0 . .
[Education=1] -.304 1.052 .083 1 .773 .738
[Education=2] .330 1.059 .097 1 .755 1.391
[Education=3] -.153 1.016 .023 1 .880 .858
[Education=4] 0b . . 0 . .
ramp up(4-7
years) [Age=1] -.510 1.060 .231 1 .631 .601
[Age=2] -.908 .971 .875 1 .350 .403
[Age=3] -.048 .872 .003 1 .957 .954
[Age=4] 0b . . 0 . .
[EnterprisesActivi-
-.460 1.529 .090 1 .764 .631
ties=1]
[EnterprisesActivi-
-4.758 1.140 17.410 1 .000 .009
ties=2]
[EnterprisesActivi-
-.719 1.452 .245 1 .621 .487
ties=3]
[EnterprisesActivi-
0b . . 0 . .
ties=4]
The reference category is: sturt up(1-3 years).a
This parameter is set to zero because it is redundant.b
 47

Table 4.18b Parameter Estimate of Logistic Regression Model (Second Part of Multinomial)

Parameter Estimates
Year of Enterprise B Std. Error Wald df Sig. Exp(B)

Intercept -16.065 5.455 8.674 1 .003

635.41
FINANCE 6.454 2.846 5.144 1 .023
2
MARKETING -1.027 .723 2.016 1 .006 .358
MANAGEMENT .076 .915 .007 1 .034 1.079
GOVERNMENT 1.204 .978 1.515 1 .218 3.334
[Gender=1] -1.343 .743 3.269 1 .071 .261
[Gender=2] 0b . . 0 . .
[Education=1] .207 1.214 .029 1 .864 1.230
[Education=2] 1.272 1.235 1.061 1 .303 3.568
[Education=3] .464 1.198 .150 1 .699 1.590
Mature (Above
[Education=4] 0b . . 0 . .
8 years)
[Age=1] -1.181 1.187 .989 1 .320 .307
[Age=2] -1.289 1.085 1.411 1 .235 .276
[Age=3] -.787 .932 .714 1 .398 .455
[Age=4] 0b . . 0 . .
[EnterprisesActivi-
.449 1.908 .055 1 .814 1.567
ties=1]
[EnterprisesActivi-
-2.357 1.629 2.095 1 .148 .095
ties=2]
[EnterprisesActivi-
2.696 1.768 2.327 1 .127 14.826
ties=3]
[EnterprisesActivi-
0b . . 0 . .
ties=4]

The reference category is: sturt up(1-3 years).a

This parameter is set to zero because it is redundant.b
 48

Multinomial Logit Model

Logit(SUSTAINABLITY) = β0+ β1Startup + β2Rampup β3AGE1 + β4AGE2 + β5AGE3, +

β6CONISTR + β7Trade+ β8Manufuc + β9MARKETING + β10MANAGEMENT + β11FINANCE +

β11GOVERNMENT + ∑ℯi

Table 4.18 highlights the parameter estimates of multinomial regression model regarding the sus-

tainability of SMEs. It also considered the effects of eight predictors by categorizing firms in to

three categories; mature (above 8 years), ramp up (4-7 years of age) and start up (up to 3 years of

age). The start-up has been considered as the reference category in the estimated model. The

eight predictors included in the multinomial logistic regression model are the experience of en-

trepreneur, gender, types of business activities, schooling, finance, marketing, management and

government related factors of the small and medium scale enterprises.

The table further show the parameter estimates of multinomial logistic regressions model in two

parts. The 1st part displays the effect of eight predictors on mature enterprises (above 8 years) in

relation to the reference category, that is, microenterprises up to 3 years, while the 2nd part high-

lights the effect of eight predictors on the ramp-up enterprises (4-7 years) in reference to start up

(up to 3 years of existence).

Age/Experience of Entrepreneur: - according to the result of this study was shows that the is

no significant relation between the age of entrepreneur and Sustainability of SMEs. The young

managers tend to be more innovative in adopting the new techniques and practices in business,

intending to enhance sustainability (Singh, 2007). But in this study there is innovative experience

in the SMEs industry of target study area.

 49

Types of Business activities: - are found to be significant p-values this is good news for those

enterprises that are in manufacturing, trade and construction compared to service sectors as ref-

erence variable. Keeping other factors, constant Operating in Trade, construction and manufac-

turing sectors had positive significant relation with sustainability except manufacturing sectors

compared to reference variable (omitted variable. Indicating that Constriction sector is sustaina-

ble compared to all other sectors. Hence the decision is accepted the significance level at P<0.05.

This finding is in consistent with a study by Cabal (1995: 79) who came out with the result that

successes of the business vary among the type of sector the business operates

Marketing factors: market factors are statistically significant at 5% significant level. The influ-

ence on the sustainability of small and medium enterprises is from the independents variables of

marketing factors (0.804, P<0.05).

The multinomial regression result clearly shows that there is significant and positive relationship

with the sustainability of small and medium enterprise Thus, enterprises with access to market

have promote significantly but, enterprises with market problem or limited access to market have

less chance of promote or their potential is likely to decrease.

If one-unit increase to the opportunity of the enterprises in ramp up category occurred there is

increased logit sustainability by 0.804 unit compared to reference category which is start up cat-

egory (up to 3 years)

Finance factors: The other variable in this study which is expected to create variation on the

sustainability of enterprises is financial factors (1.31 p< 0.05), shows there is positive significant

relationship with sustainability of small and medium scale enterprises. Based on the multinomial
 50

regression result, if one-unit change occurred to financial related factors of ramp up category of

SMEs there is a logit increase by 1.31 sustainability compared to start up or Reference category.

Management factors: The regression output shows that management related factors of the ramp

up category of SMEs enterprise (1.680, p<0.05), has positive and significant relationship with

Sustainability of small and medium scale enterprises in relative to reference category that is start

up SMEs. This would imply that, management can affect sustainability of small and medium en-

terprises. The Small and medium enterprises that can avoid their management constraint have the

probability of 3.36-time sustainability in compared to start up category of enterprises.

Government support factors: Government factors is statistically insignificant at 5% significant

level. The influence on the sustainability of small and medium scale enterprises from the inde-

pendents variables which is Government factor is (0.878, P>0.05. this result is due dependency

syndrome of enterprise expecting government without affecting sustainability of SMEs.

 51

4.9 Hypothesis Testing Result

Based on the above multiple regression result, summary of hypothesis testing is drawn.

The first hypothesis result shows expected result in relation with many studies. For instance,

(dun and Bradstreet,2009) mentioned that, irrespective of the size of any business large, medium

or small, several researches and statistics appear to have ranked poor management or manage-

ment inability the main cause of business failure. Hill, 2007 also stated that Many SME owners

and managers lack managerial training and experience. this study revealed that there is signifi-

cant problem concerning management factor.

Table 4.18 Hypothesis Summary

Hypothesis Result

Ho1. There is significant relation between management factor and Sus- Accept
tainability of SMEs
H02. There is significant relationship between marketing factor and Sus- Accept
tainability of SMEs
Ho3. There is significant relationship between financial factor and Sus- Accept
tainability of SMEs
H04. There is significant relationship between government support fac- Reject
tor and Sustainability of SMEs
Ho5. There is significant relation between Age of enterprises and sus- Reject
tainability.
Ho6. There is significant relation between types of SME sectors and Accept
sustainability.
Ho7. There is significant relation between gender and sustainability Accept

Ho8. There is significant relation between education/schooling and Reject

sustainability.
 52

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary of Findings

The descriptive part of the thesis described that the growth stage of majority of the SMEs found

in the target population was the start up enterperises.in addition to that based on the inferences of

the study different factors were identified as the constraining factors of SMEs Sustainability in

the Harar Town.

The finding reveals that, the respondents’ profile indicates male’s represent 64.5% in small en-

terprises compared to females. The age of most respondents 45.95% fall within the range of 26-

30 years. The educational qualification of selected samples of SME is in First degree indicate

46.3%.

This study implies that the enterprise with limited market opportunity have less probability of

Sustainability than SMEs with limited and experienced number of Clients.

Limited knowledge related to marketing strategies, lack of adaptation to changing environment,

and the potential leadership are the factors related marketing. lack of product improvement espe-

cially SMEs in the startup category sells identical products without any additional modification

and innovative activities. therefore, this constraint made similar products without matching their

products as there is change in demand and flexibility to emerging environment.

Thus, marketing is one of the most inputs required by businesses to growth by satisfying the

needs and wants of customers otherwise hinders the sustainability of SMEs.

 53

5.2 Conclusions

This study was conducted in Harar town with the need to identify the factors affecting the sus-

tainability of SMEs.it begins to fill the gap in the existing literature by identifying factors affect-

ing the Sustainability SMEs in emerging countries. Thus the probability of SME sustainability

that are categorized in manufacturing are higher than trading and service sectors.

The result of the study challenged the common view of that formal higher education enhances

the chance of SMEs Sustainability. Paradoxically, increased formal year of schooling do not in-

crease the probability of SMEs Sustainability.

In lieu of that it requires certain specific entrepreneurial resources that are more important to sus-

tain in the business.it is likely that formal education opens up more potential career for entrepre-

neurs, engaging them to change other business.

In addition to that, the result of the study shows that the probability of SMEs sustainability has

significant effects with the age of entrepreneurs whether it is efficiently utilized or not.

In addition to that, the result of the study shows that the probability of a SMEs sustainability has

significant effects with the age of entrepreneurs whether it is efficiently utilized or not.

The finding justifies that marketing factors affecting Small and medium scale enterprises that

there is significant relation between financial related factors and the Sustainability. Limitation of

acquiring loans from financial institution were considered as major obstacles to small business

development and most SMEs are unable to secure highly needed loans from the financial institu-

tion.
 54

Collateral requirement to get loan is required highly and its beyond their capacity and business of

SMEs. on the other hand, the loans provided by the institution are small and short repayment pe-

riod. Due to this SMEs struggled to rely on use of other informal Sectors that are costly and

risky. Financial constraints limit the number of better alternatives that can be considered and ap-

ply inappropriate technology because they can only afford thereby limit The Sustainability.

The inferential result shows that there is correlation between management factors and sustaina-

bility (0.118, p>0.05), has insignificant relationship SMEs sustainability. so there is no evidence

that show Lack of multi skill training of employees, lack of well-rounded experience in basic

business activities and lack of management ability in creating external relationship are the major

factors constraining the sustainability of SMEs.

Government support factors and sustainability (0.407), P<0.05, Thus, small enterprises with lack

of Government support have significantly promoted but, small enterprises with access to Gov-

ernment support have less chance to promote.

On the other hand, various governmental bodies designed various programs for developing small

enterprises sectors. Since good infrastructure has the effect of promoting SMEs by lowering the

cost of doing business, lack of key and adequate infrastructure related to adequate supply of elec-

trical power, access to roads, water and sewerage, telecommunications can directly or indirectly

hinder the of businesses.

 55

5.3 Recommendations

On the basis of the findings and conclusions mentioned, the following recommendations were

forwarded.

 Many SMEs hope that government should seriously reduce and prevent their Sustainabil-

ity issues, so it needs to focus urgent attention to solve the harsh financial conditions af-

fecting the sustainability of the SMEs sector such as reducing interest rates, resolving

multiple tax issues and developing easy way to loan application from formal financial in-

stitutions.

 Financial factors are frequently implied as factor for most problems faced by the studied

SMEs therefore, it is necessary to solve this problem. The Access to information about

regulations should be made available to SMEs at minimum cost.

 It is also important for business owners to properly scan their business environment to

identify the opportunities and threats and develop the various techniques that will help

them to adapt to the changing environments as much as possible.

 The major marketing constraint for the SMEs sector include lack of available market in-

formation and lack of creating awareness about the product. In addition to that, culture of

participating in exhibition and bazaar must also give take off since it benefits the econo-

my as a whole and SMEs sectors in particular. There is a great lack of information on the

changing environment market information of small and medium enterprises have to be

sustainable there has to be available information as much as possible.

 To address the issue of marketing, the trade and industry office has to organizes and facil-

itates marketing promotional programs like trade fairs and bazaars will provide them op-
 56

portunity to display their respective products so as to expand their market share,

knowledge transfers as to how to utilize marketing instruments.

 SMEs in the town should not totally rely on government agencies; they should attempt to

find their own path of progress by relying on strategies which allow them to access new

markets, increase their revenue and expand their customer because it is simple to serve an

existing customer than to attract and serve a new one.

 In relation to the regression output, concerned bodies are advised to give stronger focus

on the other statistical method of analysis.

 Last but not least beyond the government support and marketing strategies SMEs should

develop harmonious relationship and clear division of duties and responsibilities between

themselves through developing formal rules and regulation.

 57

REFERENCES

Abera, A. (2012). Factors affecting performance of micro and small enterprise (masters’ dissertation).
college of business and economics, Addis Ababa University, Ethiopia.
Ademola, I. S. & Michael, A. A. (2012). Small-scale businesses as a remedy to unemployment problem
in Nigeria. International Journal of Scientific &Engineering Research, 3(11): 1-6.
Ahmed,.S (2012) Small and Medium Enterprises (SMEs) as Drivers of Productive Capacity and Job
Creation” Addis Ababa.
Alasadi, R. and Abdelrahim, A. (2016). Critical Analysis and Modelling of Small Business Performance.
Journal of Asia Entrepreneurship and Sustainability, 3(2): 1-2.
Arinaitwe, J.K. (2015). Factors Constraining the Growth and Survival of Small Scale Businesses. A
Developing Countries Analysis, Journal of American Academy of Business, 8 (2): 167-178.
Argenti J (1976). Corporate Collapse: The Causes and Symptoms. UK: McGraw-Hill Book Company
Limited.
Al-Shaikh FN 1998. Factors for small business failure in developing countries. Journal of Advances in
Competitiveness Research, 6(10): 75-87
Ayyagari, M., Beck, T. &Demirguc-Kunt, A. (2007). Small and medium enterprises across the globe.
Small Business Economics, Turkey; McGraw-Hill Book Company Limited.
Bekele, E & Worku, Z. (2008). Factors that Affect the Long-term Survival of Micro, Small, and Medium
Enterprises in Ethiopia. South African Journal of Economics, 10(2):76-81.
Bellema, I. (2009). SMEs Key Failure-Factors: A Comparison between the United Kingdom and
Nigeria. Journal of Social Science, 18(3): 199-207
Bian, H. (2013). Logistic Regression analysis using SPSS. Office for Faculty Excellence. Upper Saddle
River, NJ: Prentice Hall, Inc.
Birley, S. and Westhead, P. (1994). A taxonomy of business start-up reasons and their impact on firm
growth and size. Journal of business venturing 9(1):7-31.
Blackbur, R. A., Hart, M. and Wainwright, T. (2013). Small business performance: business, strategy
and owner-manager characteristics. Journal of Small Business and Enterprise Development.
Cameron, K. S., & Quinn, R. E. (2006). Diagnosing and Changing Organizational Culture: Based on
the Competing Values Framework, Addison Wesley.
 58

Craig, B. R., Jackson, W. E. and Thomson, J. B. (2007). Small firm finance, credit rationing, and the
impact of SBA-guaranteed lending on local economic growth. Journal of Small Business Man-
agement, 45(1): 680-740
Chen, J. (2011), Development of Small and Medium‐ sized enterprises, Journal of Small Business,
13(1): 140‐147.
Dalberg. (2011). Report on Support to SMEs in Developing Countries Through Financial Intermediar-
ies. Available at: http://www.eib.org/attachments/dalberg_sme-briefing-paper.pdf. Accessed on
21 July 201
Dailey, B. F., & Huang, S. (2001). Achieving Sustainability through attention to human resource factors
in environmental management. International Journal of Operations & Production Management,
21(12): 15-22
Dunphy, D., Griffiths, A., & Benn, S. (2007). Organizational change for corporate sustainability.
London and New York: Routledge.
Dobbs, M. and Hamilton, R. (2007). Small business growth: recent evidence and new directions.
International Journal of Entrepreneurial behavior and research, 13(2): 296-322.
El-Said, H., Al-Said, M., Zaki, C., 2013.What determines the access to finance of SMEs? Evidence from
the Egyptian case. Working Paper Series, Economic Research Forum.
Esubalew, A. & Raghurama, A. (2017). Micro, Small and Medium Enterprises Development Strategies
in Ethiopia: International Journal of Commerce, Business and Management 6(1): 1-2.
Fadahunsi, O. (1997). The Challenge of Promoting Entrepreneurship and Small Business: The
Common Wealth Experience. Small and Medium Enterprises Development: Policies, Program-
mers and Prospects.
Fatoki, O. &Garwe, D. (2016). Obstacles to the growth of new SMEs in South Africa: a principal
component analysis approach. African Journal of Business Management, 4 (5): 729-38.
Federal Democratic Republic of Ethiopia (FDRE), Ministry of Trade and (MOT).) (2018/19).
Enterprises yearly statistical Bulletin. Addis Ababa, Ethiopia.
Federal Negarit Gazette of the Federal democratic republic of Ethiopia, (2016). Federal Small and
Medium Manufacturing Industry Development Agency Establishment Council of Ministers Reg-
ulation, 30(40):4-5.
 59

Federal Negarit Gazette of the Federal democratic republic of Ethiopia, (2010). Commercial
Registration and Business Licensing Proclamation, 36(42): 53-54.
FeMSEDA (2011). Micro and small enterprises development strategy. Addis Ababa, Ethiopia.
Fredland, E. J. and C. E. Morris. (2009). 'A Cross Section Analysis of Small Business Failure.
American Journal of Small Business, 1 (7), 7-18.
Gebretinsae, K. (2013). Dilemma Facing Enterprises in Kenya. A journal of Economic review.
Gebre-egziabher, Ayene M., (2018). Small Businesses in Small Towns of the Eastern Amhara Region:
Nature and Economic Performance. A Research Report on IDR, Addis Ababa University.
Gnizy, I., Baker, W.E., & Grinstein, A. (2014). A dynamic capability and key success factor for SMEs
entering foreign markets. International Marketing Review, 31(5): 477–505.
Gumel, I (2017). Strategizing for Sustaining Small Business Enterprises in Nigeria. Journal of Business
and Management ,19(10): 08-25.
Hair, J. F. Jr., Anderson, R. E., Tatham, R. L. & Black, W. C. (1995). Multivariate Data Analysis (3rd
edition). New York: Macmillan.
Harjula, H. (2008). Scoping study on the inclusion of releases and transfers from small and medium
sized enterprises (SMEs) in PRTRs’, environment directorate. journal of Organization for Eco-
nomic Cooperation and Development: Paris, France.
ILO, (2015) Small and Medium –Size enterprise and decent and productive employment creation.
International Labor conference report 104th Session, (2015).
Jayasundra, G. (2019). 'Reasons for Insolvency amongst Small Firms’. A Review and Fresh Evidence,
Small Business Economics 4(3): 237-250.
Jutla, S. & Bares, B. 2017. High growth SMEs: The evolution of the gazelles and some evidence from
the field.
Kotler, P. and Armstrong, G. (1999). Principles of Marketing. New Delhi: Prentice-Hall of India Private
Limited.
Lussier, R. N., &Corman, J. (2015). A business success versus failure prediction model for entrepre-
neurs with 0- 10 employees. Journal of Small Business Strategy, 7(1): 21-36.
Mahembe E. 2011. Literature review on small and medium enterprises’ access to credit and support in
South Africa. National Credit Regulator (NCR). Compiled by Underhill Corporate Solutions
(UCS).
 60

Mwobobia, F. M. (2017) Role of business management into the success and survival of small business:
the case of star learning center in Botswana. International Journal of Business Administration,
3(1), 93-112.
Marom, S., &Lussier, R. (2014). A business success versus failure prediction model for small business in
Israel. Business and Economic Research, 4(2): 63-81.
Mor, S., & Madan, S. (2019). Identification of factor affecting market offerings in micro business: Case
of India. International Journal of Computational Engineering & Management, 22(1), 1–8.
Mulugeta, H. (2014). Assessing factors affecting performance of micro and small scale enterprises
(unpublished master’s dissertation). St. Mary’s University, Addis Ababa.
Nuwagaba, A. & Nzewi, H. (2016). Major Environmental Constraints on Growth of Micro and Small
Enterprises in Uganda: A Survey of Selected Micro and Small Enterprises in Mbarara Munici-
pality. International Journal of Cooperative Studies, 2(1).
Oyelola, O. T. (2013). Entrepreneurship for sustainable economic growth in Nigeria. Journal of
Sustainable Development Studies, 67(2): 197 -215.
Rahel F (2018) and chala 2020 Factors Determining the Success of Small and Medium Enter-prises in
Tigray region: The Case of selected town Hintalo Wejerat Wereda
Probawali, B. Measuring SMEs’ sustainability; international Journal of management and sustainability,
2(12): 192-207
Salimzadeh, p. Courvisanos, J.andNayak, R. (2013). Sustainability in Small and Medium Sized
Enterprises in Regional Australia: A Framework of Analysis; Australia.
Roberta, H., &Alison T. (2015). Validity and reliability in quantitative studies, School of Nursing,
Laurentian University, Ramsey Lake Road, Sudbury, Ontario, Canada.
Stephen, E., O., and Wasiu, A., B. (2018). The Contribution of Small Scale Industries to The National
Economy. Standard Research Journal of Business Management, 1(2), 60- 71.
Surrender, Son and Geoffrey, (2019) Survival of the Smallest: A Study of Microenterprises in Haryana,
India 11(1) 54–78, 2019
Thornburg, L. (1993). IBM agents of Influence: Human Resource Magazine, 38(2).
UNIDO, (1999). SME cluster and network development in developing countries the experience of
UNIDO.
 61

Variyam, J. and Kraybill, D. (1994). Managerial Inputs and the Growth of Rural Small Firms. American
Journal of Agricultural Economics, 76 (3): 568-575
Wilkinson, A., Hill, M., & Gollan, P. (2010). The sustainability debate. International Journal of
Operations & Production Management, 21(12): 14-15.
Yustika (2005); Wijono (2009); Kuncoro (2010); Amri (2014) Factors that influence the success and
failure of land bank supported farming small, micro and medium enterprises (SMMES) in South
Africa. Journal of Development and Agricultural Economics [Electronic], 3(2), 37-45
Yamane Taro (1967). Statistics, an Introductory Analysis. Harper and Row, New York.

“The business of business is business”

Milton Friedman
Appendix

QUESTIONNAIRE
HARAMAYA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
MBA WEEKEND PROGRAM
Dear Respondent,

My name is Mr. Muktar Ahmed, MBA graduate student, at Haramaya University

currently designing this questionnaire to undertake an academic research. The pur-

pose of this questionnaire is to collect data on Factors Affecting the Sustainability

of Small and Medium-Scale Enterprises: The Case of Harar Town. The infor-

mation that you provide me will be kept confidential and only used for academic

purpose. your genuine, honest and timely response is vital for accomplishment of

this study. Therefore, it would be appreciated if you could avail yourself and your

time to complete the questionnaire, which should take approximately 15 minutes to

complete and requires only the relevant response and some written comments.

Sincerely,
Instruction

No need of writing your name.

For multiple choice questions indicate (√) sign in the appropriate box.

For Likert scale type statements mark (√) sign, only once for the given variables depending on

your level of agreement.

SECTION 2: GENERAL INFORMATION ON THE BUSINESS INTERPRISES.

Gender
A) Female
B) Male

Educational qualification/schooling
A. No formal education
B. Primary
C High School
D. Diploma
E. Degree and above
Age of respondents
A. 18-25
B. 26-30
C. 31-40
D. 51-60
E. > 60
What is the main activities of your enterprise?

Service Sector

Manufacturing

Trade

Constrictions

How many years have you been operating in this enterprise?

1-3 years

4-6 years

7-10 years

Above 11 years

What is your initial number of employees in your enterprise?

Less than 30 []

30 up to 100 []

Above 100 []

The age of SMEs operating in the business.

Start up (up to 3year) [ ]

Ramp up (3-7 years) []

Matured (above 7 years) [ ]

SECTION 3: FACTORS AFFECTING SUSTAINABLITY OF SMALL AND MEDIUM
ENTERPRISE

Please indicate your level of agreement regarding the following statements

1 Strongly disagree (SD), 2. disagree (D), 3. Neutral (N), 4. agree (A), 5. Strongly agree (SA)

S. No Marketing Dimension variables 1 2 3 4 5

There are market information and demand fore-
1.1 casting practices.

1.2 Searching new market for my products is easy.

Lack of setting clear and competitive price for
1.3 products.
There is good creating awareness for customers
1.4 about the product.

1.5 Lack of promotion to attract potential customers.

1.6 Lack of continuous improvement of product
There is good relationship with an organization
1.7 that conduct marketing research
The society’s attitude towards my Products ser-
1.8 vices is positive.
1.9 Market potential of my products is promising.
S. No Variables of Managerial Dimension 1 2 3 4 5

There are clear division of duties and responsibil-

3.1 ity among employees in the firm.
3.2 Lack of well trained and experienced employees.
We are satisfied with the Growth in sales of prod-
3.3 ucts and/or services.
Lack of management ability in creating external
3.4 relationship
3.5 The communication in the firm is effective.

S.No Government Support Dimension Variables 1 2 3 4 5

There are well of business development ser-
4.1 vices (supporting institutions).
There is bureaucracy in company registration
4.2 and licensing
There is adequate arrangement of required in-
4.3 frastructures.

4.4 Lack of providing right business location

Adequate government's effort in changing pub-
4.5 lic attitude.

Lack of providing training and skill up grading

4.6 for MSE manager or owner.
S. No 1 2 3 4 5
Perceived Measures of Sustainability
5.1 The growth of our business profit is satisfactory

5.2 Our capital is growing well as we expect.

5.3 Enterprises are maintaining production

5.4 We are satisfied in our operational efficiency.

S. No Financial Dimension Variables 1 2 3 4 5

The Credit institutions are sufficient to access loans
2.1 easily
The interest rate charged by banks and other lending
2.2 institutions are reasonable

2.3 Lack of cash management skills.

The Loan application procedures of banks and other
2.4 lending institutions are not complicated.
2.5 Lack of sufficient working capital.
Collateral requirement from banks and other lending
2.6 institutions are reasonable for my business
There is good management of Current Assets (like
2.7 inventory, A/R)